M/s. Capital Andhra Road Lines Baroda, Hyderabad V. ITO, Ward-5(2), Hyderabad

ITA 1432/HYD/2011

• Counselvise Citation: 143222514 RSA 2011
• Duration Of Justice: 2 year(s) 3 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 05-08-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ADAGIRI
• Assessee Lawyers: K NEERAJA
• Keywords: Reopening of assessment; Principle of natural justice
• Section: 147; 148

Judgement Text

1 ITA.NO.1432/HYD/2011 M/S. CAPITAL ANDHRA ROAD LINES BARODA, HYDERABAD IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES 'A' : HYDERABAD BEFORE SHRI B.RAMAKOTAIAH, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA.NO.1432/HYD/2011 ASSESSMENT YEAR 2006-2007 M/S. CAPITAL ANDHRA ROAD LINES BARODA, HYDERABAD PAN AADFC0468K VS. ITO, WARD 5 (2) HYDERABAD (APPELLANT) (RESPONDENT) FOR APPELLANT : SMT. K. NEERAJA FOR RESPONDENT : SHRI B. YADAGIRI DATE OF HEARING : 05-11-2013 DATE OF PRONOUNCEMENT : 27-11-2013 ORDER PER SMT. ASHA VIJAYARAGHAVAN, J.M. THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A)-V, HYDERABAD DATED 27.6.2011 FOR THE ASSESSM ENT YEAR 2006-2007. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S A FIRM DERIVING INCOME FROM TRANSPORT COMMISSION AGENCY AT HYDERABAD. FOR THE ASSESSMENT YEAR 2006-07, IT FILED A RETURN OF INCOME DECLARING TOTAL INCOME OF RS.2,04,814/- . THE RETURN WAS INITIALLY PROCESSED U/S. 143(1) OF THE ACT. SUBSEQUENTLY, BY A NOTICE UNDER SECTION 148 DT.20.10.2008, THE ASSESSMENT WAS RE-OP ENED TO REASSESS THE INCOME THAT ESCAPED ASSESSMENT. BY A L ETTER DT. 26.11.2008, THE ASSESSEE WAS REQUESTED THE ASSESSIN G OFFICER FOR FURNISHING OF THE REASONS FOR RE-OPENING OF THE ASS ESSMENT. THERE WAS NO RESPONSE FOR THIS LETTER. AGAIN, BY ITS LETT ER DT.23.2.2009 THE ASSESSEE REQUESTED FOR SUPPLY OF THE REASONS FOR RE -OPENING OF THE 2 ITA.NO.1432/HYD/2011 M/S. CAPITAL ANDHRA ROAD LINES BARODA, HYDERABAD ASSESSMENT. APART FROM THESE TWO LETTERS, ONCE AGAI N, IN ITS CLARIFICATIONS FILED BEFORE THE ASSESSING OFFICER I N ITS LETTER DATED 10.03.2009 IN THE COURSE OF THE ASSESSMENT PROCEEDI NGS, THE ASSESSEE REQUESTED FOR FURNISHING OF THE REASONS FO R RE-OPENING OF THE ASSESSMENT. HOWEVER, THE ASSESSING OFFICER DID NOT RESPOND TO ANY OF THESE COMMUNICATIONS AND COMPLETED THE ASSES SMENT WITHOUT FURNISHING THE REASONS FOR RE-OPENING TO TH E ASSESSEE. 3. