Deputy Commissioner of Income-tax, Nashik V. M/s. Four Pillars Communication Pvt Ltd, Mumbai

ITA 846/PUN/2017

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 6046 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 5 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-09-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 07-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ALOK MALVIYA
• Keywords: Reopening of assessment; Set aside
• Section: 133A; 139(1); 13; 148; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUNE BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI S.S. VISWANETHRA RAVI, J UDICIAL MEMBER . / ITA NO . 846 /PUN/2017 / ASSESSMENT YEAR : 20 1 2 - 13 DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 1, NASHIK ....... / APPELLANT / V/S. M/S. FOUR PILLARS COMMUNICATION PVT. LTD., C - 304, TARA SRISHTI COMPLEX, OPP. L & T GATE NO. 7, SAKI VIHAR ROAD, POWAI, MUMBAI 400072 PAN : AAACF2418C / RESPONDENT ASSESSEE BY : SHRI PRAMOD SHINGTE REVENUE BY : SHRI ALOK MALVIYA / DATE OF HEARING : 14 - 09 - 2020 / DATE OF PRONOUNCEMENT : 28 - 0 9 - 2020 / ORDER PER S.S. VISWANETHRA RAVI, JM : THIS APPEAL BY THE REVENUE AGAINST THE ORDER DATED 23 - 01 - 2017 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 12 , PUNE [CIT(A)] FOR ASSESSMENT YEAR 20 1 2 - 13. 2. THE APPELLANT REVENUE RAISED TWO GROUNDS OF APPEAL AMONGST WHICH THE LD. DR PREFERRED TO ARGUE GROUND NO. 1 WHICH WAS RAISED CHALLENGING 2 ITA NO . 846/PUN/2017, A.Y. 2012 - 13 THE ACTION OF CIT(A) IN ANNULLING THE ASSESSMENT ORDER PASSED BY THE AO U/S. 144 R.W.S. 147 OF THE ACT IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. THE LD. DR, SHRI ALOK MALVIYA SUBMITS THAT THE AO HAD REOPENED THE ASSESSMENT AFTER RECORDING REASONS AND THE ASSESSE E DID NOT RAISE ANY OBJECTION BEFORE THE AO REGARDING THE DISPOSAL OF OBJECTION BEFORE PASSING THE ASSESSMENT ORDER. HE SUBMITS THAT THE ASSESSEE COULD HAVE RAISED THE SAID ISSUE DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE RAISING OF OBJECTION IN THE APPELLATE PROCEEDINGS AFTERTHOUGHT TACTICS. THE AO SUPPLIED THE COPY OF REASONS TO THE ASSESSEE ON ITS OWN , THE ASSESSEE USED THE TACTICS OF DELAY ING THE PROCEEDINGS AND SOUGHT FURTHER ADJOURNMENTS. AT THE FAG END OF THE ASSESSMENT PROCEEDINGS, THE ASSE SSEE RAISED OBJECTION AND SOUGHT ADJOURNMENTS FROM TIME TO TIME ON THE ONE PRETEXT OR OTHERS. THE AO WAS THEN HARDLY LEFT WITH TIME TO DISPOSE OFF THE SAME BUT HOWEVER IN THE ASSESSMENT ORDER ITSELF. THE AO DISPOSED OFF THE OBJECTIONS RAISED BY THE ASSES SEE BY A SPEAKING ORDER AND THE PROCEDURE DOES NOT DEMAND THAT THE AO SHOULD PASS ORDER SEPARATELY. THE CIT(A) WITHOUT CONSIDERING THE SAME ACCEPTED THE SUBMISSIONS OF ASSESSEE AND ANNULLED THE ASSESSMENT PASSED BY THE AO. THE LD. DR PRAYED