M/S. ATUL ASHOK RUIA, MUMBAI V. THE ACIT CIR 7(1),

ITA 6530/MUM/2007

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 0966 (ITAT-MUMBAI)
• Duration Of Justice: 7 year(s) 5 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-04-2015
• Appeal Filed By: Assessee
• Bench Allotted: H
• Next Hearing Date: 12-02-2015
• Assessment Year: 2001-2002
• Appeal Filed On: 26-10-2007
• Court: TRIBUNAL
• Department Lawyers: JEETENDRA KUMAR
• Keywords: Reopening of assessment; Additional evidence; Reason to believe; Reassessment proceedings
• Section: 147; 148; 11

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL H , BENCH MUMBAI . . , , BEFORE SHRI R.C.SHARMA , A M & SHRI SANJAY GARG , J M ./ ITA N O. 6530 / MUM/20 07 ( / ASSESSMENT YEAR : 200 1 - 02 ) ATUL ASHOK RUIA, PHOENIX MILLS COMPOUND, 462, S.B.MARG, LOWER PAREL, MUMBAI - 400013 VS. ACIT, CIRCLE - 7(1), MUMBAI ./ ./ PAN/GIR NO. : A BHPR 8582 Q ( / APPELLANT ) . . ( / RESPONDENT ) AND ./ ITA NO. 6531/ MUM/20 07 ( / ASSESSMENT YEAR :200 1 - 02 ) ASHOK KUMAR RUIA, PHOENIX MILLS COMPOUND, 462, S.B.MARG, LOWER PAREL, MUMBAI - 400013 VS. ACIT, CIRCLE - 7(1), MUMBAI ./ ./ PAN/GIR NO. : A AJPR 8275 M ( / APPELLANT ) .. ( / RESPONDENT ) /ASSESSEE BY : SHRI VIJAY MEHTA /REVENUE BY : SHRI JEETENDRA KUMAR / DATE OF HEARING : 12 /0 2 /2015 / DATE OF PRONOUNCEMENT 08/04/ 2015 / O R D E R PER R.C.SHARMA (A.M) : THESE ARE THE APPEALS FILED BY DIFFERENT ASSESSEE AGAINST THE ORDER OF CIT(A) FOR THE ASSESSMENT YEAR 2001 - 02 IN THE MATTER OF ORDER PASSED U/S.143(3) R.W.S.147 OF THE I.T.ACT. ITA NO S . 6530&6531 / 07 2 2. COMMON GROUNDS HAVE BEEN TAKEN IN BOTH THE APPEALS, THEREFORE, BOTH APPEALS ARE HEARD TOGETHER AND ARE NOW DISPOSED OFF BY THIS CONSOLIDATED ORDER. 3. GROUNDS TAKEN IN ITA NO.6530/MUM/2007 READ AS UNDER : - O N THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS. 14,87,538/ - U/S.2(24)(IV) TREATING THE SAME AS BENEFIT OR PERQUISITE RECEIVED BY THE APPELLANT FROM THE COMPANY IN WHICH HE IS A DIRECTOR. THE APPELLANT PRAYS THAT THE ADDIT ION AMOUNT TO RS.14,87,538/ - MAY KINDLY BE DELETED. . 4. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. FACTS IN BRIEF ARE THAT T HE ASSESSEE IS MANAGING DIRECTOR OF THE PHOENIX MILLS LIMITED. IN THE ASSESSMENT PROCEEDING OF THE SAID COMPANY, DISALL OWANCE OF RS 63,95,767 WAS MADE ON ACCOUNT OF FOREIGN TRAVEL EXPENDITURE . IN APPEAL FILED BY THE ASSESSEE BEFORE THE CIT(A), THE CIT(A) OPINED THAT SOME OF RS.27,34,883/ - ARE IN THE NATURE OF PERQUISITES/REMUNERATION IN THE HAND OF THE ASSESSEE. ON THE BAS IS OF THE SAID OBSERVATION OF CIT(A) IN THE CASE OF M/S PHOENIX MILLS LTD., THE AO ISSUED THE NOTICE U/S 148 ON 21.10.2005. IN THE REASSESSMENT PROCEEDINGS, ADDITION WAS MADE IN THE HANDS OF ASSESSEE IN RESPECT OF RS.27,34,883/ - TREATING THE SAME IN THE NA TURE OF PERQUISITES/REMUNERATION IN THE HAND OF ASSESSEE (DIRECTOR) OF M/S PHOENIX MILLS LTD.. 5. IN AN APPEAL FILED BEFORE THE CIT(A), GROUND S WERE TAKEN BY ASSESSEE BOTH ON ACCOUNT OF REOPENING AS WELL AS MERIT OF THE ADDITION, WERE DISMISSED BY THE CIT (A), AGAINST WHICH ASSESSEE IS IN FURTHER APPEAL BEFORE US. ON THE GROUND OF VALIDITY OF REOPENING THE LD. AR DREW OUR ATTENTION TO THE REASONS FURNISHED BY THE AO AT THE TIME OF REOPENING VIS - ITA NO S . 