JT. CIT (OSD) - 6(1), MUMBAI V. M/s. BPM INDUSTRIES LTD., MUMBAI

ITA 2367/MUM/2006

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 70871 (ITAT-MUMBAI)
• Duration Of Justice: 7 year(s) 4 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-08-2013
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 29-08-2013
• Assessment Year: 1996-1997
• Appeal Filed On: 18-04-2006
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SURINDER SINGH
• Keywords: Reopening of assessment; Opportunity of being heard; Principle of natural justice; Question of law; Reassessment proceedings
• Section: 143(3); 147; 148

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI . . , . ! , '# ' $ BEFORE SHRI I.P. BANSAL, JM AND SHRI SANJAY ARO RA, AM ./ I.T.A. NO. 7327/MUM/2003 ( % % % % & & & & / ASSESSMENT YEAR:1995-96 ./ I.T.A. NO. 2367/MUM/2006 ( % % % % & & & & / ASSESSMENT YEAR:1996-97 THE DCIT, CIR. 6(1),/ JCIT(OSD) 6(1), ROOM NO.506, 5 TH FLOOR, AAYKAR BHAVAN, MK ROAD, MUMBAI - 400020 % % % % / VS. M/S.BHARAT PULVERISING MILLS LTD.,/M/S.BPM INDUSTRIES LTD. 100, DR. A.B.ROAD, SARJAN PLAZA, WORLI, MUMBAI 400018 ' '# ./ ( ./ PAN/GIR NO. : AAACB 2031K ( ') / APPELLANT ) .. ( *+') / RESPONDENT ) ') , ' / APPELLANT BY: SHRI SURINDER SINGH *+') - , ' / RESPONDENT BY : SHRI DEEPAK TRALSHAWALA % - .# / DATE OF HEARING : 29/08/2013 / & - .# / DATE OF PRONOUNCEMENT : 29/08/2013 '0 / O R D E R PER I.P.BANSAL,J.M: BOTH THESE APPEALS ARE FILED BY THE REVENUE AND TH EY ARE DIRECTED AGAINST TWO SEPARATE ORDERS PASSED BY LD. CIT(A), MUMBAI D ATED 29/8/2003 AND 1/2/2006 FOR ASSESSMENT YEARS 1995-96 AND 1996-97 R ESPECTIVELY. GROUNDS OF APPEAL IN BOTH THE APPEALS READ AS UNDER: GROUNDS OF APPEAL IN ITA NO.7327/MUM/2003: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) ERRED IN QUASHING THE REASSESSMENT ORDER U/S.143(3) READ WIT H SECTION 147 DTD.25.03.2003 ./ I.T.A. NO. 7327/MUM/03 & ./ I.T.A. NO. 2367/MUM/06 ( % % % % & & & & / ASSESSMENT YEAR: 1995-96 & 1996-97 2 HOLDING THAT THE NOTICE U/S. 148 FOR INITIATION OF REASSESSMENT PROCEEDINGS U/S.147 IS ILLEGAL AND VOID AB-INITIO IGNORING AND WITHOUT APPRECIATING THE EVIDENCES ON RECORD, THE OPPORTUNITY OF BEING HEARD GIVEN TO THE ASSESSEE AND THE CORRECT FACTUAL AND LEGAL POSITION OF THE CASE VIS-A-VIS THE PROVIS IONS OF SECTION 147 OF THE ACT. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. THE, APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUND OR ADD A NEW GROUND WHICH MAY B E NECESSARY. GROUNDS OF APPEAL IN ITA NO.2367/MUM/2006: 1.ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE CIT(A) ERRED IN QUASHING THE REASSESSMENT ORDER U/S.143 READ WITH S ECTION 147 HOLDING THAT THE NOTICE U/S. 148 FOR INITIATION OF REASSESSMENT PROC EEDINGS U/S.147 IS ILLEGAL AND VOID AB-INITIO IGNORING AND WITHOUT APPRECIATING TH E EVIDENCES ON RECORD, THE OPPORTUNITY OF BEING HEARD GIVEN TO THE ASSESSEE AN D THE CORRECT FACTUAL AND LEGAL POSITION OF THE CASE VIS-A-VIS THE PROVISIONS OF SE CTION 147 OF THE ACT. 2.THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 2. THE, APPELLANT CRAVES LEAVE TO AMEND OR ALTER AN Y GROUND OR ADD A NEW GROUND WHICH MAY BE NECESSARY. 2. IT MAY BE MENTIONED HERE THAT EARLIER THESE APPE ALS WERE DISPOSED OF BY THE TRIBUNAL AS PER FOLLOWING ORDERS: 1. ORDER DATED 5/12/2006 IN ITA NO.7327/M/2003, A. Y 1995-96. 2. ORDER DATED 29/9/2008 IN ITA NO.2367/M/2006, A. Y1996-97. 2.1 FOR ASSESSMENT YEAR 1995-96 LD. CIT(A) HAD HELD THAT REASSESSMENT PROCEEDINGS INITIATED WERE INVALID. THE TRIBUNAL HAD CONFIRMED THE ORDER OF LD. CIT(A) ON THE FOLLOWING GROUNDS: (I) THE SPECIFIC REQUEST OF THE ASSESSEE FOR SUPP LY OF REASONS RECORDED FOR REOPENING WAS NOT ACCEDED BY AO, THEREFORE, REASSES SMENT PROCEEDINGS WERE INVALID IN VIEW OF THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF GKN DRIVE SHAFT (INDIA) LTD., 259 ITR 19 (SC). (II) THE AO DID NOT PROVIDE OPPORTUNITY TO THE ASS ESSEE TO CROSS EXAMINE THE EVIDENCE ON THE BASIS OF WHICH IT WAS HELD BY THE A O THAT THE LEASE TRANSACTIONS OF THE ASSESSEE WERE PAPER TRANSACTIONS AND NON-GEN UINE. ./ I.T.A. NO. 7327/MUM/03 & ./ I.T.A. NO. 2367/MUM/06 ( % % % % & & & & / ASSESSMENT YEAR: 1995-96 & 1996-97 3 (III) THAT THERE WAS NO FAILURE OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR THE ASSESSMENT OF THE ASSESSEE DURING THE ORIGINAL ASSESSMENT PROCEEDINGS AND FOR THIS PURPOSE ITAT HA S RELIED UPON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF HIND USTAN LEVER LTD. VS. ACIT, 268 ITR 322(BOM). 2.2 IT WAS ALSO HELD BY THE TRIBUNAL THAT AFOREMENT IONED DEFICIENCIES CANNOT BE MADE GOOD BY GIVING SUBSEQUENT INNINGS TO THE AS SESSING AUTHORITY. IT IS IN THIS MANNER THE ORDER OF LD. CIT(A) WAS UPHELD AND THE APPEAL FILED BY THE REVENUE WAS DISMISSED. 2.3 FOR ASSESSMENT YEAR 1996-97 RELYING UPON AFORE MENTIONED ORDER AND FINDING THAT THE FACTS WERE SIMILAR THE TRIBUNAL WI TH THE FOLLOWING OBSERVATIONS HAS UPHELD THE ORDER OF LD. CIT(A). 