Sri Pinnamaraju Venkatapathi Raju, Visakhapatnam V. The JCIT, (OSD), Visakhapatnam

ITA 132/VIZ/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 8734 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 11 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 21-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P S MURTHY
• Assessee Lawyers: C KAMESWARA RAO
• Keywords: Reopening of assessment; Reassessment proceedings
• Section: 143(3); 147; 148

Judgement Text

ITA NO.132/VIZAG/2016 SRI PINNAMARAJU VENKATAPATHI RAJUM, VSKP 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . .. . . . . . ' , % BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER ./I.T.A.NO.132/VIZAG/2016 ( / ASSESSMENT YEAR: 2007-08) SRI PINNAMARAJU VENKATAPATHI RAJU VISAKHAPATNAM JCIT, CIRCLE - 3(1), VISAKHAPATNAM [PAN NO. ACAPP9548A ] ( ' / APPELLANT) ( ()' / RESPONDENT) / APPELLANT BY : SHRI C. KAMESWARA RAO, AR / RESPONDENT BY : SHRI P.S. MURTHY, DR / DATE OF HEARING : 21.02.2018 / DATE OF PRONOUNCEMENT : 28.02.2018 / O R D E R PER D.S. SUNDER SINGH, ACCOUNTANT MEMBER: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-I {CIT(A)}, VI SAKHAPATNAM VIDE ITA NO.265/2011-12/DC,C-3(1),VSP/2015-16 DATED 16.2 .2016 FOR THE ASSESSMENT YEAR 2007-08. ITA NO.132/VIZAG/2016 SRI PINNAMARAJU VENKATAPATHI RAJUM, VSKP 2 2. THE ASSESSEE FILED RETURN OF INCOME IN THIS CASE FOR THE ASSESSMENT YEAR 2007-08 DECLARING TOTAL INCOME OF ` 31,66,816/- BESIDES AGRICULTURAL INCOME OF ` 1,75,000/- ON 31.3.2008. THE RETURN WAS PROCESSED U/S 143(1) OF THE INCOME TAX ACT, 1961 (HEREINAFTER CAL LED AS 'THE ACT') AND SUBSEQUENTLY THE ASSESSMENT WAS REOPENED U/S 147 OF THE ACT BY ISSUE OF NOTICE U/S 148 AND COMPLETED THE ASSESSMENT U/S 143(3) R.W.S. 147 ON TOTAL INCOME OF ` 47,55,478/- APART FROM THE AGRICULTURAL INCOME OF ` 1,35,000/-. AGGRIEVED BY THE ORDER OF THE A.O., TH E ASSESSEE WENT ON APPEAL BEFORE THE CIT(A) AND AGITATED BEFORE THE CI T(A) WITH REGARD TO THE ISSUE OF NON SUPPLY OF THE REASONS FOR REOPENIN G THE ASSESSMENT, APART FROM THE TECHNICAL GROUND OF THE VALIDITY OF ISSUE OF NOTICE U/S 148 OF THE ACT, THE ASSESSEE ALSO CHALLENGED THE ORDER ON MERITS . THE LD. CIT(A) UPHELD THE VALIDITY OF THE REASSESSMENT MADE U/S 147 OF THE ACT AND ALLOWED THE APPEAL PARTLY. AGITATED BY THE ORD ER OF THE LD. CIT(A), THE ASSESSEE IS IN APPEAL BEFORE THIS TRIBUNAL AND THE RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS EARED BOTH ON FACTS AND IN LAW IN CONFIRMING THE ACTION OF THE AS SESSING OFFICER IN DENYING THE CLAIM OF THE ASSESSEE U/S.54 OF THE INCOME TAX A CT. 1961 OF RS. 10,16,860/ OUT OF THE TOTAL CLAIM OF RS.28,98,350/- 2. THE LEARNED COMMISSIONER OF INCOME TAX (A) HAS FAILE D TO APPRECIATE THE EVIDENCE ON RECORD, THE REGISTERED SALE DEEDS AND T