6530&6531 / 07 3 - VIS REASONS SUPPLIED AFTER THE ASSESSMENT ORDER PASSED BY THE AO, WHICH WAS STATED TO BE DIFFERENT. THE REASONS PROVIDED BY THE AO IS REPRODUCED AS UNDER : - IT IS SEEN THAT THE DEPARTMENT HAS NOT ACCEPTED THE DECISION OF THE LEARNED CIT(A) PRIMARILY FOR ADMISSION OF ADDITIONAL EVIDENCE IN VIOLATION OF RULE 46A. H OWEVER, IN VIEW OF THE SPECIFIC PROVISIONS OF SECTION 2(24)(IV) AND FINDINGS OF THE LEARNED CIT(A). I HAVE REASON TO BELIEVE THAT INCOME OF RS.27,31,883 HAS ESCAPED ASSESSMENT. THE VERBATIM OF REASONS RECORDED AND SUPPLIED TO THE ASSESSEE AFTER COMPLETIO N OF THE ASSESSMENT IS AS UNDER : THE ASSESSEE IS A DIRECTOR IN M/S.PHOENIX MILLS LTD. FOR THE ASSESSMENT YEAR 2001 - 02 THE ASSESSING OFFICER WHILE COMPLETING THE ASSESSMENT OF M/S.PHOENIX MILLS LTD. HAD DISALLOWED AN AMOUNT OF RS.63,95,767 ON ACCOUNT OF F OREIGN TRAVELLING EXPENSES. THE ASSESSEE DID NOT ACCEPT THE DISALLOWANCE AND PREFERRED AN APPEAL BEFORE THE CIT(A) - XIX, MUMBAI. 2. THE CIT(A) BY AN ORDER AS REFERRED ABOVE DELETED AN AMOUNT OF RS.37,70,900/ - AND RS.4,51,521/ - UNDER THE HEAD FOREIGN TRAVE LING EXPENSES IN THE HANDS OF THE COMPANY BY HOLDING THAT EXPENSES ARE IN THE NATURE OF MEDICAL EXPENSES INCURRED FOR THE TREATMENT OF SHRI. ASHOK RUIA, MANAGING DIRECTOR OF THE COMPANY AND MRS.GAYATRI RUIA, SHRI ATUL RUIA, DIRECTOR OF THE COMPANY. THE BR EAK - UP OF THE EXPENSES ARE AS BELOW: - 1) SHRI ASHOK RUIA - RS.27,34,883/ - (PL. REFER 5.2.1 AND 5.2.2 ON PG.NO.4 & 5 OF THE APPELLATE ORDER) I. SMT.GAYATRI RUIA - RS.10,36,017/ - AND RS.4,51,521/ - 2) (PLEASE REFER PARA NO.5.2.1 AND 5.2.2 ON PG.NO .4 & 5 OF THE APPELLATE ORDER) 3. THE CIT(A) ON THE PERUSAL OF THE TERMS OF EMPLOYMENT OF SHRI. ASHOK RUIA, MD OF THE COMPANY AND SHRI. ATUL RUIA, DIRECTOR OF THE COMPANY FOUND REGARDING PERQUISITES AND OTHER BENEFITS AS FOLLOWS: - SHRI ASHOK KUMAR RUIA SHALL BE ENTITLED TO THE REIMBURSEMENT OF MEDICAL EXPENSES ACTUALLY INCURRED FOR HIMSELF AND HIS FAMILY. 4. SIMILAR RESOLUTION WAS ALSO FOUND BY THE CIT(A) SHRI ATUL RUIA ALSO. A. THE CIT(A) HELD THE MEDICAL EXPENSES IN THE NATURE OF REMUNERATION OR P ERQUISITE OR BENEFIT TO THE DIRECTORS AND HELD IT ITA NO S . 