7. WE HAVE CONSIDERED THE RIVAL CONTENTIONS. WE FI ND THAT BY THE ORDER OF THIS TRIBUNAL IN ASSESSEES OWN CASE FOR 1997-98 IT WAS H ELD, BASED ON SIMILAR SET OF FACTS, THAT THOUGH NOTICE UNDER SECTION 148 WAS JUS TIFIED, SECOND ASSESSMENT WOULD BE UNSUSTAINABLE IN THE CIRCUMSTANCES OF THE CASE A ND WHEN SUCH SECOND ASSESSMENT BECAME UNSUSTAINABLE, NOTICE ISSUED UNDE R SECTION 148, EVEN THOUGH INITIALLY VALID, WOULD BECOME INEFFECTIVE. LEARNED D.R. WAS NOT ABLE TO POINT OUT ANY CHANGE IN THE CIRCUMSTANCES FROM THE ASSESSMENT YEA R 1995-96. WE FIND THAT IN ASSESSMENT YEAR 1995-96 ALSO THE REOPENING WAS BASE D ON THE INVESTIGATION DONE BY THE DIRECTORATE OF REVENUE WITH REGARD TO THE SA ME COMPANIES WHERE THE ASSESSEE WAS ONE AMONG WITH LESSER COMPANY IDENTIFI ED. THEREFORE WE HAVE NO HESITATION TO HOLD THAT FOR THE CURRENT YEAR ALSO R EOPENING AND SECOND ASSESSMENT IS NOT VALID. 8. IN THE RESULT, APPEAL OF THE REVENUE STANDS DIS MISSED. 2.4 BOTH THESE ORDERS OF THE TRIBUNAL WERE SUBJECT TO APPEAL FILED BEFORE HONBLE HIGH COURT. IT WILL BE RELEVANT TO REPROD UCE THE OBSERVATIONS OF THEIR LORDSHIP IN RESPECT OF BOTH THE YEARS. FOR ASSESSM ENT 1995-96 THE ORDER IS DATED 22/4/2009 IN INCOME TAX APPEAL NO.148 OF 200 9. THE OBSERVATIONS ARE AS UNDER: 1. HEARD THE LEARNED COUNSEL FOR PARTIES. 2. THE REVENUE HAS FILED THIS APPEAL AGAINST THE O RDER OF THE TRIBUNAL DATED 5 TH DECEMBER, 2006 CONTENDING THAT THE TRIBUNAL WAS NOT CORRECT IN UPHOLDING THE ./ I.T.A. NO. 7327/MUM/03 & ./ I.T.A. NO. 2367/MUM/06 ( % % % % & & & & / ASSESSMENT YEAR: 1995-96 & 1996-97 4 CIT(A)S ORDER OF QUASHING THE REASSESSMENT ORDER A S ILLEGAL AND VOID-AB-INITIO, IGNORING AND WITHOUT APPRECIATING THE EVIDENCE ON R ECORD AND THAT THE OPPORTUNITY OF BEING HEARD GIVEN TO THE ASSESSEE. 3. LEARNED COUNSEL APPEARING ON BEHALF OF RESPOND ENT STRONGLY CANVASSED THAT IT WAS OBLIGATORY ON THE PART OF REVENUE TO SUPPLY THE REASONS RECORDED FOR REOPENING OF ASSESSMENT UNDER SECTION 147 OF THE INCOME TAX A CT, 1961. SINCE NO REASONS WERE GIVEN, RESPONDENT WAS DEPRIVED OF THE RIGHT TO OBJECT TO THE REASONS RECORDED. HE, THUS, SUBMITS THAT ORDER OF THE TRIBUNAL, IS IN ACCORDANCE WITH LAW AND IT NEED NOT BE INTERFERED WITH. 4. DURING THE COURSE OF HEARING, THE REASONS RECOR DED BY THE REVENUE FOR REOPENING OF ASSESSMENT UNDER SECTION 147 OF THE INCOME TAX A CT ARE PLACED ON RECORD. LEARNED COUNSEL FOR ASSESSEE SUBMITS THAT FOR THE F IRST TIME, THESE REASONS ARE DISCLOSED BEFORE THIS COURT. 