2015 (11) TMI 1290 - AT - Income Tax

Reopening of assessment - non communication of reasons for initiation of proceedings Held that - We find that the Commissioner of Income Tax (Appeals) has stated in his order that no reasons for initiation of proceedings under section 148 of the IT Act, 1961 were communicated to the assessee. The Departmental Representative could not bring any material on record to controvert the finding of the Commissioner of Income Tax (Appeals) that the reason for reopening of the assessment was communicated to the assessee. Hence, following the decision of the Hon ble Bombay High Court in the case of M/s. Trend Electronics (2015 (9) TMI 1119 - BOMBAY HIGH COURT), the appeals of the assessee are to be allowed and the reassessment orders dated in all the years under consideration is to be quashed. - Decided in favour of assessee.

Summary

Issues Involved:
Appeals against Commissioner of Income Tax (Appeals) order confirming Assessing Officer's action in initiating proceedings under section 148 of the Act.

Detailed Analysis:

Issue 1: Initiation of Proceedings under Section 148 of the Act
- The appeals were filed by the assessee against the order of Commissioner of Income Tax (Appeals) confirming the initiation of proceedings under section 148 for the assessment years 2006-07 to 2008-09.
- The primary contention was that the Assessing Officer's action in initiating proceedings under section 148 was not justified.
- The Commissioner of Income Tax (Appeals) observed that specific information was available to the Assessing Officer regarding investments made by the assessee that were not disclosed in the balance sheets.
- The assessee claimed that no reasons for reopening the assessment were communicated, and this fact was acknowledged by the Commissioner of Income Tax (Appeals).
- The Authorized Representative of the assessee relied on a decision of the Hon'ble Bombay High Court to argue that the reassessment order should be quashed if reasons for reopening were not furnished to the assessee.
- The Departmental Representative supported the lower authorities' orders.
- The Tribunal noted that the Commissioner of Income Tax (Appeals) found that reasons for initiating proceedings were not communicated to the assessee.
- Citing the decision of the Hon'ble Bombay High Court, the Tribunal concluded that the reassessment orders should be quashed since the reasons for reopening were not provided to the assessee.
- Consequently, the Tribunal allowed the appeals of the assessee and quashed the reassessment orders for all the years under consideration.

Issue 2: Merits of the Additions
- Due to the decision on the appeal ground regarding the initiation of proceedings, other grounds raised by the assessee on the merits of the additions became irrelevant and were dismissed.
- The Tribunal pronounced the order in favor of the assessee, allowing all the appeals.

In conclusion, the Tribunal found in favor of the assessee, quashing the reassessment orders for the years under appeal due to the failure to communicate reasons for initiating proceedings under section 148 of the Act. The decision highlighted the importance of providing reasons for reopening assessments and aligned with legal precedents to support its ruling.