ACIT, CIRCLE-2(1), HYDERABAD vs. EMAAR HILLS TOWNSHIP PRIVATE LIMITED, HYDERABAD
Income Tax Appellate Tribunal, HYDERABAD “A” BENCH: HYDERABAD
Before: SHRI VIJAY PAL RAO & SHRI MANJUNATHA G
PER MANJUNATHA G. :
The above appeal has been filed by the Revenue against the Order dated 14.03.2023 of the learned CIT(A)-
National Faceless Appeal Centre [in short “NFAC], Delhi, relating to the assessment year 2008-2009. 2. At the very outset, there is a delay of 96 days in filing the appeal before the Tribunal. The Revenue has filed an affidavit, contending, inter alia, that the records were not 2
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readily available with this office and, therefore, it took time to retrieve the records in the case of the assessee for the assessment year 2008-2009. Therefore, it is prayed that the delay of 96 days in filing the appeal before the Tribunal may please be condoned in the interest of justice.
CA, K C Devadas, Learned Counsel for the Assessee, on the other hand, strongly opposed for condonation of delay. He submitted that, it is the settled position of law that, condoning the delay is the discretionary power of the Court/Tribunal and unless and until there is a ‘sufficient cause’ to the satisfaction of the Tribunal, the Court/Tribunal shall not exercise it’s discretionary power for condonation of delay. Since, in the instant appeal, the Revenue has not brought on record ‘sufficient cause’, the delay of 96 days in filing of the appeal before the Tribunal ought not to have been condoned. He, accordingly, pleaded that the delay of 96 days in filing the appeal before the Tribunal should not be condoned and the appeal be treated as un-admitted in the interest of justice.
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We have gone through the affidavit filed by the Revenue-appellant. We find that, the reasons explained by the Revenue in it’s affidavit are seems to be genuine and bonafide by taking note of retrieving the records of old case pertains to assessment year 2008-2009. The Hon’ble Supreme Court in the case of Collector, Land Acquisituon vs., MST Katiji [1987] 167 ITR 471 (SC) has laid down certain principles for condoning the delay and also directed the lower courts to follow a lenient approach for condoning the delay. Going by the principles laid down by the Hon’ble Supreme Court in the case of MST Katiji (supra), there is no dispute if an appeal is dismissed on account of technicalities, a meritorious case may be thrown-out of judicial review. Therefore, while condoning the delay, the courts must have a liberal approach or lenient approach considering the reasons given by the petitioners or appellants. Therefore, going by the principles laid down by the Hon’ble Supreme Court in the case of MST Katiji (supra) and also considering the submissions of the Revenue, we condone the delay of 96 days in filing the appeal before the 4 ITA.No.425/Hyd./2023
Tribunal and admit the appeal of the Revenue for adjudication.
Brief facts of the case are that, the assessee- company M/s. EMMAR Hills Township Private Limited [in short “EHTPL”] is engaged in the business of integrated township development, filed it’s return of income for the assessment year 2008-2009 on 29.09.2008, declaring total loss of Rs.38,37,418/-. The assessment has been subsequently reopened u/sec.147 of the Income Tax Act, 1961 [in short “the Act”] and notice u/sec.148 dated 13.05.2010 was issued and served on the assessee. In response to notice u/sec.148 of the Act, the assessee vide letter dated 26.05.2010 filed on 08.06.2010, filed copy of the ITR-V as a token of return filed on 29.09.2008 for the assessment year 2008-2009. Further, the assessee requested to treat the aforesaid return of income as filed in compliance to the notice u/sec.148 of the Act and requested to provide the reasons for issue of notice. The Assessing Officer supplied the copies of reasons for reopening of the assessment vide letter dated 09.06.2010. Later, a notice
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u/sec.143(2) of the Act dated 10.06.2010 was issued and duly served on the assessee. The assessee vide letter dated
05.07.2010
raised objections for reopening of the assessment u/sec.147 of the Income Tax Act, 1961 stating that, the reasons recorded for issue notice u/s 148 is on mere guess work, which is not permissible u/sec.147 of the Income Tax Act, 1961. The objection filed by the assessee has not been disposed of by the Assessing Officer by a speaking order.
