Royal Splendours Developers pvt Ltd., CHENNAI V. ACIT, CHENNAI

ITA 768/CHNY/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 7727 (ITAT-CHENNAI)
• Duration Of Justice: 10 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-02-2017
• Appeal Filed By: Assessee
• Bench Allotted: C
• Next Hearing Date: 13-02-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 28-03-2016
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH
• Assessee Lawyers: T BANUSEKAR
• Keywords: Reopening of assessment; Principle of natural justice; Assessment record; Revised return; Reason to believe; Reassessment proceedings
• Section: 69C; 143(3); 133A; 115JB; 148

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI , ' # . $ & ' BEFORE SHRI M. BALAGANESH, ACCOUNTANT MEMBER AND SHRI DUVVURU RL REDDY, JUDICIAL MEMBER ./ I.T.A. NO. 768/MDS/2016 / ASSESSMENT YEAR : 2009-10 ROYAL SPLENDOURS DEVELOPERS PVT LTD., #9, GANAPATHY COLONY, GUINDY INDUSTRIAL ESTATE, GUINDY, CHENNAI - 600 032. [PAN: AAECR 0651B] VS. ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE -V(4), CHENNAI - 600 034. ( / APPELLANT) ( / RESPONDENT) ) * / APPELLANT BY : SHRI T. BANUSEKAR, CA -.) * / RESPONDENT BY : SHRI A.V. SREEKANTH, JCIT * /DATE OF HEARING : 13.02.2017 * /DATE OF PRONOUNCEMENT : 16.02.2017 /O R D E R PER M. BALAGANESH, ACCOUNTANT MEMBER: THIS APPEAL OF THE ASSESSEE ARISE OUT OF THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-3, CHENNAI VID E PROCEEDINGS IN ITA NO. 22/2013-14/A-3, DATED 28.01.2016 FOR THE ASSESSMENT YEAR 2009-10. :-2-: I.T.A. NO. 768/MDS/2016 2. THE FIRST PRELIMINARY ISSUE TO BE DECIDED IN TH IS APPEAL IS AS TO WHETHER THE LD CITA WAS JUSTIFIED IN UPHOLDING THE VALIDITY OF REASSESSMENT PROCEEDINGS IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. THE BRIEF FACTS OF THIS ISSUE IS THAT THE ASSES SEE IS ENGAGED IN THE BUSINESS OF PROPERTY DEVELOPMENT AND THE FINANCIAL YEAR 2008 -09 IS ITS FIRST YEAR OF OPERATIONS. THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2009 10 ON 25.9.2009 DECLARING TAXABLE INCOME OF RS.4, 52,664/- UNDER NORMAL PROVISIONS OF THE ACT AND RS. 5,99,497/- U/S 115JB OF THE ACT. THE SAID RETURN WAS DULY PROCESSED U/S.143(1) OF THE ACT. A SURVEY U/S 133A OF THE ACT WAS CONDUCTED IN THE PREMISES OF THE ASSESSEE ON 26.04. 2012. SUBSEQUENTLY THE CASE WAS REOPENED VIDE ISSUANCE OF NOTICE U/S 148 DATED 19.06.2012. THE ASSESSMENT WAS COMPLETED VIDE ORDER U/S 143(3) R.W.S. 147 DATE D 28.03.2013 BY ASSESSING THE TOTAL INCOME OF THE ASSESSEE AT RS.2,35,95,401/ -. THE ASSESSEE HAD CHALLENGED THE REOPENING AS WELL AS THE ADDITIONS M ADE IN ITS APPEAL BEFORE THE LD CITA. THE LD CITA VIDE HIS ORDER DATED 28.01.201 6 UPHELD THE ORDER OF THE LD AO. 4. AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE US CH ALLENGING THE VALIDITY OF THE REASSESSMENT ON THE FOLLOWING GROUNDS :- 1. FOR THAT THE ORDER OF THE COMMISSIONER OF INCO ME TAX (APPEALS) IS CONTRARY TO LAW, FACTS AND CIRCUMSTANC ES OF THE CASE TO THE EXTENT PREJUDICIAL TO THE INTERESTS OF THE APPELLAN T AND IS OPPOSED TO THE PRINCIPLES OF NATURAL JUSTICE, EQUITY AND FAIR PLAY . :-3-: I.T.A. NO. 768/MDS/2016 2. FOR THAT THE COMMISSIONER OF INCOME TAX (APPEAL S) FAILED TO APPRECIATE THAT THE ORDER OF THE ASSESSING OFFICER IS WITHOUT JURISDICTION. 3. FOR THAT THE REOPENING WAS BAD IN LAW. 4. FOR THAT THE COMMISSIONER OF INCOME TAX (APPEAL S) FAILED TO APPRECIATE THE FACT THAT THE ASSESSING OFFICER ERRE D IN COMPLETING THE ASSESSMENT WITHOUT PROVIDING THE APPELLANT WITH COP Y OF THE REASONS RECORDED. 5. FOR THAT THE COMMISSIONER OF INCOME TAX (APPEAL S) FAILED TO APPRECIATE THE FACT THAT THE ADDITIONS WERE MADE BA SED ON INCORRECT MATERIAL AND ON THE BASIS OF ESTIMATES, CONJECTURES AND SURMISES. 5. THE LD AR CONTENDED THAT THE REASSESSMENT WAS I NVALID FOR REASONS THAT ARE THREEFOLD, VIZ., THE REASONS RECORDED FOR REOPE NING WERE NOT FURNISHED DESPITE THE ASSESSEES REQUEST; THERE WAS NO REASON BASED O N WHICH A BELIEF COULD BE FORMED THAT INCOME HAD ESCAPED ASSESSMENT; AND ADDI TIONS THAT WERE MADE DID NOT ARISE OUT OF THE ISSUE FOR WHICH ASSESSMENT WAS RE-OPENED. 5.1. THE LD AR POINTED OUT THAT IN RESPONSE TO THE NOTICE U/S.148 DATED 19.06.2012, A REPLY WAS FILED BY THE ASSESSEE REQUE STING THE LD AO TO TREAT THE ORIGINAL RETURN FILED ON 25.09.2009 AS THE RETURN F ILED IN RESPONSE TO NOTICE U/S 148 AND ALSO ASKING THE LD AO TO FURNISH A COPY OF THE REASONS THAT WERE RECORDED FOR REOPENING THE ASSESSMENT. HOWEVER, THE SAME WAS FURNISHED TO THE ASSESSEE ONLY ON 16.10.2014, BY THEN THE ASSESSMENT WAS COMPLETED AND THE ASSESSEE WAS IN APPEAL BEFORE THE LD CITA. THE LD A R DREW OUR ATTENTION TO THE :-4-: I.T.A. NO. 768/MDS/2016 COMPILATION OF CASE LAWS THAT WERE FURNISHED, AND S UBMITTED THAT IN THE FOLLOWING DECISIONS ENCLOSED AT SL. NO. 2 TO 5, IT HAS BEEN H ELD THAT NON FURNISHING OF REASONS RECORDED WHEN SOUGHT FOR WOULD MAKE THE REA SSESSMENT ORDER BAD IN LAW: CIT VIDESH SANCHAR NIGAM LTD [2012] 340 ITR 66 (BO M) CIT V FOMENTO RESORTS AND HOTELS 2006 (11) TMI 645 BOM HON'BLE HIGH COURT CIT V TREND ELECTRONICS [2015] 379 ITR 456 (BOM) S.PRAKASH RAJU V DCIT [2005] 96 TTJ (HYD) 832 HE ALSO PLACED RELIANCE ON THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF GENERAL MOTORS INDIA (P) LTD V DY CIT [2013 ] 354 ITR 0244 (GUJ) WHEREIN IT HAS BEEN HELD THAT IT WAS NOT OPEN FOR T HE ASSESSING OFFICER TO PASS A COMPOSITE REASSESSMENT ORDER FOR IT WOULD CURTAIL T HE ASSESSEES RIGHT TO FILE A WRIT BEFORE THE HIGH COURT IN CASES WHERE NO SPEAKI NG ORDER HAS BEEN PASSED IN CONNECTION WITH THE OBJECTIONS TO RE-OPENING WHICH IS AGAINST THE PRINCIPLE OF NATURAL JUSTICE. 