Income Tax Appellate Tribunal - Pune
Ajay Shantilal Lalwani,, Jalgaon vs Income-Tax Officer,, on 25 November, 2016
आयकर अपील
य अ धकरण "बी" यायपीठ पण
ु े म ।
IN THE INCOME TAX APPELLATE TRIBUNAL "B" BENCH, PUNE
ी आर. के. पांडा, लेखा सद य, एवं ी #वकास अव थी, या%यक सद य के सम& ।
BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM
आयकर अपील सं. / ITA No. 145/PN/2015
%नधा(रण वष( / Assessment Year : 2005-06
Shri Ajay Shantilal Lalwani,
'Devdarshan', 56, Jay Nagar,
Jalgaon - 425002
PAN : AAEPL3257C
.......अपीलाथ / Appellant
बनाम/Vs.
Income Tax Officer,
Ward-1(1), Jalgaon
......
यथ / Respondent
Assessee by : Shri Naresh Kumar
Revenue by : Shri Hitendra Ninawe
सन
ु वाई क तार ख / Date of Hearing : 26-10-2016
घोषणा क तार ख / Date of Pronouncement : 25-11-2016
आदे श / ORDER
PER VIKAS AWASTHY, JM :
This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals)-2, Nashik dated 10-11-2014 for the assessment year 2005-06.
2ITA No. 145/PN/2015, A.Y. 2005-06
2. The brief facts of the case as emanating from records are: The assessee filed his return of income for the impugned assessment year on 31-03-2006 declaring total income of `3,53,041/- and agriculture income of `48,930/-. A search action u/s. 132 of the Income Tax Act, 1961 (hereinafter referred to as "the Act") was carried out in the case of Chhoriya Group on 22-08-2008. During the course of search apart from other documents and papers, a rough cash book was seized by the Department. On the basis of said rough cash book it was alleged that the assessee had advanced `58,00,000/- on interest to the Chhoriya Group during the period 01-04-2004 to 31-03-2005. Reassessment proceedings were initiated against the assessee and accordingly notice u/s. 148 of the Act was issued to the assessee on 29-03-2012. Reasons were recorded for reopening the assessment on 23-06-2012 and the same were purportedly served on the assessee on 30-03-2012. The assessee filed objections against the reasons for reopening assessment on 22-08-2012. The Assessing Officer thereafter vide order dated 28-03-2013 passed u/s. 143(3) r.w.s. 147 of the Act completed the assessment without deciding the objections of the assessee in accordance with the law laid down by the Hon'ble Supreme Court of India in the case of GKN Driveshafts (India) Ltd. Vs. Income Tax Officer reported as 259 ITR 19 (SC).
Aggrieved by the assessment order dated 28-03-2013, the assessee carried the matter in appeal before the Commissioner of Income Tax (Appeals) challenging the reassessment proceedings as well as the additions made on merit. The Commissioner of Income Tax (Appeals) vide impugned order upheld the validity of the reassessment 3 ITA No. 145/PN/2015, A.Y. 2005-06 proceedings as well as the additions made by the Assessing Officer. Now, the assessee is in second appeal before the Tribunal assailing reopening, as well as the additions on merits.
