Failure to provide the assessee with the actual reasons recorded by the Assessing Officer for the reopening of assessment under Section 148 of the Income Tax Act, 1961, renders the entire reassessment proceedings invalid.

O R D E R

Per Arun Khodpia, AM:

The captioned appeal is preferred by the assessee challenging the order of Commissioner of Income Tax (Appeals), Mumbai – 36[“the Ld. CIT(A)] dated 16.12.2014 for the assessment year (AY) 2009-10, arises from assessment order u/s 143(3) r.w.s 147 of the Income Tax Act, 1961 (“the Act”) dated 28.02.2014.

The grounds of appeal raised by the assessee are as under:

Grounds of Appeal

1. The learned Commissioner of Income-Tax (Appeals)-36 committed an error of law and fact in rejecting the appellant's submissions in statement of facts made along with the grounds of the appeal while filing the appeal.

2. The learned Commissioner of Income-Tax (Appeals) erred in confirming the order of the A.O. The learned A.O. treated the disclosure of the income during the survey proceedings u/s. 133A as unexplained expenditure and treated such expenditure taxable u/s. 69C. The Assessee submits that they have no other source of income except the income from civil contractor's activities which is chargeable to tax u/s. 28 of the Income Tax Act.

3. On the facts and circumstance of case the learned A.O. has erred in law by invoking the provisions of sec. 69C instead of sec. 28 of the Income Tax Act.”

Additional Ground of Appeal (Revised)

4.1 The Learned Commissioner of Income-tax (Appeals)-36, Mumbai ["L.d. CIT (A)"), erred in confirming the action of the A.O. in initiating reassessment proceedings and framing the assessment of the Appellant by invoking the provisions of section 147 r.w.s. 148 of the Income tax Act, 1961 ["the Act"].

4.2 While doing so, the Ld. CIT (A) failed to appreciate that:

(i)The case of the appellant did not fall within the parameters laid down by section 147 r.w.s. 148 of the Act; and

(ii)The necessary preconditions for initiating reassessment and completion thereof were not satisfied.

4.3 Without prejudice to the generality of the above grounds, the reassessment is bad in law as-

(i)The actual reasons recorded before issuing the notice u/s 148 of the Act were not supplied;

(ii)The basic condition of having 'reason to believe that income chargeable to tax has escaped assessment was absent;

(iii) The purported reasons were based on wrong fact/ legal position; and

(iv) There was no live nexus between the purported reasons and the formation of belief about an income having escaped assessment.

4.4 It is submitted that in the facts and the circumstances of the case, and in law, the reassessment framed is bad, illegal and void.”

2. Brief facts of the case are, that the assessee is a firm which had filed its return of income on 31st March, 2011, for the assessment year 2009-10. It is observed by the AO that the assessee has not filed its return u/s 139(1) for the relevant assessment year, which was due on 30.09.2009. A survey u/s 133A was carried on 29.01.2010, on assessee’s business premises in which the assessee has disclosed an additional income of Rs.5 crores over and above the declared income for the assessment year 2009-10 and assessment 2010-11. Accordingly, the additional income offered by the assessee was Rs.1.5 crores for AY 2009-10 and 3.5 crores for AY 2010-11. Since assessee had not filed its return of income u/s 139(1), despite having income exceeding threshold limit for filing of return of income, the AO inferred that the income of assessee has escaped assessment within the meaning of section 147 and accordingly, the reopening assessment proceedings were invoked in the case of assessee.

3. After discussions and deliberations, the assessment u/s 143(3) r.w.s 147 had come to be completed on 28.02.2014, with an addition