S.Padmalakshmi, Madurai V. DICT, Madurai

ITA 2719/CHNY/2014

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 9920 (ITAT-CHENNAI)
• Duration Of Justice: 8 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-07-2015
• Appeal Filed By: Assessee
• Bench Allotted: A
• Next Hearing Date: 28-05-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 31-10-2014
• Court: TRIBUNAL
• Assessee Lawyers: T BANUSEKAR; V SUBBARAYAN DCITRETD RE
• Keywords: Reopening of assessment; Depreciation; Period of limitation; Difference of opinion; Deemed dividend; Assessment record; Commercial expediency; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 147; 148

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI , . !' , # $% BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI V. DURGA RAO, JUDICIAL MEMBER ./ ITA NO. 2719/MDS/2014 / ASSESSMENT YEAR : 2008-09 MRS. S. PADMALAKSHMI, W/O S. SEETHARAMAN, KESARKUNJ VINDHYACHAL APARTMENTS, CHANDRAKANTHI NAGAR, BYE PASS ROAD, MADURAI 625 016. PAN AFVPP1130L APPELLANT) V. THE DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-I(1), MADURAI 625 002. RESPONDENT) / APPELLANT BY : SHRI T. BANUSEKAR, FCA & SHRI V.SUBBARAYAN, DCIT(RETD.) / RESPONDENT BY : SHRI P. RADHAKRISHNAN, JCIT ! / DATE OF HEARING : 28.05.2015 '# ! / DATE OF PRONOUNCEMENT: 09.07.2015 & / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX(APPEALS) DATED 25 .9.2014. - - ITA 2719/14 2 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: 1 . 0 . THE ORDER OF THE LEARNED CIT(A) IS OPPOSED TO LAW INAS MUCH A S TH E SAME HAS BEEN PASSED WITHOUT FULLY CONSIDERING AND APP R E CIATIN G TH E FACTS OF THE APPELLANT ' S CASE. 2 . 1 . THE LEARNED CIT(A) HAVING OBSERVED THAT THE ID. A.O. H A D REFE RR ED T O TH E ASS E SSEE ' S LETTER DATED 05-01-2012 IN PARA.3 O F THE AS SESS M E NT ORDER OUGHT TO HA V E HELD THAT T HE ONUS IS ON THE A . O . TO MAKE A V AIL A BLE THE ASSESSMENT RECORDS WITH THE SAID LE T TER CONTAINED THEREIN . 2 . 2 . THE ID . CIT (A) HAVING NOTED THAT THE ASSESSEE ' S LETT E R DT . 05-01-2012 WAS IN FACT FILED BEFORE THE A . O. WHICH IS MISSING FR OM TH E A SSESS M E NT RECORDS ERRED IN HOLDING THAT IT IS THE RESPON S IBILIT Y OF THE A SS E SSEE T O PRODUCE E V IDENCE . 2.3 . THE LEARNED CIT (A) HAVING NOTED THAT THE RE A SONS F O R THE RE - OPENING OF THE ASSESSMENT U / S . 147 WERE NOT COMMUNICATED TO THE ASSESSEE OUGHT TO HA V E HELD THAT THE A . O . IGNORED THE SUPREME COURT 'S DIRECTI V ES IN GKN DRIVESHAFTS (INDIA) LTD . V . ITO 259 ITR 19 (SC) . 3 . L . THE LEARNED CIT (A) ERRED IN NOT APPLYING THE RATIO O F THE DECISION O F THE SUPREME COURT IN CIT V . KELVINATOR INDIA LTD . 3 2 0 I T R 591. 3 . 