Tata International Ltd vs. DCIT (ITAT Mumbai)

COURT:
CORAM:
SECTION(S):
GENRE:
CATCH WORDS:
COUNSEL:
DATE: (Date of pronouncement)
DATE: June 29, 2012 (Date of publication)
AY:
FILE:
CITATION:

Click here to download the judgement (Tata_International_147_late_furnishing_reasons.pdf)


S. 147: Non-supply of recorded reasons before passing reassessment order renders the reopening void. Subsequent supply does not validate reassessment order

After completing the s. 143(3) assessment, the AO received information from the Volcker Committee report that the assessee had paid “illegal” commission for supply of goods to Iraq under the “Oil for Food Programme” of the UN. The AO issued a s. 148 notice to disallow the commission and supplied the assessee with only the “gist” of the recorded reasons. The complete recorded reasons were furnished only after the passing of the reassessment order. In the reassessment order, the AO disallowed the commission. The CIT (A) upheld the reassessment. On appeal by the assessee to the Tribunal, HELD allowing the appeal:

As per GKN Driveshafts 259 ITR 19 (SC) and the rules of natural justice, the AO was bound to furnish reasons within a reasonable time so that the assessee could file objections against the same. The adherence to this procedure is a necessity because at the preliminary stage itself, the AO may be satisfied with the explanation of the assessee. A reassessment completed without furnishing the reasons actually recorded by the AO for reopening of assessment is not sustainable in law. The subsequent supply of the reasons would not make good of the illegality suffered at the stage of reopening of the assessment. On facts, though the assessee asked for the recorded reasons, the same was supplied to him only after the passing of the reassessment order. This failure on the part of the AO renders the reassessment order invalid (Fomento Resorts & Videsh Sanchar Nigam 340 ITR 66 (Bom) (SLP dismissed) followed (included in file)).

Contrast with A. G. Holdings (Del HC). For the merits of whether a “bribe” for the “Iraq Oil Scam” can be allowed see Rajrani Exports (ITAT Kol)

2 comments on “Tata International Ltd vs. DCIT (ITAT Mumbai)
  1. CA DEV KUMAR KOTHARI says:

    It is widely believed by public in general that Tata group does not pay bribes or illegal gratifications to customers, officers, or bureaucrats etc. The reading of the judgments gives hint that Tata also pays illegal commission. Please refer to the following excerpts from the order / report:

    ” the AO received information from the Volcker Committee report that the assessee had paid “illegal” commission for supply of goods to Iraq under the “Oil for Food Programme” of the UN. The AO issued a s. 148 notice to disallow the commission and supplied the assessee with only the “gist” of the recorded reasons …”

    The question is whether TATA’s have started to pay bribes or whether the Volcker Report is wrong?

    This can be clarified only by TATA group and in case of need they can clear doubts of public by proving that the Volcker report is wrong.

  2. Vijay says:

    Absolutely sir,,
    Tata Should clarify atleast the doubt.

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