SMT. PRABHA SAXENA, DHOLPUR V. INCOME TAX OFFICER, BHARATPUR

ITA 919/JPR/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 3630 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 4 month(s) 25 day(s)
• Appeal Type: Income Tax (International Taxation) Appeal
• Pronouncement Date: 29-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 04-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J C KULHARI
• Keywords: Reopening of assessment; Capital asset; Principle of natural justice; Cost of acquisition; Tangible material; Revised return; Reason to believe; Reassessment proceedings; Set aside
• Section: 271(1)(c); 251; 64; 147; 148; 12

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA-@ ITA. NO. 919/JP/2017 FU/KZKJ.K O'K Z@ ASSESSMENT YEARS : 2008-09 SMT. PRABHA SAXENA, D/O SH. JAMUNA PRASAD, PURANA SHAHAR, NEAR FUTA DARWAJA, DHOLPUR. CUKE VS. THE ITO, WARD-4, BHARATPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: ARCPS 3771 M VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI RAJEEV SAXENA (ADV.) JKTLO DH VKSJ LS @ REVENUE BY : SHRI J.C.KULHARI (JCIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 18/06/2018 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT : 06/08/2018 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF LD. CIT(A), UDAIPUR DATED 25.10.2017 FOR ASSESSMENT YEA R 2008-09 WHEREIN THE ASSESSEE HAS TAKEN THE FOLLOWING GROUND S OF APPEAL AS UNDER:- 1. THAT THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS), HAS GROSSLY ERRED BOTH IN LAW AND ON FACTS IN UPHOLDING THE INITIATION OF THE REASSESSMENT PROCEEDINGS UNDER SECTION 147 O F THE ACT, WHICH PROCEEDINGS HAVE BEEN INITIATED WITHOUT SATIS FYING THE ITA NO. 919/JP2017 SMT. PRABHA SAXENA VS ITO 2 STATUTORY PRECONDITIONS AS ENVISAGED UNDER SECTION 147 OF THE ACT, AND HENCE INITIATION OF THE REASSESSMENT PROCE EDINGS IS BAD IN LAW. 2. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APP EALS), HAS GROSSLY ERRED BOTH IN LAW AND ON FACTS THAT INITIAT ION OF REASSESSMENT PROCEEDINGS WAS WITHOUT JURISDICTION. 3. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APP EALS), HAS GROSSLY ERRED BOTH IN LAW AND ON FACTS IN ENHAN CING THE INCOME OF THE APPELLANT TO RS. 3,50,000/- AND BRING ING TO TAX THE AFORESAID SUM U/S 25AA AND 25B OF THE ACT FAILI NG TO APPRECIATE THAT SINCE COMPUTATION OF INCOME UNDER T HE HEAD INCOME FROM HOUSE PROPERTY WAS NOT THE ISSUE BEFORE THE LEARNED AO AS SUCH, SAME BEING NEW SOURCE OF INCOME WAS BEYOND THE SUBJECT MATTER OF APPEAL AND HENCE ENHAN CEMENT OF INCOME BY THE AFORESAID SUM IS OUTSIDE THE SCOPE OF SECTION 251 OF THE ACT AND AS SUCH, WITHOUT JURISDICTION. 4. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APP EALS), HAS GROSSLY ERRED BOTH IN LAW AND ON FACTS IN ENHANCING THE INCOME OF THE APPELLANT WITHOUT ISSUING A SPECIFIC SHOW CA USE NOTICE TO THE APPELLANT AND HENCE ENHANCEMENT MADE WAS WITHOU T JURISDICTION. 5. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APP EALS) HAS FAILED TO APPRECIATE THAT SUM OF RS. 5,00,000/- RELATES TO MAINLY RENT WHICH COULD NOT BE COLLECTED BECAUSE TH E OWNERS WERE RESIDING OUTSIDE DHAULPUR AND THIS RENT WAS NE ITHER UNREALIZED RENT NOR ARREAR OF RENT. 6. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APP EALS) HAS FAILED TO NOTICE THAT THAT INCOME FROM HOUSE PROPER TY AS AFORESAID OF EACH YEAR WAS BELOW THE TAXABLE LIMIT HENCE NOT LIABLE TO BE TAXED IN THAT YEAR AND HENCE NO RETURN OF INCOME WAS FILED. ITA NO. 919/JP2017 SMT. PRABHA SAXENA VS ITO 3 7. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APP EALS) HAS ERRED BOTH IN LAW AND ON FACTS IN INITIATING THE PR OCEEDINGS U/S 271(1)(C) OF THE ACT. 2. BRIEFLY THE FACT OF THE CASE ARE THAT THE ASSESS EE ALONG WITH HER TWO BROTHERS AND TWO SISTERS HAVE INHERITED A PROPE RTY SITUATED AT DUSHHERA ROAD, SARAI GAJRA, DHOLPUR, RAJASTHAN, LAT ER KNOWN AS ASHA HOTEL WHICH IS 150 YEARS OLD ANCESTRAL PROPERTY AND THE SAME WAS SOLD ON 18.03.2008 THROUGH A REGISTERED SALE DEED REGIST ERED WITH SUB- REGISTRAR, DHOLPUR, RAJASTHAN FOR RS. 40,00,000/-. THE ASSESSING OFFICER THEREAFTER ISSUED NOTICE U/S 148 ON 27.03.2015 WHIC H READS AS UNDER:- AS PER INFORMATION GATHERED BY THE DEPARTMENT, THE ASSESSEE AND HIS BROTHERS AND SISTERS HAS SOLD PROPERTY NAME D ASHA HOTEL OF RS. 40,00,000/- DURING THE YEAR UNDER CONSIDERAT ION AND THE SHARE OF THE ASSESSEE OF RS. 8,00,000/-. THE ASSESS EE HAS NOT EXPLAINED OF ABOVE SALE AMOUNT AND THE ASSESSEE HAS NOT FILED RETURN OF INCOME. THEREFORE, I HAVE REASONS TO BELIEVE THAT INCOME CH ARGEABLE TO TAX OF RS. 8,00,000/- (SHARE OF THE ASSESSEE) HAS E SCAPED ASSESSMENT IN VIEW OF THE EXPLANATION 2(A) OF THE S ECTION 147 OF THE INCOME TAX ACT, 1961. 3. IN RESPONSE, THE ASSESSEE FILED HER RETURN OF IN COME ON 05.05.2015 DISCLOSING INCOME OF RS. 8,140/-. IN THE COMPUTATION OF INCOME, THE ASSESSEE HAS SHOWN TOTAL SALE CONSIDERA TION OF THE PROPERTY AT RS. 65,00,000/- AND HER 1/5 SHARE AT RS. 13,00,0 00/- AND THE PROPORTIONATE SHARE OF COST OF ACQUISITION AT RS. 1 3,96,720/- TAKING 1981-82 AS THE BASE YEAR AND SHOWN LONG TERM CAPITA L LOSS OF RS. 96,730/-. THE ASSESSING OFFICER ACCEPTED THE TO TAL SALE ITA NO. 919/JP2017 SMT. PRABHA SAXENA VS ITO 4 CONSIDERATION AT RS. 65,00,000/- AND HER 1/5 SHARE AT RS. 13,00,000/-, HOWEVER, THE COST OF ACQUISITION WAS RECOMPUTED ON THE BASIS OF THE VALUE OF ANOTHER PROPERTY WHICH WAS SOLD IN 1988 AT RS 10,02,000. ACCORDINGLY, THE AO RECOMPUTED THE LONG TERM CAPITA L GAIN AT RS. 2,98,000/- AS AGAINST LONG TERM CAPITAL LOSS OF RS . 96,730/- COMPUTED BY THE ASSESSEE. ON APPEAL, THE LD. CIT(A) CONSIDER ED THE SALE CONSIDERATION OF THE PROPERTY AS PER SALE DEED AT R S. 40,00,000/- INSTEAD OF RS 65,00,000 AND TAKING THE COST OF ACQU ISITION AS COMPUTED BY THE AO AT RS. 10,02,000/- WORKED OUT THE LONG TE RM CAPITAL LOSS OF RS. 2,02,000/-. FURTHER, THE LD CIT(A) HELD THE BAL ANCE CONSIDERATION OF RS. 25,00,000/- TOWARDS UNREALIZED RENT INCLUDING U SE OF FURNITURE AND FIXTURES, AND THE APPROPRIATE SHARE OF THE ASSESSEE ARISING THEREFROM AMOUNTING TO RS. 5,00,000/- WAS BROUGHT TO TAX U/S 25AA R.W.S. 25B OF THE ACT AFTER ALLOWING DEDUCTION OF 30% UNDER THE H EAD INCOME FROM HIS PROPERTY. 