6530&6531 / 07 4 ALLOWABLE IN THE HANDS OF THE ASSESSEE COMPANY. HOWEVER, HE GAVE A SPECIFIC FINDING TO TREAT THIS AS INCOME IN THE HANDS OF THE DIRECTORS BY OBSERVING AS FOLLOWS: - SECTION 2(24)(IV) OF THE I.T. ACT IS A LSO RELEVANT FOR THIS PURPOSE CLAUSE (IV) OF SUB - SECTION 24 LAYS DOWN THAT THE VALUE OF ANY BENEFIT OR PERQUISITE WHETHER CONVERTIBLE INTO MONEY OR NOT, OBTAINED FROM A COMPANY EITHER BY A DIRECTOR OR BY A PERSON WHICH HAS SUBSTANTIAL INTEREST IN THE COMPA NY, OR BY A RELATIVE OF THE DIRECTOR OR SUCH PERSON, AND ANY SUM PAID BY ANY SUCH COMPANY IN RESPECT OF ANY OBLIGATION WHICH, BUT FOR WHICH PAYMENT, WOULD HAVE BEEN PAYABLE BY THE DIRECTOR FOR OTHER PERSON AFORESAID IS INCOME IN THE HANDS OF THE CONCERNED DIRECTORS. IN VIEW OF THIS SPECIFIC PROVISION, THE VALUE OF THE BENEFIT DERIVED BY SHRI. ASHOK RUIA, THE MANAGING DIRECTOR AND BY MRS.GAYATRI RUIA BEING RELATIVE OF A DIRECTOR, SHRI. ATUL RUIA IS INCOME IN THE HAND OF THE SAID DIRECTORS. THE ADDITION OF RS.37,70,900/ - IS, THEREFORE, DELETED. THE EXPENSES SHOULD BE ALLOWED UNDER THE HEAD BUSINESS. IT IS SEEN THAT THE DEPARTMENT HAS NOT ACCEPTED THE DECISION OF THE LEARNED CIT(A) PRIMARILY FOR ADMISSION OF ADDITIONAL EVIDENCE IN VIOLATION OF RULE 46A . HOWEVER, IN VIEW OF THE SPECIFIC PROVISIONS OF SECTION 2(24)(IV) AND FINDINGS OF THE LEARNED CIT(A). I HAVE REASON TO BELIEVE THAT INCOME OF RS.27,31,883 HAS ESCAPED ASSESSMENT. 6. IT WAS ARGUED BY LD. AR THAT AS PER THE VERBATIM OF REASONS RECORDED A ND SUPPLIED BY THE AO, MANY FACTS THEREIN WERE NEVER STATED IN THE ORIGINAL REASONS OF REOPENING WHICH WERE JUST A GIST. IT WAS ARGUED THAT T HE GIST OF REASONS CANNOT BE TREATED AS REASON ACTUALLY RECORDED BY THE ASSESSING OFFICER AS PER SECTION 148(2) AND AS MANDATED BY THE HONBLE SUPREME COURT IN CASE OF GKN DRIVESHAFTS (INDIA) LTD. IT WAS FURTHER SUBMITTED THAT THE ASSESSING OFFICER HAS FAILED TO FURNISH THE REASONS RECORDED FOR REOPENING OF THE ASSESSMENT WITHIN THE REASONABLE TIME AND RATHER PRIOR TO THE COMPLETION OF ASSESSMENT, THAN THE REASSESSMENT ORDER PASSED WITHOUT SUPPLY OF REASONS AS RECORDED FOR REOPENING OF THE ASSESSMENT, IS INVALID AND CANNOT BE SUSTAINED. FOR THIS PURPOSE, RELIANCE WAS PLACED ON THE JUDGMENT OF TATA INTERNATIONAL LIMITED VS DCIT 7 (3) ITA NO S . 6530&6531 / 07 5 52 SOT 465 WHEREIN SIMILAR TO ASSESSEE CASE, ONLY GIST OF REASONS TO REOPEN WERE PROVIDED . 7 . IT WAS FURTHER SUBMITTED THAT THE REOPENING PROCEEDING IS BAD IN LAW IF THE REASONS HAS NOT BEEN PROVIDED TO THE ASSESSEE. FOR THIS PURPOSE, RELIAN CE WAS PLACED ON THE JUDGMENTS OF CIT VS. VIDESH SANCHAR NIGAM LIMITED 340 ITR 66 (BOM). 8 . LD. AR FURTHER SUBMITTED THAT ASSESSMENT CANNOT BE REOPENED WITHOUT APPLICATION OF MIND. HE INVITED OUR ATTENTION TO THE VERBATIM REASONS INDICATING THAT THE ASSES SMENT WAS REOPENED ON THE BASIS OF THE FINDING OF LD. CIT(A) IN THE CASE OF PHOENIX MILL LIMITED. IN RELATION TO THE SAME IT WAS SUBMIT TED THAT THE PRESENT CASE WAS REOPENED ON THE BASIS OF THE FINDING OF CIT(A) AND ACCORDINGLY THERE IS NO APPLICATION OF MIND ON PART OF THE ASSESSING AUTHORITY. IT WAS CONTEND ED THAT THE ASSESSMENT CANNOT BE REOPENED AS THE REASON TO BELIEVE HAS NOT BEEN FORMED BY AO. IN THE SAID