TaxTMI 
TaxTMI 
2012 (7) TMI 21
X X X X Extracts X X X X
X X X X Extracts X X X X
....aised before him (and more specifically referred to in the original grounds of appeal urged before this Hon'ble Tribunal. 2.1. Without prejudice to the above, the [earned Commissioner(Appea(s) erred in upholding the Assessing Officer's disallowance of the aggregate commission of Rs 11,98,505. 2.2. Without prejudice to the above, the learned Commissioner(Appeal(s) erred in upholding the Assessing Officer's invocation of, and reliance upon, the Explanation to Section 37(1) (in disallowing the aggregate commission of Rs 11,98,505). 2.3. Without prejudice to the above, the (earned Commissioner(Appeals) erred in rejecting the Appellant's Ground 2.3 urged before him to the effect that, assuming whilst denying that the Assessing Officer's inference to the effect that the said aggregate commission represented ITF and ASSF was correct in Law, no part of such commission was disallowable for the reason also that all the commission payments having been made exactly in terms of the Appellant's Agency Agreements, such commission was allowable in full, and, therefore, ought to have been so allowed. 3. Without prejudice....
X X X X Extracts X X X X
X X X X Extracts X X X X
....07 along with a covering letter dated 28.3.2007 stating that the earlier notice dated 31.1.2007 may be treated as cancelled for technical . 3.2 In response to the notice under section 148 dated 28.03.2007, the assessee again demanded the reasons for issuing the said notice vide letter dated 25.04.2007. The Assessing Officer, vide its letter dated 28.6.2007 supplied the reasons (gist of the reasons) for reopening of assessment. 3.3 The assessee was not satisfied with the reasons supplied by the Assessing Officer being the gist of reasons and therefore again requested vide letter dated 25.07.2007 for the supply of the true copy of the reasons actually recorded by the Assessing Officer in terms of section 148 (2). 3.4 The Assessing Officer, vide his letter dated 27.07.2007 reiterated that the reasons for reopening has been supplied vide letter dated 28.06.2007. The assessee, still not satisfied with the response of the Assessing Officer again requested vide its letter dated 13.8.2007 for the supply of the reasons actually recorded. The Assessing Officer proceed with the re-assessment proceedings and passed t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....g Officer to supply the reasons actually recorded by the Assessing Officer in terms of section 148 (2) of the I T Act. The Sr counsel then referred the letter dated 28.6.2007 of the Assessing Officer whereby the gist of the reasons were supplied to the assessee and submitted that the assessee was not supplied full reasons of reopening of the assessment and therefore, despite the repeated requests, the Assessing Officer failed to supply the reasons till the completion of assessment and even till date. 5.2 The ld Sr counsel has referred and relied upon the decision of Hon'ble jurisdictional High Court in case of Commissioner of Income-tax v. Videsh Sanchar Nigam Ltd. reported in 340 ITR 66 and submitted that supply of reasons after the completion of assessment has no effect and the exercise is futility. Since the reasons are not furnished, the reassessment order is bad in law. Thus the ld Sr counsel has submitted that gist of reasons is no substitute of reasons recorded by the Assessing Officer and therefore, in the absence of supply of reasons recorded by the Assessing Officer to the assessee, the reassessment is bad in law. In support of his contention, th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....TO(supra) wherein the Hon'ble Apex Court has held that the Assessing Officer is bound to furnish reasons within a reasonable time and after receipt of the reasons, the assessee is entitled to file objection of issuance of notice and the Assessing Officer is bound to dispose of the same by passing a speaking order. Thus the ld DR has submitted that when the substantial reasons were furnished by the Assessing Officer, than the assessee cannot challenge the reopening of assessment on the ground of non-furnishing of reasons. He has further submitted that if prima facie some material is there on the basis of which the Assessing Officer could form an opinion that the income assessable to tax has escaped assessment, than the reopening is justified. In the case in hand, the Assessing Officer received the information through CBDT about the Volcker Committees report and came to know that the commission was illegally paid by the assessee, than the income assessable to tax has escaped assessment to the extent the deduction allowed in the original assessment on account of commission paid by the assessee. In support of his contention, he has relied upon the decision of Hon'ble Supreme Court in t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....1/01/2007. Though nothing has been elaborated either in the communication dated 28/03/2007 or in the reassessment order as what was the technical reason and a procedural lacuna in the earlier notice however, it appears from the record that the earlier notice dated 31/01/2007 was issued prior to the approval of the Commissioner of income tax dated 26/03/2007 and therefore, the earlier notice was cancelled and treated as withdrawn. The Assessing Officer, than obtained the approval of the Commissioner of Income Tax on 26/03/2007 and thereafter issued the fresh notice dated 28/03 2007 on the basis of which the Assessing Officer, proceeded with the reassessment proceedings. Thus, after the fresh notice 28/03/2007, the notice dated 31/01/2007 becomes non-est, immaterial and irrelevant for reassessment proceedings and therefore, has no consequence whatsoever with regard to the validity of reassessment. 6.2 The main objection of the assessee against the reassessment is non-supply of the reasons recorded by the Assessing Officer for reopening of assessment. There is no doubt that the Assessing Officer recorded the reasons on 31/01/2007 for reopening of the assessme....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e the above referred letter wherein we have requested that the reasons for Issue of the said notice dated 28.03.2007 be furnished in accordance with the procedure laid down in the case of GKN Driveshafts (I) Ltd. Vs. ITO [2003] 259 ITR 19 (SC). The gist of the reason for reopening is as under "During the year under consideration, the assessee company has supplied \ goods to Iraq under the scheme 'Oil for Food Programme of the UNO'. The name of the assessee company appears at Sr.No. 113 of the Voicker Committee Report submitted on 27.10.2005 wherein mention of the illegal commission under the head 'AASF' and 'Inland Transportation Fees' had been paid. Therefore, I have reasons to believe that income to that extent has escaped assessment," 6.5 Since only the gist of the reasons were supplied, the assessee was not satisfied with the reasons as supplied by the Assessing Officer and requested vide its letter dated 25/07/2007 and demanded the true copy of reasons actually recorded by the Assessing Officer in terms of section 148 (2) of the Income Tax Act instead of the gist of reasons for reopening reproduced in the letter dated 28/0 6/2007. &....
X X X X Extracts X X X X
X X X X Extracts X X X X
....epeatedly asked by the assessee were furnished only after completion of the assessment. The Tribunal following the judgment of this Court in the case of CIT vs Fomento Resorts & Hotels Ltd, Income Tax Appeal no.71 of 2006 decided on 27th November 2006 has held that though the reopening of the assessment is within three years from the end of relevant assessment year, since the reasons recorded for reopening of the assessment were not furnished to the assessee till the completion of assessment, the reassessment order cannot be upheld. Moreover, Special leave Petition filed by the revenue against the decision of this Court in the case of Fomento Resorts & Hotels Ltd has been dismissed by the Apex Court vide order dated 16th July 2007." 8.1 Thus the reasons are required to furnish within a reasonable period of time so that the assessee can raise the objections at the preliminary stage of proceedings. If the reasons are not supplied during the assessment proceedings, than furnishing the reasons subsequent to the assessment proceedings would achieve no purpose and tantamount to deprive and deny the assessee of its right to raise the objections against the validi....