Sh. Tarlochan Singh, Hoshiarpur V. The Income-tax Officer, Hoshiarpur

ITA 287/ASR/2015

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 2427 (ITAT-AMRITSAR)
• Duration Of Justice: 8 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 09-02-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 09-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S S KANWAL
• Keywords: Tangible material
• Section: 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH; AMRITSAR (SMC) BEFORE SH. A.D. JAIN, JUDICIAL MEMBER ITA NO.287(ASR)/2015 ASSESSMENT YEAR:2205-06 PAN: AXIPS1360G SH. TARLOCHAN SINGH VS. INCOME TAX OFFICER, S/O SH. MOHAN SINGH, HOSHIARPUR-3, MODEL TOWN, HOSHIARPUR. HOSHIARPUR. (APPELLANT) (RESPONDENT) APPELLANT BY: SH. SURINDER MAHAJAN, CA RESPONDENT BY:SH. S.S. KANWAL, DR DATE OF HEARING: 09/02/2016 DATE OF PRONOUNCEMENT: 12/02/2016 ORDER THIS IS THE ASSESSEES APPEAL FOR THE ASSESSMENT Y EAR 2005-06 AGAINST THE ORDER DATED 19.05.2015, PASSED BY THE L D. CIT(A), JALANDHAR. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF AP PEAL: 1. THAT ON THE FACTS & CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS GROSSLY ERRED IN LAW IN CONCLUDING THAT AO HAS FRAMED ASSESSMENT ON ASSUMPTION OF VALID JURISDICTION. 2. THAT GROUND NO 3 DISMISSED BY LD. CIT(A) WHEREIN THE ASSESSEE CHALLENGED THE ASSESSMENT FRAMED WITHOUT DISPOSING OF OBJECTIONS RAISED TO REOPENING THE ASS ESSMENT IS ILLEGAL AND BAD IN LAW IS OPPOSED TO FOLLOWING JUDG MENTS: A) GKN DRIVESHAFTS (INDIA ) LTD. VS. ITO & ORS, 259 ITR 19 (SC). B) GENERAL MOTORS INDIA (P) LIMITED VS. DCIT 354 IT R 224 (GUJ.) ITA NO.287(ASR)/2015 ASSESSMENT YEAR: 2005-06 2 C) ARVIND MILLS LTD. VS. ASSTT. COMMR. OF WEALTH TA X, 270 ITR 469 (GUJ.) WHEREIN IT HAS BEEN HELD THAT THE AO MUST PASS AN O RDER BY DISPOSING OF OBJECTIONS TO THE REASONS RECORDED BEF ORE PASSING ANY ASSESSMENT ORDER U/S 148 OF THE ACT. 3. THAT THE LD. CIT(A) HAS GROSSLY ERRED IN LAW IN CONFIRMING THE ADDITION OF RS.2,10,000/- BEING INCOME OF FIVE TRUC KS ALLEGED TO BE OWNED BY THE ASSESSEE. LD. CIT(A) HAS IGNORE D THE FACTS THAT ASSESSEE HAS ALREADY DECLARED INCOME OF RS.1,91,600/- BEING 5% OF GROSS RECEIPTS FROM THESE FIVE TRUCKS. ADDITION CONFIRMED IS ILLEGAL AND BAD IN LA W. 2. THE FIRST ISSUE RAISED BY THE ASSESSEE IS THAT T HE LD. CIT(A) HAS WRONGLY DISMISSED THE GROUND OF APPEAL NO.3 RAISED BY THE ASSESSEE, CHALLENGING THE ASSESSMENT FRAMED, WITHOUT DISPOSI NG OF THE OBJECTIONS RAISED BY THE ASSESSEE AGAINST THE REOPENING OF THE COMPLETED ASSESSMENT. 