While hearing the case of Pinnamaraju Venkatapathi Raju, Visakhapatnam bench of Income Tax Appellate Tribunal (ITAT) recently held that re-assessment is invalid since the Assessing Officer typed the reasons but bot signed the order.
Assessee being an individual in the instant case has filed his returns for the assessment year and declared his total income at Rs. 31,66,816 and the return was processed under section 143(1) of the Income Tax Act, 1961.
Thereafter, the AO issued notice under section 147 of the Act for reopening the assessment under section 148 and completed the assessment under section 143(3) r.w.s. 147 on total income of Rs.47,55,478 apart from the agricultural income of Rs. 1,35,000.
The Assessee filed an appeal before the CIT(A) with regard to the issue of non-supply of the reasons for reopening the assessment, apart from the technical ground of the validity of issue of notice under section 148 of the Act, the assessee also challenged the order on merits.
After analyzing the facts of the issue the CIT(A) upheld the validity of the reassessment made under section 147 of the Act and partly allowed the appeal of the Assessee. Aggrieved by the order of the authority the Assessee carried the matter before the tribunal on further appeal.
Before the bench, the counsel for the Assessee advocate C. Kameswara Rao submitted that the assessee has made the request for supply of the reasons to the A.O. in writing but the AO has not supplied the reasons before made the addition.
On the other hand the Revenue contended that the A.O. has not supplied the reasons, the A.O. has discussed the issue in detail with the Assessee during the assessment proceedings the reasons for reopening were also discussed with him thus there is no requirement of supply of reasons separately, since the reasons for reopening of the assessment was made known to the assessee and argued that there is no infirmity in the order of the AO.
After considering the rival submissions of both the parties, the Tribunal bench comprising of Judicial Member V.Durga Rao and Accountant Member D.S.Sunder Singh observed that “once the notice under section 148 of the Act is issued, the proper course of action is to file the return and if the assessee, so desires to seek the reasons for issue of notice and the A.O., is bound to furnish the reasons within a reasonable time”.
The division bench further held that “In the instant case, on verification of the assessment record, it is noticed that the A.O. typed the reasons but not signed the order sheet, thus there are no reasons recorded for reopening of assessment as required under section 148 of the Act. The A.O. neither complied with the statutory requirement of recording the reasons for the issue of notice nor complied with the law laid down by the Supreme Court in the case of reassessment proceedings. Therefore, the notice issued under section 148 is bad in law accordingly same is quashed and the consequent assessment order made under section 147 r.w.s. 143 (3) is annulled and the appeal of the Assessee is allowed”.
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