Shalini Chawla, New Delhi V. ITO, New Delhi

ITA 4789/DEL/2015

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 1805 (ITAT-DELHI)
• Duration Of Justice: 4 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 2
• Next Hearing Date: 13-11-2015
• Assessment Year: 2002-2003
• Appeal Filed On: 22-07-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P DAM KANUNJNA
• Assessee Lawyers: SACHIN GARG
• Keywords: Reopening of assessment; Assessment record; Reassessment proceedings
• Section: 143(3); 147; 68; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC-I NEW DELHI BEFORE SHRI P.K. BANSAL : ACCOUNTANT MEMBER ITA NO. 4789/DEL/2015 ASSTT. YRS: 2002-03 SHALINI CHAWLA VS. INCOME-TAX OFFICER, F-118, MANSAROVER GARDEN, WARD 49(2), NEW DELHI. NEW DELHI. PAN: ADEPC 4075 E ( APPELLANT ) (RESPONDENT) APPELLANT BY : SHRI SACHIN GARG RESPONDENT BY : SHRI P. DAM KANUNJNA SR. DR DATE OF HEARING : 13/11/2015. DATE OF ORDER : 30/11/2015. O R D E R THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGA INST THE ORDER DATED 18/05/2015, PASSED BY THE CIT(A)-17, NEW DELHI, IN APPEAL NO. 5/2007-08/14 TO 17/2014-15 FOR A.Y. 2002-03, CHALLENGING THE VALID ITY OF THE ORDER PASSED U/S 147 READ WITH SECTION 143(3) AS WELL AS CHALLENGING THE ADDITION MADE U/S 68 AMOUNTING TO RS. 4 LACS. 2. LD. AR AT THE OUTSET, BY REFERRING TO PAGE NOS. 33 & 34 OF THE PB CONTENDED THAT THE ASSESSEE VIDE HIS LETTER DATED 10-12-2007 ASKED FOR THE COPY OF THE REASONS FOR REOPENING OF THE ASSESSMENT FOR THE IMPUGNED AS SESSMENT YEAR. 3. THE AO DID NOT PROVIDE THE COPY OF THE REASONS, SO THAT THE ASSESSEE COULD HAVE FILED THE OBJECTIONS IN RESPECT OF THE PROCEED INGS INITIATED U/S 147 IN VIEW OF THE DECISION OF THE HONBLE SUPREME COURT IN THE CA SE OF G.K. DRIVESHAFTS (INDIA) 2 LTD. VS. ITO 259 ITR 19 (SC). IN THIS REGARD HE REL IED ON THE DECISION OF THIS TRIBUNAL DATED 10/6/2015 IN THE CASE OF M/S JAGAT T ALKIES VS. DCIT (ITA NOS. 1068 TO 1073/DEL/2008), IN WHICH THIS TRIBUNAL, IN THE ABSENCE OF REASONS BEING NOT PROVIDED BY THE AO, QUASHED THE ASSESSMENT PASS ED U/S 143(3) READ WITH SECTION 148. 4. LD. DR, ON THE OTHER HAND, VEHEMENTLY CONTENDED THAT WHETHER THE COPY OF THE REASONS HAS BEEN SUPPLIED OR NOT, HAS TO BE VER IFIED FROM THE RECORD. WHEN I POINTED OUT THAT THE ASSESSEE HAS SUBMITTED A CERTI FICATE IN THE PAPER BOOK THAT THIS LETTER DATED 10-12-2007 WAS FILED BEFORE THE AO, HE COULD NOT PLACE ANY CONTRARY MATERIAL. EVEN HE COULD NOT BRING TO MY KNOWLEDGE A NY CONTRARY DECISION WHICH MAY HAVE TAKEN A VIEW CONTRARY TO THE VIEW TAKEN BY THIS TRIBUNAL IN ITS ORDER DATED 10-6-2015 (SUPRA). 