Income Tax Appellate Tribunal - Delhi
Ramesh Chander Chadha, New Delhi vs Ito, New Delhi on 6 January, 2016
IN THE INCOME TAX APPELLATE TRIBUNAL
(DELHI BENCH "SMC-2" NEW DELHI)
BEFORE SHRI I.C. SUDHIR: HON'BLE JUDICIAL MEMBER
ITA No. 3127/Del/2015
Assessment Year: 2009-10
Ramesh Chander Chadha, Vs. ITO,
6/13, WEA, Karol Bagh, Ward-33(2),
New Delhi. New Delhi.
(PAN: AAGPC4345N)
(Appellant) (Respondent)
Assessee by: S/Shri Rajeev Sabharwal, CA & Piyush
Kumar Kamal, Adv.
Department by: Shri T. Vasudevan, Sr. DR
Date of hearing : 08.10.2015
Date of pronouncement: 06:01.2016
ORDER
The First Appellate Order upholding the addition of Rs.6 lacs under sec. 50C of the Income-tax Act, 1961 and non-deduction of cost of improvement of Rs.35,000 has been questioned on several grounds. Besides, in ground No.3, the assessee has questioned validity of assessment order in absence of supply of reasons for reopening.
2. Since the issue raised in ground No.3 goes to the root of the matter, I prefer to adjudicate upon it first. An identical issue was also raised before the Learned CIT(Appeals) vide ground No.3 but the Learned CIT(Appeals) has not allowed that ground. The Learned CIT(Appeals) in para No. 5.4 of 2 the First Appellate Order has mentioned that as per the records, the Assessing Officer by calling the assessee's explanation on long term capital had communicated the reasons to the assessee before the completion of the assessment.
3. In support of ground No.3, the Learned AR submitted that vide letter dated 15.8.2012 filed on 11.9.2012 before the Assessing Officer, the assessee had requested to provide copy of reason for reopening of the assessment, which was never supplied during the course of assessment proceedings by the Assessing Officer. Since the copy of reasons to believe was not supplied to the assessee, the assessee was having no occasion to raise objections against the said reasons to believe before the Assessing Officer. The Learned CIT(Appeals) has also not decided the issue with specific mention as to when the reasons was supplied to the assessee by the Assessing Officer. The Learned AR placed reliance on the following decisions with this contention that in absence of supply of reasons, the notice issued under sec. 148 and the assessment framed in furtherance to are invalid and the same be quashed as such:
i) GKN Driveshaft (India) Ltd. vs. ITO - 259 ITR 19 (S.C);
ii) Ferrous Infra-structure (P) Ltd. vs. DCIT - WP(C) 5229/2014, judgment dated 21.5.2015 (Del.);
iii) CIT vs. Videsh Sanchar Nigam Ltd. (2012) - 340 ITR 66 (Bom.).3
4. The Learned Senior DR on the other hand referred contents of para No. 5.4 at page No. 8 of the First Appellate Order with this submission that on verification of record, the Learned CIT(Appeals) has found that the Assessing Officer by calling the assessee's explanation on long term capital had communicated the reasons to the assessee before the completion of the assessment and since the assessee had not challenged the reopening, therefore, the ratios laid down in the case of GKN Driveshaft (supra) does not apply here. He placed reliance on the following decisions:
i) Sehkari Khand Udyog Mandal Ltd. vs. ACIT - Special Civil Application No. 3955 of 2014 - order dated 31.3.2014 (Guj.);
ii) M/s. Deepak Agr. Foods vs. St. of Rajasthan- Civil Appeal No. 4327-28 of 2008 - judgment dated 11.7.2008.
