Suresh Chandra, New Delhi V. ITO, New Delhi

ITA 3061/DEL/2012

• Counselvise Citation: 306120114 RSA 2012
• Duration Of Justice: 2 year(s) 8 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-03-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 30-12-2014
• Assessment Year: 1997-1998
• Appeal Filed On: 18-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B R R KUMAR
• Keywords: Reopening of assessment; Principle of natural justice; Tangible material
• Section: 147; 148; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH G NEW DELHI) BEFORE SHRI I.C. SUDHIR AND SHRI B.C. MEENA ITA NO. 3061 /DEL/2012 ASSESSMENT YEAR: 1997-98 SURESH CHANDRA, VS. INCOME-TAX OFFICER, C/O AHUJA ARUN & CO. WARD 44(1), 412 DEEPSHIKH BUILDING, RAJENDRA PLACE, NEW DELHI. NEW DELHI. (PAN: AACPC2002J) (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI PC YADAV , ADV. RESPONDENT BY: SHRI BRR KUMAR, SR.DR DATE OF HEARING : 30.12.2014 DATE OF PRONOUNCEMENT: 13.03.2015 ORDER PER I.C. SUDHIR: JUDICIAL MEMBER THE ASSESSEE HAS QUESTIONED FIRST APPELLATE ORDER O N THE FOLLOWING GROUNDS: 1. THAT THE LEARNED CIT(APPEALS)-XXVIII HAS ERRED ON FACTS AND IN LAW IN UPHOLDING THE RE-OPENING OF ASSESSMENT FO R ASSESSMENT YEAR 1997-98 BY INVOKING THE PROVISIONS OF SECTION 147 O F THE INCOME-TAX ACT, 1961. THE PROVISIONS OF SECTION 147 READ WITH SECTION 148 OF THE INCOME-TAX ACT, 1961 ARE NOT AT ALL APPLICABLE IN T HE CASE OF THE APPELLANT. AS OUT OF THE TOTAL INTEREST, THE INTERE ST FOR THE ASSESSMENT YEAR 1997-98 IS RS.32,806, WHICH IS BELOW 1,00,000, SO THE NOTICE U/S. 2 148 IS TIME BARRED, ACCORDING TO SEC.149/151 OF THE INCOME-TAX ACT, 1961. 2. THE LEARNED CIT(APPEALS)-XXVIII AND THE ASSESSIN G OFFICER HAS ERRED IN FACTS THAT ANY NEW FACTS WERE THE REAS ON FOR REOPENING THE CASE, WHICH WAS EARLIER, NOT DISCLOSED BY THE ASSES SEE. AS THE ASSESSMENT HAS BEEN WRONGLY REOPENED BY INVOKING TH E PROVISIONS OF SEC. 147 AS THE ASSESSEE HAS DISCLOSED ALL THE RELE VANT FACTS IN THE ORIGINAL RETURN FILED BY HIM AND MERE CHANGE OF OPI NION OF THE ASSESSING OFFICER CANNOT BE THE BASIS FOR RE-OPENIN G OF ASSESSMENTS. 3. THAT THE LEARNED CIT(APPEALS)-XXVIII ERRED ON FA CTS AND IN LAW AND WAS NOT JUSTIFIED IN UPHOLDING THAT THE AMO UNT OF RS.3,16,639 IS A REVENUE RECEIPT AND INCLUDING THE SAME IN THE TOTAL INCOME OF THE ASSESSEE. THE AMOUNT RECEIVED BY THE ASSESSEE IS FU LLY EXEMPT FROM TAX AND CANNOT BE INCLUDED IN THE TAXABLE INCOME. 