15.ITXA.1867.13.odt IN HIGH COURT OF JUDICATURE AT BOMBAY rt ORDINARY ORIGINAL CIVIL JURISDICTION ou INCOME TAX APPEAL NO. 1867 OF 2013 Commissioner of Income Tax 24 ..Appellant Vs. C M/s Trend Electronics ..Respondent .... h Mr. Arvind Pinto, Advocate for Appellant. Mr. P.J. Pardiwalla, Senior Advocate i/b L.J. Law for Respondent. ig .... CORAM : M.S. SANKLECHA & H G.S. KULKARNI, JJ. DATED : 16 SEPTEMBER 2015 P.C.: y This appeal under Section 260A of Income Tax Act, ba 1961 (the 'Act') challenges order dated 25 March 2013 passed by Income Tax Appellate Tribunal (the 'Tribunal'). om impugned order is in respect of Assessment Year 2008 09. B 2. Following questions of law are urged by revenue for our consideration: 1) Whether on facts and in circumstances of case and in law, Tribunal S.S.DESHPANDE 1 / 8 ::: Uploaded on - 21/09/2015 ::: Downloaded on - 27/10/2015 17:30:38 ::: 15.ITXA.1867.13.odt was correct in applying ratio of Apex Court in rt GNK Driveshafts (India) Ltd. Vs. ITO 259 ITR 19 (SC) when facts are contrary to facts of instant ou case? 2) Whether on facts and in circumstances of case and in law, Tribunal C had ignored fact that in proceedings before AO in subsequent hearings prior to assessment, h firm had neither sought for reasons recorded, since by interference, they were already aware of ig same? H 3. respondent assessee filed it's return of income for y Assessment Year 2008 09 declaring total income of Rs.7.67 lakhs. ba This return of income was processed under Section 143(1) of Act accepting returned income. om 4. On 26 March 2010, Assessing Officer initiated B reassessment proceedings by issuing notice under Section 148 of Act seeking to reopen assessment for Assessment Year 2008 09. On receipt of notice, respondent assessee by letter dated 28 April 2010 sought copy of recorded reasons for reopening of S.S.DESHPANDE 2 / 8 ::: Uploaded on - 21/09/2015 ::: Downloaded on - 27/10/2015 17:30:38 ::: 15.ITXA.1867.13.odt assessment in respect of notice dated 26 March 2010 under Section rt 148 of Act. Assessing Officer by letter dated 29 April 2010 ou directed respondent assessee to file it's return of income and also informed respondent assessee that reasons would be C furnished after return of income is filed. respondent assessee thereafter by letter dated 7 May 2010 informed h Assessing Officer that return of income filed on 29 September 2008 ig under Section 139 of Act be treated as return of income consequent to notice under Section 148 of Act. Assessing H Officer thereafter completed reassessment proceedings on 30 December 2010 under Section 143(3) r/w 147 of Act without y having given copy of reasons recorded for issue of reopening ba notice dated 26 March 2010 to respondent assesse. om 5. Being aggrieved, respondent assessee preferred appeal to Commissioner of Income Tax (Appeals) (the 'CIT(A)'). B However, appeal was not entertained by CIT(A) who confirmed action of Assessing Officer and order dated 30 December 2010. S.S.DESHPANDE 3 / 8 ::: Uploaded on - 21/09/2015 ::: Downloaded on - 27/10/2015 17:30:38 ::: 15.ITXA.1867.13.odt 6. further appeal was preferred by respondent to rt Tribunal. impugned order of Tribunal records ou undisputed fact that respondent assessee had sought for reasons for reopening notice dated 26 March 2010 from Assessing C Officer. reasons were admittedly not furnished to respondent assesee before completion of reassessment h proceedings. impugned order places reliance upon decision ig of Apex Court in GNK Driveshafts (India) Ltd. Vs. ITO1 wherein it has been specifically provided that Assessing Officer is bound to H furnish reasons for issuance of reopening of notice when sought for by assessee. Further, reliance was placed upon decision of y this Court in CIT Vs. Videsh Sanchar Nigam Ltd.2 wherein this ba Court has held that failure to furnish recorded reasons for issue om of reopening notices to assessee before completion of assessment proceedings would make reassessment order passed in pursuance of such notice bad in law. In above B circumstances, appeal of respondent assessee was allowed by Tribunal. 