MR. SHEKHAR DADARKAR PROP. M/S S.D. CONSTRUCTION,MUMBAI vs. ACIT-31(3), MUMBAI

The grievance of the assessee read as under:

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.

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.

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.

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. Mr. Shekhar Dadarkar Prop. M/s. S.D. Construction

We find that on 27.04.2017 the assessee has filed the following reply to the notices:

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.

You have further sought to reassess the income of our client for the subject assessment year.

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 juri iction. 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 juri iction 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 juri iction.

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.

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.