Income Tax Appellate Tribunal - Panji
M/S Svr Neuro & Traumo Super Speciality ... vs The Dcit,, Vijayawada on 29 November, 2017
आयकर अपीलीय अधधकरण, धिशाखापटणम पीठ, धिशाखापटणम
IN THE INCOME TAX APPELLATE TRIBUNAL,
VISAKHAPATNAM BENCH, VISAKHAPATNAM
श्रीिी. दुगाा राि,न्याधयक सदस्य एिं
श्री धड.एस. सुन्दर ससह, लेखा सदस्य के समक्ष
BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER&
SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER
आयकर अपील सं./I.T.A.No.249/VIZ/2015
(धनधाारण िर्ा/Assessment Year:2010-11)
M/s SVR Neuro& Trauma Vs. Dy.Commissioner of
Superspeciality Hospitals Pvt. Ltd. Income Tax,
D.No.40-1/1-14ABC Circle-2(1)
Sivananda Street Vijayawada
M.G.Road, Lobbipet
Vijayawada - 520 010
[PAN : AAHCS6884N]
(अपीलार्थी/ Appellant) (प्रत्यर्थी/ Respondent)
अपीलाथी की ओर से/ Appellant by : Shri M.S.R.Prasad, AR
प्रत्याथी की ओर से / Respondent by : Shri M.N.MurthyNaik, DR
सुनिाई की तारीख / Date of Hearing : 21.11.2017
घोषणा की तारीख/Date of Pronouncement : 29 .11.2017
आदेश /O R D E R
PER D.S. SUNDER SINGH, Accountant Member:
1. This appeal is filed by the assessee against the order of the Commissioner of Income-Tax (Appeals), Vijayawada vide ITA 2 ITA No.249/VIZ/2015 M/s S.V.R.Neuro & Truama Super Speciality Hospitals (P) Ltd. No.206/CIT(A)/VJA/2013-14dated 30.03.2015 for the assessment year 2010-11.
2. The assessee filed total six grounds of appeal along with the appeal memo but the grounds of appeal are argumentative and lengthy, hence the assessee filed revised and concise grounds of appeal covering all the issues during the appeal hearing on 21.11.2017. Hence on the request of the Ld.AR revised grounds of appeal are taken up for adjudication.
3. Ground No.1 and 5 of revised appeal are general in nature which does not require specific adjudication.
4. Ground No. 2 is related to the validity of reassessment made u/s 147 r.w.s.143(3) of I.T.Act, without communicating the reasons recorded for reopening the assessment. In this case, the assessee filed the return of income on 29.09.2010 admitting total income of Rs.11,30,830/-. A survey u/s 133A of the Act was conducted in this case on 27.01.2011 and the reassessment was completed on total income of Rs.71,71,762/-. Subsequent to the survey, the assessee has filed the revised return of 3 ITA No.249/VIZ/2015 M/s S.V.R.Neuro & Truama Super Speciality Hospitals (P) Ltd. income and the assessing officer(AO) had issued the notice u/s 148 on 22.04.2013. The assessee, in response to the notice vide letter dated 28.04.2013 requested the AO to treat the return filed on 29.01.2011 as return in response to notice u/s 148 of the I.T.Act and also requested to furnish the reasons recorded for issue of notice u/s 148. The AO completed the assessment without communicating the reasons recorded. On appeal the Ld.CIT(A) dismissed the assessee's appeal on validity of the assessment for non communication of the reasons stating that the assessee had responded to the notice.
5. During the appeal hearing Ld.AR submitted that the AO has completed the assessment without communicating the reasons recorded for issue of notice u/s 148, in spite of the specific request made by the assessee for furnishing the reasons. The Ld.AR further submitted that as per the judgement of Hon'ble Supreme Court in the case of M/s GKN Drive Shafts (India) Ltd. Vs. ITO [259 ITR 19], it is obligatory on the part of AO to communicate the reasons on furnishing the return of income. The assessee in response to the notice issued u/s 148 submitted a letter to the AO to treat the return filed on 29.01.2011 as return in response to the notice issued u/s 148. Thus the assessee has complied with the mandate of 4 ITA No.249/VIZ/2015 M/s S.V.R.Neuro & Truama Super Speciality Hospitals (P) Ltd. Hon'ble Supreme Court cited supra but the AO failed to furnish the reasons, hence the assessment made u/s 143(3) r.w.s 147 is invalid and required to be quashed. The assessee relied on the decision of Hon'ble High Court of Calcutta in the case of Berger Paints India Ltd. Vs. ACIT [139 Taxmann 200] (Cal), wherein Hon'ble High Court held that the assumption of jurisdiction of assessing officer u/s 147 depends upon existence of reasons followed by communication thereof to assessee and if notice served under section 148 is challenged, AO cannot proceed with assessment under section 147 unless reasons are communicated. In the instant case, the contention of the assessee is that the assessee has complied with the notice u/s 148 and the AO has not furnished the reasons recorded for issuance of notice u/s 148 despite the request made by the assessee, hence, argued that the assessment made u/s 148 is invalid and required to be quashed.