5.2. NEXT, THE LD AR DREW OUR ATTENTION TO THE REA SONS RECORDED FOR REOPENING WHICH WAS ENCLOSED AT SL. NO.9 OF THE PAPER BOOK. T HE SAME READS AS DURING THE SURVEY, IT WAS FOUND THAT CASH BALANCE AS PER C ASH BOOK FOR FINANCIAL YEAR 2008 09 IS RS.18,42,688/- AND THE CASH IN HAND AS PER RETURN OF INCOME IS RS.8,688/-. THIS SHOWS INCOME L IABLE TO TAX IS ESCAPED FROM ASSESSMENT. THE LD AR VEHEMENTLY ARGUED THAT SOME ALLEGED :-5-: I.T.A. NO. 768/MDS/2016 DIFFERENCE IN CASH IN HAND DOES NOT MEAN THAT INCOM E HAS ESCAPED ASSESSMENT AND IN ANY CASE THESE REASONS RECORDED CANNOT BE A BASIS TO FORM A BELIEF THAT INCOME HAS ESCAPED ASSESSMENT. HE CONTENDED THAT TH E SAME DOES NOT EVEN CONSTITUTE A REASON AND CAN AT BEST BE SUSPICION. HE STATED THAT THE EXPRESSIONS REASON TO BELIEVE IS DIFFERENT FROM REASON TO SU SPECT AND NO REOPENING COULD HAPPEN BASED ON REASON TO SUSPECT. 5.3. THEN, THE LD AR CONTENDED THAT THE ADDITIONS MADE DID NOT ARISE FROM THE CASH BOOK, WHILE THE DIFFERENCE IN CASH BALANCE HAS BEEN THE BASIS FOR REOPENING THE ASSESSMENT. IN THIS REGARD, A) HE DREW OUR ATTENTION TO THE FIRST ADDITION OF RS.5 ,78,900 U/S 69C OF THE ACT WHICH HAS BEEN MADE BASED ON THE SALARY LEDGER FROM THE TALLY THAT WAS IMPOUNDED DURING SURVEY AND NOT FROM THE CASH B OOK OR THE ALLEGED DIFFERENCE IN CASH. THE LD AR POINTED OUT TO THE AS SESSMENT ORDER WHERE THE EXTRACT OF THE LEDGER HAS BEEN REPRODUCED FROM WHICH IT IS SEEN THAT ADDITION OF RS.5,78,900/- PERTAIN TO SOME BANK TRAN SACTIONS AND NOT CASH TRANSACTIONS. B) THEN, THE LD AR DREW OUR ATTENTION TO THE NEXT ADDI TION OF RS.65,85,000/- MADE U/S.69C OF THE ACT WHICH CONSISTS OF FIVE ITEM S: FIRSTLY AN ADDITION OF RS.9,40,000/- WHICH PERTAIN S TO FINANCIAL YEAR ENDING 31.03.2010 WHICH IS NOT THE YEAR UNDER APPEAL. HE DREW OUR ATTENTION TO :-6-: I.T.A. NO. 768/MDS/2016 PAGE 6 OF THE ASSESSMENT ORDER WHEREIN THE DATE HAS BEEN CLEARLY MENTIONED AS 31.03.2010. SECONDLY, A SUM OF RS.15,30,000/- PAID TO SHRI. RA VICHANDRAN. THE LD AR SUBMITTED THAT SHRI. RAVICHANDRAN IS THE LAND OWNER TO WHOM THE LAND ADVANCE WAS PAID BY SHRI. SHIVARAMAKRISHNAN EVEN BE FORE THE BUSINESS WAS COMMENCED BY THE ASSESSEE COMPANY AND THE SAME WAS BROUGHT IN AS CAPITAL BY SHRI. SHIVARAMAKRISHNAN UPON COMMENCEMENT OF BUS INESS. OUR ATTENTION WAS DRAWN TO THE LEDGER ACCOUNTS SHIVARAMAKRISHNAN CAPITAL A/C AND RAVICHANDRAN (AISHWARYA LO) A/C IN THE BOOKS OF T HE ASSESSEE COMPANY FROM WHICH IT CAN BE SEEN THAT A SUM OF RS.37,00,00 0/- PAID TO SHRI. RAVICHANDRAN HAS BEEN ACCOUNTED AS CAPITAL CONTRIBU TION BY SHRI. SHIVARAMAKRISHNAN ON 09.08.2008 BY MEANS OF A JOURN AL VOUCHER (JV), SUBSEQUENTLY THE BALANCE OF RS.37,00,000/- IN THE L EDGER ACCOUNT OF SHRI. RAVICHANDRAN (AISHWARYA LO) HAS BEEN TRANSFERRED T O LAND PURCHASE ACCOUNT BY WAY OF A JV ON 31.03.2009. THIRDLY, A SUM OF RS.16,25,000/- PAID TO SHRI. THA NGAKRISHNAN