5. HEARD THE PARTIES. IN THE FACTS AND CIRCUMSTA NCES OF THIS CASE, BOTH PARTIES AGREED THAT THE IMPUGNED ORDER PASSED BY THE TRIBUN AL BE SET ASIDE AND MATTER BE REMANDED BACK TO THE TRIBUNAL FOR CONSIDERATION AFR ESH, GIVING LIBERTY TO BOTH THE PARTIES TO RAISE THEIR RIVAL CONTENTIONS BEFORE THE TRIBUNAL WITH DIRECTIONS TO TRIBUNAL TO DECIDE THE SAME. 6. IN THE RESULT, IMPUGNED ORDER IS SET ASIDE AND MATTER IS REMITTED BACK TO THE TRIBUNAL FOR CONSIDERATION AFRESH. THE TRIBUNAL IS DIRECTED DISPOSE OF THE MATTER WITH EXPEDITIOUS DISPATCH AT ANY RATE WITHIN SIX MO NTHS FROM THE DATE OF RECEIPT OF COPY OF THIS ORDER, FOLLOWING PRINCIPLES OF NATURAL JUSTICE. THE APPEAL IS ACCORDINGLY DISPOSED OF IN TERMS OF THIS ORDER BY CONSENT OF PA RTIES. NO ORDER AS TO COST. 2.5 FOR ASSESSMENT YEAR 1996-97 THE ORDER IS DATED 4/12/12 IN INCOME TAX APPEAL NO.214 OF 2011. THE OBSERVATIONS ARE AS UND ER: THE QUESTION OF LAW RAISED BY THE REVENUE IN THIS A PPEAL READ THUS: WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE TRIBUNAL IS JUSTIFIED IN LAW IN UPHOLDING THE ORDER OF LEARNED CIT(A) IN QUASHING THE REASSESSMENT AS ILLEGAL AND VOID AB-INITIO, IGNORIN G AND WITHOUT APPRECIATING THE EVIDENCE ON RECORD, THE OPPORTUNITY OF BEING HE ARD GIVEN TO THE ASSESSEE AND THE CORRECT FACTUAL AND LEGAL POSITION OF THE C ASE VIS-A-VIS THE PROVISIONS OF SEC.147 OF THE INCOME TAX ACT? 2) THE ASSESSMENT YEAR INVOLVED HEREIN IS A.Y. 1996 -97. THE ITAT HAS FOLLOWED ITS DECISION IN THE CASE OF THE ASSESSEE FOR ASSESSMENT YEAR 1995-96 DATED 5/12/2006 AND ALLOWED THE CLAIM OF THE ASSESSEE. ON AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF ITAT FOR A.Y. 1995-96, THIS COURT ALLOWED THE APPEAL FILED BY THE REVENUE AND RESTORED THE APPEAL BEFORE THE ITAT FOR FRESH DECISION ON MERITS AND IN ACCORDANCE WITH LAW. 3) COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE DECI SION OF THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR ASSESSMENT YEAR 1995-96 IS DISTINGUISHABLE ON FACTS AS IN THAT CASE THE REASONS FOR REOPENING THE ASSESSMENT WERE NOT HANDED OVER TO THE ./ I.T.A. NO. 7327/MUM/03 & ./ I.T.A. NO. 2367/MUM/06 ( % % % % & & & & / ASSESSMENT YEAR: 1995-96 & 1996-97 5 ASSESSEE. IF THE FACTS RELATING TO THE ASSESSMENT Y EAR 1995-96 WERE DISTINGUISHABLE, THEN THE TRIBUNAL COULD NOT HAVE DISPOSED OF THE APPEAL RELATING TO ASSESSMENT YEAR 1996-97 BY FOLLOWING THE ORDER RELA TING TO ASSESSMENT YEAR 1995- 96. 