The Tax Publishers2012 TaxPub(DT) 2450 (Mum-Trib) : (2012) 047 (II) ITCL 0136 : (2012) 052 SOT 0465

INCOME TAX ACT, 1961

--Reassessment --ValidityNon-supply of reasons recorded--The original assessment for all 3 years was completed under section 143(3). Subsequently, as per the CBDT information, the assessing officer noted that during the year under consideration the assessee supplied goods to Iraq under the Scheme called 'Oil for Food Programme of the UNO'. The name of the assessee had appeared at Sl. No. 113 of the Volcker Committee Report wherein it was mentioned that the commission paid was illegal. The assessing officer issued a notice under section 148. In response to the notice, the assessee submitted a letter and requested to furnish the reasons for issuing the said notice in view of the decision of Supreme Court in case of GKN Drivershafts (India) Ltd v. ITO 2003 TaxPub(DT) 734 (SC) : (2003) 259 ITR 19 (SC). Thereafter, the assessing officer issued a fresh notice under section 148 dated 28-3-2007 along with a covering letter dated 28-3-2007 stating that the earlier notice dated 31-1-2007 may be treated as cancelled for technical. In response to the notice under section 148 dated 28-3-2007, the assessee again demanded the reasons for issuing the said notice. The assessing officer, vide its letter dated 28-6-2007, supplied the reasons (gist of the reasons) for reopening of assessment. The assessee was not satisfied with the reasons supplied by the assessing officer being the gist of reasons and therefore again requested vide letter for the supply of the true copy of the reasons actually recorded by the assessing officer in terms of section 148(2). The assessing officer, vide his letter reiterated that the reasons for reopening has been supplied vide letter dated 28-6-2007. The assessee, still not satisfied with the response of the assessing officer again requested vide its letter dated 13-8-2007 for the supply of the reasons actually recorded. The assessing officer proceeded with the re-assessment proceedings and passed the assessment order under section 143(3) read with section 147 on 31-12-2007, whereby he disallowed the commission paid by the assessee for the supply of goods to the Iraq under the scheme 'Oil for Food Programme of the UNO'. The Commissioner (Appeals) was not impressed with the contentions and the objections raised by the assessee and accordingly, rejected the objections raised against the validity of reopening of assessment. Held: It is an undisputed fact that the reasons actually recorded by the assessing officer were not furnished to the assessee till 14-6-2012, despite repeated requests and demands and, therefore, the gist of reasons as furnished vide letter dated 28-6-2007 cannot be treated as reasons actually recorded by the assessing officer as per section 148 (2) and as mandated by the Supreme Court in case of GKN Driveshafts (India) Ltd. Thus the assessing officer has failed to furnish the reasons recorded for reopening of the assessment within the reasonable time and rather prior to the completion of assessment, than the reassessment order passed without supply of reasons as recorded for reopening of the assessment, is invalid and cannot sustain. Accordingly, the reassessments for all 3 years under consideration is set aside being invalid.

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