CASE, THE BELIEF WAS FORMED BY THE HIGHER AUTHORITY I.E CIT(A) AND NOT BY THE AO ITSELF. THE SAME IS CLEAR VIOLATION OF PRINCIPLES OF REOPENING REGARDING THE REASON TO BELIEVE. THE SAME SHOULD FLOW FROM THE AUTHORITY REOPENING THE ASSESSMENT AND NOT FROM ANY OTHER AUTHORITY. FOR THIS PURPOSE RELIANCE WAS PLACED ON THE JUDGMENT OF KARNATAKA HIGH COURT IN THE CASE OF CIT VS ALAM ULLA KHAN (321 ITR 150) AND CIT V TR RAJKUMARI (96 ITR 78). THE RELEVANT PART IS REPRODUCED AS UNDER IN THE CASE OF CIT VS ALAM ULLA KHAN (321 ITR 150) : ITA NO S . 6530&6531 / 07 6 WHILE THE QUESTION AS TO WHETHER A DECLARATION FILED BY THE ASSESSE E UNDER THE VOLUNTARY DISCLOSURE SCHEME CAN CONSTITUTE INFORMATION FOR THE PURPOSE OF REOPENING UNDER SECTION 147 MAY BE A DEBATABLE POINT AND EITHER WAY MAY BE THE POSITION, IT IS NOT OPEN FOR THIS COURT TO CONSIDER THE MATTER NOW, AS THE TRIBUNAL HAS REC ORDED A FINDING THAT THERE WAS NO APPLICATION OF MIND ON THE PART OF THE ASSESSING AUTHORITY FOR REOPENING, PARTICULARLY, IF ON PERUSING THE ACTUAL REASONING AS RECORDED IN THE PROPOSITION FOR REOPENING, WHICH WE HAVE ALREADY EXTRACTED ABOVE. WE ARE IN FU LL AGREEMENT WITH THIS VIEW THAT THE ASSESSING AUTHORITY CANNOT ACT ON THE DICTATES OF THE COMMISSIONER, WHO HAD DIRECTED HIM TO REOPEN THE CONCLUDED ASSESSMENT FOR THE YEAR 1991 - 92. THAT, IN OUR VIEW ALSO, DOES NOT CONSTITUTE AN INFORMATION WITHIN THE SC OPE OF SECTION 147 OF THE ACT. 9 . LD. AR FURTHER CONTENDED THAT THE REASSESSMENT SO DONE WAS CONTRARY TO THE AOS OWN ACTION, INSOFAR AS ORDER OF THE CIT(A) IN CASE OF M/S PHOENIX MILLS LIMITED WAS CHALLENGED BY THE AO BEFORE THE TRIBUNAL , WHEREIN HE FOUND THAT SUM OF RS.27,34,883/ - ARE IN NATURE OF PERQUISITES/REMUNERATION IN THE HAND OF THE ASSESSEE DIRECTOR. HE FURTHER INVITED OUR ATTENTION TO THE FACT THAT THE ORDER OF ITAT WAS PENDING AGAINST THE FINDING OF CIT(A) IN THE CASE OF PHOENIX MILLS LIMITED M EANWHILE, THE AO PROCEEDED CONTRARY TO HIS OWN ACTION AND ISSUED THE NOTICE FOR REOPENING IN THE CASE OF ASSESSEE. THE SAME FACTS WAS ALSO MENTIONED IN THE VERBATIM REASONS, WHEREIN, THE AO HAS HIMSELF STATED THAT THE DEPARTMENT HAS NOT ACCEPTED THE DECI SION OF LD CIT(A) IN THE CASE OF PHOENIX MILLS LIMITED AND FILED AN APPEAL BEFORE ITAT. 10. IN VIEW OF THE ABOVE, IT WAS SUBMITTED THAT THE BELIEF OF AO IN REOPENING THE ASSESSEES CASE WAS CONTRARY TO ITS OWN ACTION AND, HENCE, REOPENING CANNOT BE DONE O N SUCH A CONTRARY VIEW. FOR THIS PURPOSE ITA NO S . 6530&6531 / 07 7 RELIANCE WAS PLACED ON IL AND FS INVESTMENT MANAGERS LTD. V/S. ITO [298 ITR 32 (BOM) ] . 