4) IN THIS VIEW OF THE MATTER, WE SET ASIDE THE IMP UGNED ORDER OF ITAT DATED 29/9/2008 IN (ITA NO.2367/M/2006 RELATING TO A.Y.19 96-97) AND RESTORE THE MATTER TO THE FILE OF ITAT FOR FRESH DECISION ON ME RITS AND IN ACCORDANCE WITH LAW. 5 THE APPEAL IS DISPOSED OF IN THE ABOVE TERMS WITH NO ORDER AS TO COSTS. 2.6 FOR GIVING EFFECT TO THE AFOREMENTIONED DECISIO NS OF HONBLE JURISDICTIONAL HIGH COURT THESE APPEALS WERE FIXED FOR HEARING AN D ACCORDINGLY BOTH THE PARTIES WERE HEARD. 3. NOW IT CANNOT BE DISPUTED THAT FACTS AND CIRCUMS TANCES OF BOTH THE CASE ARE SIMILAR AS HONBLE HIGH COURT IN ITS ORDER FOR ASSESSMENT YEAR 1996-97 HAS REJECTED THE CONTENTION OF THE ASSESSEE THAT FACTS AND CIRCUMSTANCES OF THE CASE FOR A.Y 1996-97 ARE DIFFERENT. THEREFORE, WE HAVE TO PROCEED ON THE BASIS THAT FACTS AND CIRCUMSTANCES OF BOTH THE CASES ARE SIMI LAR SO AS IT RELATES TO DETERMINATION OF THE ISSUE REGARDING VALIDITY OR OT HERWISE OF THE RE-ASSESSMENT PROCEEDINGS. THE FACT REMAINS THAT NEITHER IN RES PECT OF A.Y 1995-96 NOR IN RESPECT OF 1996-97 THE ASSESSEE HAS BEEN PROVIDED WITH OPPORTUNITY TO FILE OBJECTIONS WITH REGARD TO VALIDITY OR OTHERWISE OF THE REASSESSMENT PROCEEDINGS AFTER ASSESSEE HAS FILED THE RETURN IN RESPONSE TO NOTICE UNDER SECTION 148 AND AFTER SEEKING THE REASONS RECORDED FOR THE RE-OPENI NG OF THE ASSESSMENT. IT IS THE CASE OF THE ASSESSEE THAT THE VALIDITY OF INITIAT ION OF REASSESSMENT PROCEEDINGS IS LIABLE TO BE CONTESTED ON MANY GROUNDS WHICH INTER -ALIA INCLUDE OF INITIATION OF REASSESSMENT PROCEEDINGS BEYOND THE PERIOD OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR ON THE GROUND THAT THERE W AS NO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL THE MA TERIAL FACTS NECESSARY FOR ITS ASSESSMENT AND IN ABSENCE OF SUCH FAILURE RE-ASSESS MENT PROCEEDINGS COULD NOT HAVE BEEN INITIATED AS PER PROVISO TO SECTION 147 W HICH DESCRIBES THAT IN A CASE WHERE ASSESSMENT IS FRAMED UNDER SECTION 143(3) AND SECTION 147 IS SOUGHT TO BE INVOKED, NO ACTION CAN BE TAKEN UNDER SECTION 147 A FTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, UNLE SS ANY INCOME CHARGEABLE TO ./ I.T.A. NO. 7327/MUM/03 & ./ I.T.A. NO. 2367/MUM/06 ( % % % % & & & & / ASSESSMENT YEAR: 1995-96 & 1996-97 6 TAX HAS ESCAPED ASSESSMENT BY REASON OF FAILURE ON THE PART OF THE ASSESSEE WHICH INCLUDE FULL AND TRUE DISCLOSURE OF ALL MA TERIAL FACTS NECESSARY FOR THE ASSESSMENT OF THE ASSESSEE. IT WAS ALSO SOUGHT TO BE CONVEYED BY LD. AR THAT OFFICE NOTE GIVEN IN THE REASSESSMENT ORDER ITSELF FOR ASSESSMENT YEAR 1995-96 WILL REVEAL THAT REASSESSMENT PROCEEDINGS WERE INI TIATED MERELY ON THE BASIS OF LETTER OF DIT