Tribunal quashes reassessment order, citing failure to communicate reasons to assessee prior to completion.

The Tribunal quashed the reassessment order due to the failure to communicate the reasons for reopening the assessment to the assessee before completion, following the precedent set by the Bombay High Court. Consequently, the cross-objection of the assessee was allowed, leading to the dismissal of the Revenue's appeal.

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Issues:
Challenge to reopening of assessment under section 147 of the Act.

Analysis:
The appeal was filed by the Revenue and cross appeal by the assessee against the order of the CIT(A)-XXI, Ahmedabad dated 14.6.2010. The assessee challenged the reopening of the assessment under section 147 of the Act, stating that the reasons for the notice under section 148 were not provided before the completion of assessment despite specific requests. The AO did not respond to the request for reasons recorded by the assessee. The CIT(A) held that although the AO did not provide the reasons, as the show cause notice and re-assessment order contained the reason for reopening, the reasons were considered to be before the assessee. However, the reasons recorded in the assessment order were not communicated to the assessee before completion of the assessment, rendering the reassessment bad in law. Citing a judgment of the Bombay High Court, it was concluded that reassessment without communicating the reasons for issuing notice under section 148 was invalid. Consequently, the reassessment order was quashed.

The show cause notice issued did not explicitly state that the reasons mentioned were the ones recorded by the AO before issuing the notice under section 148. The Tribunal held that the recorded reasons were not provided to the assessee before completion of the reassessment, following the precedent set by the Bombay High Court in a similar case. As a result, the reassessment made without communicating the recorded reasons was deemed unlawful, leading to the quashing of the reassessment order. The issues raised in the Revenue's grounds became irrelevant due to the decision on the cross-objection of the assessee. The cross-objection of the assessee was allowed, and the appeal of the Revenue was dismissed.

In conclusion, the Tribunal found that the reassessment made without providing the recorded reasons to the assessee before completion of assessment was invalid, following the legal precedent set by the Bombay High Court. The reassessment order was quashed, and the cross-objection of the assessee was allowed, resulting in the dismissal of the Revenue's appeal.

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