11. ON MERIT IT WAS SUBMITTED THAT ASSESSEE HAS MADE PAYMENT ON ACCOUNT OF MEDICAL TREATMENT AS WELL AS TRAVELLING EXPENDITURE I N THE ASSESSMENT YEAR 2001 - 02. SUBSEQUENTLY PHOENIX MILLS LIMITED WHEREIN ASSESSEE WAS MANAGING DIRECTOR PASSED A SPECIAL RESOLUTION ON 29.04.2001 AND REIMBURSED THE EXPENDITURE OF RS 27,34,883. T H IS AMOUNT WAS NOT PAID BY PHOENIX MILLS UNDER THE TERMS OF THE EMPLOYMENT. FURTHER THE ASSESSEE HAD NO LEGAL RIGHT TO CLAIM THE EXPENDITURE OF MEDICAL EXPENSES. THE AMOUNT WAS A DISCRETIONARY PAYMENT AND THE COMPANY WAS UNDER NO OBLIGATION TO PAY THE SAME. FOR THIS PURPOSE RELIANCE WAS PLACE ON THE DECISION OF ITA T KOLKATA BENCH IN THE CASE OF J.N. SAPRU , ITA NO.686/KOL/1994 (59 ITD 240) FOR THE ASSESSMENT YEAR 1985 - 86, WHEREIN IT WAS HELD THAT SECTION 17(2)(IV) SAYS THAT THE PERQUISITE INCLUDES ANY SUM PAID BY EMPLOYER IN RESPECT OF ANY OBLIGATION WHICH BUT FOR SU CH PAYMENT, WOULD HAVE BEEN PAYABLE BY THE ASSESSEE. THE TERMS EMPLOYMENT SHOULD PROVIDE FOR THE PAYMENT OF THE AMOUNT THAT HAS BEEN SUBJECTED AS PERQUISITE S AND AS A COROLLARY TO THAT , THE EMPLOYEE SHOULD HAVE A VESTED RIGHT TO CLAIM THE SAME FROM THE EMP LOYER. SINCE THE ASSESSEE WAS NOT ENTITLED TO CLAIM OR TO REIMBURSE THE EXPENSES RELATABLE, SURGERY, THE SAME WAS NOT LIABLE TO TAX IN THE HANDS OF THE ASSESSEE. 1 2 . AS PER LD. AR THERE WAS NO OBLIGATION ON THE PART OF THE COMPANY TO MAKE SUCH PAYMENT. TH E ASSESSEE HIMSELF HAD INCURRED THE MEDICAL EXPENSES, WHICH WAS LATER REIMBURSED BY THE COMPANY, THEREFORE, THERE ITA NO S . 6530&6531 / 07 8 WAS NO OBLIGATION ON THE PART OF THE COMPANY TO MAKE THE SAID PAYMENT. THE PAYMENT WAS MADE ON THE BASIS OF SPECIAL RESOLUTION PASSED ON 29.04 .2001 AND WAS A GRATUITOUS PAYMENT WHICH WOULD RULE OUT OF SECTION 2(24)(IV). 1 3 . WITH REGARD TO APPLICABILITY OF PROVISIONS OF SECTION 17(2)(IV), IT WAS CONTENDED THAT THE SAID SECTION WOULD BE ATTRACTED IF THERE IS OBLIGATION ON THE PART OF THE COMPANY T O MAKE THE PAYMENT. HOWEVER, IN THE CASE OF THE ASSESSEE , THE ASSESSEE HAD INCURRED THE MEDICAL EXPENSES AND PAID THE SAME AND IT WAS LATER REIMBURSED BY THE COMPANY. THEREFORE, THERE WAS NO OBLIGATION ON THE PART OF THE COMPANY TO MAKE THE SAID PAYMENT. 1 4 . ON THE OTHER HAND, IT WAS ARGUED BY LD. DR THAT AO HAD ISSUED REASONS FOR REOPENING TO THE ASSESSEE MUCH BEFORE COMPLETION OF ASSESSMENT. ON MERITS OF ADDITION, RELIANCE WAS PLACED ON THE DECISION OF HONBLE RAJASTHAN HIGH COURT IN THE CASE OF RAGHU SIN HA. 1 5 . AS PER LD. AR IN THE CASE OF RAGHU SINHA (SUPRA), THE AMOUNT OF SUCH REIMBURSEMENT WAS PAID UNDER THE PURVIEW OF SECTION 17(2)(III) OF THE ACT. AT THIS JUNCTURE, THE ARGUMENT OF LD. AR WAS THAT IN THE INSTANT CASE THE ADDITION WAS MADE U/S. 17(2) (IV ) , THEREFORE, SAID CASE LAW IS NOT APPLICABLE TO THE PRESENT CASE AND IT IS NOT PERMISSIBLE TO RAISE CONTENTION BEFORE THE TRIBUNAL WITH REGARD TO PROVISIONS OF SECTION 17(2)(III), WHICH WAS NEITHER RAISED BY THE AO NOR BY THE CIT(A) . 16 . WE HAVE CONSIDERE D RIVAL CONTENTIONS, CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. FROM THE RECORD W E FOUND THAT THE ASSESSEE HAS INCURRED MEDICAL EXPENSES ON HIS TREATMENT TAKEN IN ITA NO S . 