TO SET ASIDE THE ORDER OF CIT(A) AND SUPPORTED THE ORDER OF AO. 4. THE LD. AR, SHRI PRAMOD SHINGTE SUBMITS THAT THE ASSESSEE RAISED OBJECTION TO THE NOTICE ISSUED BY THE AO U/S. 148 OF THE ACT BUT THE AO DID NOT DISPOSE OFF THE SAME BY PASSING A SEPARATE SPEAKING OR DER AND PROCEEDED TO PASS THE ORDER U/S. 147 OF THE ACT. HE SUBMITS THAT THE AO HAS MANDATORILY DISPOSE OFF THE OBJECTIONS RAISED AGAINST THE REASONS RECORDED BY SEPARATE SPEAKING ORDER AND PLACED RELIANCE ON THE DECISION OF HONBLE SUPREME COURT IN THE C ASE OF GKN DRIVESHAFT INDIA LTD. REPORTED IN 259 ITR 19. HE ARGUED THAT THE AO IS BOUND TO DECIDE THE OBJECTIONS 3 ITA NO . 846/PUN/2017, A.Y. 2012 - 13 RAISED AGAINST THE REOPENING OF ASSESSMENT BY SPEAKING ORDER AND THE HONBLE SUPREME COURT HELD IF THE AO FAILS TO DISPOSE OFF THE SAME THE AS SESSMENT MADE THEREON IS LIABLE TO BE ANNULLED. WE NOTE THAT THE FACTS REMAINS ADMITTED THAT THE ASSESSEE RAISED OBJECTION IN THE ASSESSMENT PROCEEDINGS ITSELF BUT THE AO DID NOT PASS SPEAKING ORDER SEPARATELY REGARDING THE OBJECTIONS RAISED BY THE ASSESS EE QUESTIONING THE REOPENING OF ASSESSMENT. ON PERUSAL OF RECORD, WE NOTE THAT THE NOTICE U/S. 148 WAS ISSUED ON 25 - 10 - 2013 AND THE AO SUPPLIED REASONS RECORDED TO THE ASSESSEE ON 12 - 02 - 2015. THE ASSESSEE FILED OBJECTIONS VIDE LETTER DATED 03 - 03 - 2014 AND THE ASSESSMENT WAS COMPLETED U/S. 144(7) OF THE ACT VIDE ORDER DATED 27 - 03 - 2015. AS RIGHTLY POINTED BY THE LD. CIT(A) THAT THE AO HAS SUFFICIENT TIME TO DISPOSE OFF THE OBJECTIONS FROM 03 - 03 - 2015 TILL THE DATE OF ORDER ON 27 - 03 - 2015. THE HONBLE SUPREME COURT IN THE CASE OF GKN DRIVESHAFT INDIA LTD. (SUPRA) HELD THAT THE AO IS DUTY BOUND TO DISPOSE OFF THE OBJECTIONS BY SEPARATE SPEAKING ORDER. THE RELEVANT PORTION OF PARA S 3.4 OF CIT(A) IS REPRODUCED HERE - IN - BELOW : 3.4 IN THE REMAND REPORT THE AO HAD NOT DENIED THE FACT THAT THE OBJECTIONS RAISED WERE NOT REJECTED BY A SEPARATE ORDER. THE AD HAS SUBMITTED THAT ON PERUSAL OF RECORDS IT IS SEEN THAT APPELLANT HAS RAISED OBJECTION AGAINST ISSUE OF NOTICE U/S 147 ON 03.03.2015 I.E. AT THE FAG END OF THE Y EAR AND THE AO WAS HARDLY LEFT TIME TO DISPOSE THE OBJECTION BEFORE COMPLETING THE ASSESSMENT PROCEEDINGS, HENCE, THE SAME WERE DIPOSED IN THE ASSESSMENT ORDER ITSELF. THE APPELLANT ON THE OTHER HAND RELIED ON FOLLOWING DECISIONS IN SUPPORT OF HIS CONTENT ION THAT IN CASE OF FAILURE OF THE A O DISPOSE THE OBJECTION BEFORE THE COMPLETION OF THE ASSESSMENT ORDER, THE LAWFUL ASSESSMENT COULD NOT BE FRAMED U/S 147. GIST OF THE DECISIONS RELIED UPON IS AS UNDER: A) GKN DRIVESHAFTS INDIA LTD. (S C ) 259 ITR 19: THE APEX COURT HAD LAID DOWN GUIDELINES THAT AFTER THE FILING OF THE RETURN IN RESPONSE TO NOTICE U/S 148, THE AO WAS DUTY BOUND TO SUPPLY COPY OF REASONS