4. BEING AGGRIEVED, THE ASSESSEE IS NOW IN APPEAL B EFORE US. IT WAS SUBMITTED BY THE LD. AR THAT THE REASONS RECORDED B Y THE ASSESSING OFFICER THAT RS. 8,00,000/- HAS ESCAPED ASSESSMENT IS WHOLLY MISCONCEIVED AS PROPERTY SOLD WAS A CAPITAL ASSET A S SUCH, WHOLE OF THE SALE CONSIDERATION CANNOT BE ADOPTED AS INCOME OF T HE ASSESSEE AND IF AT ALL, ANY INCOME WOULD BE CHARGEABLE, IT IS ONLY THE CAPITAL GAIN AFTER ALLOWING DEDUCTION FOR COST OF ACQUISITION WHICH AT BEST CAN BE HELD TO HAVE ESCAPED ASSESSMENT. IT WAS SUBMITTED THAT IF THE GOVERNMENT APPROVED RATE IS APPLIED FOR DETERMINING THE COST O F ACQUISITION, THERE WOULD BE ACTUAL CAPITAL LOSS INSTEAD OF CAPITAL GAI N AND AS SUCH FOUNDATION FOR THE ASSUMPTION OF JURISDICTION IS BA D IN LAW. IT WAS ITA NO. 919/JP2017 SMT. PRABHA SAXENA VS ITO 5 SUBMITTED THAT IT IS SETTLED LAW U/S 147 OF THE ACT THAT BURDEN IS ON THE REVENUE TO ESTABLISH THAT INCOME OF THE ASSESSEE HA S ESCAPED ASSESSMENT AND UNLESS SUCH BURDEN IS DISCHARGED BY THE REVENUE, ONUS DOES NOT SHIFT TO THE ASSESSEE. IT WAS SUBMITTED TH AT IN THE INSTANT CASE THERE IS NO MATERIAL MUCH LESS TANGIBLE MATERIAL WH ICH COULD ENABLE THE AO TO FORM A PRIMA FACIE BELIEF THAT INCOME OF THE ASSESSEE HAD ESCAPED ASSESSMENT. IT WAS SUBMITTED THAT MERELY BE CAUSE THE APPELLANT HAS SOLD A PROPERTY DOES NOT LEAD TO CONC LUSION THAT INCOME OF THE ASSESSEE HAS ESCAPED ASSESSMENT. IT WAS SUBMITT ED THAT SALE OF PROPERTY BY THE APPELLANT AND NON FILING OF THE RET URN BY THE APPELLANT, CAN GIVE REASON TO SUSPECT HOWEVER WITHOUT ANY OTHE R MATERIAL, SAME CANNOT BE FORM THE BASIS OF REASONS TO BELIEVE. IT WAS FURTHER CONTENDED THAT THE APPROVAL FOR THE INITIATION OF T HE PROCEEDINGS HAS ALSO BEEN GRANTED MECHANICALLY BY THE LD. ADDITIONA L COMMISSIONER OF INCOME TAX AND IN SUPPORT RELIANCE WAS PLACED ON TH E DECISION OF PR. CIT VS. N.C. CABLES LTD 88 TAXMANN.COM 649 AND HON BLE SUPREME COURT IN CASE OF CIT VS. S. GOYANKA LIME & CHEMICAL LTD. (2015) 64 TAXMANN.COM 313. IT WAS FURTHER CONTENDED BY THE L D. AR THAT IN ORDER TO COMPLY WITH THE NOTICE ISSUED U/S 148 OF THE ACT , THE ASSESSEE HAS DULY FILED HER RETURN OF INCOME, HOWEVER, THE ASSES SING OFFICER HAS NOT PROVIDED REASONS RECORDED FOR REOPENING ASSESSMENT TO THE ASSESSEE EVEN THOUGH THE SAME WERE REQUESTED BY THE ASSESSEE . IT WAS SUBMITTED THAT DUE TO NON-FURNISHING OF REASONS BY THE AO, THE ASSESSEE COULD NOT FILE HER OBJECTIONS TO THE REOPE NING OF THE ASSESSMENT PROCEEDING. IT WAS SUBMITTED THAT THE SA ME IS AGAINST THE LAW LAID DOWN BY THE HONBLE SUPREME COURT IN CASE OF GKN DRIVESHAFTS (INDIA) LTD. VS. ITO & ORS. 125 TAXMAN 963. ITA NO. 919/JP2017 SMT. PRABHA SAXENA VS ITO 6 5. THE LD. D/R IS HEARD WHO HAS VEHEMENTLY ARGUED T HE MATTER AND RELIED ON THE ORDER OF THE LOWER AUTHORITIES. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. AS PER REASONS RECORDED U/S 14 8 THE ASSESSING OFFICER HAS NOTED THAT AS PER INFORMATION GATHERED BY THE DEPARTMENT, THE ASSESSEE AND HIS BROTHERS AND SISTERS HAD SOLD PROPERTY NAMED ASHA HOTEL FOR RS. 40,00,000/- DURING THE YEAR UNDER CON SIDERATION AND THE SHARE OF THE ASSESSEE COMES TO RS. 8,00,000/-. IT IS FURTHER RECORDED BY THE ASSESSING OFFICER THAT THE ASSESSEE HAS NOT EXP LAINED THE SAID SALE TRANSACTION AND THE ASSESSEE HAS NOT FILED HER RETU RN OF INCOME. THEREFORE, HE HAS REASONS TO BELIEVE THAT INCOME CH ARGEABLE TO TAX AMOUNTING TO RS. 8,00,000/- HAS ESCAPED ASSESSMENT IN TERMS OF EXPLANATION- 2(A) OF SECTION 147 OF THE ACT. IN OUR VIEW, THE ASSESSING OFFICER IS DULY CEASED OF THE INFORMATION IN THE FO RM OF THE SALE DEED REGISTERED WITH THE SUB-REGISTRAR, DHOLPUR, RAJASTH AN AND THE ASSESSEES SHARE IN THE SALE DEED IS ALSO DETERMINED TO THE EX TENT OF 1/5 SHARE. THERE IS, THEREFORE, A DEFINITIVE AND A LIVE LINK B ETWEEN THE INFORMATION IN POSSESSION OF THE ASSESSING OFFICER AND FORMATIO N OF BELIEVE THAT THE INCOME IN THE FORM OF CAPITAL GAIN ON THE SALE OF T HE PROPERTY HAS ESCAPED ASSESSMENT. AS FAR AS THE ASSESSEES CONTEN TION THAT WHOLE OF THE AMOUNT OF RS. 8,00,000/- IS NOT THE INCOME IN T HE HANDS OF THE ASSESSEE AND WHERE THE COST OF ACQUISITION IS TAKIN G INTO CONSIDERATION, IT WILL RESULT IN LONG TERM CAPITAL LOSS AS AGAINST LONG TERM CAPITAL GAIN. IN OUR VIEW, AT THE TIME OF ISSUANCE OF NOTICE U/S 148 OF THE ACT, WHAT IS REQUIRED IS FORMATION OF A PRIMA FACIE BELIEF THAT CERTAIN INCOME HAS ESCAPED ASSESSMENT AND AS FAR AS DETERMINATION OF T HE ACTUAL INCOME ITA NO. 919/JP2017 SMT. PRABHA SAXENA VS ITO 7 AND ALLOWING NECESSARY ALLOWANCES/DEDUCTIONS ARE CO NCERNED, THE SAME IS A MATTER OF VERIFICATION AND QUANTIFICATION WHIC H IS CARRIED OUT DURING THE COURSE OF REASSESSMENT PROCEEDINGS. MERELY BECA USE THE QUANTUM OF INCOME WHICH IS FINALLY DETERMINED IS LOWER THAN THE AMOUNT SPECIFIED IN THE REASONS, THE SAME CANNOT BE THE BASIS FOR CH ALLENGING THE INITIATION OF REASSESSMENT PROCEEDINGS U/S 147 OF T HE ACT. 7. REGARDING ANOTHER CONTENTION OF THE LD AR THAT T HE SANCTION HAS BEEN GRANTED BY THE ADDITIONAL CIT MECHANICALLY BEF ORE INITIATION PROCEEDINGS U/S 147 OF THE ACT, IT IS NOTED THAT TH E ADDITIONAL CIT, AFTER GOING THROUGH THE MATERIAL/DOCUMENTS BROUGHT TO HIS NOTICE BY THE AO, HAS STATED IN SO MANY WORDS THAT YES, HE IS SATISF IED THAT IT IS FIT CASE FOR ISSUANCE OF NOTICE U/S 148 OF THE ACT. THE SA ID APPROVAL CANNOT BE SAID TO HAVE BEEN GRANTED MECHANICALLY, RATHER IN O UR VIEW, THE LD. ADDITIONAL CIT HAS APPLIED HIS MIND BEFORE GRANTING THE APPROVAL TO THE ASSESSING OFFICER TO INITIATE THE PROCEEDINGS U/S 1 47 OF THE ACT. THE DECISIONS RELIED BY THE LD. AR ARE DISTINGUISHABLE ON FACTS AND DOES NOT SUPPORT THE CASE OF THE ASSESSEE. 