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TMI Blog2014 (9) TMI 1273X X X X Extracts X X X X X X X X Extracts X X X X ..... Without furnishing the assessee a copy of the reasons recorded would tantamount to punish the assessee without hearing him. The power of the to issue notice u/s. 147 of the Act is coupled with the duty to follow a prescribed method. A duty has been cast upon him to supply the copy of reasons recorded to the assessee. Rights are always accompanied by duties and bigger rights brings higher the duties in picture. Power given to the AO by section 147 is not a simple power it is to unsettle the completed proceedings and it generally results in higher tax liability. Therefore, safeguards have been provided in the Act. Duty of the AO to communicate the reasons to the assessee is the other side of the coin and is the right of the assessee. The assessee cannot be burdened only with duties. His duty is to file the return once he gets the notice. Similarly, his right to know the reasons starts once he files a return and asks the AO to supply him the copy of recorded reasons. Case-issuance of notice u/s. 148 of the Act, the requests made by the assessee during assessment and after the assessment/appellate proceedings, the inability of the AO to produce the reasons recorded or to pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ght to be accepted as correct. ADDITION TOWARDS GOLD BALLS AND JEWELLERY SEIZED: 2. The CIT(A) erred in not appreciating that both at the time of original assessment as well as during the remand proceedings, the Department failed to verify from the Income-tax Department, Guntur about the veracity / correctness of the various documents / evidence produced by the Appellant. 2.1. The CIT(A) erred in not allowing entire value of gold balls melted from old family jewellery particularly when the Appellant submitted various Affidavits of family members and Wealth Tax Returns at the time of original assessment as well as remand proceedings. 3. The CIT(A) erred in not appreciating that the Assessing Officer failed to provide the copy of the reasons recorded before issuance of notice u/s. 148(2) despite several reminders by the Appellant without providing an opportunity to the Appellant to submit his objections to reopening of the assessment. 4. The CIT(A) erred in not appreciating that the Assessing Officer failed to issue mandatory Notice u/s. 143(2) within the time prescribed. 5. The CIT(A) erred in not appreciating that the Assessing Officer erred in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... afresh. While deciding the matter in pursuance of the ITAT's order, the FAA deleted certain additions made by the AO. However, he upheld the addition of Rs. 2.60 Lakhs and addition made by the AO. With regard to the 5 gold balls weighing 1545 gms., he directed the AO to file a remand report. He found that the AO had not carried out any verification as directed by him, about the evidences furnished by the Authorised Representative(AR) of the assessee with regard to the ownership of the gold ornaments claimed to belonging to the members of the family of the assessee. He held that he was left with no alternative but to accept the submissions made by the assessee about the ownership of the gold ornaments, that jewellery to the extent of 975 gms. stood explained in view of the wealth tax returns filed by various persons. About the balance jewellery, to the extent of 588.9 gms (1563-975 gms), he held that it remained unexplained due to lack of proper evidences. Finally, he upheld the addition, made by the AO to that extent. About the seized amount of Rs. 2.60 lakhs, he held that legal heirs of the assessee had not been able to explain the seized cash, that they had not produced ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rse of action for the notice is to file the return and, if he so desires, to seek reasons for issuing the notices. The Assessing Officer is bound to furnish reasons within a reasonable time. On receipt of reasons, the notice is entitled to file objections to issuance of notice and the Assessing Officer is bound to dispose of the same by passing a speaking order. (259 ITR 19). The above judgment of the Hon ble Supreme Court has been followed by various Hon ble Courts while dealing with the issue of recording of reasons or supply of recorded reasons to the assessee. In the matter of Gehna a writ was filed by the assessee before the Hon ble Rajasthan High Court, as the reasons recorded were not supplied. Deciding the matter the Hon ble Court held as under:(267 ITR 782) Where a notice under section 148 of the Income-tax Act, 1961, is issued, the proper course of action for the notice is to file the return and, if he so desires, to seek reasons for issuing the notices. The Assessing Officer is bound to furnish reasons within a reasonable time. On receipt of reasons, the notice is entitled to file objections to issuance of notice and the Assessing Officer is bound to dispose of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons to be communicated only after he has filed a revised return in response to the notice under that section. The recording of reasons and obtaining approval to give notice may be administrative action but the very act of giving notice backed by good and valid reasons under section 148(2) of the Act is a quasi-judicial function. If reasons are supplied along with the notice under section 148(2), it will obviate unnecessary harassment to the assessee as well as to the Revenue by avoiding unnecessary litigation which will save courts also from being involved in unproductive litigations. Above all it will be in consonance with the principles of natural justice.(emphasis supplied) In the matter of KLM Royal Dutch Airlines (292 ITR 49), the Hon ble Delhi High Court has held that reason to believe for issuing a reassessment-notice constitutes the springboard for the section 147/148 action and simultaneously or immediately after the assessee files a return, in compliance of the notice, it would be entitled to be apprised of the reasons. The Hon ble Punjab and Haryana High Court in the matter of Vidya Sagar (305 ITR 124)has held as under: When a notice under sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the jurisdiction of an AO, who initiates reassessment proceedings. The validity of the reassessment proceedings is tested, by the Hon ble Courts, on the basis of the underlying reasoning stated and recorded for opening of the reassessment. If the person affected by the action of the AO is not aware as to why the AO had found it fit to reopen his assessment, he will be in dark and will not be in position to defend himself. Principles of natural justice demand that nobody should be penalise unheard. Without furnishing the assessee a copy of the reasons recorded would tantamount to punish the assessee without hearing him. The power of the to issue notice u/s. 147 of the Act is coupled with the duty to follow a prescribed method. A duty has been cast upon him to supply the copy of reasons recorded to the assessee. Rights are always accompanied by duties and bigger rights brings higher the duties in picture. Power given to the AO by section 147 is not a simple power it is to unsettle the completed proceedings and it generally results in higher tax liability. Therefore, safeguards have been provided in the Act. Duty of the AO to communicate the reasons to the assessee is the other si ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that though the reopening of the assessment is within three years from the end of the relevant assessment year, since the reasons recorded for reopening of the assessment were not furnished to the assessee till the completion of assessment, the reassessment order cannot be upheld. Moreover, special leave petition filed by the Revenue against the decision of this court in the of CIT v. Fomento Resorts and Hotels Ltd. has been dismissed by the apex court, vide order dated July 16, 2007. In this view of the matter, the present appeal is also dismissed with no order as to costs. In the case of Tata International Ltd. (52 SOT 465) similar issue had been dealt with by the Tribunal as under: As per the rule of natural Justice, the assessee is entitled to know the reasons on the basis of which the AO has believed and formed an opinion that the income assessable to tax has escaped assessment. It is not understandable as to why the AO was so reluctant and hesitant to furnish the reasons actually recorded for reopening of assessment. There was no reason and rather justifiable reasons for depriving the assessee of the reasons actually recorded by the AO for reopening of the assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X
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