M/s Libra Automobiles Ltd., Jalandhar V. Dy Commissioner of Income Tax, Jalandhar

ITA 3/ASR/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 3285 (ITAT-AMRITSAR)
• Duration Of Justice: 2 year(s) 3 month(s) 18 day(s)
• Appeal Type: Income Tax (International Taxation) Appeal
• Pronouncement Date: 20-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 20-06-2018
• Assessment Year: 2009-2010
• Appeal Filed On: 02-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S S NEGI LD
• Assessee Lawyers: GUNJEET SINGH SYAL LD
• Keywords: Principle of natural justice; Set aside
• Section: 143(3); 142(1); 234B; 147; 68; 148; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIB UNAL AMRITSAR BENCH, AMRITSAR BEFORE SH. SANJAY ARORA, ACCOUNTANT MEMBER AND SH. N.K.CHOUDHRY, JUDICIAL MEMBER ITA NO.03(ASR)/2017 ASSESSMENT YEAR:2009-1 0 LIBRA AUTOMOBILES LTD. 1031 GOPAL NAGAR, PATEL CHOWK, JALANDHAR PAN:AABCL0500E VS. DY. CIT, IV JALANDHAR (APPELLANT) (RESPONDENT) APPELLANT BY: SH. GUNJEET SINGH SYAL (LD. ADV.) RESPONDENT BY: SH. S. S. NEGI (LD. DR) DATE OF HEARING: 20.06.2018 DATE OF PRONOUNCEMENT: 29.06.2018 ORDER PER N.K.CHOUDHRY, JM: THE INSTANT APPEAL HAS BEEN PREFERRED BY THE ASSESSEE/APPELLANT, ON FEELING AGGRIEVED AGAINST THE ORD ER DATED 22.11.2016 PASSED BY THE LD. CIT(A)-2, JALANDHAR U/S 2 50(6) OF THE I.T. ACT, 1961 (HEREINAFTER CALLED AS THE ACT). 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL. 1. THAT ON THE FACT & CIRCUMSTANCES OF THE CASE, T HE LEARNED CIT (A)-2, .JALANDHAR HAS ERRED IN UPHOLDING THE ORDER OF LD. AO AS THE PROCEEDINGS INITIATED BY THE LEARNED A.0 ARE BAD IN LAW & WITHOUT ANY JUSTIFICATION &/OR IN EXCESS OF JURISDICTION & CONSEQUENTLY RE- ASSESSMENT ORDER PASSED BY HIM SHOULD BE QUASHED & ANNULLED. 2. THAT ON FACT OF CIRCUMSTANCES OF THE CASE, TH E PROCEEDINGS INITIATED U/S 147 ARE LIABLE TO BE QUASHED WHERE TH ERE WAS NO FRESH ITA NO.03/ASR/2017 (A.Y.2009-10) LIBRA AUTOMOBILES LTD. VS. CIT-IV, JALANDHAR 2 MARTIAL AVAILABLE WITH A.O. & THE ASSESSMENT HAS BE EN COMPLETED ORIGINALLY U/S 143(3). 3. THAT MECHANICAL APPROVAL FOR REOPENING HAS B EEN GRANTED BY HIGHER AUTHORITY WITHOUT JUDICIOUS APPLICATION OF M IND. 4. THAT NO ADDITION U/S 68 OF RS.2,97,50,000/- ACCOUNTS OF SHARE CAPITAL, SHARE APPLICATION, SHARE PREMIUM CAN BE MA DE AS NO MONEY WORTH THE NAME WAS RECEIVED DURING THE YEAR U NDER REFERENCE AS HELD BY LEARNED CIT(A) AT PARAGRAPH 5. 