8. NOW COMING TO THE OTHER CONTENTION RAISED BY THE LD. AR THAT INSPITE OF REQUESTING THE ASSESSING OFFICER TO PROV IDE THE REASONS WHICH HAS BEEN RECORDED BEFORE REOPENING THE ASSESSMENT P ROCEEDINGS, THE ASSESSING OFFICER HAS NOT PROVIDED THE REASONS TO T HE ASSESSEE, THE ENTIRE REASSESSMENT PROCEEDINGS HAVE BEEN VITIATED AND BAD IN LAW AND NOT IN CONFORMITY WITH THE LAW LAID DOWN BY THE HON BLE SUPREME COURT AND VARIOUS HIGH COURTS FROM TIME TO TIME. ITA NO. 919/JP2017 SMT. PRABHA SAXENA VS ITO 8 9. IN THE INSTANT CASE, THE REASSESSMENT PROCEEDING S WERE INITIATED BY ISSUE OF NOTICE UNDER SECTION 148 OF THE ACT FOR THE IMPUNGED ASSESSMENT YEAR. THE ASSESSEE HAS FILED HER RETURN OF INCOME AND HAS REQUESTED FOR THE REASONS LEADING TO THE REOPENING OF ASSESSMENT UNDER SECTION 148 OF THE ACT. BEFORE THE CIT(A) ALSO, TH E ASSESSEE HAS CONTENDED THAT REASONS FOR REOPENING THE ASSESSMENT PROCEEDINGS WERE NOT SUPPLIED TO THE ASSESSEE. THE SAID CONTENTION OF THE ASSESSEE COULD NOT BE CONTROVERTED BEFORE US ON BEHALF OF THE REVE NUE. IN THESE FACTS OF THE CASE, THE ONLY ISSUE WHICH REQUIRES ADJUDICA TION IS THAT WHETHER THE NON-COMMUNICATION OF THE REASONS RECORDED FOR I SSUING NOTICE UNDER SECTION 148 OF THE ACT, INSPITE OF A SPECIFIC REQUE ST MADE BY THE ASSESSEE FOR PROVIDING REASONS FOR ISSUING THE NOTI CE UNDER SECTION 148, RENDERS THE WHOLE REASSESSMENT PROCEEDINGS VITIATED AND VOID IN LAW. 10. IN CASE OF GKN DRIVESHAFTS (INDIA) LTD. VS. IT O & ORS. (SUPRA), THE HONBLE SUPREME COURT HELD AS UNDER:- 5. WE SEE NO JUSTIFIABLE REASON TO INTERFERE WITH T HE ORDER UNDER CHALLENGE. HOWEVER, WE CLARIFY THAT WHEN A NOTICE U NDER S. 148 OF THE IT ACT IS ISSUED, THE PROPER COURSE OF ACTION F OR THE NOTICEE IS TO FILE RETURN AND IF HE SO DESIRES, TO SEEK REASON S FOR ISSUING NOTICES. THE AO IS BOUND TO FURNISH REASONS WITHIN A REASONABLE TIME. ON RECEIPT OF REASONS, THE NOTICEE IS ENTITLE D TO FILE OBJECTIONS TO ISSUANCE OF NOTICE AND THE AO IS BOUN D TO DISPOSE OF THE SAME BY PASSING A SPEAKING ORDER. IN THE INSTAN T CASE, AS THE REASONS HAVE BEEN DISCLOSED IN THESE PROCEEDINGS, T HE AO HAS TO DISPOSE OF THE OBJECTIONS, IF FILED, BY PASSING A S PEAKING ORDER, BEFORE PROCEEDING WITH THE ASSESSMENT IN RESPECT OF THE ABOVESAID FIVE ASSESSMENT YEARS. ITA NO. 919/JP2017 SMT. PRABHA SAXENA VS ITO 9 6. INSOFAR AS THE APPEALS FILED AGAINST THE ORDER OF ASSESSMENT BEFORE THE CIT(A), WE DIRECT THE APPELLATE AUTHORIT Y TO DISPOSE OF THE SAME, EXPEDITIOUSLY. WITH THE ABOVE OBSERVATIONS, THE CIVIL APPEALS ARE DISMISSED. 11. THE ABOVE JUDGMENT OF THE HON'BLE SUPREME COURT HAS BEEN FOLLOWED BY VARIOUS HON'BLE HIGH COURTS WHILE DEALI NG WITH THE ISSUE OF RECORDING OF REASONS OR SUPPLY OF RECORDED REASONS TO THE ASSESSEE. 12. IN THE MATTER OF GEHNA VS UOI REPORTED IN 267 I TR 782, THE HON'BLE RAJASTHAN HIGH COURT HELD AS UNDER: 'WHERE A NOTICE UNDER SECTION 148 OF THE INCOME-TA X ACT, 1961, IS ISSUED, THE PROPER COURSE OF ACTION FOR THE NOTICEE IS TO FILE THE RETURN AND, IF HE SO DESIRES, TO SEEK REASONS FOR ISSUING THE NOTICES. THE ASSESSING OFFICER IS BOUND TO FURNISH REASONS WITHI N A REASONABLE TIME. ON RECEIPT OF REASONS, THE NOTICE IS ENTITLED TO FI LE OBJECTIONS TO ISSUANCE OF NOTICE AND THE ASSESSING OFFICER IS BOUND TO DIS POSE OF THE SAME BY PASSING A SPEAKING ORDER. 