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Income Tax Appellate Tribunal, CUTTACK BENCH, CUTTACK
Before: S/SHRI N.S SAINI & PAVAN KUMAR GADALE
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IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK
BEFORE S/SHRI N.S SAINI, ACCOUNTANT MEMBER AND PAVAN KUMAR GADALE, JUDICIAL MEMBER
ITA No.324/CTK/2017 Assessment Year : 2011-2012
Nilachal Build-tech & Resorts Vs. ACIT, Circle 1(2), (P) Ltd., Plot No.542, Sahid Bhubaneswar. Nagar, Bhubaneswar. PAN/GIR No.AABCN 3025 E (Appellant) .. ( Respondent)
Assessee by : Shri T.K.Agarwalla, aR Revenue by : Shri A. Tigga, DR
Date of Hearing : 26/04/ 2018 Date of Pronouncement : 26/04/ 2018
O R D E R Per N.S.Saini, AM This is an appeal filed by the assessee against the order of the
CIT(A)- 1, Bhubaneswar dated 19.6.2017 for the assessment year 2011-
12.
The assessee has raised the following grounds of appeal:
“ 1. Because, the order of the learned Assessing Officer is being passed under section 147 without providing any reasons to the appellant which is unjust, illegal, arbitrary and has been passed in gross violation to the principles of natural justice and for which the assessment order is liable to be quashed and/or annulled.
Because, alternatively Learned assessing officer have issued notice under section 143(2) whereas assessment order is being passed under section 147 and not under section 143(3), the very act is arbitrary, unjust and the assessment order and demand notice is liable to be quashed.
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That, the learned assessing officer have make disallowance of Expenses under section 40A (3) for Rs 5,00,000,(claimed to have been paid on 08.10.2010) which never been paid or claimed as expenses hence the computation so made is illegal unjust and liable to be deleted.
That, Learned Assessing officer has erred in fact as well as in law for making addition of Rs 12,00,000/- under section 40A (3) without considering the proviso to section 40A(3A). Hence the order so passed is arbitrary, unjust and the whole amount of disallowance is liable to be deleted.”
At the outset, ld A.R. of the assessee submitted that
notice/s.148(2) of the Act was issued to the assessee for reopening of the
assessment of the impugned assessment year on 24.5.2013. The
Assessing Officer also required the assessee file the return of income in
response to said notice. The assessee filed a letter on 25th June, 2013
stating therein that original return filed on 30.9.2011 through online vide
acknowledgement No.300469261300911 should be taken as a return in
response to notice u/s.148 of the Act. In the said letter, the assessee
also requested for supply of copy of reasons for reopening the assessment
of the impugned assessment year.
On the above stated facts, the contention of ld A.R. is that the
assessment order u/s.147 of the Act was passed on 31.3.2015 without
supplying the copy of recorded reasons to the assessee. Ld A.R. has also
filed certified copy of order sheet entries obtained from the Assessing
Officer for the impugned assessment year. He pointed out that as per
order sheet dated 25.6.2013, the Assessing Officer writes that the letter
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of assessee’s representative to treat the original return filed on 30.9.2011
to be treated a return in compliance to the notice. He pointed out that
the receipt of letter dated 25.6.2013 is therefore, not in dispute and
hence, as the Assessing Officer failed to supply copy of reasons for
reopening of the assessment to the assessee and passed the impugned
order u/s.147 of the Act on 31.3.2015, the said order is not a valid order
and liable to be quashed in view of the decision of Hon’ble Bombay High
Court in the case of CIT vs. Trend Electronics, 379 ITR 456 (Bom), where,
it was held that the power to reopen a completed assessment under the
Act is an exceptional power and whenever revenue seeks to exercise such
power, they must strictly comply with the pre-requisite conditions viz;
reopening of reasons to indicate that the Assessing Officer had reason to
believe that income chargeable to tax has escaped assessment which
would warrant the reopening of an assessment. These recorded reasons
as laid down by the Hon’ble apex Court in the case of GKN Driveshafts
(India) Ltd vs. ITO, 259 ITR 19(SC) must be furnished to the assessee
when sought for so as to enable the assessee to object to the same
before the Assessing Officer. Thus, in the absence of reasons being
furnished, when sought for, would make an order passed on
reassessment bad in law. The recording of reasons and furnishing of the
same have to be strictly complied with as it is a jurisdictional issue. This
requirement is very salutary as it not only ensures reopening notices are
not lightly issued. Besides, in case the same have been issued on some
misunderstanding/misconception, the assessee is given an opportunity to
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point out that the reasons to believe as recorded in the reasons do not
warrant reopening before the reassessment proceedings are commenced.
The Assessing Officer disposes of these objections and if satisfied with the
objections, then the impugned reopening notice under Section 148 of the
Act is dropped/withdrawn otherwise it is proceeded with further. Where
jurisdictional issue is involved, same must be strictly complied with by the
authority concerned and no question of knowledge being attributed on the
basis of implication can arise.
We have heard the rival submissions, perused the orders of lower
authorities and materials available on record. In the instant case, the
undisputed facts are that notice u/s.148(2) of the Act was issued to the
assessee for reopening of the assessment on 24.5.2013. Thereafter, the
assessee vide its letter dated 25.6.2013 informed the Assessing Officer
that original return filed on 30.9.2011 should be treated as a return filed
in pursuance to notice u/s.148 of the Act. In the said letter, he requested
for supply of reasons for reopening of the assessment for the impugned
assessment year. The Assessing Officer did not supply the copy of
reasons to the assessee and completed the assessment u/s.147 of the Act
by passing order on 31.3.2015. The contention of ld A.R. is that the
assessment framed u/s.147 of the Act on 31.3.2015 without supply of
copy of reasons for reopening the assessment is bad in law and for which,
he relied on the decision of Hon’ble Bombay High Court in the case of
Trend Electronics (supra). We find that Hon’ble Bombay High Court in the
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case of Trend Electronics (supra) has held that jurisdictional issue should
be strictly complied with by the authority concerned. It was further
observed that passing of reassessment order without supplying the
recorded reasons to the assessee as laid down by the Hon’ble apex Court
in the case of GKN Driveshafts Ltd (supra) will make the reassessment
order bad in law.
Ld D.R. could not bring any material on record to show that the
reasons recorded for reopening of assessment were supplied to the
assessee.
Therefore, the facts of the assessee’s are squarely covered by the
decision of Hon’ble Bombay High Court in the case of Trend Electronics
(supra) and respectfully following the same, we cancel the reassessment
order passed u/s.147 of the Act dated 31.3.2015 and allow the ground of
appeal of the assessee.
As we have cancelled the reassessment order dated 31.3.2015
passed u/s.147 of the Act, other grounds of appeal on merits of the
additions have become infructuous and hence, not adjudicated upon.
In the result, appeal of the assessee is allowed.
Order pronounced on 26 /04/2018. Sd/- sd/- (Pavan Kumar Gadale) (N.S Saini) JUDICIALMEMBER ACCOUNTANT MEMBER Cuttack; Dated 26 /04/2018
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B.K.Parida, SPS Copy of the Order forwarded to : 1. The Appellant : Nilachal Build-tech & Resorts (P) Ltd., Plot No.542, Sahid Nagar, Bhubaneswar 2. ACIT, Circle 1(2), The Respondent. Bhubaneswar. 3. The CIT(A)-1, Bhubaneswar 4. Pr.CIT-1, Bhubaneswar BY ORDER, 5. DR, ITAT, Cuttack 6. Guard file. //True Copy// SR.PRIVATE SECRETARY ITAT, Cuttack