14 OF HIS ORDER. 5. THAT DOCUMENT RECEIVED FROM THE OFFICE OF REGI STRAR OF THE COMPANIES, PUNJAB & HARYANA WERE NEVER CONFRONTED T O THE COMPANY OR ITS AUTHORIZED REPRESENTATIVES. 6. THAT THERE HAS BEEN GROSS VIOLATION OF PRINCIP LES OF NATURAL JUSTICE. 7. THAT THE ORDER OF LEARNED CIT (A) -2, JALAND HAR IS AGAINST LAW & FACTS OF THE CASE. 8. THAT INTEREST U/S 234A, 234B & 234C HAS WRON GLY BEEN CHARGED. 9. ANY OTHER GROUND PRESSED AT THE TIME OF HEA RING. 3. THE BRIEF FACTS OF THE CASE ARE THAT IN THE INSTANT CASE, THE INCOME OF THE ASSESSEE WAS ASSESSED FOR THE RELEVANT YEAR U NDER CONSIDERATION U/S 143(3) OF THE ACT ON 24.11.2011. TH EREAFTER, THE NOTICE U/S 148 WAS ISSUED ON RECEIVING THE INFORMATIO N FROM THE DIRECTOR OF INCOME TAX, (ICI), CHANDIGARH, THEREA FTER, THE RE-ASSESSMENT HAS BEEN STARTED U/S 147 OF THE ACT AND NOTI CE DATED 04.06.2014 U/S 142(1) WAS ISSUED ALONG WITH REASON S FOR REOPENING FOR APPEARANCE ON 19 TH JUNE, 2014, WHICH REMAINED UNCOMPLIED WITH. AGAIN NOTICE U/S 142(1) DATED 03.03. 2015 WAS ISSUED FOR EXPLAINING THE POINTS WITH EVIDENCE AS STATED BELOW. ITA NO.03/ASR/2017 (A.Y.2009-10) LIBRA AUTOMOBILES LTD. VS. CIT-IV, JALANDHAR 3 I) DETAIL OF SHARE APPLICATION MONEY RECEIVED OF RS.375000/- ALONG WITH THE MODE OF PAYMENT. II) DETAIL OF SHARE PREMIUM OF RS.26250000/- AND J USTIFICATION FOR ISSUE OF SHARE AT A PREMIUM OF RS.700/- PER SHA RE. III) COPY OF RETURN FILED WITH THE OFFICE OF REGI STRAR OF COMPANIES AT CHANDIGARH FOR ISSUING OF SHARES AT A PREMIUM OF RS.700/- PER SHARE. IV) COPY OF BALANCE SHEET, PROFIT & LOSS A/C ALONG WITH AUDIT REPORT INCLUDING ALL SCHEDULES AND COMPUTATION OF A SSESSABLE INCOME FOR THE A.Y.2009-10. V) COPIES/STATEMENTS OF BANK ACCOUNTS BEING MAINTA INED BY THE CO. FOR THE PERIOD UNDER CONSIDERATION. THE LD. AR OF THE ASSESSEE ATTENDED THE ASSESSMENT PROCEEDING ON 27 TH MARCH, 2015 AND FILED WRITTEN SUBMISSIONS OBJECTING THE PROCEEDING. HOWEVER, IT IS ADMITTED FACT T HAT THE ASSESSING OFFICER WITHOUT DISPOSING OF THE OBJECTIONS OF TH E ASSESSEE PROCEEDED WITH THE ASSESSMENT PROCEEDING, AND FINALL Y ADDED RS.2,97,50,000/- IN THE INCOME OF THE ASSESSEE. THE RE- ASSESSMENT ORDER WAS CHALLENGED BEFORE THE LD. CIT(A) BY RAISING TEN GROUNDS. BY GROUND NO.1 RAISED BEFORE THE LD. CIT(A), IT WAS EMPHASIZED WITH THE PROCEEDINGS INITIATE D BY THE LD. AO ARE BAD IN LAW