5. I HEARD THE RIVAL SUBMISSIONS AND CAREFULLY CON SIDERED THE SAME ALONG WITH THE ORDERS OF THE TAX AUTHORITIES BELOW. I HAVE ALS O GONE THROUGH THE DECISION OF THIS TRIBUNAL IN THE CASE OF M/S JAGAT TALKIES VS. DCIT (SUPRA). I NOTED THAT THE TRIBUNAL VIDE ORDER DATED 10-6-2015 IN THAT CASE IN ITA NOS. 1068 TO 1073.DEL/2008, UNDER SIMILAR CIRCUMSTANCES, WHEN TH E COPY OF THE REASONS, REQUISITIONED BY THE ASSESSEE, WAS NOT SUPPLIED THE AO TO THE ASSESSEE, THIS TRIBUNAL QUASHED THE ASSESSMENT ORDER BY OBSERVING AS UNDER: 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFU LLY AND HAVE GONE THROUGH THE ORDER OF THE ASSESSING OFFICE R AND THE LEARNED CIT(A). WE FIND THAT THE BASIC FACTS IN THI S CASE ARE NOT IN DISPUTE. THE REASSESSMENT PROCEEDINGS WERE INITI ATED IN THIS CASE BY ISSUE OF NOTICES UNDER SECTION 148 OF THE A CT FOR THE RELEVANT ASSESSMENT YEARS. THE ASSESSEE HAS SPECIFI CALLY 3 REQUESTED FOR THE REASONS LEADING TO THE REOPENING OF ASSESSMENT UNDER SECTION 148 AND HAS ALSO FILED A F OUR PAGE LETTER DATED 23.06.2006 ADDRESSED TO THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS WHEREIN , APART FROM DEALING WITH THE QUERIES OF THE ASSESSING OFFI CER, A REQUEST WAS MADE IN THE CONCLUDING PART OF THE LETTER TO SU PPLY THE REASONS FOR REOPENING OF THE ASSESSMENT UNDER SECTI ON 148 OF THE ACT. THE ASSESSEE HAS ALSO FILED AN AFFIDAVIT T O THIS EFFECT REGARDING NON-RECEIPT OF REASONS FOR REOPENING OF T HE CASE UNDER SECTION 148 OF THE ACT. THE CIT(A) HAS GIVEN A FINDING IN PARAGRAPH 6.4 OF HIS APPELLATE ORDER THAT IT APPEAR S FROM THE RECORDS THAT THE REQUEST FOR PROVIDING REASONS FOR ISSUING THE NOTICE UNDER SECTION 148 WAS MADE BY THE APPELLANT. THE CIT(A) FURTHER RECORDED THAT IT IS ALSO APPARENT FR OM THE ASSESSMENT RECORDS THAT THERE WAS NO FORMAL COMMUNI CATION OF THE REASONS FOR ISSUING NOTICE UNDER SECTION 148 BY THE ASSESSING OFFICER TO THE ASSESSEE. THIS FINDING REC ORDED BY THE LEARNED CIT(A) COULD NOT BE CONTROVERTED BEFORE US ON BEHALF OF THE REVENUE. IN THESE FACTS OF THE CASE, THE ONLY I SSUE WHICH REQUIRES ADJUDICATION IS THAT WHETHER THE NON- COMM UNICATION OF. THE REASONS RECORDED FOR ISSUING NOTICE UNDER S ECTION 148 OF THE ACT, INSPITE OF A SPECIFIC REQUEST MADE BY THE ASSESSEE FOR PROVIDING REASONS FOR ISSUING THE NOTICE UNDER SECT ION 148, RENDERS THE WHOLE REASSESSMENT PROCEEDINGS VITIATED AND VOID IN LAW. THE TRIBUNAL, VIDE ITS ORDER DATED 05.01.20 09, HAS SET ASIDE THE ISSUE OF VALIDITY OF NOTICE UNDER SECTION 148 FOR