AND SHRI. ALAGESAN. THE LD AR SUBMITTED THESE WERE AGAIN NOT EMANATING FROM THE CASH BOOK OR ALLEGED DIFFERENCE IN CASH BALANCE. HE DREW OUR ATTENTION TO THE LEDGER ACCOUNT THANGA KRISHNAN & ALAGESAN (R.M.NAG AR LO) AND STATED THAT THOSE WERE THE ONLY TRANSACTIONS WITH THESE PARTIES AND POINTED THAT A SUM OF RS.28,75,000/- HAS BEEN PAID AND THESE WERE ALL ONL Y BANK PAYMENTS. :-7-: I.T.A. NO. 768/MDS/2016 FOURTHLY, A SUM OF RS.15,00,000/- PAID TO SHRI.SHIV A SARAVANAN. THE LD AR AGAIN SUBMITTED THAT THESE ADDITIONS WERE NOT MADE BASED ON CASH BOOK OR ALLEGED DIFFERENCE IN CASH BALANCE. HE FURTHER REFE RRING TO THE LEDGER ACCOUNT OF SHIVA SARAVANAN IN THE BOOKS OF THE ASSESSEE COM PANY FORMING PART OF THE PAPER BOOK, SUBMITTED THAT DURING THE YEAR, A SUM O F RS.19,03,000/- WAS RECEIVED FROM SHRI. SHIVA SARAVANAN AS LOAN AND ALL THE TRANSACTIONS WERE THROUGH BANK. FINALLY, A SUM OF RS.5,00,000/- AND RS.4,90,000/- WHICH WERE WITHDRAWALS DONE BY SHRI. KOTHANDARAMAN FROM BANK. THE LD AR SU BMITTED THAT THESE WERE WITHDRAWALS MADE BY SHRI. KOTHANDARAMAN FOR MA KING PAYMENTS TO LABOURERS AND THAT THESE HAVE BEEN DULY ACCOUNTED I N THE BOOKS OF THE ASSESSEE. HE FURTHER SUBMITTED HAVING DULY ACCOUNTE D THE SAME, THIS ADDITION DOES NOT EMANATE FROM ALLEGED CASH DIFFERENCE AS ME NTIONED IN THE REASONS RECORDED FOR REOPENING. C) NEXT, THE LD AR DREW OUR ATTENTION TO THE ADDITION OF RS.40,20,000/- MADE U/S 68 OF THE ACT AND SUBMITTED THAT THESE WERE NOT EMANATING FROM THE CASH BOOK OR ALLEGED CASH DIFFERENCE BUT FROM THE M EMORANDUM ENTRIES IN THE IMPOUNDED TALLY. HE FURTHER SUBMITTED THAT THES E ADDITIONS ARE NOTHING BUT THE CREDIT SIDE OF THE MEMORANDUM ENTRIES THAT WERE MADE AS ADDITION U/S.69C OF THE ACT. :-8-: I.T.A. NO. 768/MDS/2016 D) THEN THE LD AR DREW OUR ATTENTION TO THE ADDITION O F RS.1,19,58,837/- U/S 68 OF THE ACT AND SUBMITTED THAT THE SAME WAS MADE BASED ON AN EXCEL FILE THAT WAS IMPOUNDED DURING SURVEY . HE FURTHER SUBMITTED THAT THESE WERE NOT EMANATING FROM THE CASH BOOK OR ALLEGED CA SH DIFFERENCE. 6. IN RESPONSE TO THIS, THE LD DR SUBMITTED THE L ETTER SEEKING REASONS FOR RE- OPENING DATED 09.07.2012 WAS FILED WITH ASK - AAYAK AR SEVA KENDRA OF THE INCOME TAX DEPARTMENT AND NOT WITH THE OFFICE OF TH E LD AO. THE LD DR PLACED RELIANCE ON THE ORDER OF THE LD CITA WHEREIN AT PAG ES 14 AND 15 IT HAS BEEN HELD AS FOLLOWS: BEFORE GOING INTO THE GROUND OF APPEAL TAKEN BY TH E APPELLANT, IT IS APPROPRIATE TO KNOW THE BRIEF FACTS OF THE CASE. I N THE APPELLANTS CASE ORIGINAL RETURN OF INCOME WAS FILED ON 25.09.2009 FOR THE AS SESSMENT YEAR 2009 10 AND THE SAME WAS PROCESSED U/S 143(1). SUBSEQUENTLY, SU RVEY U/S.133A WAS CARRIED OUT AT THE BUSINESS PREMISES OF THE APPELLANT. .. I HAVE CALLED FOR THE ASSESSMENT RECORDS AND EXAMIN ED VIS A VIS CONTENTIONS OF THE APPELLANT IN SO FAR AS