6530&6531 / 07 9 ABROAD. M/S PHOENIX MILLS LIMITED IN WHICH ASSESSEE WAS MANAGING DIRECTOR, P ASSED A SPECIAL RESOLUTION DATED 29 - 4 - 2001 AND REIMBURSED THE EXPENDITURE OF RS.27,34,883/ - . HOWEVER, UNDER THE TERMS OF THE EMPLOYMENT AS MANAGING DIRECTOR , T HERE WAS NO SUCH CLAUSE FOR REIMBURSEMENT OF SUCH MEDICAL EXPENSES. THUS, UNDER THE TERMS OF EMPL OYMENT ASSESSEE HAS NO VESTED RIGHT TO CLAIM THE SAME NOR ANY LEGAL RIGHT TO CLAIM REIMBURSEMENT OF MEDICAL EXPENSES. THUS, THE COMPANY WAS NOT UNDER THE LEGAL OBLIGATION TO PAY THE SAME. 17. WE HAD CAREFULLY GONE THROUGH THE GIST OF REASONS SUPPLIED TO THE ASSESSEE DURING THE COURSE OF RE - ASSESSMENT PROCEEDINGS AS WELL AS VERBATIM OF REASONS AS RECORDED BY THE AO U/S.148(2) WHICH WAS SUPPLIED TO THE ASSESSEE AFTER COMPLETION OF ASSESSMENT. IT IS CLEARLY UNDERSTOOD FROM THE ABOVE ACTUAL VERBATIM REASONS T HAT THE SAME WERE COMPREHENSIVE IN NATURE AND STATED MANY FACTS WHICH WERE NEVER STATED IN THE ORIGINAL REASONS OF REOPENING WHICH WERE JUST A GIST. THE SAID POINTS INCLUDED O REOPENING DONE ON THE BASIS OF CIT(A) ORDER IN THE CASE OF PHOENIX MILLS LIMITE D O DEPARTMENTS STAND TO APPEAL AGAINST THE CIT(A) ORDER FOR PHOENIX MILLS LIMITED O THE SAME INCLUDED REFERENCE TO SECTION 2(24)(IV) WHICH WAS NOT MENTIONED IN ORIGINAL GIST OF REASONS BASED ON THE REASONS FOR RE - OPENING PROVIDED, THE ASSESSEE HAS FILED THE A DDITIONAL GROUND OF APPEAL AS UNDER: ITA NO S . 6530&6531 / 07 10 ADDITIONAL GROUND 1: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED A.O. ERRED IN REOPENING THE ASSESSMENT U/S. 147 OF THE INCOME TAX ACT, 1961. THE REOPENING OF THE ASSESSMENT IS BAD IN LAW, ILLEGAL AND OTHERWISE VOID. ADDITIONAL GROUND 2: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED A.O. IS NOT JUSTIFIED, IN NOT FURNISHING THE COPY OF COMPLETE/ ACTUAL REASON FOR REOPENING BEFORE CONCLUSION OF THE REASSESSMENT P ROCEEDING IN SPITE OF SPECIFIC REQUEST. THUS, THE REASSESSMENT ORDER IS CONSEQUENTLY BAD IN LAW, ILLEGAL AND OTHERWISE VOID 18. TH E REASSESSMENT COMPLETED WITHOUT FURNISHING THE REASONS ACTUALLY RECORDED BY THE A.O. FOR REOPENING OF ASSESSMENT IS NOT SUST AINABLE IN LAW BECAUSE THE A.O. IS DUTY BOUND TO SUPPLY THE SAME WITHIN REASONABLE TIME AS HELD BY THE HONBLE SUPREME COURT IN CASE OF GKN DRIVESHAFTS (INDIA) LTD (SUPRA). THE SUBSEQUENT SUPPLY OF THE REASONS WOULD NOT MAKE GOOD OF THE ILLEGALITY SUFFERED BY THE REOPENING OF ASSESSMENT. A SIMILAR VIEW HAS BEEN TAKEN BY THIS TRIBUNAL IN CASE OF FOMENTO RESORTS & HOTELS LTD VS JCIT AND DECIDED A SIMILAR ISSUE IN PARA 7 AS UNDER: 7 WE HAVE CONSIDERED THE SUBMISSIONS MADE BY BOTH THE SIDES, PERUSED THE ORDER S OF THE AUTHORITIES BELOW AND MATERIAL ON RECORD. IT IS AN ADMITTED FACT THAT THE ASSESSEE HAS NOT FILED RETURN OF EXPENDITURE TAX IN THE NORMAL COURSE. THE ASSESSING OFFICER ISSUED NOTICE PURPORTEDLY U/S 11 BUT INADVERTENTLY ON THE NOTICE, U/S 