HE LINK DOCUMENTS, EVIDENCING THAT THERE EXISTS ONLY ONE RESIDENTIAL H OUSE PROPERTY, AND THE ASSESSEE HAS PURCHASED SAID RESIDENTIAL HOUSE IN TW O PARTS FROM TWO PERSONS FATHER AND DAUGHTER. ITA NO.132/VIZAG/2016 SRI PINNAMARAJU VENKATAPATHI RAJUM, VSKP 3 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS MISDIRECTED HIMSELF ON THE ASSESSING OFFICERS REMAND REPORT, WHICH IS B ASED ON INSPECTORS REPORT, WHICH THE ASSESSING OFFICER CONSIDERED IT A S INTERNAL CORRESPONDENCE. 4. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS FAILED TO APPRECIATE THE LAW INVOLVED IN NOT SUPPLYING THE REASONS RECOR DED BY THE A.O FOR ISSUING NOTICE U/S.148 IN SPITE OF THE SPECIFIC REQ UEST OF THE ASSESSEE. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS EQU ATED DISCUSSING THE REASONS WITH THE AUTHORISED REPRESENTATIVE, DURING THE COURSE OF ASSESSMENT PROCEEDINGS WITH THAT OF SUPPLYING THE R EASONS RECORDED TO THE ASSESSEE. 5. THE ASSESSMENT ORDER IS LIABLE TO BE QUASHED FOR NO T SUPPLYING THE REASONS RECORDED FOR ISSUING NOTICE U/S. 148, EVEN AT THE S PECIFIC REQUEST OF THE ASSESSEE. 6. THE APPELLANT PLEADS FOR PERMISSION TO ADD, AMEND, MODIFY, AND / OR ALTER ANY OF THE ABOVE GROUNDS AT THE TIME OF HEARING. FOR TH ESE AND ANY OTHER REASONS THAT MAY BE SUBMITTED AT THE TIME OF HEARING THE AP PELLANT PLEADS FOR RELIEF. 3. GROUND NOS.4 & 5 ARE RELATED TO THE VALIDITY OF REASSESSMENT MADE U/S 147 R.W.S 143(3) OF THE ACT WITHOUT SUPPLYING T HE REASONS RECORDED FOR REOPENING OF THE ASSESSMENT BY THE A.O. DURING THE APPEAL HEARING, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS MADE THE REQUEST FOR SUPPLY OF THE REASONS TO THE A.O. I N WRITING VIDE LETTER DATED 12.8.2008 BUT THE A.O. HAS NOT SUPPLIED THE R EASONS. THEREFORE, THE LD. A.R. ARGUED THAT AS PER THE HONBLE SUPREME COURT JUDGEMENT IN THE CASE OF GKN DRIVESHAFTS (INDIA) LIMITED VS. ITO AND OTHERS 259 ITR 19 (SC), THE ASSESSMENT MADE WITHOUT SUPPLY OF REAS ONS IS INVALID, ACCORDINGLY, REQUESTED TO QUASH THE ASSESSMENT MADE U/S 147 R.W.S. 143(3) OF THE ACT VIDE ORDER DATED 22.11.2011. ITA NO.132/VIZAG/2016 SRI PINNAMARAJU VENKATAPATHI RAJUM, VSKP 4 4. ON THE OTHER HAND, THE LD. D.R. ARGUED THAT THOU GH THE A.O. HAS NOT SUPPLIED THE REASONS, THE A.O. HAS DISCUSSED TH E ISSUE IN DETAIL WITH THE ASSESSEES A.R DURING THE ASSESSMENT PROCEEDING S, WHICH WAS SIGNED BY THE LD. A.R. MR. Y.S.N. MURTHY IN THE ORD ER SHEET. ACCORDING TO THE LD. D.R., THE REASONS FOR REOPENING WERE DIS CUSSED WITH THE LD. A.R., THUS THERE IS NO REQUIREMENT OF SUPPLY OF REA SONS SEPARATELY, SINCE THE REASONS FOR REOPENING OF THE ASSESSMENT WAS MAD E KNOWN TO THE ASSESSEE AND ARGUED THAT THERE IS NO INFIRMITY IN T HE ORDER OF THE ASSESSING OFFICER IN REOPENING OF ASSESSMENT AND AC CORDINGLY REQUESTED TO UPHOLD THE ORDER OF THE A.O. AND DISMISS THE APP EAL OF THE ASSESSEE. 5. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATER IALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. IN THIS CASE, THE A.O. HAS REOPENED THE ASSESSMENT BY ISSUE OF NOTICE U/S 148 OF THE ACT. DURING THE REASSESSMENT PROCEEDINGS, T HE ASSESSEE HAS REPLIED TO THE NOTICE ISSUED U/S 148 OF THE ACT AND REQUESTED FOR SUPPLY OF THE REASONS RECORDED FOR THE ISSUE OF NOTICE U/S 148 OF THE ACT. HOWEVER, THE A.O. HAS NOT SUPPLIED THE REASONS. AS PER THE HONBLE SUPREME COURT DECISION IN THE CASE OF GKN DRIVESHAF TS (INDIA) LIMITED VS. ITO AND OTHERS CITED (SUPRA), ONCE THE NOTICE U /S 148 OF THE ACT IS ISSUED, THE PROPER COURSE OF ACTION IS TO FILE THE RETURN AND IF THE ASSESSEE SO DESIRES TO SEEK THE REASONS FOR ISSUE O F NOTICE AND THE A.O. ITA NO.132/VIZAG/2016 SRI PINNAMARAJU VENKATAPATHI RAJUM, VSKP 5 IS BOUND TO FURNISH THE REASONS WITHIN A REASONABLE TIME. ON RECEIPT OF THE REASONS, THE ASSESSEE IS ENTITLED TO FILE OBJEC TIONS TO ISSUANCE OF NOTICE AND THE A.O. IS BOUND TO DISPOSE OF THE SAME BY PASSING SPEAKING ORDER. THE ASSESSING OFFICER HAS NOT FOLLOWED THE ABOVE LAW LAID DOWN BY THE HONBLE SUPREME COURT. NON-FURNISHING OF RE ASONS TO THE ASSESSEE IS FATAL TO THE REASSESSMENT MADE U/S 147 OF THE ACT. FURTHER, AS PER THE PROVISIONS OF INCOME TAX ACT, BEFORE ISS UING THE NOTICE U/S 148 OF THE ACT, THE A.O. IS BOUND TO RECORD THE REA SONS FOR ISSUE OF SUCH NOTICE. FOR READY REFERENCE, WE REPRODUCE HEREUNDE R SECTION 148 OF THE ACT: SECTION 148 [ISSUE OF NOTICE WHERE INCOME HAS ESCAP ED ASSESSMENT. 148 [(1)] BEFORE MAKING THE ASSESSMENT, REASSESSMENT OR RECOMPUTATION UNDER SECTION 147, THE ASSESSING OFFICER SHALL SERV E ON THE ASSESSEE A NOTICE REQUIRING HIM TO FURNISH WITHIN SUCH PERIOD, AS MAY BE SPECIFIED IN THE NOTICE, A RETURN OF HIS INCOME OR THE INCOME OF ANY OTHER P ERSON IN RESPECT OF WHICH HE IS ASSESSABLE UNDER THIS ACT DURING THE PREVIOUS YEAR CORRESPONDING TO THE RELEVANT ASSESSMENT YEAR, IN THE PRESCRIBED FORM AN D VERIFIED IN THE PRESCRIBED MANNER AND SETTING FORTH SUCH OTHER PART ICULARS AS MAY BE PRESCRIBED; AND THE PROVISIONS OF THIS ACT SHALL, S O FAR AS MAY BE, APPLY ACCORDINGLY AS IF SUCH RETURN WERE A RETURN REQUIRE D TO BE FURNISHED UNDER SECTION 139: [ GKN DRIVESHAFTS (INDIA) LIMITED VS. ITO AND OTHERS THAT IN A CASE (A) WHERE A RETURN HAS BEEN FURNISHED DURING THE PERIOD COMMENCING ON THE 1 ST DAY OF OCTOBER, 1991 AND E3NDING ON 30 TH DAY OF SEPTEMBER, 2005 IN RESPONSE TO A NOTICE SERVED UNDER THIS SECTION, AND (B) SUBSEQUENTLY A NOTICE HAS BEEN SERVED UNDER SUB-SEC TION (2) OF SECTION 143 AFTER THE EXPIRY OF TWELVE MONTHS SPECIFIED IN THE PROVISO TO SUB=- SECTION (2) OF SECTION 143, AS IT STOOD IMMEDIATELY