HC : Prescribes four guidelines for Revenue on re-assessments; Quashes Sec 147-proceedings on share issue

Delhi HC quashes Sec. 148 proceedings (initiated beyond 4 years period) on assessee–company (engaged in the real estate business) for AY 2008-09; AO had recorded reasons that the five companies that subscribed to assessee’s share capital were ‘paper companies’, however, HC notes that assessee had disclosed the names of all the five companies along with the details of share premium amount received from them during original assessment proceedings; Accordingly, HC holds there was ‘no new material’ for initiating re-assessment, remarks that “the reasons for reopening do not mention as to what fact or information was not disclosed by the Petitioner…. An allegation that the companies are `paper companies' without further facts is by itself insufficient to reopen assessments”; However, considering that a large number of writ petitions are filed on a routine basis challenging reopening u/s. 147/148, HC lays down  a four-point guideline in matters of reopening of assessments, viz.: 1) while communicating reasons, copy of the standard form used by AO for obtaining the approval of the Superior Officer should itself be provided to assessee, 2) reasons ought to spell out all the reasons and grounds available with the AO for re-opening including reference to investigation report or enquiry, 3) where the reasons make a reference to another document, such document and/ or relevant portions of such report should be enclosed along with reasons and 4) the exercise of considering  assessee’s objections to reopening, not a mechanical ritual, hence AO should give proper reasons for the conclusion.:HC