M/s. Mithila Credit Services Ltd., New Delhi V. ITO, New Delhi

ITA 2881/DEL/2014

• Counselvise Citation: 288120114 RSA 2014
• Duration Of Justice: 1 year(s) 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-11-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 2
• Next Hearing Date: 09-11-2015
• Assessment Year: 2001-2002
• Appeal Filed On: 09-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P DAM KANUJNA
• Keywords: Reopening of assessment; Tangible material
• Section: 147; 68; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH SMC-2, NEW DELHI) BEFORE SHRI P. K. BANSAL, ACCOUNTANT MEMBER I.T.A. NO.2881 /DEL/2014 ASSESSMENT YEAR : 2001-02 M/S. MITHILA CREDIT SERVICES LTD., VS. ITO, WARD 6 (4), D-28, SOUTH EXTENSION, PART I, NEW DELHI NEW DELHI-110 049 GIR / PAN:AAACM5532G (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI RAKESH GUPTA, CA SHRI TARUN KUMAR, ADV. RESPONDENT BY : SHRI P DAM KANUJNA, SR. DR DATE OF HEARING : 09.11.2015 DATE OF PRONOUNCEMENT : 09.11.2015 ORDER THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE O RDER OF LD. CIT(A) IX, NEW DELHI DATED 31.03.2014 FOR THE ASSESSMENT YEAR 2001-02 BY TAKING THE FOLLOWING EFFECTIVE GROUNDS OF APPEAL: 1. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANC ES OF THE CASE, LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRM ING THE ACTION OF LD. AO IN FRAMING IMPUGNED ASSESSMENT ORDER WITHOUT COMPLYING THE MANDATORY CONDITIONS OF SECTION 147 TO 151 AND REOP ENING OF THE CASE AND FRAMING THE IMPUGNED ASSESSMENT ORDER IS BAD IN LAW, BARRED BY LIMITATION ARID BEYOND THE JURISDICTION OF THE AO A ND MORE SO AS THE REASONS RECORDED ARE INVALID IN THE EYES OF LAW AND THERE IS NO VALID SATISFACTION AS PER LAW U/S 151 OF INCOME TAX, 1961 . 2. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCE S OF THE CASE, LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRM ING THE ACTION OF LD. AO IN MAKING ADDITION OF RS.3,30,000/- ON ACCOU NT OF SHARE ITA NO.2881/DEL/2014 2 CAPITAL BY TREATING IT AS ALLEGED UNEXPLAINED CREDI T U/S 68 OF I. T. ACT, 1961. 3. THAT IN ANY CASE AND IN ANY VIEW OF THE MATTER, ACTION OF LD. CIT(A) IN CONFIRMING THE ACTION OF LD. AO IN MAKING THE IMPUGNED ADDITION AND FRAMING THE IMPUGNED ASSESSMENT ORDER IS CONTRARY TO LAW AND FACTS, VOID AB INITIO, BEYOND JURISDICTION, AND WITHOUT GIVING ADEQUATE OPPORTUNITY OF HEARING, BY RECORDING INCOR RECT FACTS AND FINDINGS AND THE SAME IS NOT SUSTAINABLE ON VARIOUS LEGAL AND FACTUAL GROUNDS.' 