Income Tax Appellate Tribunal - Agra
Rajeev Kumar Agarwal & Sons, Aligarh vs Ito Ward 1(5), Aligarh on 16 April, 2018
IN THE INCOME TAX APPELLATE TRIBUNAL
AGRA BENCH: AGRA
BEFORE SHRI A. D. JAIN, JUDICIAL MEMBER, AND
DR. MITHA LAL MEENA, ACCOUNTANT MEMBER
ITA No. 29/Agra/2017
(ASSESSMENT YEAR: 2005-06)
Rajeev Kumar Agarwal & Sons Vs.. ITO-Ward 1(5),
5/1, Gooler Road, Aligarh (U.P.) Aligarh.
PANNo.AARHR6303N
(Assessee) (Revenue)
Assessee by Shri Pankaj Gargh, AR.
Revenue by Shri Waseem Arshad, Sr. DR.
Date of Hearing 26.03.2018
Date of Pronouncement 16 .04.2018
ORDER
PER, A. D. JAIN, JUDICIAL MEMBER:
This is assessee's appeal for A. Y. 2005-06, raising the concise grounds as under:
"1. Because the ex-parte order passed by Ld. CIT(A) is wrong, bad in law, arbitrary, without allowing proper and reasonable opportunity and against the principal of natural justice.
2. Because the Ld. CIT(A) has wrongly and arbitrarily erred both in law and on facts in ignoring, in noLadjudicating and in dismissing the grounds taken before him. In brief the following ITA No. 29/Agra/2017 2 legal grounds were taken before Ld. CIT(A) objecting to the proceedings and the assessment framed:-
(i) Reasons recorded do not show any independent application of mind of the Assessing Officer himself.
(ii) Reason recorded are on the direction of Ld. CIT(A) who while deciding the appeal of another person has given direction to assessed the income in the hand of assessee and other co-
owners. Ld. CIT(A) has no power to give direction in other case.
(iii) Initiation of proceedings u/s 147 and consequent issue of notice u/s 148 is bad in law, premature, without jurisdiction and does not fulfill the condition as laid down u/s 147.
(iv) There cannot be any satisfaction/reason to believe of the Assessing Officer that income chargeable to tax has escaped assessment as the determination of circle rate is subjudice before Hon'ble Allahabad High Court.
(v) Reason to believe cannot be said to be definite or determined.
(vi) No order passed by ADM (Finance) in case of appellant and hence there cannot be any satisfaction/reason to believe of the Assessing Officer.
(vii) Notice issued u/s 148 is beyond the limitation period. ITA No. 29/Agra/2017 3
(viii) Service of notice is invalid and not according to the condition as laid down in section 282. Considering the grounds as above the assessment deserves to be quashed.
3. Because the assessment framed u/s 143(3) r.w.s. 147 of the I. T. Act is wrong, bad in law, without jurisdiction and deserves to be quashed as the objection filed challenging the validity of initiation of proceedings u/s 147 and issuance of notice u/s 148 has not been decided by passing a separate Speaking Order.
4. Because the Ld. CIT(A) has wrongly and arbitrarily erred both in law and on facts in ignoring, in not adjudicating and in dismissing the grounds taken before him. In brief the following grounds objecting the addition made by the Assessing Officer were taken before Ld. CIT(A).
(i) Addition of Rs. 1,41,37,504/- under the head Long Term Capital Gain is wrong, bad in law, arbitrary, against the facts of the case and deserves to be deleted.
(ii) Assessing Officer erred in applying provisions of section 50C ignoring the fact that the value to be adopted for purpose of stamp duty is under dispute and subjudice before Hon'ble Allahabad High Court.
(iii) Assessing Officer has legally and factually erred in disallowing the deduction of Rs. 25,00,000/- made u/s 54 of the I. T. Act. ITA No. 29/Agra/2017 4
Considering the grounds as above the addition deserves to be deleted and the deduction as claimed may kindly be allowed."
2. Ground No.1 not pressed. Rejected as not pressed.
3. As per Ground No.3, the assessee's objection against the initiation of proceedings u/s 147 of the IT Act and issuance of notice u/s 148 of the IT Act have not been decided by the AO by a separate speaking order, which is not in accordance with law.
4. In this regard, as is evident from a bare perusal of the assessment order, the AO has disposed of (assessment order, page 8 onwards), the assessee's objections against the initiation of reassessment proceedings and issuance of notice with regard thereto.
