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Facts
The assessee's appeal is against an order related to Assessment Year 2010-11. The assessee challenged the assessment order, primarily arguing that no opportunity was granted and that the reassessment proceedings were time-barred due to non-service of notice under Section 148. The AO had alleged non-response from the assessee, leading to an ex-parte order.
Held
The Tribunal found that the AO wrongly framed the assessment order ex-parte, as details were available to the AO during the assessment proceedings. The Tribunal restored the appeal to the AO for a fresh decision.
Key Issues
Whether the assessment order framed ex-parte without providing an opportunity to the assessee is bad in law, and whether reassessment proceedings initiated under Section 148 were time-barred due to improper service of notice.
Sections Cited
144, 148, 143(3), 147, 139(1)
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Income Tax Appellate Tribunal, “G” BENCH, MUMBAI
Before: SHRI SAKTIJIT DEY & SHRI NARENDRA KUMAR BILLAIYA
Appellant /Assessee by : Shri Ashsh A. Thakurdesai-CA & Sunil Desai-CA Revenue / Respondent by : Shri Bhangepatil Pushkaraj Ramesh, Sr. DR Date of Hearing : 04.03.2025 Date of Pronouncement : 11.03.2025 O R D E R PER: NARENDRA KUMAR BILLAIYA, AM: This appeal by the assessee is preferred against the order dated 27.04.2024 by National Faceless Appeal Centre (NFAC), Delhi pertaining to Assessment Year (AY) 2010-11.
The grievance of the assessee read as under:
“1. On the facts and in the circumstances of the case and in law, the assessment u/s 144 is bad in law and be set aside as no opportunity was granted to the appellant. 2 On the facts and in the circumstances of the case and in law, the learned CIT (A) erred in confirming Assessing Officer's error in invoking provisions of section 148 without supplying reasons to the appellant despite making request, hence the assessment u/s 148 be set aside as null and void.
3. On the facts and in the circumstances of the case and in law, the learned CIT (A) erred in confirming Assessing Officer's error in completing the assessment without serving notice u/s 147/148 within the stipulated time and hence the entire proceedings u/s 148 are bad in law.
4. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in confirming addition of Rs. 153,60,000/- as undisclosed income.
5. The appellant submits that the order u/s 144 be set aside and / or the assessing officer be directed to delete the above additions and re-compute the total income accordingly.”
Appeal is barred by 4 days, the delay is being condoned.
4. The counsel was heard on ground no.1 by which it challenged the assessment order framed under section 144 of the Income Tax Act, 1961 (the Act) for want of opportunity.
We have carefully perused the assessment order where the AO has made the allegation that the assessee did not respond to the notices served upon it during the course of the assessment proceeding which force the AO to frame an ex-parte order.
We find that on 27.04.2017 the assessee has filed the following reply to the notices: “Ref: SO/25739/27042017 Date: 27.4.2017 To, Asstt. Commissioner of Income Tax, Circle 31(3), C-13, Bandra Kurla Complex, Bandra (East), Mumbai 400051. Dear Sir, Sub: Shekhar Dadarkar PAN: ADAPD8694G Assessment Year 2010-11 Ref: Your Notice u/s 148 of the Income Tax Act, dated 31.3.2017 With reference to the above subject matter we have been instructed to state as under:
1. 1. Vide your above notice you have stated that you have reasons to believe that our client's income for the subject assessment year is escaped assessment which was otherwise chargeable to tax.
2. You have further sought to reassess the income of our client for the subject assessment year.
3. Without prejudice we would like to inform you that the assessee has given to understand that he has not received notice on or before 31.3.2017, as a result the reassessment proceedings are time barred. You are requested to furnish evidence that the notice u/s 148 has been served on the assessee on or before 31.3.2017.
4. Without prejudice to the above we would like to inform you that the assessment for the subject assessment year was completed under section 143(3) rws 147 and order dated 23.3.2015 has been passed. As per the apex court change of opinion does not amount to reasons to believe that the income for the subject assessment year is escaped assessment.
Mr. Shekhar Dadarkar Prop. M/s. S.D. Construction 5. You are requested to intimate the reasons recorded by your office leading to above notice to our client as early as possible to enable us to respond to your above notice. As per section 147 non-supply by the AO of reasons recorded for reopening the assessment (even where the reopening is prior to GKN Driveshafts 259 ITR 19 (SC)) renders the reassessment order bad as being without jurisdiction. An alternative submission is made on behalf of the Revenue that the obligation to supply reasons on the Assessing Officer was consequent to the decision of the Apex Court that GKN Driveshafts (India) Ltd. vs. Income-tax Officer (2003) 259 ITR 19 (SC) rendered in 2003 while, in the present case, the reopening notice is dated 9 December 1996. Thus it submitted at the time when the notice under Section 148 of the Act was issued and the time when assessment was completed, there was no such requirement to furnish to the assessee a copy of the reasons recorded. This submission is not correct. We find that the impugned order relies upon the decision of this Court in Seista Steel Construction (P.) Ltd. [1984] 17 Taxman 122(Bom.) when it is held that in the absence of supply of reasons recorded for issue of reopening notice the assessment order would be without jurisdiction and needs to be quashed. The above view as taken by the Tribunal has also been taken by this Court In CIT vs. Videsh Sanchar Nigam Ltd. [2012] 21 Taxmann 53 (Bombay) viz. non-supply of reasons recorded to issue a reopening notice would make the order of Assessment passed thereon bad as being without jurisdiction.
Subject to the above you are requested to treat the return of income filed by the assessee u/s 139(1) on 28.9.2010 under e-acknowledgment no. 162247490280910 as return in response to your above notice. The said return of income is already on record with you. The assessee has already e-filed the return on 27.4.2017 under e-acknowledgment No. 764886771270417, copy enclosed. Thanking you, Yours faithfully, DESAI DIGAS & CO. Chartered Accountants 6. The AO has alleged that the assessee did not file any return of income which is incorrect as the assessee has filed the return on 27.04.2017 evident from the Acknowledgement which is as under:
In the light of the above, we are of the considered view that the AO has wrongly framed the assessment order ex-parte when the details were made available to him by the assessee during the course of the assessment proceedings itself.
Therefore, in the interest of justice and fair play, we deem it fit to restore the appeal to the file of the AO. The AO is directed to decide the impugned issues afresh after affording a reasonable and adequate Mr. Shekhar Dadarkar Prop. M/s. S.D. Construction opportunity of being heard to the assessee and after providing all the necessary details/documents relied upon him for re-opening the assessment.
In the result, appeal of the assessee is allowed for statistical purposes.