2. GROUNDS NO.1 AND 3 RELATE TO VALIDITY OF ASSESSM ENT PASSED AFTER REOPENING U/S 147 OF THE ACT. 2. I HAVE HEARD RIVAL SUBMISSIONS AND CAREFULLY CON SIDERED THE SAME. LD. A.R. BEFORE ME, DRAWN ATTENTION TO PAGE 21 OF THE P APER BOOK AND CONTENDED ON THAT BASIS THAT THE ASSESSEE HAS OBJECTED BY THI S LETTER FOR THE REOPENING OF ASSESSMENT AND ALSO THE FACT THAT THE REASONS ARE B ONA FIDE BUT THE A.O. DID NOT DISPOSE OF THE OBJECTIONS FILED BY THE ASSESSEE . SINCE, THE A.O. DID NOT DISPOSE OF THE OBJECTIONS OF THE ASSESSEE, THEREFOR E, THE ASSESSMENT HAS TO BE QUASHED. RELIANCE WAS PLACED ON THE DECISION OF CO ORDINATE BENCH OF ITAT IN I.T.A. NO. 3061/DEL/2012 IN THE CASE OF SURESH C HANDRA VS ITO IN WHICH THE TRIBUNAL VIDE ORDER DATED 13.03.2015 TOOK THE V IEW THAT THE ASSESSMENT ORDER PASSED BY THE DEPARTMENT ONOBJECTIONS FILED B Y THE ASSESSEE TO BE VOID BY HOLDING AS UNDER: 7. HAVING GONE THROUGH THE ABOVE CITED DECISIONS R EGARDING THE MANNER IN WHICH THE ASSESSING OFFICER IS TO DISPOSE OF THE OBJECTIONS RAISED AGAINST THE JURISDICTION OF THE ASSESSING OF FICER FOR ISSUANCE OF NOTICE UNDER SEC. 148 6 OF THE ACT, WE FIND THAT TH E RATIOS LAID DOWN IN THIS REGARD BY THE HON'BLE SUPREME COURT IN THE CAS E OF G.K.N. DRIVE SHAFT (INDIA) LTD. VS. ITO (SUPRA) ALONG WITH OTHER DECISIONS HAVE BEEN DISCUSSED BY THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF GENERAL MOTORS INDIA (P) LTD. VS. DCIT (SUPRA) AND THE HON'BLE HIGH COURT AFTER DETAILED DELIBERATION HAS COME TO THE F OLLOWING ITA NO.2881/DEL/2014 3 CONCLUSIONS: 23. FROM THE AFORESAID DECISION, WE A RE OF THE CONSIDERED OPINION THAT WRIT PETITION UNDER ARTICLE 226 OF THE CONSTITUTION OF INDIA IS MAINTAINABLE WHERE NO ORDE R HAS BEEN PASSED BY THE ASSESSING OFFICER DECIDING OBJECTION FILED B Y THE ASSESSEE UNDER SEC. 148 OF THE ACT AND ASSESSMENT ORDER HAS BEEN P ASSED OR THE ORDER DECIDING AN OBJECTION UNDER SEC. 148 OF THE ACT HAS NOT BEEN COMMUNICATED TO THE ASSESSEE AND ASSESSMENT ORDER H AS BEEN PASSED OR THE OBJECTION FILED UNDER SEC. 148 HAS BEEN DECI DED ALONG WITH THE ASSESSMENT ORDER. IF THE OBJECTION UNDER SEC. 148 H AS BEEN REJECTED WITHOUT THERE BEING ANY TANGIBLE MATERIAL AVAILABLE WITH THE ASSESSING OFFICER TO FORM AN OPINION THAT THERE IS ESCAPEMENT OF INCOME FROM ASSESSMENT AND IN ABSENCE OF REASONS HAVING DIRECT LINK WITH THE FORMATION OF THE BELIEF, THE WRIT PETITION FILED BY THE PETITIONER IS MAINTAINABLE. THE ASSESSING OFFICER IS MANDATED TO DECIDE THE OBJECTION TO THE NOTICE UNDER SEC. 148 AND SUPPLY O R COMMUNICATE IT TO THE ASSESSEE. THE ASSESSEE GETS AN OPPORTUNITY TO C HALLENGE THE ORDER IN A WRIT PETITION. THEREAFTER THE ASSESSING OFFICE R MAY PASS THE REASSESSMENT ORDER. WE HOLD THAT IT WAS NOT OPEN TO THE ASSESSING OFFICER TO DECIDE THE OBJECTION TO NOTICE 7 UNDER S EC. 148 BY A COMPOSITE ASSESSMENT ORDER. THE ASSESSING OFFICER W AS REQUIRED TO, FIRST DECIDE THE OBJECTION OF THE ASSESSEE FILED UN DER SEC. 148 AND SERVE A COPY OF THE ORDER ON ASSESSEE. AND AFTER GI VING SOME REASONABLE TIME TO THE ASSESSEE FOR CHALLENGING HIS ORDER, IT WAS OPEN TO HIM TO PASS AN ASSESSMENT ORDER. THIS WAS NOT DO NE BY THE ASSESSING OFFICER, THEREFORE, THE ORDER ON THE OBJE CTION TO THE NOTICE UNDER SEC. 148 AND THE ASSESSMENT ORDER PASSED UNDE R THE ACT DESERVES TO BE QUASHED. 