REOPENING PROCEEDINGS U/S.147. ON VERIFICATION OF THE ASSESSMENT RECORD, IT IS NOT ICED THAT ASSESSING OFFICER HAD ISSUED FIRST NOTICE U/S.148 ON 19.06.20 12 DIRECTING THE APPELLANT TO FILE THE REVISED RETURN OF INCOME IN R ESPONSE TO NOTICE U/S.148 WITHIN 30 DAYS, AND NOTICE U/S.142 WAS ALSO ISSUED ON 24/09/2012. IT IS OBSERVED FROM ASSESSMENT RECORD THAT NO RETURN OF I NCOME IN RESPONSE TO NOTICE U/S.148 HAVE BEEN FILED TILL 30.11.2012. THE REAFTER ASSESSING OFFICER HAD ISSUED REMINDER LETTER DATED 30.11.2012 DIRECTI NG THE APPELLANT TO FILE RETURN OF INCOME ELECTRONICALLY FOR ASSESSMENT YEAR 2009 10 WITHIN 10 :-9-: I.T.A. NO. 768/MDS/2016 DAYS. ALONG WITH THIS REMINDER LETTER AO HAD ENCLOS ED NOTICE U/S.148 ISSUED ON 19.06.2012. IN RESPONSE TO ASSESSING OFFI CERS LETTER DATED 30.11.2012, APPELLANT HAD FILED LETTER ON 13.12.201 2 IN THE OFFICE OF ADDITIONAL COMMISSIONER OF INCOME TAX RANGE-5, CHEN NAI, IN WHICH MENTION HAS BEEN MADE TO HAVE FILED RETURN OF INCOM E ELECTRONICALLY AND ENCLOSED THE ACKNOWLEDGEMENT OF FILING THE RETURN O F INCOME. ON PERUSAL OF THE INCOME TAX RETURN ACKNOWLEDGEMENT IT IS NOTI CED THAT THE REVISED RETURN OF INCOME HAS BEEN FILED IN RESPONSE TO NOTI CE U/S.148, ON 11.12.2012 ONLY. BEFORE THIS DATE, NO RETURN OF INC OME HAS BEEN FILED IN RESPONSE TO NOTICE U/S.148 OR NO REQUEST SEEM TO HA VE BEEN MADE TO TREAT THE ORIGINAL RETURN OF INCOME FILED ON 25/09/2009 T O HAVE BEEN FILED IN RESPONSE TO NOTICE U/S.148. THIS FINDING IS SUPPORT ED BY THE CONTENTS OF THE APPELLANTS LETTER FILED ON 13.12.2012. IT IS A PPROPRIATE HERE TO REPRODUCE THE CONTENTS OF THE APPELLANT LETTER DATE D 12.12.2012 FILED ON 13.12.2012 IN THE OFFICE OF THE ADDITIONAL COMMISSI ONER OF INCOME TAX RANGE 5, CHENNAI. IN RESPONSE TO LETTER DATED 30.11.2012 AND THE DIRE CTION OF THE AUTHORITY WE HAVE FILED OUR RETURN ELECTRONICALLY, IN RESPONS E TO NOTICE U/S.148. WE HERE WITH ENCLOSE THE ACKNOWLEDGEMENT OF THE RETURN TO THE AUTHORITY REFERENCE. THE CONTENTS OF THE ABOVE MENTIONED LETTER OF THE A PPELLANT PROVE BEYOND DOUBT THAT NO RETURN OF INCOME IN RESPONSE TO NOTIC E U/S.148 HAS BEEN FILED BEFORE 11.12.2012 AND ALSO NO REQUEST HAS BE EN MADE TO TREAT ORIGINAL RETURN FILED ON 25/09/2009 . .. ON VERIFICATION OF ASSESSMENT RECORD IT IS NOTICED THAT NEITHER THE AUTHORISED REPRESENTATIVE OF THE APPELLANT APPEARED BEFORE THE ASSESSING OFFICER NOR THE DIRECTORS OF THE APPELLANT COMPANY HAD QUESTIONED THE REOPENING PROCEEDINGS U/S.147 ON OR BEFORE THE COMP LETION OF ASSESSMENT :-10-: I.T.A. NO. 768/MDS/2016 PROCEEDINGS. ON THE CONTRARY THEY HAD COMPLIED WITH ALL THE NOTICES ISSUED BY THE ASSESSING OFFICER PERTAINED TO THIS ASSESSME NT PROCEEDINGS AND ATTENDED AND SUBMITTED REQUISITE DETAILS BEFORE THE AO. .. . IN VIEW OF THE ABOVE STATED FACTS I HOLD THAT NO RE QUEST FROM APPELLANT COMPANY TO