2. THE LEARNED CIT (A) ERRED IN HOLDING THAT THE DECISI ON OF THE SUPREME COURT IN CALCUTTA DISCOUNT CO. LTD. V. ITO 41 ITR 19 1 IS NOT APPLICABLE AFTER CHANGES IN LAW WERE MADE TO SEC. 147 W.E.F. 1-4-1989. 3 . 3 . THE LEARNED CIT (A) ERRED IN NOT FOLLOWING THE DECISIO N OF THE SUPREME COURT IN ACIT V. ICICI SECURITIES PRIMARY DEALERSHIP LT D. 348 ITR 299 (SC) WHICH WAS BROUGHT TO HIS NOTICE DURING THE COURSE OF APPEAL . 3 . 4. THE LEARNED CIT (A) ERRED IN LAW IN REJECTING THE ASSE SSEE ' S CONTENTION IN THE LIGHT OF EXPLN . 1 TO SEC. 147, FOR THE SAID EXPLANATION APPLIES TO ONLY TO CASES WHERE THE FIRST PROVISO TO SEC . 147 IS APPLIED . 4.L . THE LEARNED CIT (A), WHILE CONSIDERING THE ASSESSEE'S CONTENTIONS ON MERITS, FAILED TO FOLLOW THE DECISION OF THE HON 'BLE IT AT, CHENNAI IN THE CASE O(ACIT V. HARSHAD V. DOSHI REPORTED AS 130 ITD 137: 136 TTJ (CHENNAI) 351, [WHICH WAS FOLLOWED IN ACIT V . T . CHITTYBABU -- IT A NO. 934 / 2010 - ORDER DT . 19-09-2011.] AS THE FACTS OF THE ASSESSEE'S CASE ARE IDENTICAL TO THOSE CONSIDERED IN THE REPORTED CASE. 4 . 2 . THE LEARNED CIT (A) FAILED TO NOTE THAT IN HARSHAD V . DOSHI'S CASE TOO THERE WAS CAPITAL GAINS ON TRANSFER OF THE LANDS - VIDE PARA. 10 OF THE ITAT ' S ORDERS - AND THIS WOULD NOT IN ANY WAY CHANGE THE C OLOUR OF THE TRANSACTION WHICH WAS CLEARLY MOTIVATED BY BUSINES S CONSIDERATIONS AND COMMERCIAL EXPEDIENCY. - - ITA 2719/14 3 5.L . THE LEARNED CIT (A) FAILED TO NOTE THAT THE DEBIT OF RS . 18 , 60,205 / - IN VAJRA ACCOUNT REPRESENTED INTEREST CHARGED BY THE CO MPANY FOR THE DEBIT BALANCES IN THE ASSESSEE ' S ACCOUNT AND DID NOT REPRESENT ANY LOAN OR ADVANCE AND HENCE, THE PROVISIONS OF SEC . 2(22)( E) WERE NOT APPLICABLE. 6 . L . THE LEARNED A . O. FAILED TO NOTE THAT THE DEBITS OF RS. 45,69,743 / - IN VASUDHARA ACCOUNT REPRESENTED EXPENDITURE FOR THE CO MPANY AND NOT PERSONAL EXPENDITURE OF THE ASSESSEE AND HENCE, THE PROVISIONS OF SEC. 2(22)( E) WERE NOT ATTRACTED . 7.1 . FOR THE ABOVE AND OTHER GROUNDS THAT MAY BE ADDUCED AT THE TIME OF HEARING, IT IS PRAYED THAT THE HON'BLE IT AT MAY DELET E THE ADDITION OF RS. 3,34,32,175 / - AND THUS RENDER JUSTICE . 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE SMT . S . PADRNALAKSHRNI FILED HER RETURN OF INCOME FOR THE AY. 2008 - 09 ON 31 . 12 . 2009 ADMITTING AN INCOME OF ` 9 , 42 ,1 00/- . THE RETURN WAS PROCESSED U/S . 143(1) OF THE ACT ON 05 . 03 . 2010. SUBSEQUENTLY, THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS AND SCRUTINY ASSESSMENT U/S . 143[3] WAS COMPLETED ON 20 . 12 . 2010 ACCEPTING THE RETURNED INCOME . 3.1 LATER , ON EXAMINATION OF THE BALANCE SHEET OF THE COMPANY M/S . V I SVAS PROMOTERS PRIVATE LIMITED FOR THE AY . 