M/S.GANGABISAN MURLIDHAR MANIYAR,AHMEDNAGAR vs. INCOME-TAX OFFICER, WARD - 2, AHMEDNAGAR

आदेश / ORDER PER ANIL CHATURVEDI, AM :

This appeal filed by the assessee is emanating out of the order 1. of Commissioner of Income Tax (A) – 2, Pune dated 10.08.2017 for the assessment year 2007-08.

Assessee is partnership firm stated to be engaged in the business of wholesale business and commission agent of chilli, coriander etc. The AO on the basis of findings in the case of Shri Ashok Phulchand Kothari found several discrepancies in the case of the assessee and accordingly, the case of the assessee was reopened

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by issuing notice u/s 148 to the Act. In response to the notice u/s

148 of the Act, assessee vide letter dated 01.01.2010 submitted that

the return of income filed by the assessee on 31.10.2017 be treated as

return in response to the notice u/s 148 of the act. Thereafter, the

case of the assessee was taken up for scrutiny and assessment was

framed u/s 143(3) r.w.s 147 of the Act vide order dated 21.12.2010

and the total income was determined at Rs.19,70,819/-. Aggrieved by

the order of AO, assessee carried the matter before LD.CIT(A) who vide

order dated 10.8.2017 (in appeal No.PN/CIT(A)-2/DCIT

Cir/AN/259/2016-17) granted partial relief to the assessee. Aggrieved

by the order of LD.CIT(A), assessee is now before us and has raised

the following grounds :

“1. Commissioner (appeal) has erred in rejecting appellants contention that Assessment order passed by Assessing Officer u/s 143(3) r.w.s 147/148 is bad in law. Appellant prays to held that Assessment order is bad in law. 2. Commissioner (Appeals) has erred both on facts as well as in law in confirming addition of Rs.10,23,422/ - to the returned income made by Assessing Officer under the caption" addition on account of bogus accommodation entries". Same may please be deleted. 3. Commissioner (Appeals) has erred both on facts as well as in law in confirming disallowance of Rs.58000/- out of Salary paid to Rahul Maniyar and Mayur Maniyar applying the provisions of sec. 40A(2)(b). Same may please be deleted. 4. Appellant prays for just and equitable relief. 5. Appellant denied liability to interest u/s 234B & 234C. 6. Appellant prays for just and equitable relief. 7. Assessee prays to add, alter, amend, clarify and / or withdraw the grounds as the occasion may demand.”

u/s 143(3) r.w.s 147 of the Act.

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Before us, Ld AR submitted that in response to the notice u/s

148, assessee vide letter dated 01.01.2010 submitted that the original

return of income filed by the assessee be treated as return of income

in response to the notice u/s 148 of the Act. He submitted that

thereafter, assessee vide letter dated 14.01.2010 which was submitted

in the office of DCIT on 15.01.2010 had sought the copy of the

reasons that were recorded for reopening the case but assessee did

not receive the reasons till the completion of assessment order. In

support of his contention that the reasons were sought, he pointed to

the copy of the acknowledged copy of the letter dated 14.01.2010

which is placed on page 92 of the paper book. He also pointed to the

copy of the affidavit of Shri Harikishan Gangabisan Maniyar, the

partner of the assessee firm, which is placed at pages 133 & 134 of

the Paper Book in support of his contention that the copy of the

reasons were never supplied to the assessee. He relying on the

decision of Hon’ble Apex Court in the case of GKN Driveshafts (India)

Ltd. v. ITO [2003] 259 ITR 19 (SC) submitted that furnishing the

reasons recorded for reopening of the assessment is mandatory

condition and it is not an empty formality. He thereafter relying on the

decision of Hon’ble Bombay High Court in the case of CIT Vs. Videsh

Sanchar Nigam Ltd. [2012] 340 ITR 66 (Bom) submitted that the

Hon’ble High Court has held that failure to furnish the recorded

reasons for issue of reopening notices to the assessee before

completion of the assessment proceedings would make the

reassessment order passed in pursuance of such a notice bad in law.

He therefore submitted that the reassessment order passed by the AO

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be set aside. Ld DR on the other hand submitted that since the

assessee had participated in the proceedings before the Assessing

Officer, it must be implied that reasons were furnished. He thus

supported the order of lower authorities.

on record. In the present ground the assessee is challenging the

reassessment framed u/s 143(3) r.w.s 148 of the order. Before us, it is

assessee’s contention that the reasons for reopening the assessment

was never furnished to the assessee despite having asked for it. In

support of his contention that assessee had sought the reasons from

the AO and were never furnished to the assessee, he has pointed to

the letter written to the AO and the sworn affidavit of the partner to

that effect. Before us, Revenue has not placed any material on record

to demonstrate that the reasons recorded for reopening the

assessment was furnished to the assessee. In the present case it is

thus clear that despite the request by the assessee, the Assessing

Officer has completed the assessment without furnishing the reasons

recorded for reopening of assessment. Furnishing the reasons

recorded for reopening of the assessment is mandatory condition as

held by the Hon'ble Supreme Court in the case of GKN Driveshafts

(India) Ltd. Vs. ITO [2003] 259 ITR 19 (SC) wherein the Hon'ble

Supreme Court has laid down the principle that recorded reasons

must be furnished to the assessee when the assessee sought for the

reasons.

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CIT Vs. Trend Electronics (2015) 379 ITR 456 (Bom) after considering

the decision of Hon’ble Bombay High court in the case of CIT Vs.

Videsh Sanchar Nigam Ltd (2012) 340 ITR 66 (Bom) has held that

recorded reasons as laid down by the Apex Court must be furnished

to the assessee when sought for so as to enable the assessee to object

to the same before the AO. It has further held that the recording of

reasons and furnishing of the same has to be strictly complied with as

it is a jurisdictional issue and in the absence of reasons being

furnished when sought for would make an order passed on

reassessment bad in law.

decision in its support. Considering the totality of the aforesaid facts

and relying on the decisions cited herein above, we hold the

reassessment order passed by the AO to be bad in law and thus set it

aside. Since we have set aside the re-assessment order, the grounds

raised on merits requires no adjudication as they have been rendered

academic. Thus the appeal of the assessee is allowed.

Order pronounced on 18th day of March, 2019.

Sd/- (ANIL CHATURVEDI) लेखा सद�य / ACCOUNTANT MEMBER

पुणे Pune; �दनांक Dated : 18th March, 2019. Yamini

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आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to :

आदेशानुसार/ BY ORDER

// True Copy // व�र�ठ �नजी स�चव / Sr. Private Secretary आयकर अपील�य अ�धकरण ,पुणे / ITAT, Pune.