13. IN THE CASE OF MITHLESH KUMAR TRIPATHI REPORTED IN 280 ITR 216, THE HON'BLE ALLAHABAD HIGH COURT HAS HELD AS UNDER: 'THE STATUTE CONFERS JURISDICTION AND EMPOWERS THE ASSESSING OFFICER UNDER SECTION 148(2) OF THE ACT TO REOPEN ASSESSMENT PROCEEDINGS. SECTION 148(2) EXPRESSLY REQUIRES 'RECORDING OF REASONS' WHICH HAS A DEFINITE PURPOSE (AND IS NOT A MERE FOR MALITY ON PAPER), I.E., TO AVOID ARBITRARINESS OR BIASED OR MALA FIDE ACTION BY THE TAXING AUTHORITIES. SECTION 148(2) IS SILENT REGARDING COMMUNICATION OF REASONS. THE PROVISION HAS TO BE INTERPRETED IN A M ANNER WHICH MAKES IT MEANINGFUL AND PURPOSIVE. KEEPING THE OBJECT OF THE LEGISLATURE IN ITA NO. 919/JP2017 SMT. PRABHA SAXENA VS ITO 10 MIND, THE COURTS, INCLUDING THE SUPREME COURT, HAVE INTERPRETED THE SECTION BY LAYING DOWN THAT REASONS HAVE TO BE COMM UNICATED, AS OTHERWISE THE SAME WILL REMAIN A MERE FORMALITY WIT H NO ULTIMATE PURPOSE OR OBJECT TO BE SERVED. THERE IS ALSO NOTHI NG IN SECTION 148(2) OF THE ACT INDICATING EXPRESSLY OR OTHERWISE, THAT AN ASSESSEE CAN ASK FOR REASONS TO BE COMMUNICATED ONLY AFTER H E HAS FILED A 'REVISED RETURN' IN RESPONSE TO THE NOTICE UNDER TH AT SECTION. THE RECORDING OF REASONS AND 'OBTAINING APPROVAL' TO GI VE NOTICE MAY BE 'ADMINISTRATIVE ACTION' BUT THE VERY ACT OF GIVING NOTICE BACKED BY GOOD AND VALID REASONS UNDER SECTION 148(2) OF THE ACT IS A QUASI-JUDICIAL FUNCTION. IF REASONS ARE SUPPLIED ALONG WITH THE NO TICE UNDER SECTION 148(2) , IT WILL OBVIATE UNNECESSARY HARASSMENT TO THE ASS ESSEE AS WELL AS TO THE REVENUE BY AVOIDING UNNECESSARY LITIGATIO N WHICH WILL SAVE COURTS ALSO FROM BEING INVOLVED IN UNPRODUCTIVE LIT IGATIONS. ABOVE ALL IT WILL BE IN CONSONANCE WITH THE PRINCIPLES OF NATURA L JUSTICE. 14. IN THE MATTER OF HARYANA ACRYLIC MANUFACTURING CO. REPORTED IN 308 ITR 38, THE HONBLE DELHI HIGH COURT HAS HELD A S UNDER: 23. SECONDLY, LET US ASSUME FOR THE SAKE OF ARGUME NT THAT THE 'ACTUAL' REASONS WERE THOSE AS NOTED IN THE SAID FORM. THEN WHY DID THE ASSESSING OFFICER COMMUNICATE A DIFFERENT SET OF RE ASONS TO THE PETITIONER ? DID HE THINK THAT THE SUPPLYING OF REA SONS AND THE INVITING OF OBJECTIONS WERE MERE CHARADES? DID HE THINK THAT IT WAS A MERE PRETENCE OR A FORMALITY WHICH HAD TO BE GOTTEN OVER WITH? AT THIS POINT, IT WOULD BE WELL TO REMEMBER THAT THE SUPREME COURT IN GKN DRIVESHAFTS (INDIA) LTD.'S CASE (SUPRA) HAD SPECIFI CALLY DIRECTED THAT WHEN A NOTICE UNDER SECTION 148 OF THE SAID ACT IS ISSUED AND THE NOTICEE FILES A RETURN AND SEEKS REASONS FOR THE IS SUANCE OF THE NOTICE, THE ASSESSING OFFICER IS BOUND TO FURNISH REASONS W ITHIN A REASONABLE TIME. ON RECEIPT OF THE REASONS, THE NOTICEE IS ENT ITLED TO FILE OBJECTIONS TO THE ISSUANCE OF NOTICE AND THE ASSESSING OFFICER IS BOUND TO DISPOSE OF THE SAME BY PASSING A SPEAKING ORDER. THESE ARE SPECIFIC DIRECTIONS GIVEN BY THE SUPREME COURT IN ALL CASES WHERE NOTIC ES UNDER SECTION 148 OF THE SAID ACT ARE ISSUED. SURELY, THE ASSESSI NG OFFICER COULD NOT ITA NO. 919/JP2017 SMT. PRABHA SAXENA VS ITO 11 HAVE CONSTRUED