2. HOWEVER, THE LD. DR HAS POINTED OUT THAT THE LD. CIT(A) HAS DULY DEALT WITH AND DISPOSED OF THE AFORESAID GROUND NO. 3 RAISED BEFORE HIM BY THE ASSESSEE. ATTENTION HAS BEEN DRAWN TO PARA 5 .2 OF THE IMPUGNED ORDER, THE RELEVANT PORTION AT PAGE 27, WHEREIN, TH E LD. CIT(A) HAS OBSERVED THAT NO PREJUDICE HAS BEEN CAUSED TO THE A SSESSEE SINCE THE OBJECTIONS RAISED BY THE ASSESSEE HAD BEEN DEALT WI TH AT THE TIME OF COMPLETION OF ASSESSMENT. ATTENTION IN THIS REGARD HAS ALSO BEEN DRAWN TO THE FIRST PARAGRAPH AT PAGE 2 OF THE ASSESSMENT ORDER. 3. IN THIS REGARD, IT IS SEEN THAT THE AO DEALT WIT H THE MATTER OF THE OBJECTIONS RAISED BY THE ASSESSEE AGAINST THE REOPE NING OF THE COMPLETED ASSESSMENT, BY OBSERVING AS FOLLOWS: ITA NO.287(ASR)/2015 ASSESSMENT YEAR: 2005-06 3 I HAVE GONE THROUGH THE OBJECTIONS RAISED BY THE A SSESSEE REGARDING INITIATION OF PROCEEDINGS U/S 147/148 OF THE I.T.ACT AND FINDS THAT THESE ARE NOT CONVINCIBLE. IT IS INCORRE CT TO SAY THAT REASONS ARE NOT BASED ON FACTS OF THE CASE AND PROP ER SANCTION HAS NOT BEEN OBTAINED U/S 151 OF THE ACT. THE JCIT, HOS HIARPUR, RANGE- 1, HOSHIARPUR HAS GIVEN HIS APPROVAL ON 27.03.2013 FOR ISSUING NOTICE U/S 148 OF THE ACT. THE PROCEEDINGS ARE NOT INITIATED MERELY BASED ON PRESUMPTIONS BUT ON THE FACTS OF THE CASE WHICH WERE CONCLUDED AFTER PROPERTY ENQUIRY. I HAVE ALSO PURSU ED THE CASE LAWS RELIED UPON BY THE ASSESSEE AND FINDS THAT THE CASE OF THE ASSESSEE IS NOT COVERED BY THESE DECISIONS. IN VIEW OF THE A BOVE FATS THE OBJECTIONS RAISED BY THE ASSESSEE HAVE NO LOGIC AND THEREFORE THE SAME ARE REJECTED. 4. THE LD. CIT(A) TOOK NOTE OF THE ABOVE OBSERVATIO NS OF THE AO DEALING WITH AND REJECTING THE ASSESSEES OBJECTION S TO THE REOPENING OF HIS COMPLETED ASSESSMENT. 5. THE GRIEVANCE OF THE ASSESSEE IS THAT THE AO, UN DER THE LAW, COULD NOT HAVE DISPOSED OF THE OBJECTIONS RAISED BY THE A SSESSEE AGAINST THE REOPENING OF THE COMPLETED ASSESSMENT BY PASSING A CONSOLIDATED ASSESSMENT ORDER. IT IS THE CONTENTION OF THE LD. C OUNSEL FOR THE ASSESSEE THAT THE AO WAS OBLIGED TO FIRST DISPOSE OF THE OBJ ECTIONS RAISED BY THE ASSESSEE AGAINST THE INITIATION OF REOPENING PROCEE DINGS AND ALLOW TIME TO THE ASSESSEE TO TAKE THE DUE LEGAL COURSE, IN CASE SUCH OBJECTIONS WERE DECIDED AGAINST THE ASSESSEE AND ONLY THEREAFTER, T O PASS THE ASSESSMENT ORDER. IN THIS REGARD, RELIANCE HAS BEEN PLACED ON GENERAL MOTORS PVT. LTD. VS. ACIT, 354 ITR 242 (GUJ.). TO THIS, THE RE SPONSE OF THE DEPARTMENT HAS BEEN THAT THIS IS A MERE TECHNICALIT Y AND EFFECTIVELY THE OBJECTIONS RAISED BY THE ASSESSEE HAVE, IN FACT, BE EN DECIDED BY THE AO ITA NO.287(ASR)/2015 ASSESSMENT YEAR: 2005-06 4 AND, THEREFORE, AS RIGHTLY OBSERVED BY THE LD. CIT (A), NO PREJUDICE STANDS CAUSED TO THE ASSESSEE. 6. IN THIS REGARD, IN GENERAL MOTORS INDIA (SUPRA ), THE HONBLE GUJARAT HIGH COURT HAS, INTER-ALIA, HELD ( IN PARA 23 OF THAT JUDGMENT) THAT A WRIT PETITION UNDER ARTICLE 226 OF THE CONS TITUTION OF INDIA IS MAINTAINABLE IN AMONGST OTHER SITUATIONS, WHERE THE OBJECTION FILED U/S 148 OF THE ACT HAS BEEN DECIDED BY THE AO IN THE A SSESSMENT ORDER ITSELF; THAT THE AO IS MANDATED TO DECIDE THE OBJE CTION U/S 148 AND SUPPLY OR COMMUNICATE THE ORDER TO THE ASSESSEE; TH AT THE ASSESSEE GETS AN OPPORTUNITY TO CHALLENGE THE ORDER IN A WRIT PET ITION; THAT THEREAFTER, THE AO MAY PASS AN ASSESSMENT ORDER; THAT IT IS NO T OPEN TO THE AO TO DECIDE THE OBJECTION TO THE NOTICE ISSUED U/S 148 O F THE ACT BY A COMPOSITE ASSESSMENT ORDER; AND THAT THE AO IS REQU IRED TO FIRST DECIDE THE OBJECTION OF THE ASSESSEE FILED U/S 148 AND SER VE A COPY OF THE ORDER ON THE ASSESSEE AND AFTER GIVING SOME REASONABLE TI ME TO THE ASSESSEE FOR CHALLENGING THE ORDER, IT IS OPEN TO HIM TO PASS AN ASSESSMENT ORDER. THE HONBLE HIGH COURT QUASHED THE ORDER ON THE OBJECT ION TO THE NOTICE U/S 148 OF THE ACT AND THE ASSESSMENT ORDER PASSED IN PURSUANCE OF THIS, AS THIS WAS NOT DONE BY THE AO IN THAT CASE. IT WOULD BE APPROPRIATE TO REPRODUCE THE EXACT OBSERVATIONS OF THE HONBLE HIG H COURT AS UNDER: 23. FROM THE AFORESAID DISCUSSION, WE ARE OF THE C ONSIDERED OPINION THAT WRIT PETITION UNDER ARTICLE 226 OF TH E CONSTITUTION OF INDIA IS MAINTAINABLE WHERE NO ORDER HAS BEEN PASS ED BY THE AO DECIDING THE OBJECTION FILED BY THE ASSESSEE U/S 1 48 OF THE ACT AND ASSESSMENT ORDER HAS BEEN PASSED OR THE ORDER DECID ING AN OBJECTION U/S 148 OF THE ACT HAS NOT BEEN COMMUNICA TED TO THE ITA NO.287(ASR)/2015 ASSESSMENT YEAR: 2005-06 5 ASSESSEE AND ASSESSMENT ORDER HAS BEEN PASSED OR TH E OBJECTION FILED U/S 148 HAS BEEN REJECTED WITHOUT THERE BEING ANY TANGIBLE MATERIAL AVAILABLE WITH THE AO TO FORM AN OPINION T HAT THERE IS ESCAPEMENT OF INCOME FROM ASSESSMENT AND IN ABSENCE OF REASONS HAVING DIRECT LINK WITH THE FORMATION OF THE BELIE F, THE WRIT COURT UNDER ARTICLE 226 CAN QUASH THE NOTICE ISSUED U/S 1 48 OF THE ACT. THE WRIT PETITION FILED BY THE PETITIONER IS MAINT AINABLE. THE AO IS MANDATED TO DECIDE THE OBJECTION TO THE NOTICE U/S 148 AND SUPPLY OR COMMUNICATE IT TO THE ASSESSEE. THE ASSESSEE GET S AN OPPORTUNITY TO CHALLENGE THE ORDER IN A WRIT PETITION. THEREAFT ER, THE AO MAY PASS THE