2008-0 9, AO NOTICED THAT THE COMPANY , M/S . VISVAS PROMOTERS PRIVATE LIMITED ADVAN C ED LOAN/ADVANCE TO THE ASSESSEE, SMT . S . PADMALAKSHMI AMOUNTING TO ` 3 , 28 , 00 , 916/- . THE COMPANY HAS GOT - - ITA 2719/14 4 ACCUMULATED PROFITS TO THE EXTENT OF ` 23,59 , 14 , 437/- . ASSESSEE, SMT . S . PADMALAKSHMI IS A SUBSTANT I AL SHAREHOLDER OF THE COMPANY HAVING 44 . 5 % STAKE-HOLD . ACCORDING TO THE AO THESE THREE CONDIT I ONS WOULD WARRANT TREATING THE LOAN AS DEEMED DIVIDEND U/S.2(22)(E) OF THE ACT. HENCE , AO HE L D THAT INCOME HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF SECTION 14 7 OF THE ACT . AFTER RECORD I NG REASONS, NOTICE U/S 148 WAS ISSUED ON 09.12 . 2011, WHICH WAS SERVED ON THE ASSESSEE . IN RESPONSE TO THE ABOVE NOTICE ASSESSEE FILED A REPLY STATING THAT THE RETURN OF INCOME ALR EADY FILED MAY BE TREATED AS ONE FILED IN RESPONSE TO THE NOTI CE U/S 148 . N OTICE U/S 143(2) DATED 09 . 01 . 2012 WAS ISSUED TO THE ASSESSEE . 3. 2 AO EXAMINED THE ISSUE I N DETAIL AND ASSESSEE MADE DETAILED WRITTEN SUBMISSIONS . AFTER A FEW HEARINGS, AO COMPLETED THE ASSESSMENT DETERMINING T HE INCOME AT ` 3 , 43,74 , 280/- , MAJOR PORTION OF THE INCOME BEING ADDITION AS DEEMED DIVIDEND U/S . 2(22)(E) OF THE ACT . AGGRIEVED BY THE ORDER , THE ASSESSEE WENT IN - - ITA 2719/14 5 APPEAL BEFORE THE CIT(APPEALS). 4. BEFORE THE CIT(APPEALS), THE ASSESSEE HAS RAISED THE GROUND THAT THE REASONS RECORDED FOR REO PENING OF ASSESSMENT U/S.147 OF THE ACT, WERE NOT COMMUNIC ATED TO THE ASSESSEE. THE CIT(APPEALS) OBSERVED THAT TH E LETTER OF THE ASSESSEE REQUEST I NG REASONS FOR THE RE-OPENING OF THE ASSESSMENT U/S.147 WAS NOT FOUND. THEREFORE A LETTER DATED 11 - 9-2014 WAS ISSUED TO ASSESSEE TO LEAD THE EVIDENCE THAT ASSESSEE REQUESTED FOR REASONS . ASSESSEE FILED A REPLY ON 18-9-2014 RELYING ON A LE TTER DATED 5 TH JAN 2012, WHICH WAS FILED BEFORE THE AO. ASSESSEE CLAIMED THAT THIS LETTER WAS FILED WITH TH E DEPARTMENT . HOWEVER ON THIS COPY OF THE LETTER DATED 5 TH JAN 2012, THERE IS NO ACKNOWLEDGMENT FROM THE DEPARTMENT EITHER IN THE FORM OF A DEPARTMENTAL SEA L OR SIGNATURE OF THE AO . THEREFORE, THE CIT(APPEALS) WAS NOT ABLE TO ACCEPT THE EVIDENCE THAT A COPY OF THE LETTER DATED 5 . 1 . 2012 IS FILED WITH THE DEPARTMENT DURING THE ASSESSMENT PROCEEDINGS . 4 .1. FURTHER, THE CIT(APPEALS) OBSERVED THAT NOT - - ITA 2719/14 6 ACCEPTING FOR A MOMENT THAT A LETTER A DATED 5 . 1 . 2012 WAS FILED BY THE ASSESSEE ASKING FOR THE REASONS , IT IS SEEN FROM THE ORDER SHEET NOTING DATED 22 . 11 . 