AND NO EVIDENCE WAS BROUGHT ON RECORD ACCORDING TO WHICH IT COULD BE SAID THAT ANY INCOME HAS ESCAPED IN THE HANDS OF THE ASSESSEE. IT IS ALSO THE CASE OF THE ASSESSEE THAT ASSESSEE HAS NOT BEEN CON FRONTED WITH THE EVIDENCE/STATEMENT ON THE BASIS OF WHICH DEPARTMEN T HAS ARRIVED AT A FINDING THAT THE CLAIM OF THE ASSESSEE WAS NOT GENUINE. IT IS THE CASE OF THE ASSESSEE THAT UNLESS SUCH EVIDENCE IS CONFRONTED AND OPPORTUNITY FOR CROSS EXAMINATION IS GIVEN, REASSESSMENT PROCEEDINGS ARE NOT JUSTIFIED A S THERE WILL BE NO MATERIAL WITH THE DEPARTMENT TO COME TO A CONCLUSION THAT A NY INCOME HAS ESCAPED ASSESSMENT. IT IS ALSO THE CASE OF THE ASSESSEE THAT ALL THE FACTS AND MATERIAL RELATING TO THE ISSUE ON WHICH REASSESSMENT PROCEED INGS HAVE BEEN INITIATED WERE PLACED ON RECORD DURING THE COURSE OF ORIGINAL ASSE SSMENT PROCEEDINGS. IN NUTSHELL, IT IS THE CASE OF LD. AR THAT IF AO HAD PROVIDED THE ASSESSEE WITH AN OPPORTUNITY TO PLACE ITS OBJECTION WITH REGARD TO INVALIDITY OF INITIATION OF REASSESSMENT PROCEEDINGS THEN ASSESSEE WOULD HAVE BEEN ABLE TO ESTABLISH THAT REASSESSMENT PROCEEDINGS ARE NOT VALID AT ALL. 4. ON THE OTHER HAND, IT IS THE CASE OF THE DEPARTM ENT THAT THERE WAS MATERIAL ON RECORD ACCORDING TO WHICH AO HAD REASONS TO BE LIEVE THAT THE INCOME HAS ESCAPED FROM ASSESSMENT IN THE HANDS OF THE ASSESSE E AND LD. CIT(A) HAS WRONGLY CONCLUDED THAT THE REASSESSMENT PROCEEDINGS ARE INVALID. 5. WE HAVE HEARD BOTH THE PARTIES ON THIS ISSUE. IT HAS ALREADY BEEN MENTIONED THAT ASSESSEE HAS NOT BEEN PROVIDED WITH OPPORTUNITY TO RAISE OBJECTIONS AGAINST REASONS FOR RE-OPENING OF THE A SSESSMENTS. DUE TO SUCH ACTION OF DEPARTMENT ASSESSEE HAS LOST THE VALUABL E RIGHT TO RAISE OBJECTIONS WITH REGARD TO VALIDITY OF INITIATION OF REASSESSMENT PR OCEEDINGS. SUCH RIGHT OF THE ASSESSEE HAS BEEN RECOGNIZED IN THE DECISION OF HON BLE SUPREME COURT IN THE ./ I.T.A. NO. 7327/MUM/03 & ./ I.T.A. NO. 2367/MUM/06 ( % % % % & & & & / ASSESSMENT YEAR: 1995-96 & 1996-97 7 CASE OF GKN DRIVE SHAFT (INDIA) LTD. (SUPRA). IT W ILL BE RELEVANT TO REPRODUCE THE FOLLOWING OBSERVATIONS OF THEIR LORDSHIPS FROM THE SAID DECISION. 