THE RELEVANT ASSESSMENT YEARS AND HAS RESTORED THE SAME TO THE FILE OF THE ASSESSING OFFICER FOR A FRESH DECISION IN TH E LIGHT OF THE DECISION OF HON'BLE APEX COURT RENDERED IN THE CASE OF GKN DRIVESHAFTS (INDIA) LTD. (SUPRA). WE FIND THAT THE HON'BLE SUPREME COURT, IN ITS JUDGMENT DATED 25.11.2002 IN GKN DRIVESHAFTS (INDIA) LTD. (SUPRA), HELD THAT WHEN A NOTICE UNDER SECTION 148 OF THE ACT IS ISSUED, THE PROPER COURSE OF ACTION FOR THE NOTICE IS TO FILE RETURN AND IF HE SO DESIRES, TO SEEK REASONS FOR ISSUING' NOTICES. THE ASSESSING OFFICER IS BOUN D TO FURNISH 4 THE REASONS WITHIN A REASONABLE TIME. ON RECEIPT OF REASONS, THE NOTICE IS ENTITLED TO FILE OBJECTIONS TO ISSUANCE O F NOTICE AND THE ASSESSING OFFICER IS BOUND TO DISPOSE OF THE SAME B Y PASSING A SPEAKING ORDER. IN THE CASE OF THE ASSESSEE BEFORE US, WE FIND THAT THE ASSESSEE HAS REQUESTED FOR FURNISHING OF T HE REASONS RECORDED FOR ISSUANCE OF NOTICE UNDER SECTION 148 O F THE ACT AND THE ASSESSING OFFICER HAS NOT FURNISHED THE REA SONS TO THE ASSESSEE. THE PLEA OF THE LEARNED DR, THAT THIS DEC ISION OF HON'BLE APEX COURT IN GKN DRIVESHAFTS (INDIA) LTD. (SUPRA) IS DISTINGUISHABLE, AS, IN THIS CASE, THE ASSESSEE HAS FILED THE RETURN OF INCOME, IS NOT SUSTAINABLE. WE FIND THAT FILING OF RETURN OF INCOME OR OTHERWISE IS NOT DECISIVE TO THE ISSUE OF LEGALITY OF THE NOTICE OF REASSESSMENT BY ISSUE OF NOTICE UNDER SECTION 148 OF THE ACT. THE DECISION OF HON'BLE GUJARAT HIGH CO URT IN SAHKARI KHAND UDYOG MANDAI LTD. (SUPRA). RELIED UPO N BY THE LEARNED DR, IS OF NO HELP TO THE CASE OF THE REVENU E. WE FIND THAT THE DEPARTMENT IN THIS CASE HAS SUPPLIED THE A SSESSEE THE COPY OF THE REASONS RECORDED BY THE ASSESSING OFFIC ER FOR ISSUING SUCH NOTICE. THE HON'BLE HIGH COURT HAS CON CLUDED IN THIS CASE THAT THE ASSESSING OFFICER SHALL SUPPLY T HE REASONS RECORDED BY HIM FOR ISSUING SUCH NOTICE WITHIN 30 D AYS OF THE FILING OF THE RETURN OF INCOME BY THE ASSESSEE WITH OUT WAITING FOR THE ASSESSEE TO DEMAND SUCH REASONS. IN THE CAS E OF THE ASSESSEE BEFORE US, IT IS AN ADMITTED FACT THAT THE DEPARTMENT HAS FAILED TO SUPPLY THE ASSESSEE THE COPY OF REASO NS RECORDED BY THE ASSESSING OFFICER FOR ISSUANCE OF NOTICE UND ER SECTION 148 OF THE ACT. THE RELIANCE OF THE LEARNED DR ON T HE ORDER OF THE TRIBUNAL IN THE CASE OF THE ASSESSEE DATED 05.0 1.2009. WHEREIN THE ISSUE OF LEGALITY OF .ISSUE OF NOTICE U NDER SECTION 148 WAS RESTORED BY THE TRIBUNAL TO THE FILE OF THE ASSESSING OFFICER, IS ALSO MISPLACED FOR THE REASON THAT THE SAID ORDER OF THE TRIBUNAL DATED 