2012 THAT THE REASONS WERE DISCLOSED TO THE ASSESSEE ' S AR AS TO WHY PROVISIONS OF DEEMED DIVIDEND U/S 2(22)(E) OF T HE ACT ARE NOT APPLICABLE ON THE LOAN ADVANCED BY THE COMPANY . FOR THIS, ASSESSEE FILED A DETAILED REPLY ON 17-12-2012 EXPLAINING WHY THE PROVISIONS OF DEEMED DIVIDEND U/S 2(22)(E) ARE NOT APPLICABLE . IN THIS LETTER DATED 17-12-2012, ASSESSEE DID NOT QUESTION THE VAL IDITY OF REASSESSMENT PROCEEDINGS NOR IS THERE A REFERENC E TO THE LETTER DATED 5 . 1 . 2012. 4.2. THEREFORE, A LETTER DATED 11-9-2014 WAS ISSUED TO ASSESSEE BY CIT(APPEALS), AS TO WHY THIS SHOULD NOT BE TREATED AS SUFFICIENT COMPLIANCE OF A PEX COURT'S DECISION OF GKN DRIVESHAFTS (INDIA) LTD. V. ITO (259 ITR 19) (PROVIDED THE ASSESSEE IS ABLE TO ESTABLISH THAT REASONS WERE REQUESTED) . ASSESSEE FIELD WRITTEN SUBMISSIONS DATED 18 - 9-2014 BEFORE CIT(APPEALS), WHICH IS AS UNDER : - - ITA 2719/14 7 FURTHER SHE WAS REPRESENTED BY AN ITP BEFORE THE LD . ASSESSING OFFICER , WHO DID NOT ADVISE THE AS S ESSEE ON THE CORRECT LEGAL IMPLICATIONS AND APPLICABILITY OF THE DECISION OF THE APEX COURT IN THE CASE OF GKN DR I VESHAFTS (INDIA ) LTD. ' S CASE AFTER THE HEARING ON 22-12 - 2012 . FURTHER, AS PER THE ORDER SHEET NOTE DT . 22-12- 2012, THE LD . A . O . DESIRED TO KNOW AS TO WHY THE LOAN TAKEN FROM THE COMPANY CANNOT BE TREATED AS DEEMED DIVIDEND U/S . 2(22)(E) AND THE ITP POSSIBLY THOUGHT IT FIT TO REPLY TO THE POINT RAISED AND NOTHING MORE . IT IS IN THE ABOVE CIRCUMSTANCES THAT THE ISSUE/MATTER IS NOW CONTESTED BEFORE THE ID . CIT(A) . IT IS YOUR APPELLANT'S SUBMISSION THAT IT WOULD BE RATHER UNFAIR TO SHUT THE DOOR ON THE ASSESSEE THAT THE SUPREME COURT DECISION IN GKN DRIVESHAFTS (INDIA) LTD'S CASE CANNOT BE APPLIED TO MY CASE. 4.3. ACCORDING TO THE CIT(APPEALS), ASSESSEES ATTEMPT, TO THROW THE BLAME AND RESPONSIBILITY ON T HE AR IS NOT ACCEPTABLE . AR IS REPRESENTING THE ASSESSEE . THE REASONS WERE DISCLOSED TO THE ASSESSEE ' S AR DURING HEARING AND THERE WAS NO OBJECTION AGAINST T HE REASONS DUR I NG ASSESSMENT . THIS BECOMES RELEVANT , IF AND ONLY IF , ASSESSEE IS ABLE TO ESTABLISH THAT REASONS WERE ASKED AT A LATER STAGE . 4.4. FURTHER, THE ASSESSEE CONTENDED BEFORE THE CIT(APPEALS) THAT REOPENING OF ASSESSMENT IS ONLY - - ITA 2719/14 8 BECAUSE OF CHANGE OF OPINION AND THE ISSUE DEEMED DIVIDEND U/S.2(22)(E) OF THE ACT WAS ALREADY EXAMIN ED BY THE A.O. IN ORIGINAL ASSESSMENT. THE CIT(APPEAL S) OBSERVED THAT SEC.147 MAKES IT CLEAR THAT IF THE AO HAS REASON TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT, HE MAY, SUBJECT TO THE PROVISIO NS OF SECTIONS 148 TO 153, ASSESS OR REASSESS SUCH INC OME AND ALSO ANY OTHER INCOME CHARGEABLE TO TAX WHICH W AS ESCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE IN THE COURSE OF THE PROCEEDINGS UNDER THE SAID PROVIS IONS. THE AO CAN, WHILE DOING SO, RE-COMPUTE THE LOSS OF THE DEPRECIATION ALLOWANCE OR ANY OTHER ALLOWANCE AS TH E CASE MAY BE FOR THE ASSESSMENT YEAR CONCERNED. PROVISO TO SEC.147 STIPULATES A PERIOD OF LIMITATIO N WITHIN WHICH ACTION FOR REASSESSMENT CAN BE INITIATED AND PROVIDES THAT NO ACTION U.S.147 SHALL BE TAKEN AFTE R THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR IN THE CASES WHERE AN ASSESSMENT U/S.