2013 (3) TMI 633 - AT - Income Tax

Appeal allowed, reassessment quashed for lack of reasons, emphasizing timely explanation

Trends Electronics Versus ITO 24 (1) (2), Mumbai

The Tribunal allowed the appeal, quashing the reassessment order under section 143(3) r.w.s. 147 as null and void due to the AO's failure to provide ... Reopening of assessment - Held that:- Reassessment order passed by the AO u/s.143(3) r.w.s 147 of the Act dated 30.12.2010 is bad in law as the AO had not furnished copy of the reasons recorded despite specific request made by the assessee before he completed the assessment. Hence, the assessment order is quashed as null and void. - Decided in favour of assessee. Issues Involved:1. Validity of the assessment order under section 143(3) r.w.s. 147 due to non-provision of reasons for reopening the assessment.2. Confirmation of additions made by the Assessing Officer.Issue-Wise Detailed Analysis:1. Validity of the Assessment Order under Section 143(3) r.w.s. 147:The core issue in the appeal was the validity of the assessment order under section 143(3) read with section 147 of the Income Tax Act, 1961, due to the non-provision of reasons for reopening the assessment. The assessee, a partnership firm engaged in reselling computer parts and accessories, filed its return of income for the assessment year 2008-09 on 29.09.2008, declaring a total income of Rs. 7,67,171/-. The return was initially processed under section 143(1), accepting the declared income.However, based on a survey action under section 133A, where partners confessed that certain purchases were not genuine, the Assessing Officer (AO) issued a notice under section 148 on 26.03.2010, served on 29.03.2010, to reassess the income. The assessee requested the reasons for reopening the assessment on 28.04.2010, but the AO responded that these would be provided only after the return was filed. The assessee reiterated that the original return should be treated as filed in response to the notice under section 148. The AO completed the reassessment without providing the reasons.The Tribunal referenced the decision of the Hon'ble Jurisdictional High Court in Commissioner of Income-tax v. Videsh Sanchar Nigam Ltd., which held that if reasons for reopening are not furnished before the completion of the assessment, the reassessment order cannot be upheld. The Tribunal also cited the Supreme Court's decision in GKN Driveshafts (India) Ltd. v. Income-tax Officer, which mandates that the AO must provide reasons for reopening within a reasonable time upon request.The Tribunal noted that the AO failed to furnish the reasons despite the assessee's specific request, making the reassessment order null and void. This view was supported by several precedents, including the ITAT Mumbai's decision in Telco Dadajee Dhackjee Limited vs. DCIT, where the reassessment was quashed for similar reasons.2. Confirmation of Additions Made by the Assessing Officer:Since the Tribunal quashed the assessment order based on the procedural lapse of not providing reasons for reopening the assessment, it did not delve into the merits of the other grounds of appeal concerning the confirmation of additions made by the AO. The Tribunal held that addressing these grounds would be academic in nature since the assessment itself was invalidated.Conclusion:The Tribunal allowed the appeal, quashing the reassessment order under section 143(3) r.w.s. 147 as null and void due to the AO's failure to provide the reasons for reopening the assessment, despite the assessee's specific request. Consequently, there was no need to address the other grounds of appeal related to the confirmation of additions. The detailed analysis of legal precedents and adherence to procedural requirements were pivotal in reaching this judgment.Order Pronouncement:The order was pronounced in the open court on 25th March 2013.