BEFORE THE AMENDMENT OF SAID SUB-SECTION BY THE FINANCE ACT, 2002 (20 OF 2002) BUT BEFORE THE ITA NO.132/VIZAG/2016 SRI PINNAMARAJU VENKATAPATHI RAJUM, VSKP 6 EXPIRY OF THE TIME LIMIT FOR MAKING THE ASSESSMENT, REASSESSMENT OR RECOMPUTATION AS SPECIFIED IN SUB SECTION (2) OF SE CTION 153, EVERY SUCH NOTICE REFERRED TO IN THIS CLAUSE SHALL BE DEEMED T O BE A VALID NOTICE: PROVIDED FURTHER THAT IN A CASE (A) WHERE A RETURN HAS BEEN FURNISHED DURING THE PERIOD COMMENCING ON 1 ST DAY OF OCTOBER, 1991 AND ENDING ON THE 30 TH DAY OF SEPTEMBER, 2005 IN RESPONSE TO A NOTICE SERVED UNDER THIS SECT ION, AND (B) SUBSEQUENTLY A NOTICE HAS BEEN SERVED UNDER CLAUSE (II) OF SUB SECTION (2) OF SECTION 143 AFTER THE EXPIRY OF TWELVE MONTH S SPECIFIED IN THE PROVISO TO CLAUSE (II) OF SUB SECTION (2) OF SECTIO N 143, BUT BEFORE THE EXPIRY OF THE TIME LIMIT FOR MAKING THE ASSESSMENT, REASSESSMENT OR RECOMPUTATION AS SPECIFIED IN SUB-SECTION (2) OF SE CTION 153, EVERY SUCH NOTICE REFERRED TO IN THIS CLAUSE SHALL BE DEE MED TO BE A VALID NOTICE.] [EXPLANATION -- FOR THE REMOVAL OF DOUBTS, IT IS H EREBY DECLARED THAT NOTHING CONTAINED IN THE FIRST PROVISO OR THE SECON D PROVISO SHALL APPLY TO ANY RETURN WHICH HAS BEEN FURNISHED ON OR AFTER THE 1 ST DAY OF OCTOBER, 2005 IN RESPONSE TO A NOTICE SERVED UNDER THIS SECTION. [(2) THE ASSESSING OFFICER SHALL, BEFORE ISSUING AN Y NOTICE UNDER THIS SECTION RECORD HIS REASONS FOR DOING SO.] 6. IN THE INSTANT CASE, ON VERIFICATION OF THE ASSE SSMENT RECORD, IT IS NOTICED THAT THE A.O. TYPED THE REASONS BUT NOT SIG NED THE ORDER SHEET, THUS THERE ARE NO REASONS RECORDED FOR REOPENING OF ASSESSMENT AS REQUIRED U/S 148 OF THE ACT. THE A.O. NEITHER COMP LIED WITH THE STATUTORY REQUIREMENT OF RECORDING THE REASONS FOR ISSUE OF NOTICE NOR COMPLIED WITH THE LAW LAID DOWN BY THE HONBLE SUPR EME COURT IN THE CASE OF REASSESSMENT PROCEEDINGS. THEREFORE, THE N OTICE ISSUED U/S 148 IS BAD IN LAW ACCORDINGLY SAME IS QUASHED AND THE C ONSEQUENT ASSESSMENT ORDER MADE U/S 147 R.W.S. 143 (3) IS ANN ULLED AND THE APPEAL OF THE ASSESSEE IS ALLOWED. ITA NO.132/VIZAG/2016 SRI PINNAMARAJU VENKATAPATHI RAJUM, VSKP 7 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT O N 28 TH FEB18. SD/- SD/- ( . ) ( . .. . . . . . ' ) (V. DURGA RAO) (D.S. SUNDER SINGH) /JUDICIAL MEMBER /ACCOUNTANT MEMBER # /VISAKHAPATNAM: ' /DATED : 28.02.2018 VG/SPS )# *# /COPY OF THE ORDER FORWARDED TO:- 1. / THE APPELLANT SRI P. VENKATAPATHI RAJU, 3 RD FLOOR, SRIVARSHINI ENCLAVE, HIG-40, SEETHAMMADHARA, NE, VISAKHAPATNAM-530 013. 2. / THE RESPONDENT THE JCIT (OSD), CIRCLE-3(1), VI SAKHAPATNAM 3. + / THE PRINCIPAL CIT-1, VISAKHAPATNAM 4. + ( ) / THE CIT (A)-1, VISAKHAPATNAM 5. # . , . , # / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM