Ajay Shantilal Lalwani, Jalgaon V. Income-tax Officer,

ITA 145/PUN/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 0384 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 9 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-11-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 16-08-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 03-02-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HITENDRA NINAWE
• Keywords: Reassessment proceedings
• Section: 143(3); 148; 6; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUN E , , !'#'' $ , % & BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM / ITA NO. 145/PN/2015 %' ( ')( / ASSESSMENT YEAR : 2005-06 SHRI AJAY SHANTILAL LALWANI, DEVDARSHAN, 56, JAY NAGAR, JALGAON 425002 PAN : AAEPL3257C ....... / APPELLANT ' /VS. INCOME TAX OFFICER, WARD-1(1), JALGAON / RESPONDENT ASSESSEE BY : SHRI NARESH KUMAR REVENUE BY : SHRI HITENDRA NINAWE / DATE OF HEARING : 26-10-2016 / DATE OF PRONOUNCEMENT : 25-11-2016 * / ORDER PER VIKAS AWASTHY, JM : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDE R OF COMMISSIONER OF INCOME TAX (APPEALS)-2, NASHIK DATED 10-11 -2014 FOR THE ASSESSMENT YEAR 2005-06. 2 ITA NO. 145/PN/2015, A.Y. 2005-06 2. THE BRIEF FACTS OF THE CASE AS EMANATING FROM RECORD S ARE: THE ASSESSEE FILED HIS RETURN OF INCOME FOR THE IMPUGNED ASSESS MENT YEAR ON 31-03-2006 DECLARING TOTAL INCOME OF ` 3,53,041/- AND AGRICULTURE INCOME OF ` 48,930/-. A SEARCH ACTION U/S. 132 OF THE INCOME TAX AC T, 1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS CARRIED OUT IN THE CASE OF CHHORIYA GROUP ON 22-08-2008. DURING THE COURSE OF S EARCH APART FROM OTHER DOCUMENTS AND PAPERS, A ROUGH CASH BOOK WAS SEIZED BY THE DEPARTMENT. ON THE BASIS OF SAID ROUGH CASH BOOK IT WAS ALLEGED THAT THE ASSESSEE HAD ADVANCED ` 58,00,000/- ON INTEREST TO THE CHHORIYA GROUP DURING THE PERIOD 01-04-2004 TO 31-03-2005. REA SSESSMENT PROCEEDINGS WERE INITIATED AGAINST THE ASSESSEE AND ACC ORDINGLY NOTICE U/S. 148 OF THE ACT WAS ISSUED TO THE ASSESSEE ON 29-0 3-2012. REASONS WERE RECORDED FOR REOPENING THE ASSESSMENT ON 23-06-2012 AND THE SAME WERE PURPORTEDLY SERVED ON THE ASSESSE E ON 30-03-2012. THE ASSESSEE FILED OBJECTIONS AGAINST THE REASONS FOR REO PENING ASSESSMENT ON 22-08-2012. THE ASSESSING OFFICER THEREAFT ER VIDE ORDER DATED 28-03-2013 PASSED U/S. 143(3) R.W.S. 147 OF THE ACT COMPLETED THE ASSESSMENT WITHOUT DECIDING THE OBJECTIONS OF THE AS SESSEE IN ACCORDANCE WITH THE LAW LAID DOWN BY THE HONBLE SUPREME COURT OF INDIA IN THE CASE OF GKN DRIVESHAFTS (INDIA) LTD. VS. INCOME TAX OFFICER REPORTED AS 259 ITR 19 (SC). AGGRIEVED BY THE ASSESSMENT ORDER DATED 28-03-2013, T HE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE COMMISS IONER OF INCOME TAX (APPEALS) CHALLENGING THE REASSESSMENT PROCEED INGS AS WELL AS THE ADDITIONS MADE ON MERIT. THE COMMISSIONER OF INCOM E TAX (APPEALS) VIDE IMPUGNED ORDER UPHELD THE VALIDITY OF THE REAS SESSMENT 3 ITA NO. 145/PN/2015, A.Y. 2005-06 PROCEEDINGS AS WELL AS THE ADDITIONS MADE BY THE ASSESS ING OFFICER. NOW, THE ASSESSEE IS IN SECOND APPEAL BEFORE THE TRIBUN AL ASSAILING REOPENING, AS WELL AS THE ADDITIONS ON MERITS. 3. SHRI NARESH KUMAR APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER HAS NOT FOLLOWED THE P ROPER PROCEDURE FOR REOPENING THE ASSESSMENT. THE LD. AR FURTH ER DISPUTED CERTAIN DATES MENTIONED IN THE ASSESSMENT ORDER WITH RE SPECT TO RECORDING OF REASONS AND SERVICE OF THE SAME TO THE ASS ESSEE. THE LD. AR SUBMITTED THAT IN THE GROUNDS OF APPEAL THE ASSESSEE HAS CHALLENGED THE ADDITIONS MADE DURING REASSESSMENT PROCEEDINGS AS WELL AS THE VALIDITY OF THE NOTICE ISSUED U/S. 148 R.W.S. 147 OF THE ACT. ALTHOUGH, THE ASSESSEE HAD RAISED THE GROUND BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) WITH RESPECT TO VIOLATION OF THE PRO CEDURE LAID DOWN FOR DECIDING THE OBJECTIONS AGAINST REOPENING OF THE ASSESSMENT AS MANDATED BY THE HONBLE SUPREME COURT OF INDIA IN TH E CASE OF GKN DRIVESHAFTS (INDIA) LTD. VS. INCOME TAX OFFICER (SUPRA), THE GR OUND WAS INADVERTENTLY NOT TAKEN IN THE GROUNDS OF APPEAL BEFORE THE TRIBUNAL. THE ASSESSEE HAS RAISED THE SAID GROUND AS ADDITIONAL GROUND. 3.1 THE LD. AR POINTED THAT NOTICE U/S. 148 WAS ISSUED TO THE ASSESSEE ON 30-03-2012. THE ASSESSEE WAS NOT PROVIDE D WITH THE REASONS FOR REOPENING THE ASSESSMENT. ON 26-04-2012 T HE ASSESSEE ASKED THE ASSESSING OFFICER TO SUPPLY THE COPY OF REASON S FOR REOPENING ASSESSMENT. THE SAME WERE SUPPLIED TO THE ASSESSEE BY ASSESSING OFFICER ON 31-07-2012. AFTER PERUSING THE REASONS THE A SSESSEE OBSERVED THAT REASSESSMENT PROCEEDINGS HAVE BEEN INITIA TED ON THE 4 ITA NO. 145/PN/2015, A.Y. 2005-06 BASIS OF SOME ENTRIES IN THE ROUGH CASH BOOK WHICH WAS S EIZED DURING SEARCH ON CHHORIYA GROUP. THE ASSESSEE REQUESTED FOR THE COPY OF ROUGH CASH BOOK VIDE LETTER DATED 13-08-2012. THE ASS ESSEE FILED OBJECTIONS TO THE REOPENING ON 22-08-2012. A COPY OF T HE ROUGH CASH BOOK WAS SUPPLIED TO THE ASSESSEE ON 21-03-2013. ON RECEIPT OF THE SAME THE ASSESSEE FILED REVISED OBJECTIONS TO THE REOPEN ING ON 25-03-2013. THE ASSESSING OFFICER WITHOUT FIRST DECIDING THE OBJECTIONS OF THE ASSESSEE AGAINST REOPENING PROCEEDED ON TO PASS ASSESSMENT ORDER ON 28-03-2013. THE LD. AR IN ORDER TO FORTIFY HIS SUBMISSIONS WITH RESPECT TO SEQUENCE OF EVENTS AND DATES HAS FURNIS HED THE COPY OF ORDER SHEET OF PROCEEDING BEFORE ASSESSING OFFICER AND THE LETTERS ADDRESSED BY THE ASSESSEE TO ASSESSING OFFICER AND VICE-VERSA. 3.2 THE LD. AR SUBMITTED THAT THE ASSESSING OFFICER HAS FLOUT ED THE LAW LAID DOWN BY THE HONBLE SUPREME COURT OF INDIA IN THE CASE OF GKN DRIVESHAFTS (INDIA) LTD. VS. INCOME TAX OFFICER (SUPRA). T HE HONBLE APEX COURT HAS HELD THAT THE ASSESSING OFFICER IS DUTY BOU ND TO FURNISH REASONS WITHIN A REASONABLE TIME. ON RECEIPT OF REA SONS, THE NOTICEE IS ENTITLED TO FILE OBJECTIONS TO ISSUANCE OF NOTICE A ND THE ASSESSING OFFICER IS BOUND TO DISPOSE OF THE SAME BY PASSING A SPEAKING ORDER. THE HONBLE BOMBAY HIGH COURT IN THE CASE OF AS IAN PAINTS LTD. VS. DEPUTY COMMISSIONER OF INCOME TAX & ANR. REPORTED AS 296 ITR 90 HAS HELD THAT AFTER PASSING OF THE ORDER REJECTING THE O BJECTIONS, THE ASSESSING OFFICER SHALL GAVE FOUR WEEKS TIME FROM THE DATE O F SERVICE OF ORDER REJECTING OBJECTIONS, BEFORE PROCEEDING FURTHER. TH E LD. AR FURTHER PLACED RELIANCE ON THE RECENT DECISION OF HONBLE JURISDICTIO NAL HIGH COURT IN THE CASE OF KSS PETRON PRIVATE LTD. VS. THE ASS ISTANT 5 ITA NO. 145/PN/2015, A.Y. 2005-06 COMMISSIONER OF INCOME TAX IN INCOME TAX APPEAL NO. 224 OF 2014 DECIDED ON 03-10-2016, WHEREIN THE HONBLE HIGH COURT HA S SET ASIDE THE ASSESSMENT ORDER WHERE THE ASSESSING OFFICER HAS NO T COMPLIED WITH THE PROCEDURE IN DISPOSING OF THE OBJECTIONS OF THE A SSESSEE AGAINST REOPENING. THE LD. AR PRAYED FOR SETTING ASIDE OF T HE IMPUGNED ORDER. 4. SHRI HITENDRA NINAWE REPRESENTING THE DEPARTMENT VEH EMENTLY SUPPORTED THE ORDER OF COMMISSIONER OF INCOME TAX (APPEA LS) IN UPHOLDING THE VALIDITY OF REASSESSMENT PROCEEDINGS, AS WELL A S CONFIRMING OF ADDITIONS ON MERITS. THE LD. DR SUBMITTED THA T THE ASSESSING OFFICER HAS DEALT WITH THE OBJECTIONS RAISED BY T HE ASSESSEE AND AFTER CONSIDERING THE SAME, THE ASSESSING OFFICER HAS P ASSED THE ASSESSMENT ORDER. THE LD. DR PRAYED FOR UPHOLDING THE FIN DINGS OF COMMISSIONER OF INCOME TAX (APPEALS) ON MERITS AS WELL AS O N JURISDICTION. 5. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESEN TATIVES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF THE AUTHORITIE S BELOW. THE LD. AR HAS CONFINED HIS SUBMISSIONS IN CHALLENGING THE PROCED URE ADOPTED BY THE ASSESSING OFFICER IN DISPOSING OF THE OBJECT IONS OF ASSESSEE AGAINST REOPENING. BEFORE PROCEEDING TO DECIDE THE ISSUE, IT WOULD BE RELEVANT TO HAVE A QUICK LOOK OF THE CHRONOLOGY OF EVENTS : DATE EVENTS 30 - 03 - 2012 NOTICE U/S. 148 ISSUED TO THE ASSESSEE. 26 - 04 - 2012 LETTER BY THE ASSESSEE REQUESTING FOR REASONS FOR ISSUING NOTICE U/S. 148. 6 ITA NO. 145/PN/2015, A.Y. 2005-06 31 - 07 - 2012 REASONS FOR REOPENING SUPPLIED BY ASSESSING OFFICER TO THE ASSESSEE. 13 - 08 - 2012 REQUEST LETTER FROM ASSESSEE TO SUPPLY COPY OF ROUGH CASH BOOK SEIZED DURING SEARCH OPERATION ON CHHORIYA GROUP. 22 - 08 - 2012 ASSESSEE FILED OBJECTIONS FOR INITIATING REASSESSMENT PROCEEDINGS. 25 - 03 - 2013 ON RECEIPT OF COPY OF ROUGH CASH BOOK SEIZED DURING THE SEARCH OPERATION ON CHHORIYA GROUP, THE ASSESSEE FILED REVISED OBJECTIONS TO REASSESSMENT PROCEEDINGS. 