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL TO THE CIT(A)- V, HYDERABAD AND HAS TAKEN A SPECIFIC GROUN D NO.6 IN THE GROUNDS OF APPEAL FILED BEFORE HIM WITH RESPECT TO NON-FURNISHING OF REASONS RECORDED. ON BEING DIRECTED BY THE CIT(A), THE ASSESSING OFFICER SUPPLIED THE REASONS FOR RE-OPENING OF THE ASSESSMENT BY HIS LETTER DT.24.11.2010, BEFORE THE CIT(A) AND THE CIT (A) DISPOSED OFF THE APPEAL ON 27.06.2011. 4. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AND I T IS SUBMITTED BY THE LEARNED COUNSEL FOR THE ASSESSE E SMT. K. NEERAJA THAT THE SUPPLY OF REASONS AFTER COMPLETION OF THE ASSESSMENT DOES NOT HELP THE ASSESSEE AS TO EXPLAIN ITS CASE BEFORE THE ASSESSMENT IS PROCEEDED WITH, IF THE ASSESSING OFFICER SUPPLIED THE REASONS INITIALLY, IT COULD HAVE FACILITATED TH E ASSESSEE TO EXPLAIN ITS CASE TO THE SATISFACTION OF THE A.O. IN WHICH C ASE THE EXERCISE OF THE APPEAL PROCEEDINGS ETC., COULD HAVE BEEN AVOIDE D. THE ACTION OF THE ASSESSING OFFICER IN COMPLETING THE ASSESSMENT WITHOUT SUPPLYING OF THE REASONS FOR RE-OPENING UNDER SECTION 147 , DEPRIVES HIM OF THE JURISDICTION FOR COMPLETION OF THE ASSESSMENT AND T HEREFORE THE ASSESSMENT MADE BY HIM MAY BE HELD AS 'ILLEGAL' FOR WANT OF JURISDICTION. FOR THIS SUBMISSION, THE LEARNED COU NSEL FOR THE ASSESSEE RELIES UPON THE DECISION OF ITAT 'B' BENCH , HYDERABAD 3 ITA.NO.1432/HYD/2011 M/S. CAPITAL ANDHRA ROAD LINES BARODA, HYDERABAD DT.29.01.2010 IN THE CASE OF JASTHI RAMA RAO VS. IT O (2010) L30 TTJ 66 (HYD) AND TATA INTERNATIONAL LTD., VS. DY.CIT, M UMBAI DT.29.6.20 12 FOR THE ASST. YEARS 2000-01, 2001-02 AND 2002-03 IN ITA NOS.3359 TO 3361/MUM/2009. THE LEARNED COUNSEL FOR THE ASSES SEE SUBMITTED THAT THE ASSESSMEENT MADE BY THE ASSESSING OFFICER MAY BE HELD AS WITHOUT JURISDICTION AND ANNULLED ACCORDINGLY. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE ASSESSEE HAS RAISED A SPECIFIC GROUND THAT THE ASSESSING OFFICER HAS NOT SUPPLIED THE REASONS FOR REOPENING THE ASSESSMENT INITIALLY TO THE ASSESSEE AND HAS SUPPLIED THE REASONS FOR REOPENING OF ASSESSMENT BY LETTER D ATED 24.11.2010 ONLY WHEN THE APPEAL WAS BEFORE THE CIT(A). 6. IN THE CASE OF GKN DRIVESHAFTS (INDIA) LTD. V I TO (2003) 259 ITR 19 (SC) THE HONBLE SUPREME COURT HAS HELD THAT THE ASSESSING OFFICER IS BOUND TO FURNISH REASONS WITHIN A REASON ABLE TIME SO THAT THE ASSESSEE CAN FILE OBJECTIONS TO THE ISSUE OF NO TICES AND THE ASSESSING OFFICER, ACCORDINGLY IS BOUND TO DISPOSE OF THE SAME BY PASSING A SPEAKING ORDER. THUS THE SUPPLY OF REASON S IS TO FACILITATE THE ASSESSEE TO PRESENT ITS DEFENCE AND OBJECTION A GAINST THE REOPENING OF THE ASSESSMENT. 