3. Shri Naresh Kumar appearing on behalf of the assessee submitted that the Assessing Officer has not followed the proper procedure for reopening the assessment. The ld. AR further disputed certain dates mentioned in the assessment order with respect to recording of reasons and service of the same to the assessee. The ld. AR submitted that in the grounds of appeal the assessee has challenged the additions made during reassessment proceedings as well as the validity of the notice issued u/s. 148 r.w.s. 147 of the Act. Although, the assessee had raised the ground before the Commissioner of Income Tax (Appeals) with respect to violation of the procedure laid down for deciding the objections against reopening of the assessment as mandated by the Hon'ble Supreme Court of India in the case of GKN Driveshafts (India) Ltd. Vs. Income Tax Officer (supra), the ground was inadvertently not taken in the grounds of appeal before the Tribunal. The assessee has raised the said ground as additional ground. 3.1 The ld. AR pointed that notice u/s. 148 was issued to the assessee on 30-03-2012. The assessee was not provided with the reasons for reopening the assessment. On 26-04-2012 the assessee asked the Assessing Officer to supply the copy of reasons for reopening assessment. The same were supplied to the assessee by Assessing Officer on 31-07-2012. After perusing the reasons the assessee observed that reassessment proceedings have been initiated on the 4 ITA No. 145/PN/2015, A.Y. 2005-06 basis of some entries in the rough cash book which was seized during search on Chhoriya Group. The assessee requested for the copy of rough cash book vide letter dated 13-08-2012. The assessee filed objections to the reopening on 22-08-2012. A copy of the rough cash book was supplied to the assessee on 21-03-2013. On receipt of the same the assessee filed revised objections to the reopening on 25-03-2013. The Assessing Officer without first deciding the objections of the assessee against reopening proceeded on to pass assessment order on 28-03-2013. The ld. AR in order to fortify his submissions with respect to sequence of events and dates has furnished the copy of order sheet of proceeding before Assessing Officer and the letters addressed by the assessee to Assessing Officer and vice-versa. 3.2 The ld. AR submitted that the Assessing Officer has flouted the law laid down by the Hon'ble Supreme Court of India in the case of GKN Driveshafts (India) Ltd. Vs. Income Tax Officer (supra). The Hon'ble Apex Court has held that the Assessing Officer is duty 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. The Hon'ble Bombay High Court in the case of Asian Paints Ltd. Vs. Deputy Commissioner of Income Tax & Anr. reported as 296 ITR 90 has held that after passing of the order rejecting the objections, the Assessing Officer shall gave four weeks time from the date of service of order rejecting objections, before proceeding further. The ld. AR further placed reliance on the recent decision of Hon'ble Jurisdictional High Court in the case of KSS Petron Private Ltd. Vs. The Assistant 5 ITA No. 145/PN/2015, A.Y. 2005-06 Commissioner of Income Tax in Income Tax Appeal No. 224 of 2014 decided on 03-10-2016, wherein the Hon'ble High Court has set aside the assessment order where the Assessing Officer has not complied with the procedure in disposing of the objections of the assessee against reopening. The ld. AR prayed for setting aside of the impugned order.
4. Shri Hitendra Ninawe representing the Department vehemently supported the order of Commissioner of Income Tax (Appeals) in upholding the validity of reassessment proceedings, as well as confirming of additions on merits. The ld. DR submitted that the Assessing Officer has dealt with the objections raised by the assessee and after considering the same, the Assessing Officer has passed the assessment order. The ld. DR prayed for upholding the findings of Commissioner of Income Tax (Appeals) on merits as well as on jurisdiction.
5. We have heard the submissions made by the representatives of rival sides and have perused the orders of the authorities below. The ld. AR has confined his submissions in challenging the procedure adopted by the Assessing Officer in disposing of the objections of assessee against reopening. Before proceeding to decide the issue, it would be relevant to have a quick look of the chronology of events :
Date Events 30-03-2012 Notice u/s. 148 issued to the assessee. 26-04-2012 Letter by the assessee requesting for reasons for issuing notice u/s. 148. 6 ITA No. 145/PN/2015, A.Y. 2005-06 31-07-2012 Reasons for reopening supplied by Assessing Officer to the assessee. 13-08-2012 Request letter from assessee to supply copy of 'rough
cash book' seized during search operation on Chhoriya Group.
22-08-2012 Assessee filed objections for initiating reassessment proceedings.
25-03-2013 On receipt of copy of 'rough cash book' seized during the search operation on Chhoriya Group, the assessee filed revised objections to reassessment proceedings. 28-03-2013 Assessment order u/s. 143(3) r.w.s. 147 passed.