REASSESSMENT ORDER. WE HOLD THAT IT WAS NOT OPE N TO THE AO TO DECIDE THE OBJECTION TO NOTICE U/S 148 BY A COMPOSI TE ASSESSMENT ORDER. THE AO WAS REQUIRED TO, FIRST DECIDE THE OBJ ECTION OF THE ASSESSEE FILED U/S 148 AND SERVE A COPY OF THE ORDE R ON ASSESSEE. AND AFTER GIVING SOME REASONABLE TIME TO THE ASSES SEE FOR CHALLENGING HIS ORDER, IT WAS OPEN TO HIM TO PASS AN ASSESSMENT ORDER. THIS WAS NOT DONE BY THE AO, THEREFORE, THE ORDER ON THE OBJECTION TO THE NOTICE U/S 148 AND THE ASSESSMENT ORDER PASSED UNDER THE ACT DESERVES TO BE QUASHED. 7. THEREFORE, AS EVIDENT FROM THE OBSERVATIONS OF THEIR LORDSHIPS IN GENERAL MOTORS INDIA PVT. LTD. (SUPRA), THE OBLI GATION TO DECIDE THE OBJECTION RAISED BY AN ASSESSEE AGAINST A NOTICE IS SUED U/S 148 OF THE ACT, FIRST, I.E., PRIOR TO AD SEPARATE FROM THE AS SESSMENT ORDER, IS NOT A MERE TECHNICALITY, AS IS TRIED TO BE MADE OUT BY TH E DEPARTMENT. IT IS A BINDING MANDATE AND IN THE PRESENT CASE TOO, THIS M ANDATE HAS NOT BEEN FOLLOWED. NO DECISION CONTRARY TO GENERAL MOTORS INDIA PVT. LTD. (SUPRA) HAS BEEN CITED BEFORE US BY THE DEPARTMENT. 8. HENCE, RESPECTFULLY FOLLOWING GENERAL MOTORS IN DIA PVT. LTD. (SUPRA), IT IS HELD THAT THE LD. CIT(A) ERRED IN O BSERVING THAT NO PREJUDICE WAS CAUSED TO THE ASSESSEE, SINCE THE OBJECTIONS RA ISED BY THE ASSESSEE AGAINST THE NOTICE ISSUED U/S 148 OF THE ACT HAD BE EN DEALT WITH BY THE AO AT THE TIME OF COMPLETION OF ASSESSMENT. IN KEEP ING WITH THE LAW LAID ITA NO.287(ASR)/2015 ASSESSMENT YEAR: 2005-06 6 DOWN IN GENERAL MOTORS INDIA PVT. LTD (SUPRA), IT IS HELD THAT THE AO OUGHT TO HAVE FIRST SEPARATELY DECIDED THE OBJECTIO NS RAISED BY THE ASSESSEE AGAINST THE NOTICE U/S 148 OF THE ACT. ON SUCH DECISION, THE ASSESSEE SHOULD HAVE BEEN PROVIDED SOME REASONABLE TIME TO PURSUE THE LEGAL REMEDY AVAILABLE TO HIM, IN CASE SUCH OBJECTI ONS WERE DECIDED AGAINST THE ASSESSEE AND THE AO SHOULD ONLY THEREAF TER HAVE PASSED THE ASSESSMENT ORDER. THIS WAS NOT DONE BY THE AO AND T HEREFORE, IN ACCORDANCE WITH GENERAL MOTORS INDIA PVT. LTD. (SU PRA), THE ORDER ON THE OBJECTIONS RAISED BY THE ASSESSEE TO THE NOTICE U/S 148 OF THE ACT AND THE ASSESSMENT ORDER PASSED ARE QUASHED. 9. IN THE RESULT, THE APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 12/02/201 6 SD/- (A.D. JAIN) JUDICIAL MEMBER DATED: 12/02/2016 /SKR/ COPY OF ORDER FORWARDED TO: 1. THE ASSESSEE: SH. TARLOCHAN SINGH, HOSHIARPUR. 2. THE ITO, HOSHIARPUR-1. 3. THE CIT(A), JLR 4. THE CIT, JLR 5. THE SR. DR, ITAT, ASR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH: AMRITSAR.