6. During the course of assessment proceedings, the Assessing Officer called-upon the assessee to file relevant evidences in support of the return of income filed for the year under consideration. The Assessing Officer after considering the submissions of the assessee and also taking note of return of income filed for the year under consideration, completed the assessment u/sec.143(3) r.w.s.147 of the Income Tax Act, 1961 on 30.12.2011 and determined the total income at Rs.16,30,573/- by making addition towards advance received, but, not shown in the books for Rs.46,61,250/-, addition u/sec.40(a)(ia) for non-
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compliance to TDS provisions of Rs.4,76,913/- and addition u/sec.14A read with Rule 8D of I.T. Rules, 1962 for Rs.1,08,488/-.
7. Aggrieved by the assessment order, the assessee preferred an appeal before the learned CIT(A). Before the learned CIT(A), the assessee challenged the assessment order passed by the Assessing
Officer u/sec.143(3) r.w.s.147 of the Act in light of decision of Hon’ble Supreme
Court in the case of GKN Driveshrafts India Ltd., vs., ITO &
Ors. [2003] 259 ITR 19 (SC) and argued that, assessment order passed by the Assessing Officer without disposing of the objection filed by the assessee by way of a speaking order renders the assessment proceedings nullity and needs to be quashed. The learned CIT(A) after considering the relevant submissions of the assessee and also taking note of the decision of Hon’ble Supreme Court in the case of GKN
Driveshrafts India Ltd., vs., ITO & Ors. (supra) and various other decisions, quashed the re-assessment order passed by the Assessing Officer by holding that, “the Assessing Officer did not pass any speaking order on the objections filed by the 7
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assessee on reopening of the assessment. Even in the assessment order, while dealing with the issue of objections raised by the appellant, he only dealt with them in most perfunctory manner which is not in accordance with the law laid down by various courts as referred to above. This failure of the AO to adhere to the law laid down by the Hon'ble
Supreme Court in the case of GKN Driveshafts (India) Ltd.
(Supra) renders the assessment proceedings invalid”. Thus, the learned CIT(A) quashed the assessment order passed by the Assessing Officer.
8. Aggrieved by the order of the learned CIT(A), the Revenue is now, in appeal before the Tribunal.
9. Sri Gurpreet Singh, learned Sr. AR for the Revenue submitted that, the learned CIT(A) has erred in quashing the assessment order passed by the Assessing
Officer u/sec.143(3) r.w.s.147 of the Act for not disposing of the objections filed by the assessee by way of a speaking order without appreciating the fact that, the Hon’ble
Supreme Court in the case of Home Finders Housing Ltd., vs., ITO, Corporate Ward-2(3) [2018] 256 Taxman 59 (SC)
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held that, non-compliance of direction of Supreme Court in GKN Driveshafts (India) Ltd. v. ITO (supra) that, on receipt of objection given by assessee to notice under section 148, the Assessing Officer is bound to dispose of objections by passing a speaking order, would not make reassessment order void ab initio. The Hon’ble Supreme Court upheld the order passed by the Hon’ble High Court of Madras in the case of Home Finders Housing Ltd., vs., ITO, Corporate
Ward-2(3), Chennai [2018] 404 ITR 611 (Madras) where the Hon’ble Madras High Court clearly held that, non- compliance of the procedure indicated in the GKN
Driveshafts (India) Ltd.'s case (supra), would not make the order void or non-est and such a violation in the matter of procedure is only an irregularity which could be cured by remitting the matter to the Authority. Therefore, he submitted that, the order of the learned CIT(A) should be set-aside and matter may be remitted back to the file of Assessing Officer for disposing of the objections filed by the assessee and proceed with the assessment in accordance with law.
