Assessment u/s 147 without giving assessee copy of reasons to believe invalid – ITAT

Assessment framed u/s 147 without providing assessee copy of reasons to believe despite specific request was without valid assumption of jurisdiction – ITAT

In a recent judgment, the ITAT Raipur has held that assessment framed u/s 147 without giving assessee copy of reasons to believe despite specific request was without valid assumption of jurisdiction and cannot be sustained

ABCAUS Case Law Citation:
4346 (2024) (12) abcaus.in ITAT Raipur

In the instant case, the assessee had challenged the order passed by the CIT(A), NFAC in upholding the validity of re-assessment made u/s 147 of the Income Tax Act, 1961 (the Act).

The assessee company was engaged in the business of trading of electrical, instrumentation & automation spares and accessories. It e-filed its return of income for the relevant Assessment Year. Subsequently, the Assessing Officer (AO) based on information that the assessee had taken accommodation entry from Kolkata based three shell companies initiated proceedings u/s 147 of the Act and notice u/s. 148 of the Act was issued.

During the course of the assessment proceedings, the AO observed that the assessee company had during the year under consideration received share capital/premium of Rs.25,00,000/- from three parties. As the assessee company could not substantiate the authenticity of its claim of having received genuine share capital/premium from the aforesaid investor companies to his satisfaction, the AO passed the order u/s.143(3) r.w.s. 147 of the Act by making addition u/s 68 of the Act.

Before the Tribunal, the assessee at the threshold assailed the validity of the jurisdiction that was assumed by the A.O for framing of the assessment vide his order passed u/s. 143(3) r.w.s. 147 of the Act.

It was submitted that as the AO despite specific request made by the assessee after effective compliance of the notice u/s 148 of the Act had failed to make available a copy of the “reasons to believe”, based on which, proceedings u/s 147 of the Act were initiated in his case, therefore, the assessment so framed by him is liable to be struck down on the said count itself. To support its contention, the assessee relied upon the judgment of the Co-ordinate Bench.

The Tribunal found that there was nothing on record regarding the details of providing to the assessee, the copy of reasons recorded as well as the information based upon which the case was reopened.

The Tribunal noted that the issue involved in the appeal was squarely covered by the order of the Co-ordinate Bench of the ITAT had dealt with the question of sustainability of the assessment framed by the AO without making available a copy of the “reasons to believe” to the assessee who after duly complying with the notice u/s 148 of the Act is stated to have specifically requested for the same. The Bench following the judicial precedents, held that the assessment framed by him being devoid and bereft of any valid assumption of jurisdiction cannot be sustained and was quashed.

Accordingly, the Tribunal following the judgment of the Co-ordinate Bench quashed the assessment framed by the AO u/s 143(3) r.w.s. 147 of the Actfor want of valid assumption of jurisdiction.

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