FURNISH REASONS RECORDED FOR REOPENING P ROCEEDINGS HAD BEEN FILED BEFORE THE ASSESSING OFFICER AND ALSO AT NO P OINT OF TIME, APPELLANT COMPANY HAD REGISTERED ITS PROTEST AGAINST REOPENIN G PROCEEDINGS. BASED ON THE SAME, THE LD DR CONTENDED THAT THE ASS ESSEE DID NOT COMPLY WITH THE NOTICE ISSUED U/S 148 OF THE ACT AND WAS COMPLI ED ONLY AFTER THE REMINDER LETTER DATED 30.11.2012 WAS SERVED. THE RETURN WAS FILED IN RESPONSE TO NOTICE U/S. 148 ON 11.12.2012 AND IN THE LETTER INTIMATING THE SAME TO THE LD AO, THE ASSESSEE HAS NOT SOUGHT FOR THE REASONS RECORDED FO R REOPENING. 7. IN DEFENCE, THE LD AR SUBMITTED THAT ASK BEIN G AN OFFICE OF THE INCOME TAX DEPARTMENT, THE SANCTITY OF FILING THE LETTER W ITH ASK CANNOT BE QUESTIONED. HE FURTHER SUBMITTED THAT IF THE LETTER DATED 09.07 .2012 IS CONSIDERED NOT TO HAVE BEEN FILED THEN THE LD AO COULD NOT HAVE ISSUED A V ALID NOTICE U/S 143(2) OF THE ACT. HE ELABORATED THAT IN THE FIRST PAGE OF THE A SSESSMENT ORDER IT HAS BEEN MENTIONED THAT NOTICE U/S 143(2) OF THE ACT WAS ISS UED AND SERVED ON THE ASSESSEE COMPANY ON 26.09.2012 CALLING FOR DETAILS WHICH IS CONSEQUENT TO THE COMPLIANCE LETTER DATED 09.07.2012. IF THE LETTER D ATED 09.07.2012 IS TREATED AS NOT FILED, THEN THE NOTICE U/S 143(2) OF THE ACT SH OULD BE TREATED TO HAVE BEEN :-11-: I.T.A. NO. 768/MDS/2016 ISSUED IN RESPECT OF THE ORIGINAL RETURN FILED ON 2 5.09.2009. IN THAT CASE, THE SAID NOTICE U/S 143(2) OF THE ACT WOULD BECOME BARRED BY LIMITATION BECAUSE THE PROVISO TO SECTION 143(2) OF THE ACT STATES THAT NO NOTICE U/S 143(2) OF THE ACT SHALL BE FILED AFTER THE EXPIRY OF SIX MONTHS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE RETURN IS FURNISHED, WHICH MEANS THAT THE LIMITATION FOR ISSUE OF NOTICE U/S 143(2) OF THE ACT WOULD BE BARRED BY 30.09.2010 . 8. WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. WE CONFINE OUR DECISION ONLY ON THE VALIDIT Y OF REOPENING OF ASSESSMENT. IT IS NOW LEGALLY WELL SETTLED THAT THE REASONS REC ORDED FOR RE-OPENING THE ASSESSMENT SHOULD BE FURNISHED TO THE ASSESSEE. THE HON'BLE SUPREME COURT IN THE CASE OF GKN DRIVESHAFTS (INDIA) LTD V ITO [2003 ] 259 ITR 19 (SC) HAS CLARIFIED THAT WHEN A NOTICE U/S.148 IS ISSUED, THE PROPER COURSE OF ACTION FOR THE NOTICE IS TO FILE A RETURN OF INCOME AND IF HE DESI RES TO SEEK REASONS FOR ISSUING NOTICES AND THE LD AO IS BOUND TO FURNISH REASONS W ITHIN A REASONABLE TIME. THE HON'BLE SUPREME COURT HAS FURTHER STATED THAT ON RE CEIPT OF THE REASONS, THE NOTICE IS ENTITLED TO FILE OBJECTIONS TO ISSUANCE O F NOTICE AND THE LD AO IS BOUND TO DISPOSE OFF THE SAME BY PASSING A SPEAKING ORDER. S IMILARLY, THE HON'BLE BOMBAY HIGH COURT IN CIT V TREND ELECTRONICS 379 ITR 456 ( BOM) HAS HELD AS FOLLOWS: THESE RECORDED REASONS AS LAID DOWN BY THE APEX COU RT MUST BE FURNISHED TO THE ASSESSEE WHEN SOUGHT