RECORDED ON THE REQUEST MADE BY THE ASSESSEE SO THAT HE COULD FILE THE OBJECTION TO ISSUANCE OF THE N OTICE AND THE AO WAS DUTY BOUND TO DISPOSE OF THE SAME BY PASSING SEPARATE SPEAKING ORDER. IN THE PRESENT CASE, THE OBJECTIONS TO THE REASONS PROVIDED FOR REOPENING WERE FILED ON 03.03.2015 BUT THE AO DID NOT DISPOSE OFF THE OBJECTIONS BY SEPARATE ORDER A ND PASSED ASSESSMENT ORDER ON 27.03.2015 . B) M/S. BAYER MATERIAL SCIENCES PVT. LTD. V /S. DCIT (W.P. NO.2502 OF 2015) BOMBAY HIGH COURT IN THIS CASE DRAFT ASSESSMENT ORDER PASSED WAS HELD AS BEING WITHOUT JURISDICTION AS THE SAME WAS PASSED WITHOUT DISPOSING OF THE OBJECTIONS FILED BY THE PETITIONER TO THE REASONS RECORDED FOR ISSUING NOTICE. HON'BLE BOMBAY HIGH COURT DISMISSED THE APPEAL BY 4 ITA NO . 846/PUN/2017, A.Y. 2012 - 13 SPECIFICALLY OBSERVING 'THIS PASSING OF THE DRAFT ASSESSMENT WITHOUT HAVING DISPOSED OF THE OBJECTIONS IS IN DEFIANCE OF THE SUPREME COURT'S DECISION IN GKN DRIVESHAFTS (INDIA) LTD (SUPRA)'. C) ASIAN PAINTS LTD (296 ITR 0090) BOMBAY HIGH COURT IN THIS CASE, THE COURT HELD THAT IF THE AO DOES NOT ACCEPT THE OBJECTIONS SO FILED, HE SHALL NOT PROCEED FURTHER IN THE MATTER WITHIN A PERIOD OF 4 WEEKS FROM THE DATE OF RECEIPT OF SERVICE OF THE SAID ORDER ON THE OBJECTIONS. 5. WE NOTE THAT THE HONBLE BOMBAY HIGH COURT IN THE CASE OF M/S. BAYER MATERIAL SCIENCE PVT. LTD. IN W.P. NO. 2502 OF 2015 HELD PASSING OF ASSESSMENT ORDER WITHOUT HAVING DISPOSED OF THE OBJECTIONS IS IN DEFIANCE OF THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF GKN DRIVESHAFTS (INDIA) LTD. (SUPRA). WE FIND THAT THE CIT(A) PLACED RELIANCE ON THE DECISION OF HONBLE HIGH COURT OF BOMBAY IN THE CASE OF ASIAN PAINTS LTD. REPORTED IN 296 ITR 090 AND KSS PETRON PVT. LTD. REPORTED IN 44 TAXMANN.COM 397 AND HELD THE ASSESSMENT DATED 27 - 03 - 2015 PASSED BY THE AO U/S. 144/147 IS NOT LEGALLY SUSTAINABLE. THE RELEVANT PORTION OF WHICH FROM PARA 3. 3 TO 3.5 IS REPRODUCED HERE - IN - BELOW : 3.3 I HAVE CONSIDERED THE MATERIAL PLACED BEFORE ME. BRIEF FACTS ARE THAT A SURVEY ACTION U/S. 133A WAS CARRIED OUT ON THE APPELLANT AND SOFT DATA OF THE APPELLANT INCLUDING BOOKS OF ACCOUNTS, PROVISIONS FINANCIAL AND PROJECTED FINANCIAL STATEMENTS OF THE APPELLANT FOR THE YEAR UNDER CONSIDERATION ALONGWITH MANY OTHER DATA WERE FOUND AND IMPOUNDED. THE APPELLANT HAD NOT FILER RETURN U/S 139(1) FOR THE YEAR UNDER CONSIDERATION AND THE A O ISSUED NOTICE U/S 148 ON 25. 10.2013 AFTER RECORDING THE REASONS. THE APPELLANT FILED RETURN ON 14.02.2014 DECLARING NIL TOTAL INCOME UNDER REGULAR AS WELL AS MAT PROVISIONS DUE TO NET LOSS OF RS.6, 31,71,617/ - COMPUTED ON THE BASIS OF AUDITED PROFIT 8: LOSS ACCOUNT. LATER APPELLANT FILED OBJECTIONS AGAINST ISSUING OF NOTICE U/S 147 VIDE SUBMISSION DATED 03.03.2015. THE APPELLANT VIDE ADDITIONAL GROUND HAS RAISED THE ISSUE THAT THE A O PASSED THE ASSESSMENT ORDER U/S 144 RWS 147 DATED 27.03.2015 WITHOUT DISPOSING OFF THE OBJECTION RAI SED BY IT AGAINST THE NOTICE U/S 148 VIDE LETTER DATED 03.03.2015. ADDITIONAL GROUND RAISED BY THE APPELLANT WAS REMANDED TO THE A O FOR HIS COMMENTS. 