Case Law Details
INCOME TAX APPELLATE TRIBUNAL,BANGALORE
ITA No.549/Bang/2011 – (Asst. year 2005-06)
M/s Synopsys International Limited
vs
The Deputy Director of Income-tax
Date of Pronouncement 10.12.2012
RELEVANT PARAGRAPHS
4.1.2 As per the records, we find that the then Assessing Officer had recorded in writing the reasons for initiation of proceedings under section 147/148 of the Act. It is also a matter of record that the assessee’s letter dated 16/4/2007, for filing the return of income for the assessment year 2005-06 in response to notice under section 148 dt.2/4/2007, contained a specific request to the Assessing Officer to be provided with the reasons for initiating the proceedings under section 147/148 of the Act (copy on page 10 of assessee’s paper book filed on 07/11/2012). The assessee’s letter dated 16/4/2007 forms a part of the record of assessment with the Assessing Officer. It is clear from a perusal of paras 3.2 and 3.3 of the learned CIT(A)’s order that reasons recorded by the Assessing Officer for initiation of proceedings under section 147/148 of the Act were never provided to the assessee by the Assessing Officer during the pendency of assessment proceedings which culminated in the order of assessment on 29/12/2008, almost one year and eight months after the request for the same was made by the assessee on 16/4/2007. In para 3.2 of his order, the learned CIT(A) states that the reasons recorded for initiation were given to the assessee on 28/1/2010 only. This establishes the fact that the assessee was never given the reasons for initiation of proceedings under section 147/148 of the Act by the Assessing Officer during the pendency of assessment proceedings but only during appellate proceedings almost 33 months after the assessee made the request for the same by letter dated 16/4/2007.
4.1.3 As held by the Hon’ble Apex Court in the case of GKN Driveshafts (India) Ltd. v ITO (259 ITR 19) (2003) that on being requested by the assessee, the Assessing Officer is bound to furnish the reasons recorded for initiation of proceedings under section 147 of the Act within a reasonable period of time so that the assessee could file its objections thereto and the Assessing Officer was to dispose off the same by passing a speaking order thereon. Even as per the rules of natural justice, the assessee is entitled to know the reasons on the basis of which the Assessing Officer has formed an opinion that income assessable to tax has escaped assessment. The furnishing of reasons to the assessee is to enable/facilitate it to present its defence and objections to the initiation of proceedings under section 147/148 of the Act. We are of the considered opinion that there was no justifiable reason for the Assessing Officer to deprive the assessee of the recorded reasons by him for initiating proceedings under section 147/148 of the Act.
4.1.4 In the decision cited by the learned AR in CIT v Videsh Sanchar Nigam Ltd. (ITA No.4235 of 2010 dt.20/7/2011), the Bombay High Court has held that re-assessment proceedings were invalid for the reason that the reasons recorded for reopening of the assessment were not furnished despite requests by the assessee till the completion of the assessment and were furnished only after completion of the assessment. From this decision it is clear that the reasons recorded for initiation of proceedings under section 147/148 of the Act are required to be furnished by the Assessing Officer to the assessee within a reasonable period in order for the assessee to raise its objections at the preliminary stage of proceedings. If the reasons are not furnished to the assessee during the assessment proceedings, then the subsequent furnishing of the reasons after completion of assessment proceedings would serve no purpose and would amount to the assessee being denied its right to raise objections to the validity of proceedings initiated under section 147/148 of the Act. In the light of the findings of their Lordships in this case, it is clear that the completion of assessment/re-assessment without furnishing the reasons recorded by the Assessing Officer for initiation of proceedings under section 147/148 of the Act is not sustainable in law as it is incumbent on the Assessing Officer to supply them within reasonable time as held by the Hon’ble Apex Court in the case of GKN Driveshafts (India) Ltd. v ITO (supra). The subsequent furnishing of reasons i.e. after completion of assessment would not make good the defect/invalidity with which the initiation of proceedings under section 147/148 of the act is tainted. Similar view has been held by coordinate benches of the ITAT in the case of (i) ACIT v K V Venkataswamy Reddy of the ITAT, Bangalore in ITA Nos.797, 807, 798 & 808/Bang/2009 dated 21/5/2010 and (ii) Tata International Limited v DCIT by the ITAT, Mumbai in ITA Nos.3359 to 3361/Mum/2009 dated 29/6/2012.
4.1.5 From the discussion in paras 4.1.1 to 4.1.4 of this order (supra), it is clear that the settled proposition of law, as laid down by the Hon’ble Apex Court, Hon’ble High Court of Mumbai and as followed by the two decisions of the coordinate benches of the Tribunal (all cited supra), is that the reasons as recorded by the Assessing Officer are required to be furnished to the assessee within reasonable time of their being recorded and certainly prior to the completion of assessment. In the instant case, the undisputable facts on record establish beyond doubt that the reasons recorded for initiation of proceedings under section 147/148 of the Act were never furnished to the assessee by the Assessing Officer before completion of the assessment proceedings on 29/12/2008, 33 months after the request was made by the assessee by letter dated 16/4/2007. The subsequent furnishing of the reasons recorded to the assessee by the learned CIT(A) by letter dated 28/1/2010 does not achieve any purpose or mitigate the illegality of the action of depriving the assessee its right to raise objections against the initiation of proceedings under section 147/148 of the Act. In this view of the matter, we hold that the order of assessment passed under section 143(3) rws 148 of the Act dated 29/12/2008 for the assessment year 2005-06 without the Assessing Officer furnishing the recorded reasons for initiation of proceedings under section 147/148 of the Act to the assessee within reasonable time and prior to the completion of the assessment proceedings, renders this order of assessment invalid and unsustainable in law.
