TaxTMI Login
Just a moment...
Press 'Enter' to add multiple search terms. Rules for Better Search
When case Id is present, search is done only for this
of 
of 
No Folders have been created
Are you sure you want to delete "My most important" ?
NOTE:
of of 
All Case Laws
of of All Case Laws
Note
Bookmark
Share
Don't have an account? Register Here
of <h1>Court clarifies mandatory recording of reasons under Income-tax Act, balancing source protection and assessee rights</h1> <h3>KM Bansal (deceased By Lrs. Versus Commissioner Of Income-Tax And Another</h3> KM Bansal (deceased By Lrs. Versus Commissioner Of Income-Tax And Another - [1992] 195 ITR 247, 103 CTR 324, 59 TAXMANN 463 Issues Involved:1. Whether the assessee has a right to compel the Assessing Officer to communicate the reasons recorded u/s 148(2) of the Income-tax Act, 1961, either before or after filing the return.Summary:Issue 1: Right to Communication of Reasons Recorded u/s 148(2)The primary issue revolves around the assessee's right to be informed of the reasons recorded by the Assessing Officer under sub-section (2) of section 148 of the Income-tax Act, 1961, before or after filing the return. The court examined this issue in the context of six writ petitions, all of which raised the same question.The court noted that the assessee was a partner in three partnership firms and had filed returns for the assessment years 1983-84 to 1987-88. Following a search u/s 132, the Assessing Officer issued notices u/s 148 for reassessment. The assessee filed returns under protest and requested the reasons for initiating reassessment, which were not provided, prompting the writ petitions.The court held that while the recording of reasons u/s 148(2) is mandatory, these reasons need not be communicated to the assessee along with the notice u/s 148(1). The assessee must first file the return and then, if he contests the initiation of reassessment on grounds of invalidity, the Assessing Officer must communicate the reasons. This approach balances the need to protect sources and informants and the assessee's right to a fair hearing.The court emphasized that the Assessing Officer's action must be based on subjective satisfaction and relevant material. The reasons recorded are subject to judicial scrutiny to ensure they are not arbitrary. However, the court does not evaluate the adequacy of these reasons, only their existence and relevance.Key Principles Established:1. Recording of Reasons: The Assessing Officer must record reasons before issuing a notice u/s 148(1).2. Communication of Reasons: Reasons need not be communicated along with the notice but must be disclosed if the assessee questions the initiation of reassessment after filing the return.3. Protection of Sources: The Assessing Officer can withhold the names of informants or sources if necessary.4. Judicial Scrutiny: Courts can review the reasons to ensure they are relevant and not arbitrary but do not assess their sufficiency.5. Material Disclosure: Only the material used against the assessee must be disclosed, not all gathered information.The court disposed of the writ petitions, directing that the Assessing Officer must communicate the reasons recorded u/s 148(2) to the assessee if the latter has filed the return and raised objections to the reassessment's validity.
TaxTMI 