2025 (3) TMI 1120

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.... group. A search action u/s. 132 was carried out in Yashovardhan Birla group and concerns on 07/01/2013. Since assessee was one of the associates of the group and was working as Director in M/s. Zenith Dye Intermediates Limited, he was also covered under the search u/s. 132. Based on the information available from the seized material with respect to cash and jewellery found from the possession of the assessee and his family members during search action at the residence of the assessee, a notice u/s. 148 was issued after recording the reasons for reopening. A notice u/s. 148 dated 18/12/2015 was issued. In response to the notice, assessee filed the return of income vide letter dated 11/12/2015 and further vide letter dated 24/12/2015. Assessee requested to furnish the reasons for reopening assessment u/s. 147. The relevant reply is reproduced hereunder:- "We refer to our above mentioned client and subject; and to your notice dated 18-12-2015 Issued u/s. 148 for re-opening of assessment for AY-2014-15. In response we would like to bring to your notice that: We have already submitted copy of acknowledgement of return along with a copy of tax computation for ....

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.... to the notice of the assessing officer and the formation of the belief that there has been escapement of income of the assessee from assessment in a particular year. However, the AO has without providing the reason for re-opening of the said assessment year has concluded the assessment proceedings and has passed the assessment order. The AO has erred in law in passing an assessment order u/s 143(3) of the Act instead of passing an assessment order u/s 143(3) r.w.s. 147 of the Act. 11.3 The Hon'ble Apex Court in the case of GKN Driveshafts (India) Ltd. vs. ITO [2002] 125 ΤΑΧΜΑΝ 963/259 ITR 19 (SC) (Pg.42-43) held that "it is clear that the completion of assessment/re-assessment without furnishing the reasons recorded by the AO for initiation of proceedings under section 147/148 of the Act is not sustainable in law as it is incumbent on the AO to supply them within reasonable time. I note that on the anvil of this judgment, on the request of the Assessee, the AO is bound to furnish the reasons recorded for initiation of proceedings under section 147 of the Act within a reasonable period of time so that the Assessee could file its objec....

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....e case of CIT v. Videsh Sanchar Nigam Ltd. (2012) 340 ITR 66/21 Taxmann.com 53 (Bom.) (Pg.46) wherein it was held that "Section 147 of the Income-tax Act, 1961-Income escaping assessment-General -Where reasons recorded for reopening of assessment, though repeatedly asked by assessee, were furnished only after completion of assessment, reassessment order could not be upheld [In favour of assessee)" 11.6 The jurisdictional High Court in the case of CIT v. Trend Electronics (2015) 61 Taxmann.com 308 (Bom.) (Pg.47-50) wherein it was held that "IT: Where reasons were not furnished for reopening of an assessment even when assessee sought for same, reassessment order would be bad in law" "Section 147, read with section 143 of the Income-tax Act, 1961-Income escaping assessment-General (Reason's supply of) Assessment year 2008-09- Whether revenue cannot be allowed to justify failure to furnish reason for reopening assessment on plea that assessee had asked for reasons recorded only once - Held, yes Return of income filed by assessee was processed under section 143(1) accepting returned income-Subsequently Assessing Officer initiated reassessment proc....

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....f Yashovardhan Birla Group on 07.01.2014. During the course of Search proceedings at residential premises of Mr. Raghunandan Bhomla, at A-101, IVY Tower, Vasant Valley, Malad east, Mumbai 400097, cash/jewellery were found from his residential premises and bank lockers. During the search proceeding at his residential premises, jewellery (diamond, gold &silver items) were found as listed below; a) Cash found: Rs. 9,38,980/- b) Cash deposits in bank: Rs. 5,01,000/- c) Gold/diamond/silver jewellery/bullions Value: Rs. 53,16,296/- Mr. Raghunandan Bhomia in his statement recorded u/s. 132(4) on 07.01.2014 also disclosed additional Income of Rs. 9,38,980/ on account of cash found and pay order of Rs. 4,02,332/- on account of unexplained jewellery for tax in his hands on the basis of cash and jewellery items found from his residential premises, still the source of balance cash/jewellery items required reconciliation. In view of the above, I have reason to believe that the income of more than one lakh has escaped assessment within the meaning of section 147 of the I.T.Act, 1961, on account of failure on the part of the assessee to disclo....

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....he Hon'ble Supreme Court in the case of GKN Driveshafts (India) Ltd. vs. DCIT [2003] 259 ITR 19 (SC). The Hon'ble Jurisdictional High Court in the case of CIT vs. IDBI Ltd., in ITA No.494 of 2014 have held that in absence of supply of reasons recorded for issue of reopening notice then, the entire re-assessment is without jurisdiction. The Hon'ble High Court has followed the judgment of Siesta Steel Construction (P) Ltd., reported in 154 ITR 547; and CIT vs. Videsh Sanchar Nigam Ltd., reported in 340 ITR 56. Apart from that there is another judgment in the case of CIT vs. Trend Electronics reported in 61 taxmann.com 308 (Bombay) wherein Hon'ble Court has observed and held as under:- "8. We find that the impugned order merely applies the decision of the Apex Court in GNK Driveshafts (India) Ltd. (supra). Further it also follows the decision of this Court in Videsh Sanchar Nigam Ltd. (supra) in holding that an order passed in reassessment proceedings are bad in law in the absence of reasons recorded for issuing a reopening notice under Section 148 of the Act being furnished to the assessee when sought for. It is axiomatic that power to reopen a completed assessment under the....