2014 (11) TMI 1203 - AT - Income Tax

Tribunal stresses reasons for reopening assessments, ensures fair hearing

The tribunal allowed the appeal primarily on the issue of reopening the assessment under section 147 without providing reasons to the assessee. It ... Reopening of assessment u/s 147 - HELD THAT:- Assessee has requested in its written submissions before the CIT(A) for copy of reasons recorded by the AO while reopening assessment under section 147 of the Act, and the same were not given to the assessee. In these facts and in the light of the decision of the Hon’ble Gujarat High Court SAHKARI KHAND UDYOG MANDAL LTD. VERSUS ASSTT. COMMISSIONER OF INCOME TAX [2014 (6) TMI 149 - GUJARAT HIGH COURT] relied upon by the assessee, we are of the view that the copy of the reasons recorded while reopening the assessment u/s 147 has to be issued to the assessee, and accordingly, the issue in the grounds of the appeal of the assessee is restored to the file of the AO with direction to frame de novo assessment in accordance with law, after issuing the copy of the reasons recorded while reopening the assessment under section 147, and after allowing the assessee reasonable opportunity of hearing. - Appeal of the assessee is allowed for statistical purpose. Issues:1. Reopening of assessment under section 147 without providing reasons to the assessee.2. Disallowance of depreciation on tankers.3. Disallowance of commission paid to individuals.4. Disallowance of Director's remuneration.Analysis:Issue 1: Reopening of assessment under section 147 without providing reasons to the assesseeThe appeal challenged the CIT(A)'s confirmation of the AO's decision to invoke the provisions of section 147 for reopening the assessment without providing reasons to the assessee. The counsel for the assessee argued that the lack of reasons being provided made the reopening of the assessment unlawful. Citing a relevant decision of the Hon'ble jurisdictional High Court, it was emphasized that the Department is obligated to supply a copy of the reasons even if not requested by the assessee. The DR opposed this argument, stating that the assessee did not request the reasons and participated in the assessment proceedings. The tribunal, after considering the submissions, found in favor of the assessee, directing the AO to provide the copy of reasons recorded for reopening the assessment under section 147 and to conduct a de novo assessment after allowing a reasonable opportunity of hearing to the assessee.Issue 2: Disallowance of depreciation on tankersThe appeal contested the AO's decision to allow depreciation on tankers at 20% instead of the claimed 40%, resulting in a disallowance. However, the specific details and arguments related to this issue were not elaborated in the judgment, and the tribunal's decision did not provide a detailed analysis or reasoning for this particular aspect.Issue 3: Disallowance of commission paid to individualsThe CIT(A) confirmed the disallowance of commission paid to certain individuals, considering it as non-business expenditure. The tribunal noted the disallowance of commission paid to two individuals and the Director's remuneration. The specific reasons or justifications for these disallowances were not detailed in the judgment, and the tribunal's decision did not delve into the specifics of these disallowances.Issue 4: Disallowance of Director's remunerationThe appeal also challenged the disallowance of Director's remuneration paid to certain individuals. The judgment did not provide extensive details or reasoning for this disallowance, and the tribunal's decision did not offer a comprehensive analysis of this particular issue.In conclusion, the tribunal allowed the appeal for statistical purposes, primarily focusing on the issue of reopening the assessment under section 147 without providing reasons to the assessee. The decision highlighted the importance of providing the assessee with the copy of reasons recorded for reopening the assessment and ensuring a fair opportunity for hearing before conducting a de novo assessment.