3.4 IN THE REMAND REPORT THE AO HAD NOT DENIED THE FACT THAT THE OBJECTIONS RAISED WERE NOT REJECTED BY A SEPARATE ORDER. THE AD HAS SUBMITTED THAT ON PERUSAL OF RECORDS IT IS SEEN THAT APPELLANT HAS RAISED OBJECTION AGAINST ISSUE OF NOTICE U/S 147 ON 03.03.20 15 I.E. AT THE FAG END OF THE YEAR AND THE AO WAS HARDLY LEFT TIME TO DISPOSE THE OBJECTION BEFORE COMPLETING THE ASSESSMENT PROCEEDINGS, HENCE, THE SAME WERE DIPOSED IN THE ASSESSMENT ORDER ITSELF. THE APPELLANT ON THE OTHER HAND RELIED ON FOLLOWING DECI SIONS IN SUPPORT OF HIS CONTENTION THAT IN CASE OF FAILURE OF THE AO DISPOSE THE OBJECTION BEFORE THE COMPLETION OF THE ASSESSMENT ORDER, THE LAWFUL ASSESSMENT COULD NOT BE FRAMED U/S 147. GIST OF THE DECISIONS RELIED UPON IS AS UNDER: A) GKN DRIVESHAFTS INDIA LTD. (SC) 259 ITR 19: 5 ITA NO . 846/PUN/2017, A.Y. 2012 - 13 THE APEX COURT HAD LAID DOWN GUIDELINES THAT AFTER THE FILING OF THE RETURN IN RESPONSE TO NOTICE U/S 148, THE AO WAS DUTY BOUND TO SUPPLY COPY OF REASONS RECORDED ON THE REQUEST MADE BY THE ASSESSEE SO THAT HE COULD FILE THE OBJECTION TO ISSUANCE OF THE NOTICE AND THE AO WAS DUTY BOUND TO DISPOSE OF THE SAME BY PASSING SEP ARATE SPEAKING ORDER. IN THE PRESENT CASE, THE OBJECTIONS TO THE REASONS PROVIDED FOR REOPENING WERE FILED ON 03.03.2015 BUT THE AO DID NOT DISPOSE OFF THE OBJECTIONS BY SEPARATE ORDER AND PASSED ASSESSMENT ORDER ON 27.03.2015. B) M/S. BAYER MATERIAL SCI ENCES PVT. LTD. V/S. DCIT (W.P. NO.2502 OF 2015) BOMBAY HIGH COURT IN THIS CASE DRAFT ASSESSMENT ORDER PASSED WAS HELD AS BEING WITHOUT JURISDICTION AS THE SAME WAS PASSED WITHOUT DISPOSING OF THE OBJECTIONS FILED BY THE PETITIONER TO THE REASONS RECORDE D FOR ISSUING NOTICE. HON'BLE BOMBAY HIGH COURT DISMISSED THE APPEAL BY SPECIFICALLY OBSERVING 'THIS PASSING OF THE DRAFT ASSESSMENT WITHOUT HAVING DISPOSED OF THE OBJECTIONS IS IN DEFIANCE OF THE SUPREME COURT'S DECISION IN GKN DRIVESHAFTS (INDIA) LTD (S UPRA)'. C) ASIAN PAINTS LTD (296 ITR 0090) BOMBAY HIGH COURT IN THIS CASE, THE COURT HELD THAT IF THE AO DOES NOT ACCEPT THE OBJECTIONS SO FILED, HE SHALL NOT PROCEED FURTHER IN THE MATTER WITHIN A PERIOD OF 4 WEEKS FROM THE DATE OF RECEIPT OF SERVICE OF THE SAID ORDER ON THE OBJECTIONS. 