1 259 ITR 19 2 340 ITR 66 S.S.DESHPANDE 4 / 8 ::: Uploaded on - 21/09/2015 ::: Downloaded on - 27/10/2015 17:30:38 ::: 15.ITXA.1867.13.odt 7. Mr. Pinto, learned Counsel for revenue submits rt that respondent assessee had only asked for reasons once and ou did not further ask for reasons. Further he submits that as respondent assessee had participated in proceedings before C Assessing Officer, it must be implied that reasons were furnished. 8. We find that impugned order merely applies h decision of Apex Court in GNK Driveshafts (India) Ltd. (supra). ig Further it also follows decision of this Court in Videsh Sanchanr H Nigam Ltd. (supra) in holding that order passed in reassessment proceedings are bad in law in absence of reasons recorded for y issuing reopening notice under Section 148 of Act being ba furnished to assessee when sought for. It is axiomatic that power to reopen completed assessment under Act is om exceptional power and whenever revenue seeks to exercise such power, they must strictly comply with prerequisite conditions B viz. Reopening of reasons to indicate that Assessing Officer had reason to believe that income chargeable to tax has escaped assessment which would warrant reopening of assessment. S.S.DESHPANDE 5 / 8 ::: Uploaded on - 21/09/2015 ::: Downloaded on - 27/10/2015 17:30:38 ::: 15.ITXA.1867.13.odt These recorded reasons as laid down by Apex Court must be rt furnished to assessee when sought for so as to enable ou assessee to object to same before Assessing Officer. Thus in absence of reasons being furnished, when sought for would C make order passed on reassessment bad in law. recording of reasons (which has been done in this case) and furnishing of h same has to be strictly complied with as it is jurisdictional issue. ig This requirement is very salutary as it not only ensures reopening notices are not lightly issued. Besides in case same have been H issued on some misunderstanding/misconception, assessee is given opportunity to point out that reasons to believe as y recorded in reasons do not warrant reopening before ba reassessment proceedings are commenced. Assessing Officer om disposes of these objections and if satisfied with objections, then impugned reopening notice under Section 148 of Act is dropped/withdrawn otherwise it is proceeded with further. In B issues such as this, i.e. where jurisdictional issue is involved same must be strictly complied with by authority concerned and no question of knowledge being attributed on basis of S.S.DESHPANDE 6 / 8 ::: Uploaded on - 21/09/2015 ::: Downloaded on - 27/10/2015 17:30:38 ::: 15.ITXA.1867.13.odt implication can arise. We also do not appreciate stand of rt revenue, that respondent assessee had asked for reasons ou recorded only once and therefore seeking to justify non furnishing of reasons. We expect state to act more responsibly. C 9. In view of fact that order of Tribunal has only applied settled position of law in allowing respondent h assessee's appeal. No substantial question of law arises for our ig consideration. H 10. Accordingly appeal dismissed. No order as to costs. y ba [G.S. KULKARNI, J] [M.S. SANKLECHA, J.] om B S.S.DESHPANDE 7 / 8 ::: Uploaded on - 21/09/2015 ::: Downloaded on - 27/10/2015 17:30:38 ::: 15.ITXA.1867.13.odt CERTIFICATE rt Certified to be true and correct copy of original signed ou Order. C h ig H y ba om B S.S.DESHPANDE 8 / 8 ::: Uploaded on - 21/09/2015 ::: Downloaded on - 27/10/2015 17:30:38 ::: CommissionerofIncomeTax-24 v. M/sTrendElectronic