7. WE ARE ALSO OF THE OPINION THAT AS PER THE RULE OF NATURAL JUSTICE, THE ASSESSEE IS ENTITLED TO KNOW THE REASO NS ON THE BASIS OF WHICH THE ASSESSING OFFICER HAS BELIEVED AND FRAMED AN OPINION THAT THE INCOME ASSESSABLE TO TAX HAS ESCAPED ASSESSMENT . WE SEE NO JUSTIFIABLE REASON FOR DEPRIVING THE ASSESSEE OF TH E REASONS ACTUALLY RECORDED BY THE ASSESSING OFFICER FOR THE REOPENING OF THE SAME. 4 ITA.NO.1432/HYD/2011 M/S. CAPITAL ANDHRA ROAD LINES BARODA, HYDERABAD 8. IN THE DECISION OF CIT VS. VSNL 340 ITR 66 IT H AS BEEN HELD THAT SUPPLY OF REASONS AFTER THE COMPLETION OF ASSE SSMENT HAS NO EFFECT AND THE EXERCISE IS FUTILE. 9. IN THE PRESENT CASE, SINCE THE ASSESSEE HAS BEE N DENIED THE RIGHT TO RAISE OBJECTIONS AGAINST THE VALIDITY OF N OTICE ISSUED UNDER SECTION 148 AS THE REASONS FOR NOT BEING SUPPLIED T O HIM IN THE COURSE OF ASSESSMENT PROCEEDINGS, WE REMIT THE ISSUE TO TH E FILE OF THE ASSESSING OFFICER TO GIVE A REASONABLE OPPORTUNITY TO THE ASSESSEE AND DECIDE THE ISSUE AFRESH. ACCORDINGLY, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 10. DURING THE COURSE OF HEARING, WE FIND THAT THE ASSESSEE HAS FILED ADDITIONAL GROUNDS WHICH ARE AS UNDER : 'REOPENING OF THE ASSESSMENT UNDER SECTION 147 OF T HE ACT ON THE GROUND THAT INCOME ESCAPED ASSESSMENT ONLY FO R RECONCILING THE GROSS RECEIPTS WITH RECEIPTS BASED ON TDS CER TIFICATES IS WITHOUT JURISDICTION, IN VALID AND BAD IN LAW AND IS LIABLE TO BE QUASHED.' THE APPELLANT SUBMITS THAT THE ABOVE LEGAL GROUND DOES NOT REQUIRE DETAILED SCRUTINY AND INVESTIGATION INTO THE FACTS, AND PRAYS THAT IT MAY KINDLY BE ADMITTED AND BE ADJUD ICATED UPON TO DO SUBSTANTIAL JUSTICE TO THE CASE OF THE APPE LLANT OR ELSE THE APPELLANT WOULD BE PUT TO IRREPARABLE LOSS AN D HARDSHIP'. 11. WE ARE NOT ADJUDICATING THE ADDITIONAL GROUND AS WE HAVE REMITTED THE ISSUE TO THE FILE OF ASSESSING OFFICER FOR DECIDING AFRESH. ASSESSEE CAN MAKE NECESSARY SUBMISSIONS BEFORE ASSE SSING OFFICER. 12. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOW ED FOR STATISTICAL PURPOSES. 5 ITA.NO.1432/HYD/2011 M/S. CAPITAL ANDHRA ROAD LINES BARODA, HYDERABAD ORDER PRONOUNCED IN THE OPEN COURT ON 27.11.2013. SD/- SD/- (B. RAMAKOTAIAH) ACCOUNTANT MEMBER (ASHA VIJAYARAGHAVAN) JUDICIAL MEMBER HYDERABAD, DATED THE 27 TH NOVEMBER, 2013 VBP/- COPY FORWARDED TO: 1. M/S. CAPITAL ANDHRA ROAD LINES BARODA, 377, 1 ST FLOOR, SAIKRUPA MARKET, MEHABOOB MANSION, MALAKPET, HYDERABAD PAN AADFC0468K 2. THE INCOME TAX OFFICER, WARD 5 (2), HYDERABAD. 3. CIT(A)-V, HYDERABAD. 4. THE CIT(A)-IV, HYDERABAD 5. THE DR 'A' BENCH, ITAT, HYDERABAD