8 WAS MENT IONED IN LIEU OF SEC. 11. IN THIS REGARD, WE ARE IN AGREEMENT WITH THE FINDINGS OF THE LD COMMISSIONER OF INCOME TAX(APPEALS) THAT THIS MISTAKE WAS COVERED BY THE PROVISIONS OF SEE. 292B OF THE INCOME TAX ACT, THEREFORE, WE DO NOT FIND ANY MERIT IN THE CON TENTIONS OF THE ASSESSEE IN THIS REGARD. AS FAR AS THE ISSUANCE OF NOTICE U/S 11 IS CONCERNED, THE PRELIMINARY CONDITION OF NOT FILING OF RETURN IS SATISFIED. THEREFORE, IN SUCH A SITUATION, NOTICE CAN BE ISSUED, PROVIDED THE SAME IS NOT BARRED BY LIMITATI ON. HOWEVER, AFTER ISSUE OF NOTICE, IF THE ASSESSEE ASKS FOR FURNISHING OF REASONS FOR ISSUANCE OF SUCH NOTICE, THE ASSESSING OFFICER IS BOUND TO FURNISH SUCH REASONS. THE ADHERENCE TO THIS PROCEDURE IS A NECESSITY BECAUSE AT THE PRELIMINARY STAGE ITSELF, IF THE PROCEEDINGS ITA NO S . 6530&6531 / 07 11 CAN BE COMPLETED IF THE ASSESSING OFFICER GETS SATISFIED WITH THE EXPLANATIONS GIVEN BY THE ASSESSEE. IT IS AN UNDISPUTED FACT THAT THE ASSESSING OFFICER, IN THE PRESENT CASE HAS NOT SUPPLIED REASONS TO THE ASSESSEE, THEREFORE, THE NOTIC E ISSUED BY THE ASSESSING OFFICER IS BAD IN LAW AND CONSEQUENTLY THE ASSESSMENT MADE IN PURSUANCE OF SUCH NOTICE IS LIABLE TO BE QUASHED. IN THIS VIEW OF THE MATTER, WE CANCEL THE IMPUGNED ASSESSMENT. WE ORDER ACCORDINGLY. 19. IN THE CASE OF CIT VS VIDES H SANCHAR NIGAM LTD, THE HONBLE JURISDICTIONAL HIGH COURT HAS CONFIRMED THE ORDER OF THIS TRIBUNAL WHEREBY THE REASSESSMENT WAS HELD AS INVALID BECAUSE THE REASONS RECORDED FOR REOPENING OF THE ASSESSMENT WERE NOT FURNISHED DESPITE REPEATED REQUESTS AND F URNISHED ONLY AFTER COMPLETION OF ASSESSMENT. THE HONBLE HIGH COURT HAS OBSERVED IN PARA TO AS UNDER: 2 THE FINING OF FACT RECORDED BY THE INCOME TAX APPELLATE TRIBUNAL IS THAT IN THE PRESENT CASE THE REASONS RECORDED FOR REOPENING OF THE ASSESSMENT THRO UGH REPEATEDLY ASKED BY THE ASSESSEE WERE FURNISHED ONLY AFTER COMPLETION OF THE ASSESSMENT. THE TRIBUNAL FOLLOWING THE JUDGMENT OF THIS COURT IN THE CASE OF CIT VS FOMENTO RESORTS & HOTELS LTD, INCOME TAX APPEAL NO.71 OF 2006 DECIDED ON 27TH NOVEMBER 2006 HAS HELD THAT THOUGH THE REOPENING OF THE ASSESSMENT IS WITHIN THREE YEARS FROM THE END OF RELEVANT ASSESSMENT YEAR, SINCE THE REASONS RECORDED FOR REOPENING OF THE ASSESSMENT WERE NOT FURNISHED TO THE ASSESSEE TILL THE COMPLETION OF ASSESSMENT, THE REASS ESSMENT ORDER CANNOT BE UPHELD. MOREOVER, SPECIAL LEAVE PETITION FILED BY THE REVENUE AGAINST THE DECISION OF THIS COURT IN THE CASE OF FOMENTO RESORTS & HOTELS LTD HAS BEEN DISMISSED BY THE APEX COURT VIDE ORDER DATED 16TH JULY 2007. 20. THUS THE REASO NS AS RECORDED BY AO U/S.148(2) IN VERBATIM ARE REQUIRED TO BE FURNISH ED WITHIN A REASONABLE PERIOD OF TIME SO THAT THE ASSESSEE CAN RAISE THE OBJECTIONS AT THE PRELIMINARY STAGE OF PROCEEDINGS. IF SUCH REASONS ARE NOT SUPPLIED DURING THE ASSESSMENT PROCEE DINGS, THAN FURNISHING THE REASONS SUBSEQUENT TO THE ASSESSMENT PROCEEDINGS WOULD ACHIEVE NO PURPOSE AND TANTAMOUNT TO DEPRIVE AND ITA NO S . 