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CA, K C Devdas, Learned Counsel for the Assessee, on the other hand, supporting the order of the learned CIT(A) submitted that, the Hon’ble Supreme Court in the case of GKN Driveshrafts India Ltd., vs., ITO & Ors. (supra) has laid down certain parameters in case of re- assessment and as per the decision of Hon’ble Supreme Court, the Assessing Officer is bound to dispose-off the objections filed by the assessee by passing a speaking order and in case, the Assessing Officer has not followed the procedure laid down by the Hon’ble Supreme Court, then, the said assessment order is nullity and cannot be sustained. The learned CIT(A) after considering the relevant facts, has rightly quashed the assessment order passed by the Assessing Officer. Learned Counsel for the Assessee further referring to the decision of Hon’ble High Court of Bombay at Nagpur Bench, Nagpur in the case of Arvind Sahdeo Gupta, Akola vs., ITO, Ward-1, Akola in W.P.No. 4793 of 2021, Judgment dated 08.08.2023 submitted that, on identical issue and after considering the decision of Hon’ble Supreme Court in the case of GKN Driveshrafts
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India Ltd., vs., ITO & Ors. (supra) held that, non-disposal of objection filed by the assessee by a speaking order renders the assessment order nullity. He submitted that, since there are two divergent views from two different High Courts, in view of decision of Hon’ble Supreme Court in the case of CIT vs., Vegetable Products Ltd., [1973] 88 ITR 192 (SC), the decision in favour of the assessee needs to be followed. If we go by the said analogy, the ratio of Hon’ble High Court of Bombay squarely apply in favour of the assessee and thus, there is no error in the reasons given by the learned CIT(A) to quash the re-assessment order passed by the Assessing
Officer. therefore, he submitted that, the order of the learned CIT(A) should be upheld.
11. We have heard both the parties, perused the material on record and the orders of the authorities below.
There is no dispute with regard to the fact that, the Assessing Officer did not dispose of the objections filed by the assessee for reopening of the assessment by a speaking order. Although, the Assessing Officer has discussed and rejected the objections filed by the assessee in the 11
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assessment order itself, but, the Assessing Officer has considered the issue in perfunctory manner without assigning any reasons as to how the objections filed by the assessee is incorrect. Therefore, to this extent, we are of the considered view that, the action of the Assessing Officer in not disposing of the objection filed by the assessee against the reopening of the assessment is against the principles laid down by the Hon’ble Supreme Court in the case of GKN
Driveshrafts India Ltd., vs., ITO & Ors. (supra).
12. The learned CIT(A) quashed the re-assessment order passed by the Assessing
Officer u/sec.143(3) r.w.s.147 of the Income Tax Act, 1961 by following the decision of Hon’ble Supreme Court in the case of GKN
Driveshrafts India Ltd., vs., ITO & Ors. (supra) and held that, failure of the Assessing Officer to adhere to the law laid down by the Hon’ble Supreme Court in the case of GKN
Driveshrafts India Ltd., vs., ITO & Ors. (supra) renders the assessment proceedings invalid. The learned Sr. AR for the Revenue has relied upon the decision of Hon’ble Supreme
Court in the case of Home Finders Housing Ltd., vs., ITO,
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Corporate Ward-2(3) (supra). The Hon’ble Supreme Court dismissed the SLP filed by the assessee against the Judgment of Hon’ble Madras High Court in the case of Home Finders Housing Ltd., vs., ITO, Corporate Ward-2(3),
Chennai (supra) that, non-compliance of direction of Hon’ble
Supreme Court in the case of GKN Driveshrafts India Ltd., vs., ITO & Ors. (supra) that, on receipt of objection given by the assessee to notice u/sec.148, the Assessing Officer is bound to dispose of the objections, by passing a speaking order, would not make re-assessment order void abi nitio.
The Hon’ble Supreme Court dismissed the SLP filed by the assessee and upheld the decision of Hon’ble Madras High
Court in the case of Home Finders Housing Ltd., vs., ITO,
Corporate Ward-2(3), Chennai (supra) where, it has been clearly held that, non-compliance of the procedure indicated by the Hon’ble Supreme Court in the case of GKN
Driveshrafts India Ltd., vs., ITO & Ors. (supra), would not make the order void ab initio or non-est and such a violation in the matter of procedure is only an irregularity which could be cured by remitting the matter back to the 13
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Authority. If we go by the ratio laid down by the Hon’ble
High Court of Madras, subsequently upheld by the Hon’ble
Supreme Court by dismissing the SLP filed by the assessee, it is abundantly clear that, non-following the law laid down by the Hon’ble Supreme Court in the case of GKN
Driveshrafts India Ltd., vs., ITO & Ors. (supra), does not render the assessment proceedings invalid.