28 - 03 - 2013 ASSESSMENT ORDER U/S. 143(3) R.W.S. 147 PASSED. 6. A PERUSAL OF THE ABOVE CHRONOLOGY EVENTS SHOW THAT THE ASSESSING OFFICER HAS NOT PASSED ANY ORDER DISPOSING OF THE OBJECT IONS FILED BY THE ASSESSEE AGAINST REASSESSMENT PROCEEDINGS. THE ASSESS EE HAS FURNISHED A COPY OF ORDERSHEETS FROM THE FILE OF ASSESSING O FFICER STARTING FROM 31-07-2012 TO 28-03-2013. A PERUSAL OF O RDERSHEET ENTRIES SHOW THAT THERE IS NO ENDORSEMENT TO THE EFFECT THAT OBJECTIONS FILED BY THE ASSESSEE HAVE BEEN DISPOSED OF/DECIDED BY T HE ASSESSING OFFICER. THE LD. DR HAS ALSO NOT CONTROVERTED THE CHRONOLO GY OF EVENTS WHICH HAS BEEN FURNISHED BY THE ASSESSEE SEPARATELY. NO SEPARATE ORDER DECIDING THE OBJECTIONS OF THE ASSESSEE AGAINST RE OPENING IS AVAILABLE ON RECORD. A PERUSAL OF THE ASSESSMENT ORDER S HOWS THAT THE ASSESSING OFFICER HAS REFERRED TO OBJECTION PETITION DATED 22-08-2012 FILED BY THE ASSESSEE. HOWEVER, THE SAME HAVE NOT BEEN ADJUDICATED BY THE ASSESSING OFFICER. THE ASSESSEE HAS TAKEN OBJECTIONS TO THE SA ME IN GROUND NO. 6 OF THE GROUNDS OF APPEAL BEFORE THE FIRST AP PELLATE AUTHORITY. A PERUSAL OF THE IMPUGNED ORDER SHOWS THAT E VEN THE 7 ITA NO. 145/PN/2015, A.Y. 2005-06 COMMISSIONER OF INCOME TAX (APPEALS) HAS NOT TAKEN COGNIZ ANCE OF THE SAME AND HAS NOT COMMENTED WHETHER THE ASSESSING OFFICE R HAS COMPLIED WITH THE PROPER PROCEDURE FOR DISPOSING OF THE OB JECTIONS FILED BY THE ASSESSEE AGAINST REOPENING OF THE ASSESSMENT. 7. THE HONBLE SUPREME COURT OF INDIA IN THE CASE OF GKN DRIVESHAFTS (INDIA) LTD. VS. INCOME TAX OFFICER (SUPRA) HAS IN UNEQUIVOCAL TERMS HELD THAT THE ASSESSING OFFICER IS BOUND TO FURNISH REASONS WITHIN A REASONABLE TIME. ON RECEIPT OF REASONS, TH E NOTICEE IS ENTITLED TO FILE OBJECTIONS TO ISSUANCE OF NOTICE AND THE AS SESSING OFFICER IS BOUND TO DISPOSE OF THE SAME BY PASSING A SPEAKING ORDER. 8. THE HONBLE BOMBAY HIGH COURT IN THE CASE OF ASIAN PA INTS LTD. VS. DEPUTY COMMISSIONER OF INCOME TAX & ANR. (SUPRA) HAS FURTHER CLARIFIED THAT IF THE ASSESSING OFFICER DOES NOT ACCEPT THE O BJECTIONS, HE SHALL NOT PROCEED FURTHER IN THE MATTER WITHIN A PERIOD OF FOUR WEEKS FROM THE DATE OF SERVICE OF THE ORDER ON OBJECTIONS TO THE ASSESS EE. 9. THE ASSESSING OFFICER IS DUTY BOUND TO DECIDE THE OBJE CTIONS OF THE ASSESSEE AGAINST INITIATION OF REASSESSMENT PROCEEDING S BY PASSING A SEPARATE SPEAKING ORDER. THEREAFTER, THE ASSESSING OFFIC ER SHALL GIVE FOUR WEEKS TIME TO THE ASSESSEE FROM THE DATE OF SERVICE OF THE SAID ORDER BEFORE PROCEEDING WITH THE FINALIZATION OF ASSESSMEN T. THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF KSS PETRON PRIVATE LTD. VS. THE ASSISTANT COMMISSIONER OF INCOME TAX (SUPRA) HAS SET ASIDE REASSESSMENT PROCEEDINGS WERE THE ASSESSING