4. THAT THE ASSESSING OFFICER AND HE LEARNED CIT(AP PEALS)- XXVIII HAS ERRED ON FACTS AND IN LAW IN UPHOLDING T HE REASSESSMENT VALIDITY. AS THE PRESENT CASE, NOTICE U/S. 148 WAS ISSUED TWICE FOR THE SAME ASSESSMENT YEAR. 5. THAT THE IMPUGNED ORDER ISSUED BY ASSESSING OFFI CER IS BAD IN AWL AS HE ONCE AGAIN FAILS TO FURNISH THE REASONS O F NOTICE U/S. 148 BEFORE PROCEEDING WITH ASSESSMENT AND THE LEARNED C IT(APPEALS)- XXVIII HAS ERRED ON FACTS AND IN LAW IN UPHOLDING T HE SAME. 3 6. THAT THE IMPUGNED ORDER IS BAD IN LAW AS IT IS B ASED UPON IRRELEVANT CONSIDERATIONS. THE ORDER OF THE LEARNED CIT(APPEALS)- XXVIII ARE NOT BASED UPON THE FACTS OF THE CASE BUT ON ASSUMPTIONS AND SURMISES. 7. THAT THE IMPUGNED ORDER IS ILLEGAL, BAD IN LAW A ND IN VIOLATION OF THE CONTEMPORARY PRINCIPLES OF NATURAL JUSTICE A S WELL AS ESTABLISHED JUDICIAL PRONOUNCEMENTS. 2. AT THE OUTSET OF HEARING, THE LEARNED AR SUBMITT ED THAT THE ASSESSEE DOES NOT WISH TO PRESS GROUND NOS. 1 TO 3. THESE GR OUNDS ARE ACCORDINGLY REJECTED AS WITHDRAWN. 3. IN GROUND NOS. 4 AND 5, THE VALIDITY OF NOTICE I SSUED UNDER SEC. 148 OF THE INCOME-TAX ACT, 1961 HAS BEEN QUESTIONED. GROUN D NOS. 6 AND 7 ARE GENERAL IN NATURE. 4. HEARD AND CONSIDERED THE ARGUMENTS ADVANCED BY T HE PARTIES IN VIEW OF ORDERS OF THE AUTHORITIES BELOW, MATERIAL AVAILA BLE ON RECORD AND THE DECISIONS RELIED UPON. 4 5. IN SUPPORT OF THE GROUND NOS. 4 AND 5, THE LEARN ED AR SUBMITTED THAT IN THE FIRST ROUND OF THE APPEAL, THE I.T.A.T VIDE ITS ORDER DATED 27.7.2007 IN ITA NO.476/DEL/2006 HAS SET ASIDE THE MATTER TO THE FILE OF THE ASSESSING OFFICER WITH THE DIRECTION TO DISPOSE OF THE OBJECTIONS RAISED BY THE ASSESSEE TO THE JURISDICTION OF THE ASSESSING O FFICER FOR ISSUANCE OF NOTICE UNDER SEC. 148 OF THE ACT FIRST BY PASSING A SPEAKING ORDER IN VIEW OF THE DECISION OF THE HON'BLE SUPREME COURT IN THE CA SE OF G.K.N. DRIVE SHAFT (INDIA) LTD. VS. ITO 259 ITR 19 (S.C). HE SUBMITT ED THAT THE ASSESSEE HAD RAISED OBJECTION ON THE ISSUE OF JURISDICTION FOR I SSUANCE OF NOTICE UNDER SEC. 148 OF THE ACT VIDE LETTER DATED 11.01.2005 (WRONGL Y TYPED AS 11.01.2004) WHICH HAS ALSO BEEN CORRECTED BY THE LEARNED CIT(AP PEALS) ). THE ASSESSING OFFICER WHILE DISPOSING OF THE SAID OBJEC TION ALSO PROCEEDED TO PASS THE REASSESSMENT ORDER INSTEAD OF RESTRICTING ITSELF FOR THE DISPOSAL OF THE OBJECTION PASSING A SEPARATE ORDER. HE SUBMITTE D THAT IN THE ABOVE CITED DECISION OF THE HON'BLE SUPREME COURT IN THE CASE O F G.K.N. DRIVE SHAFT (INDIA) LTD. VS. ITO (SUPRA), THE RATIOS LAID DOWN IS THAT THE ASSESSING OFFICER OUGHT TO HAVE DISPOSED OF THE OBJECTION RAI SED BY THE ASSESSEE TO THE JURISDICTION OF THE ASSESSING OFFICER FOR ISSUANCE OF NOTICE UNDER SEC. 148 OF THE ACT BY PASSING A SEPARATE ORDER AND PROCEED