TaxTMI 
TaxTMI 
2012 (12) TMI 1027
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.... finance to industries for expansion and diversification. During the year, the assessee also engaged in the business of leasing out equipments and assets with as many as 25 parties and Gujarat Electricity Board is one of such parties. There was a search action u/s 132 of the Act and survey action u/s 133(A) of the Act in one of the major lessees namely M/s. Western Pacque India Limited (WPIL) and noticed various irregularities and such irregularity relates to the claim of depreciation on the leased assets. Thus, the AO initiated proceedings u/s 147 r.w.s. 148 of the Act and issued notice u/s 148 dt 9.12.1996. The reassessment was completed determining the total income at Rs. 272,48,51,396/-. Aggrieved with such order of the AO, assessee filed an appeal before the CIT (A) and raised various grounds. Ground relating to validity of the reassessment is one of them. The said issue was discussed in para 2.3 of the impugned order. In the reassessment proceedings, the assessee made "repeated requests" to the AO asking for supply of copy of the reasons recorded by the AO before issue of notice u/s 148 of the Act. In this regard, CIT (A) made reference in his order to said 'repeated requests....
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....he repeated requests of the assessee for want of copy of the reasons recorded by the AO. Ld Counsel read out from page 5 of the paper book ie assessee's letter dated 17.11.1998 once again requesting the revenue for the supply of the reasons recorded for reopening of the assessment. Thus, Ld Counsel made his point very clearly that there were repeated requests of the assessee to the AO for supplying a copy of the reasons recorded for reopening of the assessment by the AO before assuming the jurisdiction u/s 147 r.w.s. 148 of the Act. Further, Ld Counsel mentioned that it is an undisputed fact that the Assessing Officer did not supply the same to the assessee. It is a fact that the AO has not supplied the same to the assessee even before the completion of reassessment and not even before first and second appellate authorities namely CIT(A)/Tribunal. 5. Further, on the issue of related legal summary, Ld Counsel mentioned that the AO is under obligation to supply the copy of the reasons to the assessee when demanded and the consequences of the failure to supply the same are fatal to the reassessment proceedings. Sri Vyas relied on various judgments on this issue. To start with, Ld C....
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....d. Ld Counsel also mentioned that this aspect of quashing of such order is in existence since 1983, where the Hon'ble Bombay High Court in the case of Siesta Steel Construction P. Ltd. vs. Shikare (K.K) [1985] 154 ITR 547 has held that Assessing Officer is bound to furnish the reasons recorded for reopening the assessment. By all the above summary of decisions, Ld Counsel made out his point by stating that the assessee made various requests for want of a copy of reasons recorded by the AO before assuming the jurisdiction u/s 147 r.w.s. 148 of the Act and the AO is under obligation to furnish the same and when such obligation has not discharged, the assessment made consequent to the notice u/s 148 becomes null and void. Therefore, the notice issued by the AO to the assessee on 9.12.1996 and assessment made by the AO on 26.3.1999 should be declared null and void. 6. Per contra, Ms. Rupinder Brar, Ld CIT-DR mentioned that the assessee is aware of the reasons for which the reassessment notice was issued and duly served The search action on certain lessee on the transaction involved IDBI, a public sector financial institution has alerted and brought forth relevant reasons for reasses....
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....sessment to the assessee despite specific request, the reassessment order is liable to be quashed as null and void. The point of difference no.(ii) is answered accordingly." 2. In the case of Siesta Steel Construction P. Ltd. vs. Shikera (K.K.), Honble Bombay High Court [1985] 154 ITR 547 held that the reassessment proceedings are required to be quashed when the AO did not care to furnish the reasons to the assessee and relevant paragraphs read as under: ".............Shri Khari, Ld Counsel appearing on behalf of the petitioner, submitted that in spite of several reminders from the petitioner, respondent no.1 has not cared to furnish the reasons, which prompted respondent no.1 to issue notice under section 148 of the Act. .................The initiation of proceedings by respondent no.1, therefore, was clearly without jurisdiction and are required to be quashed." 3. Similar view was taken by the Tribunal in the case of Tata International Ltd. vs. DCIT vide ITA Nos. 3359 to 3361/Mum/2009. Relevant parts of the said decision read as follows,- "............In the case of CIT vs. Videsh Sanchar Nigam Ltd, the Hon'ble jurisdictional High Court has con....
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....CIT [2005] 96 TTJ (Hyd) 832 that,- "Conclusion: Reasons for reopening of assessment having been not disclosed by the Department despite specific request by assessee, reopening was invalid." 8. Therefore, the above summary of Judgment of Jurisdictional High Court of Bombay and the other decisions of the Tribunal answers the question in favour of the assessee and against the revenue. Consequently, the consequences of failure to supply the reasons recorded u/s 148 of the Act to the assessee when asked for, the reassessment is required to the quashed. Considering the undisputed facts of repeated requests for supply of reasons by the assessee and the AO's blanket failure to supply the reasons recorded u/s 148 of the Act, the impugned reassessment is bad in law and the same is required to be quashed. Accordingly, ground no.1 raised by the assessee is allowed. 9. Ground no.2 relates to the disallowance of depreciation in respect of the assets given on lease amounting to Rs. 18,75,09,465/- u/s 32 of the Act. In this regard, both the parties concurred in stating that in the light of the above decision of the Tribunal on ground 1 in favour of the assessee, the adjudication on ....