NILACHAL BUILD-TECH & RESORTS PVT. LTD.,BHUBANESWAR vs. ACIT, CIRCLE-1(2), BHUBANESWAR

PDF · subscribers
ITA 324/CTK/2017Status: DisposedITAT Cuttack16 April 2018AY 2011-126 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that failure to supply the reasons for reopening the assessment, when requested, makes the reassessment order bad in law. This is a jurisdictional issue that must be strictly complied with.

What were the facts?

The Assessing Officer reopened the assessment under Section 147 without providing the assessee with the reasons for reopening, despite a request from the assessee. The assessee had requested their original return be treated as the return for the reassessment proceedings.

What were the issues?

Whether a reassessment order passed under Section 147 is valid if the reasons for reopening are not provided to the assessee upon request? Whether the failure to supply reasons for reopening is a jurisdictional defect?

Which sections of the Income-tax Act were involved?

Section 147,Section 148,Section 143(2)

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(2)Show list

Detected automatically from the text. Citations are also linked where they appear in the judgment. The count shows how many other judgments on BharatTax rely on the same authority.

Income Tax Appellate Tribunal, CUTTACK BENCH, CUTTACK

Before: S/SHRI N.S SAINI & PAVAN KUMAR GADALE

For Appellant: Shri T.K.Agarwalla, aR
For Respondent: Shri A. Tigga, DR
Hearing: 26/04Pronounced: 26/04

1 ITA No. 324/CT K/ 2017 Asse ssment Year : 20 11- 201 2

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.

2.

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.

2.

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.

2 ITA No. 324/CT K/ 2017 Asse ssment Year : 20 11- 201 2

3.

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.

4.

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.”

2.

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.

3.

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

3 ITA No. 324/CT K/ 2017 Asse ssment Year : 20 11- 201 2

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

4 ITA No. 324/CT K/ 2017 Asse ssment Year : 20 11- 201 2

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.

4.

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

5 ITA No. 324/CT K/ 2017 Asse ssment Year : 20 11- 201 2

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.

5.

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.

6.

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.

7.

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.

8.

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

6 ITA No. 324/CT K/ 2017 Asse ssment Year : 20 11- 201 2

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

More judgments on Section 147

All 49,210 judgments and leading authorities on Section 147 →

Recent GST High Court judgments

Search GST case law →