FOR REASSESSMENT ONLY AFTER GIVING AN OPPORTUNITY TO THE ASSESSEE TO QUESTION T HE SAID ORDER OF THE 5 ASSESSING OFFICER REJECTING THE OBJECTION OF THE AS SESSEE. SINCE THE ASSESSING OFFICER HAS FAILED TO ABIDE BY SUCH RATIO OF THE ABOVE DECISION AS DIRECTED BY THE ITAT, THE REJECTION OF THE OBJECTIO N BY THE ASSESSING OFFICER VIDE ORDER DATED 03.10.2008 IS BAD IN LAW AND THE S AME SHOULD BE DECLARED AS VOID AB INITIO. HE PLACED RELIANCE ON SEVERAL DE CISIONS INCLUDING DECISIONS OF HON'BLE GUJARAT HIGH COURT IN THE CASE OF GENERA L MOTORS INDIA PVT. LTD. VS. DCIT 353 ITR 244 (GUJ.); M/S. BHARUCH ENVOIR ITA NOS. 731 & 732/AHMEDABAD/2007 (A.YS. 2000-01 AND 2001-02) VIDE ORDER DATED 05.08.2014. 6. THE LEARNED AR ON THE OTHER HAND SUBMITTED THAT THE ASSESSING OFFICER HAS FULLY COMPLIED WITH THE DIRECTION OF TH E ITAT WHILE DISPOSING OF THE OBJECTION RAISED BY THE ASSESSEE TO THE JURISDI CTION OF THE ASSESSING OFFICER FOR ISSUANCE OF NOTICE UNDER SEC. 148 OF TH E ACT. THE LEARNED CIT(APPEALS) WAS THUS JUSTIFIED IN UPHOLDING THE SA ME. HE REITERATED THE CONTENTS OF THE ORDERS OF THE AUTHORITIES BELOW IN THIS REGARD. 7. HAVING GONE THROUGH THE ABOVE CITED DECISIONS RE GARDING THE MANNER IN WHICH THE ASSESSING OFFICER IS TO DISPOSE OF THE OBJECTIONS RAISED AGAINST THE JURISDICTION OF THE ASSESSING OFFICER FOR ISSUA NCE OF NOTICE UNDER SEC. 148 6 OF THE ACT, WE FIND THAT THE RATIOS LAID DOWN IN TH IS REGARD BY THE HON'BLE SUPREME COURT IN THE CASE OF G.K.N. DRIVE SHAFT (IN DIA) LTD. VS. ITO (SUPRA) ALONG WITH OTHER DECISIONS HAVE BEEN DISCUS SED BY THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF GENERAL MOTORS IN DIA (P) LTD. VS. DCIT (SUPRA) AND THE HON'BLE HIGH COURT AFTER DETAILED D ELIBERATION HAS COME TO THE FOLLOWING CONCLUSIONS: 23. FROM THE AFORESAID DECISION, WE ARE OF THE CON SIDERED OPINION THAT WRIT PETITION UNDER ARTICLE 226 OF THE CONSTIT UTION OF INDIA IS MAINTAINABLE WHERE NO ORDER HAS BEEN PASSED BY THE ASSESSING OFFICER DECIDING OBJECTION FILED BY THE ASSESSEE UNDER SEC. 148 OF THE ACT AND ASSESSMENT ORDER HAS BEEN PASSED OR THE ORDER DECID ING AN OBJECTION UNDER SEC. 148 OF THE ACT HAS NOT BEEN COMMUNICATED TO THE ASSESSEE AND ASSESSMENT ORDER HAS BEEN PASSED OR THE OBJECTI ON FILED UNDER SEC. 148 HAS BEEN DECIDED ALONG WITH THE ASSESSMENT ORDE R. IF THE OBJECTION UNDER SEC. 148 HAS BEEN REJECTED WITHOUT THERE BEIN G ANY TANGIBLE MATERIAL AVAILABLE WITH THE ASSESSING OFFICER TO FO RM AN OPINION THAT THERE IS ESCAPEMENT OF INCOME FROM ASSESSMENT AND I N ABSENCE OF REASONS HAVING DIRECT LINK WITH THE FORMATION OF TH E BELIEF, THE WRIT PETITION