ATUL NRIPRAJ BARAR,MUMBAI vs. ITO WARD 17(1)(2), MUMBAI

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ITA 6706/MUM/2024Status: DisposedITAT Mumbai25 March 2025AY 2014-153 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the facts on record clearly indicated that the AO did not provide the assessee with an opportunity to raise objections to the reopening of the assessment before proceeding with the assessment proceedings. This was in direct contravention of the ratio laid down by the Hon'ble Supreme Court in GKN Driveshafts (India) Limited vs. ITO, which mandates that a noticee is entitled to file objections to the issuance of a notice under Section 148, and the AO is bound to dispose of these objections by passing a speaking order. The Tribunal also referred to the Bombay High Court's decision in Asian Paints Ltd. vs. Deputy Commissioner of Income-Tax, which held that the assessee must be given a reasonable period to take remedial action if objections to reopening are rejected. In the interest of justice and fair play, the Tribunal decided to remit the matter back to the Assessing Officer. The assessee is directed to raise objections regarding the reopening, and the AO is directed to dispose of these objections first and then decide the issues afresh. The appeal was allowed for statistical purposes.

What were the facts?

The assessee, Atul Nripraj Barar, filed an appeal against the order dated 30/09/2024 by the NFAC, Delhi, concerning Assessment Year 2014-15. The assessee challenged the reopening of assessment under Section 147 of the Income Tax Act, 1961, and the merits of the additions made. The assessee also raised additional grounds concerning the procedural lapses in initiating reassessment proceedings. The notice under Section 148 was issued on 30/03/2017, and the reasons recorded were provided on 23/08/2017. On the same day, notice under Section 143(2) and a questionnaire under Section 142(1) were issued and served. The assessee contended that no opportunity was given to raise objections to the reopening.

What were the issues?

1. Whether the Assessing Officer (AO) failed to follow the procedure laid down by the Hon'ble Supreme Court in GKN Driveshafts (India) Limited vs. ITO [2003] 259 ITR 19 (SC) before initiating reassessment proceedings under Section 147 of the Act, rendering the notice under Section 148 and the subsequent assessment order under Section 143(3) r.w.s 147 bad in law and without jurisdiction? (Question of law and fact, concerning Section 147 and 148). 2. Whether the AO was justified in proceeding with reassessment proceedings without giving the assessee an opportunity to raise objections to the reasons recorded for issuing a notice under Section 148, contravening the procedure prescribed by the Hon'ble Supreme Court in GKN Driveshaft (Supra)? (Question of law and fact, concerning Section 147 and 148). Assessee's Contentions: The assessee argued that the AO failed to follow the procedure laid down in GKN Driveshafts (India) Limited vs. ITO, specifically by not providing an opportunity to raise objections to the reasons for reopening before issuing the notice under Section 148. This procedural lapse, according to the assessee, made the notice and the subsequent assessment order without jurisdiction and bad in law. The assessee relied on GKN Driveshafts (India) Limited vs. ITO and Asian Paints Ltd. vs Deputy Commissioner of Income-Tax [2008] 296 ITR 90 (Bom). Revenue's Contentions: The judgment does not record any specific contentions made by the revenue.

Which sections of the Income-tax Act were involved?

Section 147,Section 148,Section 143(3),Section 142(1),Section 143(2)

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Income Tax Appellate Tribunal, “A” BENCH, MUMBAI

Before: SHRI NARENDRA KUMAR BILLAIYA, HONBLE & MS. KAVITHA RAJAGOPAL, HONBLE

For Appellant: Shri K. Gopal & Ms. Neha Paranjpe, A/Rs
For Respondent: Shri Ram Krishn Kedia, Sr. D/R
Hearing: 24/03/2025Pronounced: 25/03/2025

PER NARENDRA KUMAR BILLAIYA, AM: This appeal by the assessee is preferred against the order dated 30/09/2024 by NFAC, Delhi [hereinafter “the ld. CIT(A)"], pertaining to AY 2014-15. 2. The assessee has challenged the re-opening u/s 147 of the Act and has also challenged the merits of the additions made. The assessee has also raised the following additional grounds:- "

1.

The Ld. A.O. failed to follow the procedure laid down by the Hon'ble Supreme Court in the case of GKN Driveshafts (India) Limited vs. ITO [2003] 259 ITR 19 (SC) before initiating reassessment proceedings under section 147 of the Act. Thus, the notice dated 30.03.2017 issued under section 148 of the Act and the subsequent assessment order dated 27.12.2017 passed under section 143(3) r.w.s 147 of the Act are without jurisdiction and bad in law.

2.

The Ld.A.O. is not justified to proceed with the reassessments proceedings without giving an opportunity to the Appellant to raise the objections to the reasons recorded to issue a notice under section 148 of the Act. This action on the part of the Ld.A.O. is in contravention of the procedure prescribed by the Hon'ble Supreme Court in the case of GKN Driveshaft (Supra). Thus, the notice under section 148 of the Act and the subsequent reassessment order passed under section 143(3) r.w.s 147 of the Act are bad in law and without jurisdiction and the same needs to be quashed."

3.

Since the additional grounds raised, go to the root of the matter, we decide to adjudicate it first.

4.

Facts on record show that the notice u/s 148 of the Act was issued on 30/03/2017 and the copy of the reasons recorded were provided to the assessee on 23/08/2017. On 23/08/2017 itself, the notice u/s 143(2) of the Act was issued and on the very same date, questionnaire u/s 142(1) of the Act was also issued and served upon the assessee.

5.

The above facts show that no opportunity was given to the assessee to raise objections for reopening the assessment. This is in contradiction of the ratio laid down by the Hon'ble Supreme Court in the case of GKN Driveshafts (India) Limited vs. ITO [2003] 259 ITR 19 (SC) wherein the Hon'ble Supreme Court has held that "... ... 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 High Court of Bombay in the case of Asian Paints Ltd. vs Deputy Commissioner of Income- Tax [2008] 296 ITR 90(Bom), has held that “the assessee must be given a reasonable period of about four weeks to take any remedial course of action should the assessee's objections to the reopening be rejected by the revenue."

6.

Facts on record show that the AO never gave any opportunity to raise objections before proceeding with the assessment proceedings.

7.

In the interest of justice and fairplay and in light of the decision discussed hereinabove, we remit the matter to the file of the AO. The assessee is directed to raise objections qua the reopening of the assessment and the AO is directed to dispose off the objections first and decide the issues afresh accordingly.

8.

In the result, appeal of the assessee is allowed for statistical purposes. Order pronounced in the Court on 25th March, 2025 at Mumbai. Mumbai, Dated 25/03/2025 *SC SPPS आदेश की प्रतिलिपि अग्रेषित/

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