Reasons of Reassessment : A.O Duty Bound to Tell Assessee !Reviewed by Adminon Oct 1.Rating: A.O Duty Bound to Tell Reassessment Reasons
The reassment proceeding , as per various court ruling, cast a duty upon the assessing officer to record the reason to believ and then communicate the same to the assessee gainst whom the proceeding u/s 147 has been initiated.When assessee objectes, the A.,O can not supplement the original reaosn of belief to mean something new.Facts Related to Reassessment Case under Section 147
the facts of the case are that the petitioner, which is a limited company, filed its original return of income on October 24, 2001, declaring therein, a total income of Rs. 18,26,66,410. On February 23, 2004, the assessment was framed under section 143(3) of the Act. On March 31, 2008, the Assessing Officer issued the impugned notice under section 148 of the Act for reopening the assessment for the assessment year 2001-02. The petitioner, vide communication dated April 24, 2008, addressed to the respondent-Assessing Officer, requested him to treat the original return as return filed under section 148 of the Act with a further request to be supplied with a copy of the reasons recorded, for reopening the assessment, as well as a copy of the approval required, for the purpose of initiation of reopening proceedings. By letter dated April 28, 2008, the respondent supplied the copy of the reasons recorded for reopening the assessment. As per the reasons recorded, the assessment has been reopened on the ground that the petitioner has shown long-term capital gains of Rs. 1,09,47,296 under the head “Capital gains” and has wrongly been assessed at a lower slab of tax. That the said income should have been assessed under the head “Profits and gains of business or profession and not capital gains”. The petitioner raised various objections, by letter dated July 7, 2008, both on the ground of jurisdiction as well as on the merits, and requested the respondent to drop the reassessment proceedings. The respondent rejected the objections filed by the petitioner by letter dated August 28, 2008, holding that the assessment is valid, and within jurisdiction.
The issue before , Gujarat High Court in Gujarat Fluorochemicals Ltd vs DCIT 319 ITR 282 (GUJ.)/[2009] was
Whether recorded reasons for issue of notice can be supplemented or explained by a subsequent order so as to give an entirely different complexion to the case?
Gujarat High Court held on issue of Reassessment Proceeding under Section 147
The Gujarat High Court held vide its order 20-Oct-08 as under :
As the petitioner has disclosed the primary facts, it was for the Assessing Officer to draw the necessary inferences in regard to the factual and legal aspects, in order to ascertain the tax to be levied. If the Assessing Officer had reason to believe that the assessee had not disclosed fully and truly all material facts, then it should have been stated clearly in the reasons recorded, which has not been done. Instead, we find that the order dated August 28, 2008, rejecting the objections of the petitioner, seeks to supplement the reasons which have been recorded, so as to fill in the lacunae, attempting to bring it within the ambit and scope of the proviso to section 147 of the Act. In view of the disclosure of material facts by the petitioner, Explanation 1 to section 147 will have no application and the reference thereto, in the order dated August 28, 2008, is misconceived. In fact, the order dated August 28, 2008, travels far beyond the reasons recorded as have been communicated, which is not permissible and, therefore, we cannot look into the contents thereof, which seek to supplement the reasons recorded. It is the statutory duty of the Assessing Officer to record reasons for issuing notice under section 148 of the Act and reasons recorded cannot further be supplemented or explained by a subsequent order so as to give an entirely different complexion to the case.
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