(3) OF SEC.143 HAS BEEN MADE UNLESS ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR SUCH - - ITA 2719/14 9 ASSESSMENT YEAR BY REASON OF THE FAILURE ON THE PAR T OF THE ASSESSEE TO EITHER MAKE A RETURN U/S.139 OR TO 148 OR TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS N ECESSARY FOR HIS ASSESSMENT FOR THAT ASSESSMENT YEAR. 4. 5. THE CIT(APPEALS) OBSERVED THAT IN VIEW OF THE PROVISIONS OF SECTION 147 AND 148 TO 153, DISCU SSED ABOVE, THE TWO CRITICAL ASPECTS WHICH NEED TO BE ADDRESSED IN ANY ACTION U/S.147 ARE WHETHER THE ASSESSING OFFICER HAS 'REASON TO BELIEVE' THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT AND WHETHER THE PROPOSED REASSESSMENT IS WITHIN THE PERIOD OF LIMITATION PRESCRIBED UNDER THE PROVISO T O SECTION 147 . EXPLANATION(1) TO THE SAID PROVISION MAKES IT CLEAR THAT PRODUCTION OF ACCOUNT BOOKS OR OTHER EVIDENCE FROM WHICH THE ASSESSING OFFICER COULD WIT H DUE DILIGENCE DISCOVER MATERIAL EVIDENCE WOULD NOT NECESSARILY AMOUNT TO DISCLOSURE WITHIN THE MEANING OF THE PROVISO THAT STIPULATES AN EXTENDED PERIOD OF LIMITATION FOR ACTION IN THE CASES WHERE THE ESCAPE MENT ARISES OUT OF THE FAILURE ON THE PART OF THE ASSESS EE TO - - ITA 2719/14 10 DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSA RY FOR ASSESSMENT . EXPLANATION (2) TO SECTION 147 STIPULATES THE CIRCUMSTANCES IN WHICH INCOME CHARGEABLE TO TAX SHALL BE DEEMED TO HAVE ESCAPED ASSESSMENT . 4.6. ACCORDING TO CIT(APPEALS), ACTION U/S.147 IS PERMISSIBLE EVEN IF THE ASSESSING OFFICER GATHERED HIS REASONS TO BELIEVE FROM THE VERY SAME RECORD AS HAD BEEN THE SUBJECT-MATTER OF THE COMPLETED ASSESSMENT PROCEEDINGS . THE PROVISO TO SECTION 147 ENVISAGES ACTION IN THE ORDINARY COURSE WITHIN A PERIOD OF FO UR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. THE CONTENTION ON BEHALF OF THE ASSESSEE THAT PRODUCTION OF THE ACCOUNT BOOKS AND OTHER DOCUMENTARY EVIDENCE RELEVANT FOR ASSESSMENT BEFORE THE ASSESSING OFFICER IN THE COURSE OF ORIGINAL ASSESSMENT IMPLY A FULL AND TRUE DISCLOSURE OF ALL MATERIAL FACTS IS NOT ACCEPTABLE AND IS REJECTED OU T OF HAND IN THE LIGHT OF THE PROVISIONS OF EXPLANATION( 1), ACCORDING TO WHICH MERE PRODUCTION OF THE BOOKS OF ACCOUNT OR OTHER EVIDENCE FROM WHICH THE ASSESSING - - ITA 2719/14 11 OFFICER COULD HAVE, WITH DUE DILIGENCE, DISCOVERED