Sections 147 and 148 – Reassessment – Validity of notice – No action taken on notice u/s. 148 dated 23/03/2015 for A. Y. 2008-09 – Another notice u/s. 148 issued on 18/01/2016 for A. Y. 2008-09 by new AO – Notice not mentioned that it was in continuation of earlier notice – Notice barred by limitation – No reasons given – Notices and consequent reassessment not valid

26. Mastech Technologies P. Ltd. vs. Dy. CIT; 407 ITR 242 (Del): Date of order: 13^th July, 2017

Sections 147 and 148 – Reassessment – Validity of notice – No action taken on notice u/s. 148 dated 23/03/2015 for A. Y. 2008-09 – Another notice u/s. 148 issued on 18/01/2016 for A. Y. 2008-09 by new AO – Notice not mentioned that it was in continuation of earlier notice – Notice barred by limitation – No reasons given – Notices and consequent reassessment not valid

The assessee filed writ petition and challenged the validity of two notices dated 23/03/2015 and 18/01/2016 issued u/s. 148 of the Act by the Assessing Officer for the A. Y. 2008-09. During the pendency of the writ petition, the Assessing officer passed the reassessment order making additions but did not give effect to the order in terms of the interim order passed by the High Court.

The Delhi High Court allowed the writ petition and held as under:

“i)    The Revenue did not pursue the notice dated 23/03/2015 issued to the assessee u/s. 148 of the Income-tax Act, 1961. The notice dated 18/01/2016 did not state anywhere that it was in continuation of the earlier notice dated 23/03/2015. There was no noting even on the file made by the Assessing Officer that while issuing the notice he was proposing to continue the proceedings that already commenced with the notice dated 23/03/2015. The entire proceedings u/s. 148 stood vitiated since even according to the Assessing Officer, he initiated proceedings on 18/01/2016 on which date such initiation was clearly time barred.

ii)    Secondly, the fresh initiation did not have the approval of the Additional Commissioner, as required by law. The Assessing Officer had followed a very strange procedure. The reasons that he furnished the assessee by the letter dated 23/02/2016 contained only one sentence. For some reasons, the Assessing officer did not provide the assessee the reasons recorded in annexure A to the pro forma which contained the approval of the Additional Commissioner dated 19/03/2015. Also, clearly, these were not the reasons for reopening of the assessment on 18/01/2016. There was no satisfactory explanation as to why the notice dated 23/03/2015 was not carried to its logical end. The mere fact that the Assessing Officer who issued that notice was replaced by another Assessing Officer could hardly be the justification for not proceeding in the matter. On the other hand, the Assessing Officer did not seek to proceed u/s. 129 of the Act but to proceed de novo u/s. 148 of the Act.

iii)   This was a serious error which could not be accepted to be a mere irregularity. As regards the non-communication of the reasons as contained in annexure A to the pro forma on which the approval dated 19/03/2015 was granted by the Additional Commissioner, there was again no satisfactory explanation. The fact remained that what was communicated to the assessee on 23/02/2016 was only one line without any supporting material.

iv)   Consequently, there were numerous legal infirmities which led to the inevitable invalidation of all the proceedings that took place pursuant to the notice issued to the assessee first on 23/03/2015 and then again on 18/01/2016 – both u/s. 148 and all consequential proceedings including the assessment order dated 30/03/2016 was to be set aside.”