AND WITHOUT ANY JUSTIFICATION A ND/OR IN EXCESS OF JURISDICTION AND CONSEQUENTLY REASSESSMENT ORDER PASSED BY HIM U/S 147 SHOULD BE QUASHED AND ANNULLED. HOWEVER, THE LD. CIT(A) UPHOLD THE ASSESSMENT ORDER PASS ED BY THE ASSESSING OFFICER WITHOUT MEETING OUT THE GROUND NO .1 SPECIFICALLY. THEREFORE, THE ASSESSEE IS IN APPEAL BEFORE U S. ITA NO.03/ASR/2017 (A.Y.2009-10) LIBRA AUTOMOBILES LTD. VS. CIT-IV, JALANDHAR 4 4. AT THE OUTSET, THE LEARNED COUNSEL FOR THE APPELLANT SH. GUNGEET SINGH SYAL, LD. ADVOCATE SUBMITTED THAT THE R E- ASSESSMENT PROCEEDINGS HAVE BEEN STARTED BY THE ASSESSING OFFICER BY ISSUING A RELEVANT NOTICES ACCORDING TO THE A CT AND THE ASSESSEE SPECIFICALLY FILED WRITTEN SUBMISSION VIDE LETTER DA TED 25 TH MARCH, 2015 OBJECTING TO THE PROCEEDINGS, WHICH WAS NE VER BEEN DISPOSED OF BY THE ASSESSING OFFICER AND EVEN OTHERWI SE THE LD. CIT(A) ALSO FAILED TO PASS A REASONED ORDER ON THIS PARTICULAR ASPECT. THEREFORE, IN VIEW OF THE JUDGMENT RENDERED IN THE CASE OF GKN DRIVESHAFTS (INDIA) LTD. VS. DCIT [2003] 259 ITR 19 (SC ), THE APPROPRIATE DIRECTIONS ARE REQUIRED TO BE PASSED IN DISPOSING THE SAID OBJECTIONS OF THE ASSESSEE. 5. ON THE OTHER HAND, THE LD. DR RELIED UPON THE ORDE R PASSED BY THE AUTHORITIES BELOW AS WELL AS THE JUDGMENT RENDERED BY THE APEX COURT IN THE CASE OF M/S HOME FIN DERS HOUSING LTD. VERSUS INCOME TAX OFFICER CORPORATE WARD 2 (3) { SPECIAL LEAVE TO APPEAL (C) NO(S). 12721/2018, DECI DED ON 18- 05-2018} [94 TAXMAN.COM 84 (SC)]. AND SUBMITTED THAT NON- COMPLIANCE OF DIRECTION OF SUPREME COURT IN GKN DRIVESH AFTS (INDIA) LTD. V. ITO [2002] 125 TAXMAN 963, TO THE EFFECT THAT ON RECEIPT OF OBJECTION GIVEN BY ASSESSEE TO NOTICE UNDER SECTION 148, ASSESSING OFFICER IS BOUND TO DISPOSE OFF THE OBJECTIO NS BY PASSING A SPEAKING ORDER, WOULD NOT MAKE REASSESSMENT ORDE R VOID AB INITIO. ITA NO.03/ASR/2017 (A.Y.2009-10) LIBRA AUTOMOBILES LTD. VS. CIT-IV, JALANDHAR 5 6. HAVING HEARD THE RIVAL SUBMISSIONS OF THE PARTIES A ND GONE THROUGH THE MATERIAL AVAILABLE ON RECORD, WE REALIZ ED THAT THE ASSESSEE VIDE LETTER DATED 25 TH MARCH, 2015 SPECIFICALLY RAISED THE OBJECTIONS QUA INITIATIONS OF THE PROCEEDINGS U/S 147 OF THE ACT. AS IT IS CLEARLY REFLECTS FROM THE ORDER PASSED BY THE ASSESSING OFFICER AS WELL AS THE LD. CIT(A) THAT THE SAID OBJECTIONS WERE NEITHER ADDRESSED BY THE ASSESSING OFFICER NOR ADJUDICATED BY THE