05.01.2009 WAS SET ASIDE BY THE HON'BLE DELHI HIGH COURT VIDE THEIR ORDER DATED 09.05.2011, WHEREIN IT DIRECTED THE TRIBUNAL TO DECIDE THE AFORESAID APPEA LS AFRESH. THE CASE LAW CITED BY THE LEARNED COUNSEL FOR THE A SSESSEE 5 SUPPORTS THE CASE OF THE ASSESSEE THAT ONCE IT IS F OUND THAT THE COPY OF THE REASONS RECORDED FOR ISSUANCE OF NOTICE UNDER SECTION 148 OF THE ACT WAS NOT GIVEN TO THE ASSESSE E, INSPITE OF A SPECIFIC REQUEST MADE BY THE ASSESSEE IN THIS BEHAL F, THE PROCEEDINGS OF ASSESSMENT THEREAFTER, INCLUDING TH E ASSESSMENT ORDER PASSED, SHALL BE VITIATED AND VOID. THE DECIS ION OF HON'BLE DELHI HIGH COURT IN HARYANA ACRYLIC MANUFAC TURING COMPANY (SUPRA) IS BINDING ON THE TRIBUNAL, WHEREIN IT IS HELD THAT THE REQUIREMENT OF RECORDING THE REASONS AND COMMUNICATING THE SAME TO THE ASSESSEE, ENABLING TH E ASSESSEE TO FILE OBJECTIONS AND THE REQUIREMENT OF PASSING A SPEAKING ORDER ARE ALL DESIGNED TO ENSURE THAT THE ASSESSING OFFICER DOES NOT REOPEN THE ASSESSMENTS WHICH HAVE BEEN FINALIZE D ON HIS MERE WHIM AND FANCY AND THAT HE DOES SO ONLY ON THE BASIS OF LAWFUL REASONS AND A DEVIATION FROM THESE DIRECTION S WOULD ENTAIL THE NULLIFYING OF THE PROCEEDINGS AND. THE O RDER OF ASSESSMENT IN THIS CASE WAS ACCORDINGLY QUASHED. RE SPECTFULLY FOLLOWING THE DECISION OF HON'BLE JURISDICTIONAL HI GH COURT IN HARYANA ACRYLIC MANUFACTURING COMPANY (SUPRA), WE DECIDE THE ISSUE IN FAVOUR OF THE ASSESSEE AND HOLD THAT I N VIEW OF THE FACT THAT THE ASSESSEE WAS NOT GIVEN THE COPY OF TH E REASONS FOR ISSUING NOTICE UNDER SECTION 148 OF THE ACT BY THE ASSESSING OFFICER INSPITE OF A SPECIFIC WRITTEN REQUEST OF TH E ASSESSEE FOR PROVIDING THE SAME. THE WHOLE REASSESSMENT PROCEEDI NGS AND THE RESULTANT ORDER OF ASSESSMENT PASSED UNDER SECT ION 143(3)/148 OF THE ACT HAVE BECOME VITIATED ENTAILIN G IN NULLIFYING PROCEEDINGS AND. ACCORDINGLY, THE ORDERS OF ASSESSMENT UNDER SECTION 143(3)/148 ARE QUASHED AND . THE GROUNDS OF APPEAL NO.1 TO 4 OF THE ASSESSEE IN ALL THESE APPEALS ARE ALLOWED. 6 6. RESPECTFULLY FOLLOWING THE DECISION OF THIS TRIB UNAL IN THE CASE OF M/S JAGAT TALKIES VS. DCIT (SUPRA), I QUASH THE ASSESSMENT OR DER PASSED U/S 143(3) READ WITH SECTION 148. 7. SINCE I HAVE ALREADY QUASHED THE REASSESSMENT, T HEREFORE, OTHER GROUNDS TAKEN BY THE ASSESSEE ON MERITS, DOES NOT REQUIRE A NY ADJUDICATION. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 30/11/2015. SD/- (P.K. BANSAL ACCOUNTANT MEMBER DATED: 30/11/2015. *MP* COPY OF ORDER TO: 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR, ITAT, NEW DELHI.