13. The Counsel for the Assessee has relied upon the decision of Hon’ble High Court of Bombay at Nagpur Bench,
Nagpur in the case of Arvind Sahdeo Gupta, Akola vs., ITO,
Ward-1, Akola (supra), where the Hon’ble Bombay High
Court Nagpur Bench at Nagpur by following the decision of Hon’ble Supreme Court in the case of GKN Driveshrafts
India Ltd., vs., ITO & Ors. (supra) has held that, the Assessing Officer is bound to dispose of the objections filed by the assessee by a speaking order and in case, objections have been decided without any speaking order and not dealing with the factual aspects lead to the conclusion that reopening of the assessment is without there being any reason to believe that the income has escaped assessment.
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Learned Counsel for the Assessee referred to the decision of Hon’ble Supreme Court in the case of CIT vs., Vegetable
Products Ltd., (supra) and argued that, when there are two divergent views from two different High Courts, then, the view, which is in favour of the assessee should be considered. In our considered view, when there are divergent view from two different High Courts, as per the decision of Hon’ble Supreme Court in the case of CIT vs.,
Vegetable Products Ltd., (supra), the view which is in favour of the assessee should be considered. Learned Counsel for the Assessee relied upon the decision of Hon’ble High Court of Bombay at Nagpur Bench, Nagpur in the case of Arvind
Sahdeo Gupta, Akola vs., ITO, Ward-1, Akola (supra), where the Hon’ble High Court has clearly held that, in not adherence to the procedure laid down by the Hon’ble
Supreme Court in the case of GKN Driveshrafts India Ltd., vs., ITO & Ors. (supra), renders the assessment order invalid. Whereas, the Learned DR for Revenue, relied upon the decision of Hon’ble Madras High Court in the case of Home Finders Housing Ltd., vs., ITO, Corporate Ward-2(3),
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Chennai (supra), wherein it has been held that, in not following the law laid down by the Hon’ble Supreme Court in the case of GKN Driveshrafts India Ltd., vs., ITO & Ors.
(supra), does not render the assessment proceedings invalid. Since the view taken by the Hon’ble High Court of Bombay at Nagpur Bench, Nagpur in the case of Arvind
Sahdeo Gupta, Akola vs., ITO, Ward-1, Akola (supra), is in favour of the assessee, in our considered view, in view of decision of Hon’ble Supreme Court in the case of GKN
Driveshrafts India Ltd., vs., ITO & Ors. (supra), the decision of Hon’ble Bombay High Court needs to be followed. In this view of the matter and considering the facts of the case, we are of the considered view that, there is no error in the reasons given by the learned CIT(A) in quashing the re- assessment order passed by the Assessing Officer for failure to adhere to the law laid down by the Hon’ble Supreme
Court in the case of GKN Driveshrafts India Ltd., vs., ITO &
Ors. (supra). Thus, we uphold the order of the learned
CIT(A) and dismiss the appeal filed by the Revenue.
14. In the result, appeal of the Revenue is dismissed.
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Order pronounced in the open Court on 31.07.2025. [VIJAY PAL RAO]
[MANJUNATHA G]
VICE PRESIDENT
ACCOUNTANT MEMBER
Hyderabad, Dated 31st July, 2025
VBP
Copy to 1. The ACIT, Circle-2(1), Room No.513, 5th Floor, Signature
Towers, Kondapur, Hyderabad – 500 084. Telangana.
EMMAR Hills Township Private Limited, Boulders Hills, Golf & Country Club, Opp ISB, Manikonda Village, Gachibowli, Hyderabad - 500 032. Telangana. 3. The Pr. CIT, Hyderabad. 4. The DR ITAT “A” Bench, Hyderabad. 5. Guard File.
//By Order//
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