6. On the other hand, the Ld.DR relied on the orders of the lower authorities and also submitted that the Ld.CIT(A) has considered the issue and upheld the reassessment made u/s 148. Therefore, Ld.DR submitted that the assessee had responded to the notice issued u/s 148 and participated in the assessment proceedings, hence, notice issued u/s 148 and the consequent assessment order required to be upheld. 5 ITA No.249/VIZ/2015
M/s S.V.R.Neuro & Truama Super Speciality Hospitals (P) Ltd.
7. We have heard both the parties and perused the material placed on record. In this case, the assessment is reopened u/s 148 by issue of notice to the assessee. In response to the notice issued u/s 148, the assessee filed the reply and requested for communication of the reasons recorded for reopening the assessment. The AO did not communicate the reasons and completed the assessment. Hon'ble Supreme Court in the case of M/s GKN Drive Shafts(India) Limited Vs. ACIT framed the guidelines on what should be done when the notice is issued. As per the guidelines framed by the Hon'ble Supreme Court, proper course of action for the notice is to file return of income and seek reasons for issuing the notices. The AO is bound to furnish the reasons within the reasonable time. On receipt of reasons, the assessee is entitled to file objections to the issuance of notice and the AO is bound to dispose of the objections by passing speaking order. Hon'ble High Court of Calcutta in the case of Berger Paints India Ltd. Vs. ACIT cited supra held that the AO cannot proceed with the assessment u/s 147 unless the reasons are communicated. We have called for the records and directed the Ld.DR to clarify whether the reasons were communicated to the assessee or not and the Ld.DR fairly conceded that the reasons were not communicated. We have also verified the assessment records and noticed that the order sheet of the assessment do not indicate 6 ITA No.249/VIZ/2015 M/s S.V.R.Neuro & Truama Super Speciality Hospitals (P) Ltd. communication of reason to the assessee. In the case of CIT Vs. Videsh Sanchar Nigam Ltd. [340 ITR66], Hon'ble Bombay High Court in 21 taxman.com 23 (Bom) held that non furnishing of the reasons would make the assessment invalid. For ready reference we extract the relevant part of the order of the Hon'ble Bombay High court supra which reads as under:
"2. The finding of fact recorded by the Income-tax Appellate Tribunal is that in the present case the reasons recorded for reopening of the assessment though 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 v. Fomento Resorts & Hotels Ltd., IT Appeal No. 71 of 2006, dated 27-11-2006, has held that though the reopening of the assessment is within three years from the end of the relevant assessment year, since the reasons recorded for reopening of the assessment were not furnished to the assessee till the completion of assessment, the reassessment 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. (supra) has been dismissed by the apex court, vide order dated July 16, 2007."
Facts of the instant case are similar to that of M/s Videsi Sanchar Nigam Ltd. And Berger Paints Ltd. Cited supra. Therefore, respectfully following the decisions of Hon'ble Bombay High court and the Calcutta High court we hold that the AO cannot proceed to make the reassessment without communicating the reasons and the assessment order framed u/s 147 without communicating the reasons required to be quashed. Accordingly, the assessment order made u/s 143(3) r.w.s. 147 is hereby quashed. The appeal of the assessee is allowed on this ground. 7 ITA No.249/VIZ/2015
M/s S.V.R.Neuro & Truama Super Speciality Hospitals (P) Ltd.
8. Ground No.3 and 4 of the revised grounds of appeal are related to the additions made by the AO on merits. Since we have quashed the assessment order made u/s 147 r.w.s. 148, we consider it is not necessary to adjudicate the grounds on merits. Accordingly, the appeal of the assessee is allowed.
9. In the result, appeal of the assessee is allowed.
The above order was pronounced in the open court on 29th Nov' 2017.
Sd/- Sd/-
(िी.दुगाा राि) (धड.एस. सुन्दर ससह)
(V. DURGA RAO) (D.S. SUNDER SINGH)
न्याधयकसदस्य/JUDICIAL MEMBER लेखासदस्य/ACCOUNTANT MEMBER धिशाखापटणम /Visakhapatnam ददनांक /Dated : 29.11.2017 L. Rama, SPS 8 ITA No.249/VIZ/2015 M/s S.V.R.Neuro & Truama Super Speciality Hospitals (P) Ltd. आदेशकीप्रधतधलधपअग्रेधर्त/Copy of the order forwarded to:-
1. अपीलाथी / The Appellant- M/s SVR Neuro& Trauma Superspeciality Hospitals Pvt. Ltd., D.No.40-1/1-14ABC, Sivananda Street, M.G.Road, Lobbipet, Vijayawada - 520 010
2. प्रत्याथी / The Respondent-Dy.Commissioner of Income Tax, Circle-2(1) Vijayawada
3. The Pr.Commissioner of Income Tax, Vijayawada
4. The Commissioner of Income Tax (Appeals), Vijayawada
5. धिभागीयप्रधतधनधध, आयकरअपीलीयअधधकरण, धिशाखापटणम /DR, ITAT, Visakhapatnam
6. गाडाफ़ाईल / Guard file आदेशानुसार / BY ORDER // True Copy // Sr. Private Secretary ITAT, VISAKHAPATNAM