OFFICER HAS NOT FOLLOWED THE PROPER PROCEDURE AS MANDATED FOR DISPOSING OF THE OBJECTIONS OF THE 8 ITA NO. 145/PN/2015, A.Y. 2005-06 ASSESSEE ON REOPENING. THE RELEVANT EXTRACT OF THE FINDI NGS OF THE HONBLE BOMBAY HIGH COURT ARE AS UNDER : 8 WE NOTE THAT ONCE THE IMPUGNED ORDER FINDS THE A SSESSMENT ORDER IS WITHOUT JURISDICTION AS THE LAW LAID DOWN BY THE AP EX COURT IN GKN DRIVESHAFTS (SUPRA) HAS NOT BEEN FOLLOWED, THEN THE RE IS NO REASON TO RESTORE THE ISSUE TO THE ASSESSING OFFICE TO PASS A FURTHER/FRESH ORDER. IF THIS IS PERMITTED, IT WOULD GIVE A LICENCE TO THE A SSESSING OFFICER TO PASS ORDERS ON RE-OPENING NOTICE, WITHOUT JURISDICTION ( WITHOUT COMPLIANCE OF THE LAW IN ACCORDANCE WITH THE PROCEDURE, YET THE O NLY CONSEQUENCE, WOULD BE THAT IN APPEAL, IT WOULD BE RESTORED TO TH E ASSESSING OFFICER FOR FRESH ADJUDICATION AFTER FOLLOWING THE DUE PROCEDUR E. THIS WOULD LEAD TO UNNECESSARY HARASSMENT OF THE ASSESSEE BY REVIVING STALE/ OLD MATTERS. 10. IN THE PRESENT CASE WE FIND THAT THE ASSESSING OFFICE R HAS NOT ADJUDICATED THE OBJECTIONS FILED BY THE ASSESSEE ON REOP ENING AND HAS STRAIGHTAWAY PASSED THE ASSESSMENT ORDER. THUS, THE A SSESSMENT ORDER HAS BEEN PASSED IN CLEAR VIOLATION OF LAW LAID DOWN BY THE HONBLE SUPREME COURT OF INDIA IN THE CASE OF GKN DRIVESHAFTS (IN DIA) LTD. VS. INCOME TAX OFFICER (SUPRA). THE ASSESSING OFFICER IS QUASI JU DICIAL AUTHORITY AND HAS TO FOLLOW THE LAW AND THE PRINCIPLES OF NA TURAL JUSTICE AT THE TIME OF PASSING ANY ORDER. WE ARE OF THE CONSIDER ED OPINION THAT REMITTING THE MATTER BACK TO THE ASSESSING OFFICER WOULD B E ALLOWING FRESH INNING TO ASSESSING OFFICER AT THE COST OF HARASSMENT AND INCONVENIENCE TO ASSESSEE. THE ASSESSING OFFICER HAS MISS ED THE BUS BY VIOLATING THE LAW LAID DOWN BY THE HONBLE APEX COURT. THE ASSESSING OFFICER HAS COMMITTED ERROR IN NOT COMPLYING WITH THE PROPER PROCEDURE IN DECIDING THE OBJECTIONS OF THE ASSESSEE AGA INST REASSESSMENT PROCEEDINGS. FURTHER, WE OBSERVE THAT R EASSESSMENT PROCEEDINGS WERE INITIATED AFTER THE PERIOD OF FOUR YEARS. REMITTING THE 9 ITA NO. 145/PN/2015, A.Y. 2005-06 MATTER BACK TO THE ASSESSING OFFICER WOULD RESULT IN EXTE NDING THE PERIOD OF REASSESSMENT. THEREFORE, WE SET ASIDE THE IMPUG NED ORDER AND ALLOW THE APPEAL OF THE ASSESSEE. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON FRIDAY, THE 25 TH DAY OF NOVEMBER, 2016. SD/- SD/- ( . . / R.K. PANDA) ( ! ' / VIKAS AWASTHY) #' / ACCOUNTANT MEMBER $ % #' / JUDICIAL MEMBER / PUNE; &# / DATED : 25 TH NOVEMBER, 2016 RK *+,%-.#/#)- / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. ' () / THE CIT(A)-2, NASHIK 4. ' / THE CIT-2, NASHIK 5. !*+ %%,- , ,- , . ./0 , / DR, ITAT, B BENCH, PUNE. 6. + 1 23 / GUARD FILE. // ! % // TRUE COPY// #4 / BY ORDER, %5 ,0 / PRIVATE SECRETARY, ,- , / ITAT, PUNE