THESE SPECIFIC DIRECTIONS TO BE A ME RE EMPTY FORMALITIES OR DEAD LETTERS? THERE IS A STRONG LOGIC AND PURPOS E BEHIND THE DIRECTIONS ISSUED BY THE SUPREME COURT AND THAT IS TO PREVENT HIGH- HANDEDNESS ON THE PART OF ASSESSING OFFICERS AND TO TEMPER ANY ACTION CONTEMPLATED UNDER SECTION 147 OF THE SAID ACT BY R EASON AND SUBSTANCE. IN FACT, EVEN SECTION 148 (2) STIPULATES THAT THE ASSESSING OFFICER SHALL, BEFORE ISSUING ANY NOTICE UNDER THE SAID SECTION, RECORD HIS REASONS FOR DOING SO. THE SUPREME COURT HAS ONLY CA RRIED FORWARD THIS MANDATORY REQUIREMENT BY DIRECTING THAT THE REASONS WHICH ARE RECORDED BE COMMUNICATED TO THE ASSESSEE WITHIN A R EASONABLE PERIOD OF TIME SO THAT AT THAT STAGE ITSELF THE ASSESSEE M AY POINT OUT ANY OBJECTIONS THAT HE MAY HAVE WITH REGARD TO THE INIT IATION OF ACTION UNDER SECTION 147 OF THE SAID ACT. THE REQUIREMENT OF REC ORDING THE REASONS, COMMUNICATING THE SAME TO THE ASSESSEE, ENABLING TH E ASSESSEE TO FILE OBJECTIONS AND THE REQUIREMENT OF PASSING A SPEAKIN G ORDER ARE ALL DESIGNED TO ENSURE THAT THE ASSESSING OFFICER DOES NOT REOPEN ASSESSMENTS WHICH HAVE BEEN FINALIZED ON HIS MERE W HIM OR FANCY AND THAT HE DOES SO ONLY ON THE BASIS OF LAWFUL REASONS . THESE STEPS ARE ALSO DESIGNED TO ENSURE COMPLETE TRANSPARENCY AND A DHERENCE TO THE PRINCIPLES OF NATURAL JUSTICE. THUS, A DEVIATION FR OM THESE DIRECTIONS WOULD ENTAIL THE NULLIFYING OF THE PROCEEDINGS. ASS UMING AS WE HAVE DONE THAT THE 'ACTUAL' REASONS WERE THOSE AS NOTED IN THE SAID FORM, IT IS OBVIOUS THAT THE REASONS WERE NEVER COMMUNICATED TO THE PETITIONER AND IT IS ONLY FOR THE FIRST TIME IN THE COURSE OF THE PRESENT WRIT PETITION THAT THOSE 'REASONS' HAVE SURFACED. THEREFORE, IF H E PROCEEDED ON THE ASSUMPTION THAT THE 'ACTUAL' REASONS WERE THOSE AS NOTED IN THE SAID FORM, THE PROPER COURSE OF ACTION AS DIRECTED BY TH E SUPREME COURT IN GKN DRIVESHAFTS (INDIA) LTD.'S CASE (SUPRA), HAS NO T BEEN FOLLOWED. IT WOULD MEAN THAT THE REASONS WHICH WERE SUPPLIED TO THE PETITIONER WERE NOT THE ACTUAL REASONS AND THE OBJECTIONS WHIC H WERE TAKEN BY THE PETITIONER WERE NOT TO THE ACTUAL REASONS AND THE S PEAKING ORDER DATED 2-3-2005 WHICH WAS PASSED WAS ALSO NEITHER ON THE B ASIS OF THE ACTUAL REASONS NOR THE OBJECTIONS TO THE ACTUAL REASONS. T HE ENTIRE PROCESS WOULD BE A SHAM AND WOULD AMOUNT TO MAKING A MOCKER Y OF THE LAW AS SETTLED BY THE SUPREME COURT. THEREFORE, FOR THIS R EASON ALSO, THE NOTICE ITA NO. 919/JP2017 SMT. PRABHA SAXENA VS ITO 12 UNDER SECTION 148 AS WELL AS ALL PROCEEDINGS SUBSEQ UENT THERETO AS ALSO THE ORDER DATED 2-3-2005 ARE LIABLE TO BE QUASHED. 