6530&6531 / 07 12 DENY THE ASSESSEE OF ITS RIGHT TO RAISE THE OBJECTIONS AGAINST THE VALIDITY OF NOTICE ISSUED UNDER SECTION 148. 21. THE ORDE R OF THIS TRIBUNAL IN CASE OF WAS UPHELD BY THE HONBLE JURISDICTIONAL HIGH COURT AS MENTIONED IN THE DECISION IN THE CASE OF VIDESH SANCHAR NIGAM LTD (SUPRA). EVEN THE SLP FILED BY THE REVENUE AGAINST THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT HAS ALSO BEEN DISMISSED BY THE HONBLE SUPREME COURT VIDE ORDER DATED 16TH JULY, 2007. 22. THUS, IT IS SETTLED PROPOSITION AS LAID DOWN BY THE HONBLE SUPREME COURT AS WELL AS HONBLE HIGH COURT THAT THE REASONS AS RECORDED BY THE ASSESSING OFFICER ARE REQU IRED TO BE FURNISHED TO THE ASSESSEE AND THE REASONS RECORDED CANNOT BE IMPROVED UPON OR AMENDED BY ANY CORRESPONDENCE, LETTERS ETC. IN THE INSTANT CASE I T IS AN UNDISPUTED FACT THAT THE REASONS ACTUALLY RECORDED BY THE ASSESSING OFFICER WERE NOT FURNISHE D TO THE ASSESSEE TILL ONLY AFTER COMPLETION OF ASSESSMENT DESPITE REPEATED REQUESTS AND DEMANDS AND THEREFORE, THE GIST OF REASONS AS FURNISHED CANNOT BE TREATED AS REASONS ACTUALLY RECORDED BY THE ASSESSING OFFICER AS PER SECTION 148(2) AND AS MANDATED B Y THE HONBLE SUPREME COURT IN CASE OF GKN DRIVESHAFTS (INDIA) LTD (SUPRA). THUS, THE ASSESSING OFFICER HAS FAILED TO FURNISH THE REASONS RECORDED FOR REOPENING OF THE ASSESSMENT WITHIN THE REASONABLE TIME AND RATHER PRIOR TO THE COMPLETION OF ASSESSMENT, THAN THE REASSESSMENT ORDER PASSED WITHOUT SUPPLY OF REASONS AS RECORDED FOR REOPENING OF THE ASSESSMENT, IS INVALID ITA NO S . 6530&6531 / 07 13 AND CANNOT SUSTAIN. ACCORDINGLY, WE SET ASIDE THE REASSESSMENT UNDER CONSIDERATION BEING INVALID. 2 3 . WITH REGARD TO MERIT OF ADDITION, WE FOUND THAT SPECIAL RESOLUTION FOR REIMBURSEMENT OF MEDICAL EXPENSES WAS PASSED ON 29 - 4 - 2001, WHICH FALLS IN THE FINANCIAL YEAR 2001 - 02, RELEVANT TO ASSESSMENT YEAR 200 2 - 0 3 , HENCE, ADDITION CANNOT BE MADE IN THE ASSESSMENT YEAR 2001 - 02 AS MADE BY THE AO. ACCORDINGLY, WE DO NOT FIND ANY JUSTIFICATION FOR THE ADDITION SO MADE BY THE AO IN THE ASSESSMENT YEAR 2001 - 02 UNDER CONSIDERATION. 2 4 . AS THE FACTS AND CIRCUMSTANCES IN ITA NO.6531/MUM/2007 ARE EXACTLY SAME, FOLLOWING THE REASONING GIVEN HEREINABOVE, SA ME IS ALLOWED IN FAVOUR OF ASSESSEE. 2 5 . IN THE RESULT, APPEAL S OF BOTH THE ASSESSEE S ARE ALLOWED IN TERMS INDICATED HEREINABOVE. O RDER PRONOUNCED IN THE OPEN COURT ON THIS 08/04 / 201 5 . SD/ - SD/ - ( ) ( SANJAY GARG ) ( . . ) ( R.C.SHARMA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED 08/04 /201 5 . . /PKM , . / PS / COPY OF THE ORDER FORWARDED TO : / BY ORDER, / ( ASSTT. REGISTRAR) , / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A), MUMBAI. 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. //TRUE COPY//