LD. CIT(A). FOR THE SAKE OF CONVENI ENCE AND BREVITY SUBMISSIONS MADE QUA NON-DISPOSAL OF OBJECTIONS AS REFLECTS IN TOP PARA OF PAGE NO.28 OF THE ORDER OF LD . CIT(A) ,ARE REPRODUCED HEREIN BELOW FOR THE SAKE OF CONVENIENCE A ND BREVITY. NON DISPOSAL OF OBJECTIONS BY THE AO. THE ASSESSEE HAD FILED LETTER DATED 25.03.2015 WHEREIN IT HAD RAISED CERTAIN OBJE CTIONS TO THE REASONS RECORDED BY THE AO (PAGE 18 OF PAPER BOOK). THE AO WITHOUT DISPOSING THE SAID OBJECTIONS PROCEEDED TO FRAME THE IMPUGNED ASSESSMENT. THE COURTS HAVE CONSISTENTLY H ELD THAT THE PRECONDITION IS JURISDICTION CONFERRING ON THE AO T O REOPEN THE ASSESSMENT AND THEIR NON FULFILLMENT RENDERS THE IN ITIATION ITSELF AB- INITIO VOID. WHERE SUCH ACTION OF EXECUTIVE AUTHORI TY ACTING WITHOUT JURISDICTION SUBJECTS OR IS LIKELY TO SUBJECT A PER SON TO LENGTHY PROCEEDINGS AND UNNECESSARY HARASSMENT, COURTS, ISS UE APPROPRIATE ORDERS OR DIRECTIONS TO PREVENT SUCH CO NSEQUENCES. THE COURTS HAVE CONSISTENTLY WARNED THE DEPARTMENT NOT TO HARASS TAXPAYERS BY REOPENING ASSESSMENTS IN A MECHANICAL AND CASUAL MANNER. THE AOS ARE REPEATEDLY DIRECTE TO STRICTLY COMPLY WITH THE LAW LAID DOWN IN GKN DRIVESHAFTS (INDIA) LTD. VS. D CIT (2003) 259 ITR 19 (SC) AS REGARDS DISPOSAL OF OBJECTIONS TO RE OPENING ASSESSMENT. THE ORDER PASSED BY THE AO IS IN CONTRA VENTION OF THE ORDER OF THE APEX COURT AS THE OBJECTIONS OF THE AS SESSEE WERE NOT DISPOSED-OFF BY PASSING A SPEAKING ORDER. ITA NO.03/ASR/2017 (A.Y.2009-10) LIBRA AUTOMOBILES LTD. VS. CIT-IV, JALANDHAR 6 6.1 THE PROCEDURE TO BE FOLLOWED WHEN A NOTICE UNDER SECT ION 148 OF THE SAID ACT IS ISSUED HAS BEEN SETTLED BY THE DECI SION OF THE SUPREME COURT IN THE CASE OF GKN DRIVESHAFTS (INDIA ) LTD V. INCOME-TAX OFFICER AND ORS. (2003) 259 ITR 19 IN THE F OLLOWING WORDS:- WE SEE NO JUSTIFIABLE REASON TO INTERFERE WITH THE ORDER UNDER CHALLENGE. HOWEVER, WE CLARIFY THAT WHEN A NO TICE UNDER SECTION 148 OF THE INCOME-TAX ACT IS ISSUED, THE PROPER COURSE OF ACTION FOR THE NOTICEE IS TO FILE A RETUR N AND IF HE SO DESIRES, TO SEEK REASONS FOR ISSUING NOTICES. THE A SSESSING OFFICER IS BOUND TO FURNISH REASONS WITHIN A REASON ABLE 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 O F THE OBJECTIONS, IF FILED, BY PASSING A SPEAKING ORDER, BEFORE PROCEEDING WITH THE ASSESSMENT IN RESPECT OF THE AB OVE SAID FIVE ASSESSMENT YEARS. ACCORDING TO MANDATE OF THE