WITHIN THE MEANING OF THE PROVISO. ACCORDINGLY, TH E CIT(APPEALS), CONFIRMED THE ADDITION OF ` 2,73,87,645/- MADE BY THE ASSESSING OFFICER REGARDING THE DEEMED DIVIDEND. AGAINST THIS, THE ASSESSEE IS IN APPEAL BEFORE US. 5. REGARDING THE REOPENING, THE LD. AR SUBMITTED THAT THE ASSESSEE HAS FILED A LETTER DATE D 5.1.2012 SEEKING REASONS FOR REOPENING OF THE ASSESSMENT. HOWEVER, THE AO HAS NOT FURNISHED REASONS FOR REOPENING OF THE ASSESSMENT. BEING SO, IN VIEW OF THE JUDGMENT OF THE SUPREME COURT IN THE CA SE OF GKN DRIVESHAFTS (INDIA) LTD., CITED SUPRA, THE ASSESSMENT TO BE ANNULLED. 6. ON THE OTHER HAND, THE LD. DR SUBMITTED THAT THERE IS NO COPY OF LETTER FILED BY THE ASSESSEE FO R SEEKING REASONS FOR REOPENING OF THE ASSESSMENT U/S.147 OF THE ACT. AS SUCH, HE CONTENDED THAT IT CANNOT BE SAID THAT THE ASSESSEE ASKED FOR REASONS FOR REOPENING OF THE ASSESSMENT. - - ITA 2719/14 12 7. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE MATERIAL ON RECORD. WE HAVE ALSO GONE THROUGH THE ASSESSMENT ORDER DATED 12.3.2013 PASSED UNDER SEC.143(3) READ WITH SEC. 147 OF THE ACT. THE ASSESSING OFFICER MENTIONED IN PARA 3 OF THE ASSESSMENT ORDER THAT THE ASSESSEE FILED A REPLY DA TED 5.1.2012 STATING THAT THE RETURN OF INCOME ALREADY FILED MAY BE TREATED AS ONE FILED IN RESPONSE TO THE NOTI CE U/S.148 OF THE ACT DATED 8.12.2011. SO THAT, THE ASSESSING OFFICER ACKNOWLEDGED THE RECEIPT OF THE ASSESSEES LETTER DATED 5.1.2012. FOR CLARITY, WE EXTRACT THE COPY OF THE SAID LETTER DATED 5.1.2012 AS BELOW: 5 T H J A NU A R Y , 201 2 F R O M S. P AD M A L A K S H M I , DS 0 L , VAJ R A A P A RTMENT S, 202 B YE P A S S R OA D, M A DUR A I - 625 01 6. TO THE DEPUTY COMMISSIONER OF INC O M E- T AX CIR C L E 1(1) M A DUR A I - 6 25002 S IR , SUB : PA NO . AFVPPL130L ASST YEAR 20 08 -0 9 MY OWN STATEMENT - - ITA 2719/14 13 REF : YOUR NOTIC E U / S 148 DT . 8 TH DE C 2 0 1 1 R E CD ON 9 TH DEC.2011 W ITH R E F E REN CE TO THE ABOVE I W ISH TO S U BMIT T H E F O LL O WIN G F O R YOUR KIND CO N SI D ERA TI O N . IN Y OUR NOTI CE, TH E R EASONS FOR ISSU IN G T H E N O TI CE U/S 14 8 H AVE N O T B EE N MENTIONED . H OWEVE R I A M TO I NF O RM TH AT T H E R ETURN O F IN CO M E F O R TH E SA ID ASST . Y EAR W AS FI LED BY M E ON 3 1 ST D EC 2009 (V I DE ACK 104589870311209) . THE RETURN WAS ASSE SS E D U/ S 14 3 ( 3 ) AND TH E ASSESSMENT ORDER HAS BEEN PASSED O N 20 T H D EC 2010. I A M E N C L O SING A C OP Y OF TH E ABOVE R ET U RN OF INCOME AND T H E ASSESSMEN T OR D E R F O R Y OUR KIND PERUS A L . I R EQ U EST YO U TO K I NDL Y T A K E T H E M AS M Y RES P O NS E TO TH E NOTICE AND I AWA I T YO U R INTIM AT I O N O F TH E R EASONS FOR R EO P E NING O F TH E A SSESSMENT F O R T H E ASST YEA R 20 0 8- 0 9. TH A NKIN G Y OU , YO UR S F A ITHFULL Y, SD/- S . PADMALAKSHMI EN C: AS ABOVE. 