Case Law Details
Brief of the Case
ITAT Jaipur held In case of ACIT vs. Shri M.R. Seetharam that it is mandatory that Assessing Officer should furnish the copy of the reasons recorded for initiation of re-assessment proceedings under Section 147 exactly as it is recorded by the Assessing Officer. Mere assessee was aware of the reassessment proceedings or participated in reassessment proceedings will not make any difference regarding comply with the mandatory requirement of supply of copy of reasons. Non supply of reasons will be treated as violation of principal of natural justice and it will make the whole exercise of reassessment void.
Facts of the Case
The assessee, an individual engaged in real estate, filed his return for AY 2004-05 on 12.1.2005 declaring total income of Rs.5,68,81,556 and agricultural income of Rs.2,00,000. The return was processed under Section 143(1) and the case was taken up for scrutiny. The assessment was completed vide order dt.22.12.2006, wherein the income of the assessee was determined at Rs.6,74,73,557.
A search under Section 132 was conducted in the case of one Sri Sohanraj as well as M/s. Mehta Associates, Bangalore on 10.10.2009 wherein it was found that the assessee was a partner in the above firm, which was the sole C&F Agent of Manikchand Gutka for the State of Karnataka. As per information gathered in the search of the Sohanraj Group of cases, the assessee in the case on hand had received Rs.7,16,22,000 in cash from these parties. In this regard, the Assessing Officer initiated re-assessment proceedings under Section 147 in order to bring to tax in the assessee’s hands the amount of Rs.7,16,22,000 which had not been disclosed by the assessee and Notice under Section 148 was issued to the assessee on 31.3.2011 after obtaining the approval of the CIT. The Assessing Officer concluded the reassessment proceedings under Section 143(3) rws 147 of the Act vide order dt.30.12.2011 wherein the income of the assessee was determined at Rs.12,87,03,560; which included an addition of the said amount of Rs.7,16,22,000 under Section 69A /69.
Contention of the Revenue
The ld counsel contended that though it is evident that the assessee was not supplied with a copy of the reasons recorded by the Assessing Officer for initiation of re-assessment proceedings under Section 147 of the Act and sought for vide his letter dt.26.4.2011, the assessee was well aware of the reasons for re-opening of the assessment for Assessment Year 2004-05 under Section 147 of the Act. The learned Departmental Representative contends that since the assessee was impliedly aware of the reasons recorded and had also participated and co-operated in the assessment proceedings, the non-supply to the assessee of the copy of reasons recorded by the Assessing Officer was not fatal to the re-assessment and the defect, if any, is covered by the provisions of Section 292BB of the Act. The learned Departmental Representative also placed reliance on the decision of the Hon’ble Allahabad High Court in the case of CIT V Shyam Cold Storage in ITA No.28/2011 in support of the contention that the provisions of Section 292BB of the Act cure the defect of non-supply of reasons.
Held by CIT (A)
The CIT (A) allowed the assessee’s appeal, by cancelling the re-assessment order passed under Section 143(3) rws 147 holding the same to be bad in law as the same was passed without supply of copy of the reasons recorded by the Assessing Officer, for initiating re-assessment proceedings under Section 147, to the assessee which were sought by him vide letter dt.26.11.2011. This fact of non-supply of copy of reasons recorded is also evident from the assessee’s letter filed on 23.12.2011 before the Assessing Officer. He relied on the decision of the co-ordinate bench in the cases of: – (i) Synopsis International Ltd. V DDIT in ITA No.549/Bang/2011 dt.10.12.2012; and (ii) Suez Tractabel SA V DDIT in ITA No.656/Bang/2009 dt.7.6.2013.
Held by ITAT
We do not concur with the contentions of Revenue that non-supply of copy of the reasons recorded by the Assessing Officer, for initiation of re-assessment proceedings under Section 147, as requested for by the assessee is not fatal to the reassessment proceedings / order. The Hon’ble Apex Court in the case of GKN Drive Shafts (India) Ltd. in 259 ITR 19, laid down the law that it is mandatory for supply of the copy of the reasons recorded, if asked for by the assessee; provided the assessee has complied with his duty of filing a return of income in response to the notice under Section 148.
This failure on the part of the Assessing Officer is in violation of the principles of natural justice and falls foul of the decision of the Hon’ble Apex Court in the case of GKN Drive Shaft (India) Ltd. 259 ITR 19, It is mandatory that the Assessing Officer should furnish the copy of the reasons recorded for initiation of re-assessment proceedings under Section 147 of the Act exactly as it is recorded by the Assessing Officer and there is no question of inferring whether the assessee is aware of the reasons or not in the absence of such communication.
The co-ordinate benches of this Tribunal while rendering their findings in the cases of Synopsis International Ltd. ITA No.549/Bang/2011 dt.10.12.2012 and Suez Tractabel S.A. ITA No.656/Bang/2009 dt.7.6.2013 have followed the principle laid down by the Hon’ble Apex Court in the case of GKN Driveshafts (India) Ltd 259 ITR 19 which have been followed by the learned CIT (Appeals) in her order while cancelling the order of re-assessment passed under Section 143(3) rws 147 dt.29.12.2011. Accordingly, we concur with and uphold the decision of the learned CIT (Appeals) in cancelling the order of re assessment for Assessment Year 2004-05 dt.29.12.2011 passed under Section 143(3) rws 147.
Accordingly appeal of the revenue dismissed.
