While quashing an order for re-assessment under section 148 of the Income Tax Act, 1961, the Bombay High Court held that recording of reason for re-assessment is an essential requirement though there is a presumption that the assessee is well-aware of such reasons. The Court emphasized that such an order passed by the officer is without jurisdication.
Instant case, the assesee challenged the order for re-assessment on ground that the assessing officer has failed to note the reasons for the same.The assessee, relying upon the decisions in Siesta Steel Construction (P.) Ltd. vs. K.K. Shikare, CIT vs. Fomento Resorts and Hotels Ltd.and in Tata International Ltd. vs. DCIT, contended that the order is liable to be quashed for the reason of non-supply of reasons. On appeal, the Commissioner of Income Tax (appeals) confirmed the said order. However, the Income Tax Appellate Tribunal allowed the second appeal preferred by the assessee and held that the order is invalid.
The division bench observed that “We find that the question as framed proceeds on the basis that the Respondent Assessee was aware of the reasons for reassessment. The only basis for the aforesaid submission is the submission made by the Revenue before the Tribunal that the Respondent Assessee is a public sector institution who was aware that search action has been initiated on certain lessees in respect of transactions with IDBI i.e. Respondent-Assessee.
On the basis of the above, it is to be inferred that the reason for reassessment was known to the Respondent Assessee. The supply of reason in support of the notice for reopening of an assessment is a jurisdictional requirement. The reasons recorded form the basis to examine whether the Assessing Officer had at all applied his mind to the facts and had reasons to believe that taxable income has escaped reassessment. It is these reasons, which have to be made available to the Assessee and it could give rise to a challenge to the reopening notice. It is undisputed that the reasons recorded for issuing reopening notice were never communicated to the Respondent Assessee in spite of its repeated requests. Thus, the grievance of the Revenue on the above count is unsustainable.”
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