27 Sections 147 and 148 – Reassessment Sections 147 and 148 – A.Ys. 1999-00 to 2004-05 – Procedure – Failure to furnish copy of reasons recorded for reopening of assessments – Not mere procedural lapse – Notices and proceedings vitiated

27.  Reassessment – Sections 147 and 148 – A.Ys.
1999-00 to 2004-05 – Procedure – Failure to furnish copy of reasons recorded
for reopening of assessments – Not mere procedural lapse – Notices and
proceedings vitiated 

Principal CIT vs. Jagat Talkies Distributors; 398 ITR 13 (Del):

The
assessee did not file returns u/s. 139(1) of the Act, for the A.Ys. 1999-00 to
2004-05, but had filed returns for earlier years. On the basis of information
received from the banks to which the assessee had let out its property, it was
discovered by the Department that rent had been paid to the assessee by them
after deducting tax at source. The Assessing Officer recorded reasons for
reopening of the assessment u/s. 147 and issued notices u/s. 148 asking the
assessee to file the returns. Pursuant to the notice, the assessee filed
returns which disclosed the income from the property and the business income.
The Assessing Officer initiated the assessment proceedings by issuing notices
u/s. 143(2) and section 142(1) of the Act. The assessee sought supply of the
reasons recorded for the reopening of the assessments. The reasons were not
furnished by the Assessing Officer to the assessee. Since the assessment was
getting time barred, the Assessing Officer made additions on account of the
income from house property and passed separate reassessment orders in respect
of each of the assessment years in question. The Appellate Tribunal held that
the failure to supply the reasons u/s. 148 despite the request made by the
assessee, vitiated the entire reassessment proceedings.

On
appeal by the Revenue, the Delhi High Court upheld the decision of the Tribunal
and held as under:

i)    The Appellate Tribunal was right in holding
that on account of failure on the part of the Assessing Officer to furnish the
copy of reasons recorded for reopening the assessments u/s. 147, to the
assessee, the reassessment proceedings stood vitiated. Failure by the Assessing
Officer to provide the assessee the reasons recorded for reopening the assessment
could not be treated as a mere procedural lapse.

ii)   The assessments for the A.Ys 1999-00 onwards
for five years were sought to be reopened. Having contested those proceedings
for nearly two decades, the Department was not fair in making the offer to
consider the assessee’s objections to the reopening and pass orders thereon. No
reasons could be discerned why the Assessing Officer had failed to furnish to
the assessee the reasons for reopeniong the assessments. It was not disputed
that the assessee had made requests in writing for reasons in respect of each
of the assessment years in question.

iii)   Merely because the assessee did not repeat
the request did not mean that it had waived its right to be provided with the
reasons for reopening the assessment. According to the provisions of section
292BB(1) there was no estoppels against the assessee, on account of
participating in the proceedings, as long as it had raised an objection in
writing regarding the failure by the Assessing Officer to follow the prescribed
procedure. No question of law arose.