FOR SO AS TO ENABLE THE ASSESSEE TO OBJECT TO THE SAME BEFORE THE ASSESSING OFFICER. THUS IN THE ABSENCE OF REASONS BEING FURNISHED, WHEN SOUGHT FOR WOULD MAKE AN ORDE R PASSED ON REASSESSMENT BAD IN LAW. THE RECORDING OF REASONS ( WHICH HAS BEEN DONE :-12-: I.T.A. NO. 768/MDS/2016 IN THIS CASE) AND FURNISHING OF THE SAME HAS TO BE STRICTLY COMPLIED WITH AS IT IS A JURISDICTIONAL ISSUE. THIS REQUIREMENT IS V ERY SALUTARY AS IT NOT ONLY ENSURES REOPENING NOTICES ARE NOT LIGHTLY ISSUED. B ESIDES IN CASE THE SAME HAVE BEEN ISSUED ON SOME MISUNDERSTANDING/MISCONCEP TION, THE ASSESSEE IS GIVEN AN OPPORTUNITY TO POINT OUT THAT THE REASO NS TO BELIEVE AS RECORDED IN THE REASONS DO NOT WARRANT REOPENING BEFORE THE REASSESSMENT PROCEEDINGS ARE COMMENCED. THE ASSESSING OFFICER DI SPOSES OF THESE OBJECTIONS AND IF SATISFIED WITH THE OBJECTIONS, TH EN THE IMPUGNED REOPENING NOTICE UNDER SECTION 148 OF THE ACT IS DR OPPED/WITHDRAWN OTHERWISE IT IS PROCEEDED WITH FURTHER. IN ISSUES S UCH AS THIS, I.E. WHERE JURISDICTIONAL ISSUE IS INVOLVED THE SAME MUST BE S TRICTLY COMPLIED WITH BY THE AUTHORITY CONCERNED AND NO QUESTION OF KNOWLEDG E BEING ATTRIBUTED ON THE BASIS OF IMPLICATION CAN ARISE. WE ALSO DO NOT APPRECIATE THE STAND OF THE REVENUE, THAT THE RESPONDENT ASSESSEE HAD ASKED FOR REASONS RECORDED ONLY ONCE AND THEREFORE SEEKING TO JUSTIFY NON-FURN ISHING OF REASONS. WE EXPECT THE STATE TO ACT MORE RESPONSIBLY. THEREFORE, IT IS CLEAR THAT IT IS MANDATORY ON THE PART OF THE LD AO TO FURNISH THE REASONS RECORDED FOR REOPENING FAILURE OF WHICH WOU LD RENDER THE REASSESSMENT INVALID. IN THE INSTANT CASE, THE ASSESSEE COMPAN Y HAS VIDE LETTER DATED 09.07.2012 COMPLIED WITH THE NOTICE U/S 148 OF THE ACT AND HAS ALSO SOUGHT FOR REASONS RECORDED FOR REOPENING THE ASSESSMENT. THE CONTENTIONS OF THE LD DR BASED ON THE ORDER OF THE LD CITA THAT THE LETTER D ATED 09.07.2012 HAS NOT BEEN FILED, CANNOT BE ACCEPTED. THE LETTER DATED 09.07. 2012 HAS BEEN FILED WITH ASK WHICH IS THE OFFICE OF THE INCOME TAX DEPARTMENT AN D THEREFORE IS A VALID ONE. IN ANY CASE, AS POINTED OUT BY THE LD AR, IF THE SAID LETTER IS CONSIDERED INVALID, THEN THE NOTICE ISSUED U/S 143(2) OF THE ACT DATED 26.09.2012 WOULD BE BARRED :-13-: I.T.A. NO. 768/MDS/2016 BY LIMITATION RENDERING THE ENTIRE REASSESSMENT INV ALID. PROVISO TO SECTION 143(2) OF THE ACT STATES THAT NO NOTICE U/S 143(2) OF THE ACT SHALL BE ISSUED AFTER THE EXPIRY OF SIX MONTHS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE RETURN WAS FILED. IF THE LETTER DATED 09.07.2012 IS CONSIDERED NOT FILED, THEN THE SECTION 143(2) NOTICE DATED 26.09.2012 SHOULD HAVE BEEN ISS UED ON THE ORIGINAL RETURN FILED ON 25.09.2009 IN WHICH CASE THE LIMITATION WO ULD HAVE BEEN EXPIRED ON 30.09.2010. 8.1. THE NOTICE U/S 143(2) OF THE ACT CANNOT BE TR EATED TO HAVE BEEN ISSUED BASED ON THE RETURN FILED ON 11.12.2012, BECAUSE BO TH THE REMINDER LETTER OF THE ASSESSING OFFICER DATED 30.11.2012 AND THE RETURN OF INCOME FILED ON 11.12.2012 ARE SUBSEQUENT TO ISSUE OF NOTICE U/S 143(2) OF THE ACT DATED 26.09.2012. ADMITTEDLY NO NOTICE U/S 143(2) OF THE ACT WAS ISSU ED AND SERVED ON THE ASSESSEE AFTER 11.12.2012. THE HON'BLE SUPREME COURT IN THE CASE OF ACIT V HOTEL BLUE MOON 321 ITR 362 (SC) HAS MANDATED THE ISSUE OF NOTICE U/S 143(2) OF THE ACT FOR COMPLETION OF ASSESSMENT U/S 143(3) R.W.S. 158BC OF THE ACT AND HAS STATED THAT OMISSION OF ISSUE OF NOTICE U/S 143 (2) OF THE ACT IS NOT CURABLE. THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF SA PTHAGIRI FINANCE & INVESTMENT V ITO 90 DTR 289 (MAD) HAS BY PLACING RELIANCE ON THE DECISION OF THE HON'BLE SUPREME COURT IN BLUE MOON HAS HELD THA T IN COMPLETING THE ASSESSMENT U/S 148 OF THE ACT, COMPLIANCE OF THE PR OCEDURE LAID OUT IN SECTION 143(2) OF THE ACT IS MANDATORY. THEREFORE IF THE C ONTENTIONS OF THE REVENUE THAT THE LETTER DATED 09.07.2012 IS CONSIDERED, THEN IT WOULD INVALIDATE THE NOTICE U/S :-14-: I.T.A. NO. 768/MDS/2016 143(2) OF THE ACT DATED 26.09.2012 AND CONSEQUENTLY INVALIDATE THE REASSESSMENT. 8.2. ON THE CONTRA, IF THE LETTER DATED 09.07.2012 IS CONSIDERED VALID, THEN THE ASSESSMENT IS INVALID ON ACCOUNT ON NON-FURNISHING OF REASONS RECORDED FOR REOPENING THE ASSESSMENT. IN OUR CONSIDERED OPINIO N, THE LETTER DATED 09.07.2012 FILED WITH ASK IS A VALID ONE AND BASED ON THE 143(2) NOTICE, IT IS CLEAR THAT THIS LETTER IS ONE THAT HAS BEEN ACCEPTE D AND ACTED UPON BY THE REVENUE. THEREFORE, THE LD CITAS CONCLUSION AND TH E REVENUES CONTENTION THAT THE SAID LETTER DATED 09.07.2012 IS NOT A VALID COM PLIANCE TO NOTICE U/S 148 OF THE ACT AND THAT REASONS RECORDED FOR REOPENING WAS NOT SOUGHT FOR, IS ERRONEOUS AND INCORRECT. AS HELD BY THE HON'BLE SUPREME COURT IN GKN DRIVESHAFTS THE LD AO OUGHT TO HAVE FURNISHED THE REASONS RECORDED FOR REOPENING THE ASSESSMENT TO ENABLE THE ASSESSEE TO FILE ITS OBJECTIONS TO TH E SAME. 8.3. IN THE LIGHT OF THESE FACTS AND CIRCUMSTANCES THAT THE REASONS RECORDED WERE NOT FURNISHED TO THE ASSESSEE, WE ARE OF THE O PINION THAT THE ASSESSMENT IS BAD IN LAW. ACCORDINGLY, THE GROUNDS RAISED IN THI S REGARD ARE ALLOWED. 9. SINCE THE CASE IS DECIDED ON ASSUMPTION OF JURI SDICTION BY THE LD AO IN FAVOUR OF THE ASSESSEE, WE REFRAIN TO ADJUDICATE TH E MERITS OF THE CASE. :-15-: I.T.A. NO. 768/MDS/2016 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS A LLOWED. ORDER PRONOUNCED ON THURSDAY, THE 16TH DAY OF FEBRU ARY, 2017 AT CHENNAI. SD/ - ( ' # . $ ) (DUVVURU RL REDDY) /JUDICIAL MEMBER SD/ - ( ) (M. BALAGANESH) / ACCOUNTANT MEMBER /CHENNAI, 3 /DATED: 16TH FEBRUARY, 2017 JPV * -&45 65 /COPY TO: 1. ) APPELLANT 2. -.) /RESPONDENT 3. 7 ( )/CIT(A) 4. 7 /CIT 5. 5 -&& /DR 6. 9 /GF