5. WE SEE NO JUSTIFIABLE REASON TO INTERFERE WITH THE ORDER UNDER CHALLENGE. HOWEVER, WE CLARIFY THAT WHEN A NOTICE UNDER S. 148 OF THE IT ACT IS ISSUED, THE PROPER COURSE OF ACTION FOR THE NOTICEE IS TO FILE RETURN AND IF HE SO DESIRES, TO SEEK REASONS FOR ISSUING NOTICES. THE AO IS BOUND TO FUR NISH REASONS WITHIN A REASONABLE TIME. ON RECEIPT OF REASONS, THE NOTICEE IS ENTITLE D TO FILE OBJECTIONS TO ISSUANCE OF NOTICE AND THE AO IS BOUND TO DISPOSE OF THE SAME B Y PASSING A SPEAKING ORDER. IN THE INSTANT CASE, AS THE REASONS HAVE BEEN DISCLOSE D IN THESE PROCEEDINGS, THE AO HAS TO DISPOSE OF THE OBJECTIONS, IF FILED, BY PASS ING A SPEAKING ORDER, BEFORE PROCEEDING WITH THE ASSESSMENT IN RESPECT OF THE AB OVE SAID FIVE ASSESSMENT YEARS. 5.1 AS PER AFOREMENTIONED OBSERVATIONS OF THEIR L ORDSHIPS, IT HAS BEEN CLARIFIED THAT WHEN A NOTICE UNDER SECTION 148 IS I SSUED, THE PROPER COURSE OF ACTION FOR THE ASSESSEE WILL BE TO FILE THE RETURN, WHICH IN THE PRESENT CASE HAVE BEEN FILED, AND THE ASSESSEE, IF SO DESIRED, TO SE EK REASONS FOR ISSUING NOTICES. IN THE PRESENT CASE ASSESSEE HAS ALSO REQUESTED TO FUR NISH THE REASONS. THE AO IS BOUND TO GIVE REASONS TO THE ASSESSEE WITHIN REASON ABLE TIME ON RECEIPT OF REASONS AND THE ASSESSEE IS ENTITLED TO FILE OBJEC TIONS TO THE ISSUE OF NOTICE AND AO IS BOUND TO DISPOSE OF THE SAME BY PASSING A SPE AKING ORDER. IN THE PRESENT CASE AO DID NOT GIVE SUCH OPPORTUNITY AND LD. CIT (A) HAS ALSO NOT GONE THROUGH SUCH A PROCESS WHICH REQUIRE THE AO TO DISPOSE OF THE OBJECTIONS OF THE ASSESSEE BY WAY OF A SPEAKING ORDER. KEEPING IN VIEW SUCH D EFICIENCIES, WE ARE OF THE HUMBLE OPINION THAT BOTH THESE ASSESSMENTS SHOULD B E RESTORED BACK TO THE FILE OF AO WITH A DIRECTION TO PROVIDE THE ASSESSEE WITH THE REASONS WHICH ARE RECORDED FOR INITIATION OF REASSESSMENT PROCEEDINGS AND GIVE THE ASSESSEE A REASONABLE TIME TO FILE OBJECTION, IF ANY. IF THE ASSESSEE FILE THE OBJECTION/S, WHICH IN THE PRESENT CASE ARE INTENDED TO BE FILED BY THE ASSESSEE, THE AO WILL DISPOSE OF THOSE OBJECTIONS OF THE ASSESSEE BY WAY OF A SPE AKING ORDER WHICH WILL BE SERVED ON THE ASSESSEE. WE DIRECT ACCORDINGLY. 5.2 WE MAY MENTION HERE THAT DURING THE COURSE OF HEARING LD. AR HAS EXPRESSED HIS APPREHENSION THAT THE AO MAY BY TAKI NG RESTRICTED VIEW CONFINE THE OBJECTIONS OF THE ASSESSEE ONLY TO THE REASONS WHEREAS THE GRIEVANCE OF THE ./ I.T.A. NO. 7327/MUM/03 & ./ I.T.A. NO. 2367/MUM/06 ( % % % % & & & & / ASSESSMENT YEAR: 1995-96 & 1996-97 8 ASSESSEE IN THE PRESENT CASE IS ALSO TO TAKE RESORT TO PROVISO TO SECTION 147 WHICH WAS ALSO THE MAIN CONTENTION OF THE ASSESSEE AND TH E SAID CONTENTION WAS ALSO TAKEN INTO CONSIDERATION BY THE TRIBUNAL WHILE DE CIDING THE APPEAL FOR ASSESSMENT YEAR 1995-96. IN THIS REGARD LD. AR REFERRED TO THE ORDER OF TRIBUNAL IN WHICH RELIANCE WAS ALSO PLACED BY THE TRIBUNAL