8. IT IS SEEN FROM THE ABOVE LETTER THAT IT CONTAIN S TWO PARAGRAPHS. IN FIRST PARAGRAPH, THE ASSESSEE STAT ED THAT THE REASONS FOR ISSUING NOTICE U/S.148 WERE NOT MENTION ED. FURTHER, IN THE SAID PARAGRAPH, IT WAS MENTIONED THAT THE RE TURN FILED BY THE ASSESSEE ON 31.12.2009 AND CONSEQUENTLY, THE AS SESSMENT ORDER WAS PASSED ON 20.12.2010. IN SECOND PARAGRA PH, IT WAS STATED THAT A COPY OF THE ABOVE RETURN IS ENCLOSED AND THE SAME IS TO BE CONSIDERED AS RETURN FILED IN RESPONSE TO NOTICE U/S.148 - - ITA 2719/14 14 OF THE ACT. FURTHER, IT WAS MENTIONED THAT THE ASS ESSEE IS AWAITING THE INTIMATION OF REASONS FOR REOPENING OF THE ASSESSMENT FROM THE AO. HOWEVER, THE FINDING OF T HE CIT(APPEALS) WAS THAT THE LETTER DATED 5.1.2012 WAS NOT ON ASSESSMENT RECORD. HENCE, HE WAS NOT ABLE TO ACCEP T THE CONTENTION OF THE ASSESSEES COUNSEL THAT THE ASSES SEE FILED THE LETTER DATED 5.1.2012. CONTRARY TO THIS, HE ACKNOW LEDGED THAT THE AO MENTIONED IN THE ASSESSMENT ORDER THAT VIDE LETT ER DATED 5.1.2012, THE ASSESSEE REQUESTED THE AO TO TREAT TH E RETURN OF INCOME ALREADY FILED AS RETURN FILED IN RESPONSE TO NOTICE U/S.148 OF THE ACT. HOWEVER, ACCORDING TO THE CIT(APPEALS) , THIS LETTER ALSO WAS NOT FOUND PLACED IN THE ASSESSMENT ORDER. SO, IT IS CLEAR THAT THE ASSESSEE HAS FILED THE LETTER DATED 5.1.2012. IT IS PERTINENT TO NOTE THAT, AS TO HOW THE AO MENTIONED THAT THE ASSESSEE REQUESTED TO TREAT THE ORIGINAL RETURN FIL ED AS RETURN OF INCOME FILED IN RESPONSE TO THE NOTICE U/S.148 OF T HE ACT; BUT, HE HAS NOT RECORDED THE ENTIRE FACT, WHICH WAS IN THE SAME LETTER THAT THE ASSESSEE HAS ASKED FOR THE REASONS FOR REO PENING OF THE ASSESSMENT. CONTRARY TO THIS, THE CIT(APPEALS) OBS ERVED, AS PER ORDER SHEET NOTE DATED 22.11.2012 THAT THE REASONS WERE - - ITA 2719/14 15 DISCLOSED TO THE ASSESSEES AR STATING THAT WHY THE PROVISIONS OF DEEMED DIVIDEND U/S.2(22)(E) WERE NOT APPLICABLE ON THE LOAN ADVANCED BY THE COMPANY. FOR THIS, THE ASSESSEE H AS ALSO FILED A REPLY VIDE LETTER DATED 17.12.2012 EXPLAINING AS TO WHY THE PROVISIONS OF DEEMED DIVIDEND U/S.2(22)(E) WERE NOT APPLICABLE. SINCE, THE ASSESSEE HAS NOT QUESTIONED THE VALIDITY OF RE- ASSESSMENT PROCEEDINGS, THERE IS NO REFERENCE TO TH E LETTER DATED 5.1.2012. ACCORDING TO THE AR, NEITHER THE A O INTIMATED THE REASONS FOR REOPENING OF THE ASSESSMENT NOR HE DENIED THE FILING OF LETTER DATED 5.1.2012. IN SUCH CIRCUMSTA NCES, WHEN THERE IS NO POSITIVE EVIDENCE TO STATE THAT THE ASS ESSEE HAS NOT FILED THE LETTER DATED 5.1.2012 AND THE FACT OF FIL ING OF THE SAID LETTER IS