2011 (7) TMI 715 - HC - Income Tax

Reassessment invalidated where reasons for reopening were not given to taxpayer before assessment completion despite three-year window

HC dismissed the appeal, holding that the reassessment could not be sustained where reasons recorded for reopening were not furnished to the assessee ... Reopening of assessment - Reasons recorded for reopening - Furnishing of reasons to the assessee as precondition for reassessment - Reassessment order invalidated for non-furnishing of reasons - Limitation period does not cure failure to supply reasonsReopening of assessment - Reasons recorded for reopening - Furnishing of reasons to the assessee as precondition for reassessment - Reassessment order invalidated for non-furnishing of reasons - Validity of reassessment where reasons for reopening were supplied to the assessee only after completion of the assessment - HELD THAT: - The Tribunal found as a fact that although the reopening fell within the three year limitation, the reasons recorded for reopening were not furnished to the assessee despite repeated requests and were supplied only after completion of the assessment. Applying the precedent of this Court in CIT v. Fomento Resorts and Hotels Ltd., and noting that the Revenue's special leave petition against that decision was dismissed by the Supreme Court, the Tribunal held that non furnishing of the reasons to the assessee until after assessment completion vitiates the reassessment and the reassessment order cannot be upheld. The Court accepted the Tribunal's factual finding and its application of the cited principle, holding that lapse of the statutory limitation period does not cure the failure to supply reasons prior to completing reassessment. [Paras 2, 3]The Tribunal correctly cancelled the reopening; the reassessment order is unsustainable because the reasons were not furnished to the assessee until after completion of assessment.Final Conclusion: The appeal is dismissed; the reassessment is invalidated because the reasons for reopening were not furnished to the assessee until after completion of assessment, and the Tribunal's cancellation of the reopening is upheld. The High Court of Bombay dismissed an appeal regarding the cancellation of reopening of assessment because the reasons for reopening were not provided to the assessee until after completion of assessment, following a previous judgment in a similar case. The appeal was dismissed with no order as to costs.