5. The ld. DR has contended that the return of income was filed beyond time; that the objections were preferred only on 11.02.2015, when only one month was left with the AO to complete the assessment. Attention has been drawn to page 10, para (xii), wherein, the AO has observed that the assessee has not filed the objections after receiving the notice, filing the return of income and seeking the reasons recorded by the AO and that so, he is not entitled for shelter under 'GKN Driveshafts', 259 ITR 19 (SC). It has also been contended that as observed by the ITA No. 29/Agra/2017 5 AO [assessment order, page 10, paras (ix) and (x)], the assessment was reopened entirely on the directions issued by the CIT(A), whereas such directions have not been chllenged by the assessee.
6. Having considered the matter in the light of the rival contentions and the material placed on record, we find that in response to the notice issued u/s 148 of the Act in pursuance of the reasons recorded by the AO to believe escapement of income, the assessee had, in fact, filed a return of income. Now, the question is, whether the AO was correct in deciding the objections raised by the assessee against the initiation of reassessment proceedings and the issuance of the notice u/s 148 of the Act, in the assessment order itself.
7. In 'GKN Driveshafts' (supra) the Hon'ble Supreme Court has observed as follows:
"However, we clarify that when a notice under section 148 of the Income Tax Act is issued, the proper course of action for the noticee is to file return and if he so desires, to seek reasons for issuing notices. The Assessing Officer is bound to furnish reasons within a reasonable time. On receipt of reasons, the noticee is entitled to file objections to issuance of notice and the Assessing Officer is bound to dispose of the same by passing a speaking order. In ITA No. 29/Agra/2017 6 the instant case, as the reasons have been disclosed in these proceedings, the Assessing Officer has to dispose of the objections, if filed, by passing a speaking order, before proceeding with the assessment in respect of the above said five assessment years."
8. Thus, as per 'GKN Driveshafts' (supra), when objections against the AO's reasons of belief of escapement of income are filed, it is incumbent on the AO to dispose of the same by a separate speaking order before proceeding with the assessment.
9. In 'General Motors India P. Ltd. vs. DCIT', 354 ITR 244 (Guj.), it has been held as follows:
"The Assessing Officer is mandated to decide the objection to the notice under section 148 and supply or communicate it to the assessee. The assessee gets an opportunity to challenge the order in writ petition. Thereafter, the Assessing Officer may pass the reassessment order. We hold that it was not open to the Assessing Officer to decide the objection to notice under section 148 by a composite assessment order. The Assessing Officer was required to, first decide the objection of the assessee filed under section 148 and serve a copy of the order on the assessee. And after giving some reasonable time to the assessee for ITA No. 29/Agra/2017 7 challenging his order, it was open to him to pass an assessment order. This was not done by the Assessing Officer, therefore, the order on the objection to the notice under section 148 and the assessment order passed under the Act deserves to be quashed."
10. In, 'M/s Haryana Acrylic Manufacturing Company. Vs. Commissioner Of Income-tax', 308 ITR 38 (Del), it has been held that deviation from the directions issued by the Hon'ble Supreme Court in 'GKN Driveshafts' (supra) would entail nullifying the proceedings. As such, the CIT(A) is incorrect on this score also.
11. In 'KSS Petron Private Ltd. vs. ACIT', order dated 03.10.2016 in ITA No. 224 of 2014, the Hon'ble Bombay High Court has held as under:
"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 Officer 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 by reviving stale/old matters."ITA No. 29/Agra/2017 8
12. In view of above, the grievance of the assessee is found justified and it is accepted. The AO having not disposed of the assessee's objections to the reasons recorded, by passing a separate speaking order before proceeding with the assessment, the assessee has been illegally debarred from exercising a legally enforceable right, which would have become available to him.
13. For this reason, the assessment order is null and void and it is quashed as such. Nothing further survives for adjudication.
14. In the result, the appeal is allowed.
Order pronounced in the open court on 16/04/2018.
Sd/- Sd/-
(DR. MITHA LAL MEENA) (A.D. JAIN)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated: 16/04/2018
*AKV*
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(Appeals)
5. DR: ITAT
ASSISTANT REGISTRAR
ITA No. 29/Agra/2017
9
Date
1. Draft dictated (DNS) 27.03.2018 PS
2. Draft placed before author 09.04.2018 PS
3. Draft proposed & placed before the second member JM/AM
4. Draft discussed/approved by Second Member. JM/AM
5. Approved Draft comes to the Sr.PS/PS PS/PS
6. Kept for pronouncement on PS
7. File sent to the Bench Clerk PS
8. Date on which file goes to the AR
9. Date on which file goes to the Head Clerk.
10. Date of dispatch of Order.