2023 (8) TMI 674 - AT - Income Tax

Validity of reopening of assessment u/s 147 - reasons for reopening supplied but were not legible and not readable - as argued assessee could not exercise the right to file objection against the reasons formed to issue notice under section 148 - As per assessee without supplying the legible reasons AO passed draft assessment order proposing addition u/s 69C - HELD THAT - Revenue could not produce the signed legible / readable reasons, which was provided to the assessee. On perusal of the draft / final assessment order the CIT (Appeals) s order it is noticed that the reasons said to have been recorded for re-opening of assessment were neither legible nor readable. It is also noticed that in spite of several requests the Revenue did not provide legible and reasonable reasons to the assessee to file rebuttal. The procedure laid down in the case of GKN Driveshafts (India) Ltd 2002 (11) TMI 7 - SUPREME COURT have not been followed strictly making the reassessment bad in law. The reasons said to have been supplied to the assessee if it is neither legible nor readable it is as good as non-supply of the reasons to the assessee. The assessee filed return on 26.02.2021 and requested for reasons on 28.02.2021. Reminder was sent on 2.07.2021. The reasons said to have been furnished on 28.07.2021 and again on 20.08.2021. The assessee filed objections on 28.09.2021 making it clear that in the absence of legible and readable reasons for reopening the assessment the assessee is not in a position to file its objections for reopening the assessment. Immediately on 29.09.2021 the assessment was completed under section 143(3)/147/144B of the Act. It is not in dispute before me that the reasons said to have been supplied by the Revenue are neither legible nor readable. In the circumstances the reasons said to have been furnished are as good as no reasons furnished at all. Thus the reassessment order is quashed as bad in law - Decided in favour of assessee.

Summary

Issues involved:
The appeal challenges the order of the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre for assessment year 2015-16, specifically regarding the assessment made under section 148 of the Act and the reasons supplied by the Assessing Officer.

Assessment under Section 148 of the Act:
The appellant contested the assessment made under section 148 of the Act, arguing that the Assessing Officer failed to provide proper reasons as mandated by the Hon'ble Supreme Court in the case of GKN Driveshafts (India) Ltd. vs. ITO. The appellant highlighted that the reasons supplied were illegible and provided after a significant delay, rendering them non-compliant with legal requirements. Despite repeated requests for legible reasons, the Assessing Officer proceeded with the assessment without addressing the appellant's objections, leading to a proposed addition under section 69C of the Act.

Legal Proceedings and Decision:
Upon appeal, the CIT (Appeals) acknowledged the appellant's contentions, noting that the reasons for re-opening the assessment were neither legible nor readable. The CIT (Appeals) emphasized that the failure to provide clear reasons violated the procedural standards set by the Hon'ble Supreme Court in the GKN Driveshafts case, rendering the reassessment legally flawed. Consequently, the reassessment order was quashed on the grounds of inadequate compliance with legal requirements. The CIT (Appeals) declined to delve into other legal grounds or merits due to the fundamental legal flaw in the reassessment process.

Conclusion:
The appeal was partly allowed based on the inadequacy of the reasons provided for the reassessment, leading to the quashing of the reassessment order as legally defective. The decision was in line with the legal precedents set by the Hon'ble Supreme Court and the jurisdictional High Court, emphasizing the importance of adhering to procedural fairness in assessment procedures.