15. IN THE MATTER OF TREND ELECTRONICS REPORTED IN 379 ITR 456, THE HONBLE BOMBAY HIGH COURT HAS HELD AS UNDER: 8. WE FIND THAT THE IMPUGNED ORDER MERELY APPLIES THE DECISION OF THE APEX COURT IN GNK DRIVESHAFTS (INDIA) LTD. (SUPRA). FURTHER IT ALSO FOLLOWS THE DECISION OF THIS COURT IN VIDESH SANCHA NR NIGAM LTD. (SUPRA) IN HOLDING THAT AN ORDER PASSED IN REASSESSMENT PRO CEEDINGS ARE BAD IN LAW IN THE ABSENCE OF REASONS RECORDED FOR ISSUING A REOPENING NOTICE UNDER SECTION 148 OF THE ACT BEING FURNISHED TO THE ASSESSEE WHEN SOUGHT FOR. IT IS AXIOMATIC THAT POWER TO REOPEN A COMPLETED ASSESSMENT UNDER THE ACT IS AN EXCEPTIONAL POWER AN D WHENEVER REVENUE SEEKS TO EXERCISE SUCH POWER, THEY MUST STR ICTLY COMPLY WITH THE PREREQUISITE CONDITIONS VIZ. REOPENING OF REASO NS TO INDICATE THAT THE ASSESSING OFFICER HAD REASON TO BELIEVE THAT IN COME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT WHICH WOULD WARRANT THE REOPENING OF AN ASSESSMENT. THESE RECORDED REASONS AS LAID DOWN BY THE APEX COURT MUST BE FURNISHED TO THE ASSESSEE WHEN SOUGHT FOR S O 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 ORDER PASSED ON REASSESSMENT BAD IN LAW. THE RECORD ING OF REASONS (WHICH HAS BEEN DONE IN THIS CASE) AND FURNISHING O F THE SAME HAS TO BE STRICTLY COMPLIED WITH AS IT IS A JURISDICTIONAL IS SUE. THIS REQUIREMENT IS VERY SALUTARY AS IT NOT ONLY ENSURES REOPENING NOTI CES ARE NOT LIGHTLY ISSUED. BESIDES IN CASE THE SAME HAVE BEEN ISSUED O N SOME MISUNDERSTANDING/MISCONCEPTION, THE ASSESSEE IS GIV EN AN OPPORTUNITY TO POINT OUT THAT THE REASONS TO BELIEVE AS RECORDE D IN THE REASONS DO NOT WARRANT REOPENING BEFORE THE REASSESSMENT PROCE EDINGS ARE COMMENCED. THE ASSESSING OFFICER DISPOSES OF THESE OBJECTIONS AND IF SATISFIED WITH THE OBJECTIONS, THEN THE IMPUGNED RE OPENING NOTICE UNDER SECTION 148 OF THE ACT IS DROPPED/WITHDRAWN OTHERWI SE IT IS PROCEEDED WITH FURTHER. IN ISSUES SUCH AS THIS, I.E. WHERE JU RISDICTIONAL ISSUE IS INVOLVED THE SAME MUST BE STRICTLY COMPLIED WITH BY THE AUTHORITY ITA NO. 919/JP2017 SMT. PRABHA SAXENA VS ITO 13 CONCERNED AND NO QUESTION OF KNOWLEDGE BEING ATTRIB UTED 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. 16. IN LIGHT OF THE ABOVE DISCUSSIONS, CONSIDERING THE ENTIRETY OF FACTS AND CIRCUMSTANCES OF THE CASE, EVEN THOUGH THE PROC EEDINGS HAVE BEEN VALIDLY INITIATED BY ISSUANCE OF NOTICE U/S 148 OF THE ACT, HOWEVER, GIVING THE FACT THAT THE REASONS SO RECORDED HAVE N OT BEEN SUPPLIED TO THE ASSESSEE EVEN THOUGH THE SAME WERE BEING SPECIF ICALLY ASKED DURING COURSE OF REASSESSMENT PROCEEDING, A FACT WH ICH REMAIN UNDISPUTED BEFORE US, THE REASSESSMENT PROCEEDINGS HAVE BECOME VITIATED AND LIABLE TO BE SET ASIDE RESPECTFULLY FO LLOWING THE DECISIONS OF THE HONBLE SUPREME COURT AND OTHER HIGH COURTS REF ERRED SUPRA. 17. THE OTHER GROUNDS RAISED BY THE LD. AR REGARDIN G UNREALISED RENT/ ARREARS OF RENT HAVE THUS BECOME ACADEMIC AND HAVE NOT BEEN ADJUDICATED UPON. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 06/08/2018. SD/- SD/- FOT; IKY JKO FOE FLAG ;KNO (VIJAY PAL RAO) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 06/08/2018. ITA NO. 919/JP2017 SMT. PRABHA SAXENA VS ITO 14 *SANTOSH VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SMT. PRABHA SAXENA, DHOLPUR. 2. IZR;FKHZ@ THE RESPONDENT- ITO, WARD- 4, BHARATPUR. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE { ITA NO. 919/JP/2017} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR