Case Law Details
Case Name : CIT (LTU) vs. IDBI Ltd. (Bombay High Court)
Appeal Number : Income Tax Appeal No-494/2014
Date of Judgement/Order : 19/09/2016
Related Assessment Year : 1993-94
CA Saurabh Chokhra
Brief of the case:
The Hon’ble Bombay HC in the above cited case held that supplying of reasons for reopening assessment is a jurisdictional requirement and non-supplying of the same when the assessee specifically asked for the same would made the reassessment notice bad in law.
Facts of the case:
- For AY 1993-94 the regular assessment u/s 143(3) was completed by an order dated 26 March 1996. Thereafter, on 9 December 1996, the Assessing Officer issued a notice u/s. 147 read with Section 148 of the Act, seeking to reopen the assessment for the Assessment Year 1993-94.
- On receipt of notice, the assessee company sought from the Assessing Officer a copy of reasons recorded for issuing notice for reopening assessment. However, the same was not supplied. The Assessing Officer, in fact passed an Assessment Order on 26 March 1999 consequent to the impugned notice for reassessment dated 9 December 1996 without supplying the copy of the reasons recorded.
- Aggrieved assessee carried the issue in appeal to the Commissioner of Income Tax (Appeals). CIT(A) dismissed the assessee’s appeal relating to lack of jurisdiction with the Assessing Officer to complete the assessment on a reopening notice without having furnished a copy of the reasons in support thereof to the Assessee.
- On appeal to tribunal, it held that in spite of repeated requests made by the assessee, the AO did not supply its reasons in support of the reopening notice u/s 148 of the Act. Tribunal relied on its own decision rendered in case of Tata International Limited wherein it was held that non-supply of reasons in support of the reopening notice would make the order passed thereon bad in law. Consequently, tribunal allowed the appeal without going in the merits of case.
- Aggrieved revenue is in appeal before the Bombay HC.
Held by Hon’ble Bombay HC:
- The High court observed that the supply of reason in support of the notice for reopening of an assessment is a jurisdictional requirement which forms the basis to examine whether the AO had applied his mind to conclude that he had reason to believe that income had escaped assessment.
- Further , high court rejected the revenue’s contention that assessee is a public sector institution who was aware that search action has been initiated on certain lessees in respect of transactions with IDBI of which IDBI was aware of , so no need to communicate the reasons of reopening separately.
- It is because communication of reasons recorded for reopening is the requirement of law and revenue cannot overlook the same just by presuming that assessee is already aware of the reasons more so when the assessee repeatedly asked for the same.
- As such the appeal of revenue was dismissed.