2015 (2) TMI 806 - HC - Income Tax

Reopening of assessment - assessees were not registered under section 12A nor had requisite approval under section 10(23C)(vi) - Held that - From a bare perusal of section 148 of the Act, it is clear as crystal that the Assessing Officer is obliged to record reasons before issuing notice under section 148 of the Act. In this backdrop, we have examined the original records placed before us by the learned counsel for the Revenue. It is true that in one of the files, there was a draft of reasons purportedly prepared by the Assessing Officer on January 20, 2004. It was not signed by the Assessing Officer. The reasons recorded by the Assessing Officer were typed, as is clear from the printout of the original reasons, on February 4, 2004. The typed date was struck off with pen and the date January 30, 2004, was written by hand with the same pen. Though the original date (typed) was struck off with pen still the typed date is visible/could be read or is clearly seen, and it was typed as February 4, 2004. The typed date or the date of print out was February 4, 2004, and that it was changed to January 30, 2004, as the date of reasons recorded under sub-section (2) of section 148 of the Act. Thus, the record was set right by showing that the date of the notice and the date on which the reasons were recorded was the same. Why and how the date February 4, 2004, is appearing on the original reasons recorded under sub-section (2) of section 148 of the Act is not explained by the Assessing Officer. Neither in the order of the Assessing Officer nor in the order of the Commissioner of Income-tax (Appeals) an attempt was made to explain striking off the original date and writing the date January 30, 2004, by hand. thus is a finding of fact recorded by the Tribunal holding that the notice was issued even before the reasons were recorded. - Decided in favour of assessee.

Summary

Issues:
- Appeal arising from common order dated June 1, 2007, by the Income-tax Appellate Tribunal, Bangalore Bench.
- Disposal of 13 Income-tax appeals pertaining to different assessment years.
- Assessees claiming exemption under section 10(23C)(vi) of the Income-tax Act, 1961.
- Reopening of assessments under section 147 due to lack of registration under section 12A.
- Dispute regarding the validity of notice issued under section 148 without recorded reasons.
- Examination of original records to determine the timing of reason recording and notice issuance.
- Contention by Revenue of reasons being recorded before issuing notice.
- Tribunal's finding that notice was issued before reasons were recorded.
- Final dismissal of all appeals.

Detailed Analysis:

The judgment involves a batch of 13 Income-tax appeals arising from a common order by the Income-tax Appellate Tribunal, Bangalore Bench, concerning different assessment years. The appeals involve assessees, including educational institutions, claiming exemption under section 10(23C)(vi) of the Income-tax Act, 1961. Assessments were reopened under section 147 due to lack of registration under section 12A, leading to the present appeals filed by the Revenue against the Tribunal's partial allowance of assessees' appeals.

The primary issue raised by the Revenue in all appeals pertains to the validity of the notice issued under section 148 of the Income-tax Act without recorded reasons, which could potentially impact the entire assessment proceedings. The parties unanimously agreed that resolving this legal question would be pivotal in determining the outcome of the appeals. The assessees contended that the notice was issued without recorded reasons, thereby challenging the legality of the assessment proceedings.

During the proceedings, the counsel for the assessees highlighted the mandatory requirement under section 148 for the Assessing Officer to record reasons before issuing a notice. The Revenue, on the other hand, argued that the reasons were indeed recorded before the notice was issued, presenting original records to support their claim. The Court meticulously examined the original records, including a draft notice and the purportedly recorded reasons, to ascertain the sequence of events and the timing of reason recording vis-a-vis notice issuance.

Upon thorough examination, the Court found discrepancies in the dates associated with the recorded reasons and the notice issuance, ultimately concurring with the Tribunal's factual finding that the notice was indeed issued before the reasons were recorded. The Court upheld the Tribunal's decision, emphasizing that the findings were not erroneous or unjustifiable. Consequently, all the appeals were dismissed, with no order as to costs, based on the established facts and legal interpretations presented during the proceedings.