raomohan (n/a) 23 August 2007

Sec. 147 of IT Act...

Can an assessee ask for reasons in writing from the ITO as to what prompted initiation of reassessment proceedings u/s 147 of the IT Act?

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5 Replies

mmn (n/a) 26 August 2007

[font=""times new roman""]According to me the assessee has a right to ask for such reasons from the ITO. The law is that even if a statute is silent and there are no positive words in the Act or the Rules made thereunder giving such a right, still there could be nothing wrong in spelling out the need to hear the parties whose rights and interest are likely to be affected by the orders that may be passed, and making it a requirement to follow a fair procedure before taking a decision, unless the statute provides otherwise. The principles of natural justice must be read into the statute, unless there is a clear mandate to the contrary. [/font]

[font=""Times New Roman""]If the assessee has to be given effective hearing it definitely implies that the reasons for such reassessment should also be stated to him so that he can make an effective representation. Only then can it be said that the principles of natural justice have been properly followed. [/font]

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[font=""Times New Roman""]Adv. Murtaza Najmi from Mumbai. [/font]

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raomohan (n/a) 26 August 2007

Ya mmn, you are right. But i think i should have been more specific in asking... What i wanted to know is can we ask for the reasons before we file the return u/s 148 as required by the notice?

Suppose the AO gives the reasons before the return is filed, then the assessee could easily incorporate such (escaped) income in his return and offer for re-assessment, thus not amounting to 'concealment' anymore. Is this what the law needs?

Shambasiv (n/a) 29 August 2007

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[font=""trebuchet ms""]The scope and effect of [color=#000066]SECTION 147[/color] as substituted with effect from April 1, 1989, as also sections 148 to 152 are substantially different from the provisions as they stood prior to such substitution. Under the old provisions of [color=#000066]SECTION 147[/color], separate clauses (a) and (b) laid down the circumstances under which income escaping assessment for the past assessment years could be assessed or reassessed. To confer jurisdiction under [color=#000066]SECTION 147[/color](a) two conditions were required to be satisfied firstly the Assessing Officer must have reason to believe that income profits or gains chargeable to income tax have escaped assessment, and secondly he must also have reason to believe that such escapement has occurred by reason of either omission or failure on the part of the assessee to disclose fully or truly all material facts necessary for his assessment of that year. Both these conditions were conditions precedent to be satisfied before the Assessing Officer could have jurisdiction to issue notice under section 148 read with [color=#000066]SECTION 147[/color](a) But under the substituted [color=#000066]SECTION 147[/color] existence of only the first condition suffices. In other words if the Assessing Officer for whatever reason has reason to believe that income has escaped assessment it confers jurisdiction to reopen the assessment. It is however to be noted that both the conditions must be fulfilled if the case falls within the ambit of the proviso to [color=#000066]SECTION 147[/color]. [/font]

[font=""trebuchet ms""]This view was taken by the Honourable Supreme Court in a recent unreported judgment dated 23.05.2007 made in Assistant Commissioner of Income Tax Versus Rajesh Jhaveri Stock Brokers Pvt. Ltd.[/font]

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