6. A perusal of the above chronology events show that the Assessing Officer has not passed any order disposing of the objections filed by the assessee against reassessment proceedings. The assessee has furnished a copy of ordersheets from the file of Assessing Officer starting from 31-07-2012 to 28-03-2013. A perusal of ordersheet entries show that there is no endorsement to the effect that objections filed by the assessee have been disposed of/decided by the Assessing Officer. The ld. DR has also not controverted the chronology of events which has been furnished by the assessee separately. No separate order deciding the objections of the assessee against reopening is available on record. A perusal of the assessment order shows that the Assessing Officer has referred to objection petition dated 22-08-2012 filed by the assessee. However, the same have not been adjudicated by the Assessing Officer. The assessee has taken objections to the same in ground No. 6 of the grounds of appeal before the First Appellate Authority. A perusal of the impugned order shows that even the 7 ITA No. 145/PN/2015, A.Y. 2005-06 Commissioner of Income Tax (Appeals) has not taken cognizance of the same and has not commented whether the Assessing Officer has complied with the proper procedure for disposing of the objections filed by the assessee against reopening of the assessment.
7. The Hon'ble Supreme Court of India in the case of GKN Driveshafts (India) Ltd. Vs. Income Tax Officer (supra) has in unequivocal terms held that 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.
8. The Hon'ble Bombay High Court in the case of Asian Paints Ltd. Vs. Deputy Commissioner of Income Tax & Anr. (supra) has further clarified that if the Assessing Officer does not accept the objections, he shall not proceed further in the matter within a period of four weeks from the date of service of the order on objections to the assessee.
9. The Assessing Officer is duty bound to decide the objections of the assessee against initiation of reassessment proceedings by passing a separate speaking order. Thereafter, the Assessing Officer shall give four weeks time to the assessee from the date of service of the said order before proceeding with the finalization of assessment. The Hon'ble Jurisdictional High Court in the case of KSS Petron Private Ltd. Vs. The Assistant Commissioner of Income Tax (supra) has set aside reassessment proceedings were the Assessing Officer has not followed the proper procedure as mandated for disposing of the objections of the 8 ITA No. 145/PN/2015, A.Y. 2005-06 assessee on reopening. The relevant extract of the findings of the Hon'ble Bombay High Court are 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 by reviving stale/ old matters."
10. In the present case we find that the Assessing Officer has not adjudicated the objections filed by the assessee on reopening and has straightaway passed the assessment order. Thus, the assessment order has been passed in clear violation of law laid down by the Hon'ble Supreme Court of India in the case of GKN Driveshafts (India) Ltd. Vs. Income Tax Officer (supra). The Assessing Officer is quasi judicial authority and has to follow the law and the principles of natural justice at the time of passing any order. We are of the considered opinion that remitting the matter back to the Assessing Officer would be allowing fresh inning to Assessing Officer at the cost of harassment and inconvenience to assessee. The Assessing Officer has missed the bus by violating the law laid down by the Hon'ble Apex Court. The Assessing Officer has committed error in not complying with the proper procedure in deciding the objections of the assessee against reassessment proceedings. Further, we observe that reassessment proceedings were initiated after the period of four years. Remitting the 9 ITA No. 145/PN/2015, A.Y. 2005-06 matter back to the Assessing Officer would result in extending the period of reassessment. Therefore, we set aside the impugned order and allow the appeal of the assessee.
11. In the result, the appeal of the assessee is allowed.
Order pronounced on Friday, the 25th day of November, 2016.
Sd/- Sd/-
(आर. के. पांडा / R.K. Panda) (!वकास अव"थी / Vikas Awasthy)
लेखा सद"य / ACCOUNTANT MEMBER $या%यक सद"य / JUDICIAL MEMBER
पुणे / Pune; &दनांक / Dated : 25th November, 2016
RK
आदे श क+ ,%त.ल#प अ/े#षत / Copy of the Order forwarded to :
1. अपीलाथ / The Appellant.
2. यथ / The Respondent.
3. आयकर आय' ु त (अपील) / The CIT(A)-2, Nashik
4. आयकर आयु'त / The CIT-2, Nashik
5. !वभागीय %त%न,ध, आयकर अपील य अ,धकरण, "बी" ब/च, पुणे / DR, ITAT, "B" Bench, Pune.
6. गाड1 फ़ाइल / Guard File.
//स या!पत %त // True Copy// आदे शानस ु ार / BY ORDER, %नजी स,चव / Private Secretary, आयकर अपील य अ,धकरण, पुणे / ITAT, Pune