5. Considering the above submission, I find that the Assessing Officer though has mentioned about the request of the assessee vide letters dated 15.8.2012 received on 11.9.2012 regarding the request to provide copy of reasons for reopening of the assessment under sec. 148 of the Act, at the bottom of page No. 1 of the assessment order but the Assessing Officer has not mentioned about compliance of this request of the assessee by him. Again the Learned CIT(Appeals) in para No. 5.4 of the First Appellate Order on the grievance of the assessee that the Assessing Officer had not given the 4 reasons for reopening the assessment, has mentioned that as per the records the Assessing Officer by calling the assessee's explanation on long term capital gain had communicated the reasons to the assessee before the completion of the assessment. He has mentioned further that the assessee had not challenged the reopening and, therefore, ratio laid down in the case of GKN Driveshaft (supra) does not apply. There is vagueness in the finding of the Learned CIT(Appeals) on the supply of reasons to believe by the Assessing Officer to the assessee during the assessment proceedings. When an specific ground regarding non-supply of reasons was raised by the assessee before the Learned CIT(Appeals) and there is mention of a specific request made by the assessee vide letter dated 15.8.2012 received by the Assessing Officer on 11.9.2012 for supply of the reasons, mentioned at the bottom of page number 1 of the assessment order, the Learned CIT(Appeals) ought to have given a specific finding by mentioning date as to when the reasons was supplied to the assessee by the Assessing Officer. The very purpose of supply of reasons by the Assessing Officer to the assessee is to afford opportunity to the assessee to raise objections, if any, against the said reasons and against the initiation of reopening proceedings. Hon'ble Supreme Court in the case of GKN Driveshaft (supra) has been pleased to clarify as under:
5
"However, we clarify that when a notice under sec. 148 of the Income-tax Act, 1961 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 off the same by passing a speaking order in the instant case, as the reasons have been disclosed in these proceedings, the Assessing Officer has to dispose off the objections, if filed, by passing a speaking order, before proceeding with the assessment in respect of the above said five assessment years."
6. Following the above decision of the Hon'ble Supreme Court and others, the Hon'ble jurisdictional High Court of Delhi in the case of Ferrous Infra-structure Pvt. Ltd. vs. DCIT (supra) in its recent judgment dated 21.5.2015 has been pleased to hold that the Assessing Officer has to pass an speaking order disposing off the objections before proceeding with the assessment. Hon'ble High Court observed further that in the case before it, a separate speaking order was not passed and the objections had been dealt with, if at all, in the reassessment order itself. On this ground also, the petitioner is liable to succeed, held the Hon'ble High Court. The notice issued under sec. 148 and proceedings pursuant to the said notice was accordingly quashed. Being latest decision of the Hon'ble jurisdictional High 6 Court of Delhi in the above case, the Delhi Bench of the ITAT is bound to follow this decision. The case of the present assessee before us is on the better footing as in the present case despite specific request made by the assessee vide letter dated 15.8.2012 received by the Assessing Officer on 11.9.2012 ( a copy of which has been made available at page No. 1 of the paper book , the Assessing Officer did not bother to supply copy of reasons to the assessee giving him an opportunity to raise objection, if any, against the said reasons. The decision of Hon'ble Supreme Court in the case of M/s. Deepak Agr. Food vs. State of Rajasthan (supra) is related to the Rajasthan Sales-tax Act, 1994,hence, it is not relevant and helpful to the Revenue in the present case. I thus respectfully following the ratios laid down by the Hon'ble jurisdictional High Court of Delhi in the case of Ferrous Infra- structure Pvt. Ltd. vs. DCIT (supra) hold that the notice issued under sec. 148 of the Act was not valid and the same is quashed as such so also all proceedings pursuant to the said notice under sec. 148. The ground No.3 is accordingly allowed.
7. In view of the above finding wherein the very assessment order framed under sec. 147/143(3) of the Income-tax Act, 1961 has been quashed, the issues raised in other grounds questioning the merit of additions 7 made in the assessment order and upheld by the Learned CIT(Appeals) do not survive and these disposed off as having become infructuous.
8. The appeal is accordingly allowed.
Order pronounced in the open court on 06.01.2016 Sd/-
( I.C. SUDHIR ) JUDICIAL MEMBER Dated: 06/01/2016 Mohan Lal Copy forwarded to:
1) Appellant
2) Respondent
3) CIT
4) CIT(Appeals)
5) DR:ITAT
ASSISTANT REGISTRAR
Date
Draft dictated on computer 06.01.2016
Draft placed before author
Draft proposed & placed before the second
member
Draft discussed/approved by Second Member.
Approved Draft comes to the Sr.PS/PS 06.01.2016
Kept for pronouncement on 06.01.2016
File sent to the Bench Clerk 06.01.2016
Date on which file goes to the AR
Date on which file goes to the Head Clerk.
Date of dispatch of Order.