Reassessment bad as four weeks time not given after rejection of objections to reopening

Reassessment held bad in law as assessee not given four weeks time to seek legal remedy after rejection of objections to reopening

ABCAUS Case Law Citation
ABCAUS 3438 (2021) (01) ITAT

Important case law relied upon by the parties:
Smt. Kamlesh Goel vs. Income Tax Officer
Pr. CIT vs. Sagar Developer
Bharat Jayantilal Patel 378 ITR 596 (Bom.) 
GKN Driveshaft (India)  Ltd.

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

The assessee company filed return of income which was later revised and was processed under section 143(1).

Subsequently, the A.O. received information from the Investigation Wing that the assessee had received a bogus accommodation entry for share application. issued notice u/s 148 of the Act for reopening the assessment.

The assessee in response to the notice filed letter submitting that the return filed u/s 139 of the Act may be considered as return filed in response to the notice under section 148 of the Act.

The assessee also requested for supply of the reasons recorded for re-assessment proceedings. However, the reasons were supplied to the assessee only about three weeks before passing of the re-assessment order u/s 147 read  with section 143(3).

On receiving the reasons recorded for reopening, the assessee immediately on the same day filed objections against the initiation of re-assessment proceedings.

The AO disposed of the objections of the assessee and immediately after disposing of the objections of the assessee passed the impugned assessment order whereby the AO made addition under section 68 of the Act of the amount of the share application received on account of unexplained share capital.

The CIT(A) dismissed the appeal of assessee.

Before the Tribunal, the assessee contended that A.O. had not given four weeks time to the assessee to seek legal remedy after rejection of the objections and within about three weeks passed the impugned assessment order. Therefore, reopening of the assessment was clearly bad in Law and was nullity and liable to be quashed. In this respect, the assessee relied upon the judgment of the coordinate bench of the ITAT.

The Tribunal observed that the assessee on receipt of the notice u/s 148, immediately asked for copy of the reasons for reopening of the assessment and as claimed by the Revenue, there was no delay on the part of the assessee asking for copy of the reasons recorded for re-assessment proceeding.

The Tribunal observed that the case of the assesse was covered by the order of the Coordinate Bench of the Tribunal which followed the decision of the Hon’ble High Court in which the decision of the Hon’ble Supreme Court was also considered.

The Tribunal stated that it is well settled Law that if there are two views are possible, then the view in favour of the assessee shall have to be followed for deciding the matter in dispute.

The Tribunal rejected the contention of the Revenue that the case may be remanded back to the AO and held that re-assessment order framed u/s 147/143(3) of the Act was bad in Law and deserved to be quashed.

Accordingly, the Tribunal allowed the appeal in the favour of the assessee.

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