APEX COURT IN THE AFORESA ID CASE, THE NOTICEE ON RECEIPTS OF REASONS RECORDED BY THE ASSESSING OFFICER U/S 147 OF THE ACT, IS ENTITLED TO FILE OBJECTION(S) TO ISSUANCE OF NOTICE AND FILED, IF ANY, T HEN THE ASSESSING OFFICER IS BOUND TO DISPOSE OFF THE SAME BY PASSING A ITA NO.03/ASR/2017 (A.Y.2009-10) LIBRA AUTOMOBILES LTD. VS. CIT-IV, JALANDHAR 7 SPEAKING ORDER BEFORE PROCEEDING WITH THE ASSESSMENT PROCEEDINGS. WE ARE IN AGREEMENT WITH THE ARGUMENT OF THE LD. DR QUA NON-COMPLIANCE OF DIRECTION OF SUPREME COURT IN GKN DRIVESHAFTS (INDIA) LTD. V. ITO [2002] 125 TAXMAN 963 , TO THE EFFECT THAT ON RECEIPT OF OBJECTION GIVEN BY ASSESSEE TO N OTICE UNDER SECTION 148, ASSESSING OFFICER IS BOUND TO DISPOSE OFF THE OBJECTIONS BY PASSING A SPEAKING ORDER, WOULD NOT MAKE REASSESSMENT ORDER VOID AB INITIO IN VIEW OF THE JUDGME NT TITLED AS M/S HOME FINDERS HOUSING LTD. VERSUS INCOME TAX OFFICER CORPORATE WARD 2(3) { SPECIAL LEAVE TO APPEAL (C) N O(S). 12721/2018, DECIDED ON 18-05-2018} [94 TAXMAN.COM 84 (SC)]. IN THE INSTANT CASE, NO SPEAKING ORDER HAS BEEN PASSED B Y THE ASSESSING OFFICER BUT HE DIRECTLY PROCEEDED TO PASS THE RE- ASSESSMENT ORDER WHICH IS UN-DOUBTLY CONTRARY TO THE DIRECT IONS OF THE APEX COURT. AS THE ASSESSING OFFICER IS BOUND TO DI SPOSE OFF THE OBJECTION(S) OF THE ASSESSEE BY PASSING SPEAKING OR DER BEFORE PROCEEDING WITH THE RE-ASSESSMENT, HENCE, THE APPROPRIATE COURSE SHOULD BE TO RESTORE BACK THE MATTER TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO DISPOSE O FF THE ASSESSEES OBJECTIONS BY PASSING SPEAKING ORDER THEREON AND THEREAFTER, TO PROCEED WITH THE REASSESSMENT PROCEEDING, IF REQUIRED, AS PER LAW. ITA NO.03/ASR/2017 (A.Y.2009-10) LIBRA AUTOMOBILES LTD. VS. CIT-IV, JALANDHAR 8 WE, THEREFORE, SET ASIDE THE IMPUGNED ORDER PASSED BY T HE LD CIT(A) WITH DIRECTION TO THE ASSESSING OFFICER FOR PA SSING A SPEAKING ORDER ON ASSESSEES OBJECTIONS AND THEREAFTER CAN PROCEED FURTHER, IF REQUIRED, AS PER LAW. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOW ED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 29.06.2018. SD/- SD/- (SANJAY ARORA) (N.K.CHOUDHRY) ACCOUNTANT MEMBER JUDIC IAL MEMBER DATED:29.06.2018 /PK/ PS. COPY OF THE ORDER FORWARDED TO: (1) LIBRA AUTOMOBILES LTD., JALANDHAR (2) THE DY. CIT-IV, JALANDHAR (3) THE CIT(A), JALANDHAR (4) THE CIT CONCERNED (5) THE SR DR, I.T.A.T., AMRITSAR TRUE COPY BY ORDER