3.5 I FIND MERIT IN THE CONTENTION RAISED BY THE APPELLANT. CONTENTION OF THE AO THAT REASONS WERE ASKED AT THE FAG END IS NOT TENABLE IN VIEW OF THE DECISIONS DISCUSSED ABOVE. THE ASSESSING OFFICER COULD HAVE DISP OSED OFF THE OBJECTIONS RAISED BY THE APPELLANT BY A SEPARATE SPEAKING ORDER AND THEN COULD HAVE PROCEEDED TO PASS THE ASSESSMENT ORDER IF THE TIME PERIOD AVAILABLE WAS LESS THAN 4 WEEKS. NON DISPOSAL OF OBJECTIONS RAISED AGAINST THE INITIATION OF PROCEEDI NGS U/S 147 VIOLATES THE DATE LAID DOWN BY THE APEX COURT. THIS RATIO HAS BEEN CONSISTENTLY FOLLOWED BY THE JURISDICTIONAL HIGH COURT AND TRIBUNAL. IN LATEST DECISION HON'BLE BOMBAY HE WHILE DECIDING THE IDENTICAL ISSUE IN THE CASE OF KSS PETRON PVT LTD 44 TAXMANN.COM 397 (ITA NO. 224 OF 2014 DATED 03.10.2016) HELD AS UNDER : '8 WE NOTE THAT ONCE THE IMPUGNED ORDER FINDS THE ASSESSMENT ORDER IS WITHOUT JURISDICTION AS THE LAW LAID DOWN BY THE APEX COURT IN GKN DRIVESHAFTS (SUPRA) HAS NOT BEEN FOLLOWED , THEN THERE IS NO REASON TO RESTORE THE ISSUE TO THE ASSESSING OFFICE TO PASS A FURTHER/FRESH ORDER. IF THIS IS PERMITTED, IT WOULD GIVE A LICENCE TO THE ASSESSING OFFICER TO PASS ORDERS ON RE - OPENING NOTICE, WITHOUT JURISDICTION (WITHOUT COMPLIANCE OF THE LAW IN ACCORDANCE WITH THE PROCEDURE, YET THE ONLY CONSEQUENCE, WOULD BE THAT IN APPEAL, IT WOULD BE RESTORED TO THE ASSESSING OFFICER FOR FRESH ADJUDICATION AFTER FOLLOWING THE DUE PROCEDURE. THIS WOULD LEAD TO UNNECESSARY HARASSMENT OF THE ASSESSEE B Y REVIVING STALE/ OLD MATTERS.' RESPECTFULLY FOLLOWING THE ABOVE DECISIONS, IT IS HELD THAT ORDER PASSED BY THE AO IS LEGALLY NOT SUSTAINABLE FOR HIS FAILURE OR NOT DISPOSING OF OBJECTIONS RAISED BY THE APPELLANT BY WAY OF SEPARATE ORDER BEFORE FINALIZING THE ASSESSMENT ORDER. ADDITIONAL GROUND RAISED BY THE APPELLANT IS HEREBY ALLOWED. 6. AS DISCUSSED ABOVE IN THE PRESENT CASE THE AO DID NOT PASS THE SEPARATE SPEAKING ORDER REGARDING THE OBJECTIONS RAISED BY THE ASSESSEE AGAINST THE REOPENING THE ASSESSMENT FALLING WHICH THE ASSESSMENT PASSED THEREON IS LIABLE TO BE ANNULLED IN VIEW OF THE PRINCIPLE LAID DOWN IN THE 6 ITA NO . 846/PUN/2017, A.Y. 2012 - 13 CASE OF GKN DRIVESHAFTS INDIA LTD. (SUPRA). THEREBY, WE COMPLETELY AGREE WITH THE REASONS RECORDED BY THE CIT(A) IN ANNULLING THE REASSESSMENT ORDER PASSED BY THE AO AND THE ORDER OF CIT(A) IS JUSTIFIED. THEREFORE, GROUND NO. 2 RAISED BY THE REVENUE IS DISMISSED. 7. IN VIEW OF OUR DECISION IN GROUND NO. 2 IN THE ABOVE MENTIONED PARA, THE GROUND NO. 1 BECOMES ACADEMIC, HENCE, NO ADJUDICATION IS REQUIRED. 8. IN THE RESULT, THE APPEAL OF REVENUE IS DISMISSED. ORDER PRONOU NCED IN THE OPEN COURT ON 28 TH SEPTEMBER, 2020 . SD/ - SD/ - ( R.S. SYAL ) ( S.S. VISWANETHRA RAVI ) VICE PRESIDENT JUDICIAL MEMBER / PUNE; / DATED : 28 TH SEPTEMBER, 2020. RK / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(A) - 12 , PUNE 4. THE PR. CIT CENTRAL, NAGPUR 5. , , , / DR, ITAT, B BENCH, PUNE. 6. / GUARD FILE. // // TRUE COPY// / BY ORDER, / PRIVATE SECRETARY, , / ITAT, PUNE