TaxTMI 
TaxTMI 
2012 (7) TMI 172
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.... upholding the validity of the reasons for reopening of the assessment recorded by the Assessing Officer. 4. The learned CIT(A) erred in law and in facts in confirming the order of the Assessing Officer in bringing to tax a sum of Rs. 1,87,02,463/- as long-term capital gains in respect of sale of 1/3rd share of the appellant in 'Bachani Niwas' as against Nil declared. 5. The learned CIT(A) erred in law and in facts in sustaining the order of the Assessing Officer denying deduction of the following amounts while computing capital gains in respect of sale of 1/3rd share of the appellant in 'Bachani Niwas' ignoring the provisions of S.54 of the Act : (i) Rs. 85,00,000/- paid to Shri Brijlal Bachani; (ii) Rs. 85,00,000/- paid to Shri Ramchand Bachani; (iii) Rs. 24,00,000/- paid to M/s Haq Constitution; and (iv) Rs. 1,00,00/- being construction cost.  ....
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.... vide order dated 21-1-2008 also dismissed the appeal of the assessee without verifying the fact that copy of "reasons recorded" have not been made available to the assessee as per directions of the ITAT, nor he himself called upon for such records from the Assessing Officer to verify the "reasons recorded" and adjudicate the objections for validity of Sections 147 & 148. For the second time aggrieved by the order of the CIT(A), the assessee carried the matter before the ITAT. This time the ITAT restored the matter to the file of the CIT(A) with the specific directions :- "We, therefore, set aside the order of Ld. CIT(A) and restore the matter back to his file in terms of the direction of ITAT order dated 26.12.2005. The CIT(A) is directed to provide the reasons for reopening the assessment to the assessee and decide the issue afresh after giving opportunity to the assessee." 4. In pursuance of the categorical direction of the ITAT , the CIT(A), required the Assessing Officer to provide the "reasons" for re-opening the assessment u/s.147, vide letter dated 10-11-2010. The Assessing Officer in compliance thereof submitted the "reasons recorded" for re-....
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....ate of transfer nor has constructed the residential house within a period of 3 years after the transfer took place. Hence, notice u/s 148 was issued on 10-2-2000 to ascertain details of the aforesaid facts and was served on the assessee on 14.2.2000." The above reason for reopening of the assessment were not communicated to the assessee as the assessee did not file return of income in response to notice u/s 148 by relying the decision of Hon'ble Supreme Court in the case of GKN Driveshafts (India) Ltd. v. Income tax officer and others, 259 ITR 19. As per the said judgment of the Apex Court, the assessee is duty bound to file a valid return of income in response to notice u/s 148. The above action has been confirmed by the learned CIT(A)-XX, Mumbai vide his order dated 21.1.2008 in Para 2.2 OF THE ORDER. Submitted for your kind perusal and further direction if any. Yours faithfully, Sd/- (ASHOK S CHOTIA) Income Tax Officer-19(1)-3, Mumbai 5. After receiving the aforesaid "reasons recorded", the assessee vide letter dated 18-1-2011 raised objections not only on the "reasons recorded" but also strongly objected to assumption of jurisdiction under Section 148....
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....ve been followed in as much as the reasons for reopening the case have been provided to the appellant. Besides, I also find that the case was originally reopened without any infirmity. I find that notice dated 10.2.2000 was duly served on the appellant on 14.2.2000. This is perfectly in terms of provisions of section 147 of the Act. In fact I find that it is the appellant who showed scant regard to this notice issued u/s.148 of the Act in as much as she defied the principles and procedures laid down by the Hon. Apex Court in the case of GKN Driveshafts (India) Ltd. v. ITO and Others, 259 ITR 19. I also find that despite this omission by the appellant, the reasons for reopening the assessment were communicated to the appellant. Accordingly I do not find any merit in the grounds of the appellant with regard to the reopening the case. 2.5 Besides I also find that in this case, the satisfaction of the A.O. that the appellant has neither purchased a new house one year before or two years after the date of transfer nor has constructed a residential house within a period of 3 years after the transfer took place is earlier than the notice issued u/s.148 of the A....
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....tice under Section 148 and as such the entire proceedings as have been initiated by issuance of notice under Section 148 dated 10-2-2000 is void ab initio and without jurisdiction. On the other hand, learned Senior DR relied upon the findings of the CIT(A) as given in para 2.4 & 2.5, which have been reproduced above. 8. We have heard the rival submissions and carefully perused the material placed on record and the finding of the learned CIT(A). From the facts narrated hereinabove, it is seen that the departmental officials have not only violated the judicial discipline but also the mandatory requirement of providing "reasons recorded". It was after a gap of almost 11 years that so-called 'reasons' have been provided and that to when the assessee had to approach the ITAT twice to get the direction for providing the "reasons recorded". The manner in which the CIT(A) has dealt this issue is wholly erroneous on two counts:- Firstly :-, the observation that the assessee has defied the principle and procedure of the Hon'ble Supreme Court in the Case of GKN Driveshafts (India) Ltd. v. ITO [2003] 259 ITR 19/[2002] 123 Taxman 963, is not correct was no longer relevant at his stage as ....
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....tice under this section, record his reasons for doing so". The word "shall" and "record his reasons" appearing in the said section makes it mandatory that the Assessing Officer has to record the 'reasons' before serving a notice under Section 148. If this mandatory requirement of the law is not fulfilled, the entire proceedings become without jurisdiction which has to be struck down. Section 148(2) has a definite purpose and is not mere a formality on paper otherwise it will lead to arbitrariness, bias or malafide action by the taxing authorities to justify the re-opening under Section 147 at any time. 10. Adverting to the present case, it is clearly evident that 'reasons recorded' were not provided to the assessee despite categorical directions by the ITAT and even when the so-called "reasons recorded" have been supplied after a gap of almost 11 years, it is amply clear from the face of it that the 'reasons' were not recorded prior to the issuance of notice under Section 148. The relevant portion of the alleged 'reasons recorded' as have been incorporated in the foregoing paragraphs reading as "hence notice under Section 148 was issued on 10-2-2000 to ascertain details of the a....