FILED BY THE PETITIONER IS MAINTAINABLE. T HE ASSESSING OFFICER IS MANDATED TO DECIDE THE OBJECTION TO THE NOTICE U NDER SEC. 148 AND SUPPLY OR COMMUNICATE IT TO THE ASSESSEE. THE ASSES SEE GETS AN OPPORTUNITY TO CHALLENGE THE ORDER IN A WRIT PETITI ON. THEREAFTER THE ASSESSING OFFICER MAY PASS THE REASSESSMENT ORDER. WE HOLD THAT IT WAS NOT OPEN TO THE ASSESSING OFFICER TO DECIDE THE OBJECTION TO NOTICE 7 UNDER SEC. 148 BY A COMPOSITE ASSESSMENT ORDER. THE ASSESSING OFFICER WAS REQUIRED TO, FIRST DECIDE THE OBJECTION OF THE ASSESSEE FILED UNDER SEC. 148 AND SERVE A COPY OF THE ORDER ON ASS ESSEE. AND AFTER GIVING SOME REASONABLE TIME TO THE ASSESSEE FOR CHA LLENGING HIS ORDER, IT WAS OPEN TO HIM TO PASS AN ASSESSMENT ORDER. THI S WAS NOT DONE BY THE ASSESSING OFFICER, THEREFORE, THE ORDER ON THE OBJECTION TO THE NOTICE UNDER SEC. 148 AND THE ASSESSMENT ORDER PASS ED UNDER THE ACT DESERVES TO BE QUASHED. 8. IN VIEW OF THE ABOVE DECISIONS, WE FIND THAT THE ASSESSING OFFICER IS MANDATED TO DECIDE THE OBJECTION TO THE NOTICE UNDE R SEC. 148 OF THE ACT AND SUPPLY OR COMMUNICATE IT TO THE ASSESSEE. THEREAFTE R, THE ASSESSEE GETS AN OPPORTUNITY TO CHALLENGE THE ORDER IN A WRIT PETITI ON. THEREAFTER, THE ASSESSING OFFICER MAY PASS THE REASSESSMENT ORDER. IT IS NOT OPEN TO THE ASSESSING OFFICER TO DECIDE THE OBJECTION RAISED A GAINST NOTICE UNDER SEC. 148 BY A COMPOSITE ASSESSMENT ORDER. THUS, THE ASSE SSING OFFICER WAS REQUIRED TO FIRST DECIDE THE OBJECTION OF THE ASSES SEE FILED UNDER 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 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 ASSESSMENT ORDER DATED 03.10.2008 AS NOT VALID AND THE SAME IS HELD AS VOID AB INITIO. 8 9. IN RESULT, THE SAID ASSESSMENT ORDER DATED 03.10 .2008 IS QUASHED. THE ISSUE RAISED IN GROUND NOS. 4 AND 5 ON THE VALIDITY OF NOTICE ISSUED UNDER SEC. 148 OF THE ACT AND THE ASSESSMENT MADE IN FURT HERANCE THERETO IS THUS ALLOWED. 7. IN RESULT, THE APPEAL IS ALLOWED. DECISION PRONOUNCED IN THE OPEN COURT ON 13.03.2015 SD/- SD/- ( B.C. MEENA ) ( I.C. SUDHIR ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 13 /03/2015 MOHAN LAL COPY FORWARDED TO: 1) APPELLANT 2) RESPONDENT 3) CIT 4) CIT(APPEALS) 5) DR:ITAT ASSISTANT REGISTRAR 9 DATE DRAFT DICTATED ON COMPUTER DIRECTLY 13.03.2015 DRAFT PLACED BEFORE AUTHOR 13.03.2015 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. APPROVED DRAFT COMES TO THE SR.PS/PS KEPT FOR PRONOUNCEMENT ON 13.03.2015 FILE SENT TO THE BENCH CLERK 13.03.2015 DATE ON WHICH FILE GOES TO THE AR DATE ON WHICH FILE GOES TO THE HEAD CLERK. DATE OF DISPATCH OF ORDER.