No reassessment notice under section 148 of the Income Tax Act can be issue unless. The reasons to believe is note by the assessing officer. No reassessment proceeding can start without service of notice on the assessee. The notice u/s 148 can be serve on the assessee within 6years from the end of relevant assessment year. The issue is whether when the A.O issues and serve notice u/s 148 on the assessee well within the time , but fails to supply the “reasons to believe” within the time , is the service of notice u/s 148 was proper. bound to supply
For example say , A.O desires to reopen case for assessment year 2010-11 for which the last date when limitation period for reopening assessment expired was 31/03/2017 . The notice u/s 148 is date 25/03/2017 without enclosing the recorde reasons . The reasons for reopening was was subsequently provided to the assessee after 31/03/2017. Is the proceeding u/s 148 correct in law ?
Let’s understand this situation with help of judgment of Delhi High Court
Honorable Delhi High Court in the case of Haryana Acrylic Manufacturing Co. v. Commissioner of Income-tax, (2009) 308 ITR 38 held that any proceeding pursuant to the act that reasons of belief was served on assessee after six years will be hit by the bar of limitation . bound to supply
The relevant extract is as under :
A Notice Under Section 148 Without The Communication Of The Reasons Therefore Is Meaningless Inasmuch As The Assessing Officer Is Bound To Furnish The Reasons Within A Reasonable Time. In A Case Where The Notice Has Been Issued Within The Said Period Of Six Years But The Reasons Have Not Been Furnished Within That Period, Any Proceedings Pursuant Thereto Would Be Hit By The Bar Of LimitationInasmuch As The Issuance Of The Notice And The Communication And Furnishing Of Reasons Go HAND-IN-HAND. The Expression ‘Within A Reasonable Period Of Time’ As Used By. The Supreme Court In The Case Of GKN Driveshafts (India) Ltd. (Supra) Cannot Be Stretch To Such An Extent That It Extends Even Beyond The Six Years Stipulate In Section 149. Then, The Validity Of The Notice Under Section 148 And Any Proceedings Pursuant Thereto Could Not Be Uphold.
The aforesaid decision of Delhi High Court was further follow by ITAT Delhi bench in the case of Shri Balwant Rai Wadhwa Vs. ITO Ward 18 (2), in ITA No. I.T.A No. 4806/Del/10. The ITAT bench held that if reasons were not supply to the assessee within the period of 6 years then it would be constru that assessment has not be validly reopen.
Assessing officer is bond to record reasons to believe before issuing notice u/s 148 and if require is bond to supply those reasons record by him to assessee. If reasons to believe record by him is not supply the notice issue by A.O. will become invalid.