ON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF M/S. HINDU STAN LEVER LTD. VS. ACIT, 268 ITR 322, WHEREIN IT HAS BEEN HELD THAT AS REA SON RECORDED BY AO DID NOT STATE THAT THERE WAS FAILURE ON THE PART OF THE ASS ESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR THE ASSESSMENT, RE OPENING OF ASSESSMENT MADE UNDER SECTION 143(3) OF THE ACT, AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR WAS INVALID. 5.3 FOR REMOVING SUCH APPREHENSION OF LD. AR WE MAY MENTION HERE THAT THE RIGHT OF THE ASSESSEE TO FILE OBJECTIONS AGAINST IS SUANCE OF NOTICE, AS RECOGNIZED BY HONBLE SUPREME COURT IN THE AFOREMENTIONED DECISIO N OF GKN DRIVE SHAFT (INDIA) LTD.(SUPRA), IS NOT A MERE FORMALITY. IT IS A RIG HT WHICH HAS BEEN PROVIDED TO THE ASSESSEE BY THE AFOREMENTIONED DECISION OF HONBLE SUPREME COURT AND THAT RIGHT IS TO FILE OBJECTION AGAINST THE ISSUANCE OF NOTICE. WHATEVER ARGUMENTS/SUBMISSION IS AVAILABLE TO THE ASSESSEE U NDER THE STATUTE CAN BE PLEADED AGAINST THE ISSUANCE OF NOTICE AND SUCH RIG HT INCLUDE THE RIGHT OF THE ASSESSEE UNDER THE PROVISO TO SECTION 147 OF THE AC T. THEREFORE, WE HOLD THAT ASSESSEE IS ENTITLED TO RAISE ALL OBJECTIONS WHICH ARE PERMITTED UNDER INCOME TAX ACT TO PLEAD THAT REASSESSMENT PROCEEDINGS ARE NOT IN ACCORDANCE WITH THE PROVISIONS OF LAW. 5.4 WE MAY FURTHER OBSERVE THAT IF AFTER DISPOSING OF THE OBJECTIONS OF THE ASSESSEE BY WAY OF A SPEAKING ORDER, THE AO DOES NOT ACCEPT THE OBJECTIONS THEN HE MAY PROCEED TO FRAME REASSESSMENT AS PER P ROVISIONS OF LAW AFTER GIVING THE ASSESSEE A REASONABLE OPPORTUNITY OF HEARING. WE DIRECT ACCORDINGLY. 5.5 WITH THESE OBSERVATIONS BOTH THE APPEALS FILED BY THE REVENUE ARE DISPOSED OF . ./ I.T.A. NO. 7327/MUM/03 & ./ I.T.A. NO. 2367/MUM/06 ( % % % % & & & & / ASSESSMENT YEAR: 1995-96 & 1996-97 9 6. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE ARE TREATED AS ALLOWED FOR STATISTICAL PURPOSES IN THE MANNER AFORESAID. ORDER PRONOUNCED IN THE OPEN COURT ON 29/08/2013 . '0 - & #' 1 2%3 29/08/2013 - 4 SD/- SD/- ( SANJAY ARORA) (I.P.BANSAL) /ACCOUNTANT MEMBER '# /JUDICIAL MEMBER MUMBAI; 2% DATED 29/08/2013 '0 '0 '0 '0 - -- - *.56 *.56 *.56 *.56 7'6&. 7'6&. 7'6&. 7'6&. / COPY OF THE ORDER FORWARDED TO : 1. ') / THE APPELLANT 2. *+') / THE RESPONDENT. 3. 8 ( ) / THE CIT(A)- 4. 8 / CIT 5. 694 *.% , , / DR, ITAT, MUMBAI 6. 4: ; / GUARD FILE. '0% '0% '0% '0% / BY ORDER, +6. *. //TRUE COPY// < << < / = = = = (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI . % . .VM , SR. PS