Validity of reassessment proceedings is not affected if reasons are recorded by the Assessing Officer for reopening the assessment but not furnished to the taxpayer within a limitation period
There is no requirement in Section 147 or Section 148 or Section 149 that the reasons recorded should also accompany the notice issued under Section 148. The requirement in Section 149(1) is only that the notice under Section 148 shall be issued. There is no requirement that it should also be served on the assessee before the period of limitation.
There is also no requirement in Section 148(2) that the reasons recorded shall be served along with the notice of reopening the assessment. The requirement, which is mandatory, is only that before issuing the notice to reopen the assessment the Assessing Officer shall record his reasons for doing so.
It is significant to note that the recording of the reasons under Section 148(2) shall precede the issue of notice under Section 148(1) as indicated clearly by the words “before issuing any notice under this section”.
The only feature in the present case is that there was a delay of 4 1/2 months in supplying the reasons recorded by the Assessing Officer to the petitioner. This by itself cannot invalidate the reassessment proceedings.
HIGH COURT OF DELHI
Date of Decision : 25th April, 2012.
W.P.(C) 8031/2011
A.G.Holdings Pvt Ltd
Versus
Income Tax Officer
ORDER
This writ petition under Article 226 has been filed by the petitioner A G Holdings Pvt. Ltd. for issue of a writ of certiorari or any other writ or order quashing the impugned notice issued under Section 148 of the Income Tax Act, 1961 (“Act”, for short) on 15.3.2011 for the assessment year 2004-05 and the order dated 8.11.2011 passed by the respondent herein, who is the Assessing Officer, disposing of the objections filed by the petitioner to the initiation of proceedings under Section 147 of the Act.
2. The facts giving rise to the writ petition are as follows :-
The petitioner is a company. In respect of the assessment year 2004- 05 it filed a return of income on 23.3.2005 declaring loss of Rs. 6,097/-, along with the audited accounts. The return of income was accepted under Section 143(1) of the Act. On 15.3.2011, a notice was issued by the respondent under Section 148 of the Act on the ground that income chargeable to tax had escaped assessment for the assessment year 2004-05. In response to the notice, the petitioner filed a return declaring loss of Rs. 6,100/-, which was the same as declared in the original return. Along with the return the petitioner also filed a letter dated 7.4.2011 in which a request was made to the respondent to supply the reasons recorded for reopening the assessment. The respondent supplied the reasons recorded for reopening the assessment to the petitioner on 30.8.2011. These were accompanied by a letter dated 25.8.2011, which was a covering letter and to this letter, the respondent also enclosed a notice under Section 143(2) calling upon the assessee to furnish certain details. The reasons recorded for reopening are as under :
“M/s. A G Holdings Pvt. Ltd. A.Y.-2004-05
Certain investigations were carried out by the Directorate of Investigation, Jhandewalan, New Delhi in respect of the bogus’ accommodation entries provided by certain individuals’ companies. The name of the assessee figures as one of the beneficiaries of these alleged bogus transactions given by the Directorate after making the necessary enquiries. In the said information, it has been inter alia reported as under: –
“Entries are broadly taken for two purposes
1. To plough back unaccounted black money for the purpose of business or for personal needs such as purchase of assets etc., in the form of gifts, share application money, loans etc.
2. To inflate expenses in the trading and profit and loss account so as to reduce the real profits and thereby pay less taxes.
It has been revealed that the following entries have been received by the assessee: –
