2018 (1) TMI 1617 - AT - Income Tax

Tribunal overturns reassessment due to failure to provide reasons, emphasizing assessee's right to challenge assessment order

The tribunal allowed the appeal filed by the assessee, declaring the reassessment invalid due to the assessing officer's failure to provide reasons ... Validity of Re-opening of assessment - assessee requesting for the reasons recorded for the purpose of re-opening denied - HELD THAT:- Revenue has not been able to produce any evidence to show that the reasons recorded had been provided to the assessee as prayed for in its letter. This being so, respectfully following the decision in the case of Videsh Sanchar Nigam Ltd. [2011 (7) TMI 715 - BOMBAY HIGH COURT] as also the principles laid down by the Hon’ble Jurisdictional High Court in the case of M/s.Jayanthi Natarajan [2017 (9) TMI 1042 - MADRAS HIGH COURT] we are of the view that the reasons recorded having not been given to the assessee before the completion of the assessment, the re-assessment is invalid and liable to be annulled and we do so. Appeal filed by the assessee is allowed. Issues: Validity of reassessment due to non-furnishing of reasons recorded to the assessee before completion of assessment.Analysis:1. The appeal was filed by the assessee against the Order of the Commissioner of Income Tax (Appeals)-2, Chennai, in relation to the assessment year 2006-07.2. The assessee had initially filed a return of income admitting a loss, which was accepted by the assessing officer. However, the assessment was later re-opened by issuance of notice under section 148 in 2013.3. The assessee requested a copy of the reasons recorded for the re-opening, but the reasons were not provided before the completion of the assessment. The assessee raised objections based on non-furnishing of reasons, citing legal precedents.4. The assessing officer argued that the reasons should have been provided as directed to the IT Inspector. However, the tribunal found that no evidence was produced to show that the reasons were actually provided to the assessee.5. Citing decisions of the Bombay High Court and the High Court of Madras, the tribunal held that failure to furnish reasons to the assessee before completion of assessment rendered the reassessment invalid. The tribunal annulled the reassessment on this ground without delving into the merits of the case.6. The tribunal emphasized the importance of providing reasons to the assessee to enable them to raise objections and challenge the assessment order through proper legal procedures.7. Ultimately, the appeal filed by the assessee was allowed, and the reassessment was declared invalid due to non-furnishing of reasons recorded before completion of assessment.