RECORDED IN THE ASSESSMENT ORDER, IT IS T O BE CONSTRUED THAT THE ASSESSEE HAS FILED THE LETTER DATED 5.1.20 12. FURTHER, VIDE ORDER SHEET NOTE DATED 22.11.2012, THE REASON S DISCLOSED TO THE ASSESSEE CANNOT BE CONSTRUED IN RESPONSE TO THE LETTER DATED 5.1.2012 AS HELD BY THE SUPREME COURT IN THE CASE OF GKN DRIVESHAFTS (INDIA) LTD. V. ITO CITED SUPRA, WH ICH IS AS UNDER: - - ITA 2719/14 16 'WE SEE NO JUSTIFIABLE REASON TO INTERFERE WITH THE ORDER UNDER CHALLENGE HOWEVER, WE CLARIFY THAT WHEN A NOT ICE UNDER SECTION 148 OF THE INCOME-TAX ACT IS ISSUED, THE PROPER COURSE OF ACTION FOR THE NOTICEE IS TO FILE A RETURN AND IF HE SO DESIRES, TO SEEK REASONS FOR ISSUING N OTICES THE ASSESSING OFFICER IS BOUND TO FURNISH REASONS W ITHIN A REASONABLE TIME. ON RECEIPT OF REASONS, THE NOTICEE IS ENTITLED TO F ILE OBJECTIONS TO ISSUANCE OF NOTICE AND THE ASSESSING OFFICER IS BOUND TO DISPOSE OF THE SAME BY PASSING A SPEAKING ORDER IN THE INSTANT CASE, AS THE REASONS HAVE BEEN DISCLOSED IN THESE PROCEEDINGS, THE ASSESSING OFFICER HAS TO DISPOSE OF THE OBJECTIONS, IF FILED, BY PASSING A SPEAKING ORDER, BEFORE PROCEEDING WITH TH E ASSESSMENT IN RESPECT OF THE ABOVE SAID FIVE ASSESS MENT YEARS' 9. FURTHER, THE MADRAS HIGH COURT IN THE CASE OF FI SHER- XOMOX SANMAR LTD. V. ACIT (271 ITR 393) OBSERVED AS UNDER: THE LAW IS WELL SETTLED BY THE AUTHORITATIVE PRONOUNCEMENT OF THE APEX COURT THAT THE ASSESSING OFFICER IS BOUND TO FURNISH REASONS TO THE ASSESSEE WITHIN A REASONABLE TIME, ENTITLING THE ASSESSEE TO FILE THE OBJECTIONS AND AS A NECESSARY COROLLARY, THE ASSESSING OFFICER HAS TO CONSIDER THOSE OBJECTIONS AND PASS A SPEAKING ORDER. IN THE ABSENCE OF THE ABOVE COMPLIANCE, THE ASSESSE E IS ENTITLED TO THE RELIEF SOUGHT FOR IN THIS APPEAL. THE SAME VIEW WAS TAKEN BY THE BOMBAY HIGH COURT IN THE CASE OF CIT V. VIDE SH SANCHAR NIGAM LTD. (340 ITR 66) AND ASSESSMENT WAS QUASHED BY OBSERVING THAT REASSESSMENT CANNOT BE UPHELD IN VIE W OF NON- - - ITA 2719/14 17 FURNISHING OF REASONS RECORDED FOR REOPENING WHEN T HERE IS SPECIFIC REQUEST FOR THE SAME. 10. ACCORDINGLY, IN OUR OPINION, THIS IS NOT A CUR ABLE MISTAKE TO RECTIFY AND THE REASSESSMENT ORDER IS AN NULLED AS VOID. SINCE, WE QUASH THE REOPENING OF THE ASSE SSMENT, AT THIS STAGE, WE REFRAIN FROM GOING INTO OTHER GRO UNDS RAISED BY THE ASSESSEE. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THURSDAY, THE 9 TH OF JULY, 2015 AT CHENNAI. SD/- SD/- ( . $ % ) ( & ' ( ) ) *+,-./01023 45067.082290.:3 ; $< /JUDICIAL MEMBER ! $<=>>2-6?06?@ABCA. &; /CHENNAI, D$ /DATED, THE 9 TH JULY, 2015. MPO* $E FGHG /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. I3 /CIT(A) 4. I /CIT 5. GJ% K /DR 6. %LM /GF.