8. IN VIEW OF THE ABOVE DE CISIONS, WE FIND THAT THE ASSESSING OFFICER IS MANDATED TO DECIDE TH E OBJECTION TO THE NOTICE UNDER SEC. 148 OF THE ACT AND SUPPLY OR COMM UNICATE IT TO THE ASSESSEE. THEREAFTER, THE ASSESSEE GETS AN OPPORTUN ITY TO CHALLENGE THE ORDER IN A WRIT PETITION. THEREAFTER, THE ASSESSING OFFICER MAY PASS THE REASSESSMENT ORDER. IT IS NOT OPEN TO THE ASSESSING OFFICER TO DECIDE THE OBJECTION RAISED AGAINST NOTICE UNDER SEC. 148 BY A COMPOSITE ASSESSMENT ORDER. THUS, THE ASSESSING OFFICER WAS R EQUIRED TO FIRST DECIDE THE OBJECTION OF THE ASSESSEE FILED UNDER SE C. 148 AND SERVE A COPY OF THE ORDER ON ASSESSEE. AND AFTER GIVING SOM E REASONABLE TIME TO THE ASSESSEE FOR CHALLENGING HIS ORDER, IT IS OP EN TO HIM TO PASS AN ASSESSMENT ORDER. SINCE SUCH COMPLIANCE HAS NOT BEE N MADE BY THE ASSESSING OFFICER IN THE PRESENT CASE, WE HOLD THE IMPUGNED ITA NO.2881/DEL/2014 4 ASSESSMENT ORDER DATED 03.10.2008 AS NOT VALID AND THE SAME IS HELD AS VOID AB INITIO. 3. I ALSO NOTED THAT THE HON'BLE JURISDICTIONAL HIG H COURT IN I.T.A. NO. 415/2015 VIDE ORDER DATED 10.08.2015 UNDER PARA 6 H ELD AS UNDER: 6. THE COURT IS OF THE CONSIDERED VIE THAT AFTER H AVING CORRECTLY UNDERSTOOD THE DECISION OF THE SUPREME COURT IN G.K .N. DRIVE SHAFTS (INDI) LTD. (SUPRA) AS MANDATORILY REQUIRING THE A. O. TO COMPLY WITH THE PROCEDURE LAID DOWN THEREIN AND TO DISPOSE OF T HE OBJECTIONS TO THE REOPENING ORDER WITH A SPEAKING ORDER, THE CIT(A) C OMMITT4ED AN ERROR IN NOT QUASHING THE REOPENING ORDER AND THE C ONSEQUENT ASSESSMENT. 4. LD. D.R. EVEN THOUGH VEHEMENTLY CONTENDED BEFORE ME THAT THAT BECAUSE, THE A.O. FAILED TO DISPOSE OF THE OBJECTIO NS, ASSESSMENT SHOULD BE RESTORED TO THE FILE OF A.O. SO THAT HE CAN DISPOSE OF THE OBJECTIONS BUT COULD NOT BROUGHT TO MY KNOWLEDGE ANY CONTRARY JUDGEMENT. 5. IN VIEW OF THIS FACT, I DO NOT HAVE ANY OTHER AL TERNATIVE EXCEPT TO FOLLOW THE DECISION OF COORDINATE BENCH OF ITAT AND THAT OF HONBLE JURISDICTIONAL HIGH COURT (SUPRA) AND ACCORDINGLY Q UASH THE REASSESSMENT. 6. SINCE, I HAVE QUASHED THE ASSESSMENT ITSELF IN PREVIOUS PARAGRAPH AND THE OTHER GROUNDS TAKEN BY THE ASSESSEE DOES NOT RE QUIRE ANY ADJUDICATION. 7. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS A LLOWED. 8. ORDER PRONOUNCED IN THE OPEN COURT ON 09 TH NOV., 2015. SD./- (P. K. BANSAL) ACCOUNTANT MEMBER DATE: 09 TH NOV., 2015 SP ITA NO.2881/DEL/2014 5 COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DEL HI. TRUE COPY. BY ORDER (ITAT, NEW DELHI). S.NO. DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 9/11 SR. PS/PS 2 DRAFT PLACED BEFORE AUTHOR 9/11 SR. PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/AM 5 APPROVED DRAFT COMES TO THE SR. PS/PS SR. PS/PS 6 KEPT FOR PRONOUNCEMENT SR. PS/PS 7 FILE SENT TO BENCH CLERK SR. PS/PS 8 DATE ON WHICH THE FILE GOES TO HEAD CLERK 9 DATE ON WHICH FILE GOES TO A.R. 10 DATE OF DISPATCH OF ORDER