Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, AMRITSAR BENCH, AMRITSAR
Before: SH. SANJAY ARORA & SH. N.K.CHOUDHRY
IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR BEFORE SH. SANJAY ARORA, ACCOUNTANT MEMBER AND SH. N.K.CHOUDHRY, JUDICIAL MEMBER ITA No.03(Asr)/2017 Assessment Year:2009-10
Libra Automobiles Ltd. Vs. Dy. CIT, IV 1031 Gopal Nagar, Jalandhar Patel Chowk, Jalandhar PAN:AABCL0500E (Appellant) (Respondent) Appellant by: Sh. Gunjeet Singh Syal (Ld. Adv.) Respondent by: Sh. S. S. Negi (Ld. DR) Date of hearing: 20.06.2018 Date of pronouncement: 29.06.2018 ORDER PER N.K.CHOUDHRY, JM: The instant appeal has been preferred by the Assessee/Appellant, on feeling aggrieved against the order dated 22.11.2016 passed by the Ld. CIT(A)-2, Jalandhar u/s 250(6) of the I.T. Act, 1961 (hereinafter called as ‘the Act’).
The assessee has raised the following grounds of appeal. “1. That on the fact & circumstances of the case, the learned CIT (A)-2, .Jalandhar has erred in upholding the order of ld. AO as the proceedings initiated by the learned A.0 are bad in law & without any justification &/or in excess of jurisdiction & consequently re- assessment order passed by him should be quashed & annulled. 2. That on fact of circumstances of the case, the proceedings initiated u/s 147 are liable to be quashed where there was no fresh
ITA No.03/Asr/2017 (A.Y.2009-10) 2 Libra Automobiles Ltd. vs. CIT-IV, Jalandhar
martial available with A.O. & the assessment has been completed originally u/s 143(3). 3. That mechanical approval for reopening has been granted by higher authority without judicious application of mind.
That no addition u/s 68 of Rs.2,97,50,000/- accounts of share capital, share application, share premium can be made as no money worth the name was received during the year under reference as held by learned CIT(A) at paragraph 5.14 of his order.
That document received from the office of Registrar of the companies, Punjab & Haryana were never confronted to the company or its Authorized Representatives. 6. That there has been gross violation of principles of natural justice. 7. That the order of learned CIT (A) -2, Jalandhar is against law & facts of the case.
That interest u/s 234A, 234B & 234C has wrongly been charged. 9. Any other ground pressed at the time of hearing.” 3. The brief facts of the case are that in the instant case, the income of the assessee was assessed for the relevant year under consideration u/s 143(3) of the Act on 24.11.2011. Thereafter, the notice u/s 148 was issued on receiving the information from the Director of Income Tax, (ICI), Chandigarh, thereafter, the re-assessment has been started u/s 147 of the Act and notice dated 04.06.2014 u/s 142(1) was issued along with reasons for reopening for appearance on 19th June, 2014, which remained uncomplied with. Again notice u/s 142(1) dated 03.03.2015 was issued for explaining the points with evidence as stated below.
ITA No.03/Asr/2017 (A.Y.2009-10) 3 Libra Automobiles Ltd. vs. CIT-IV, Jalandhar
“i) Detail of share application money received of Rs.375000/- along with the mode of payment. ii) Detail of share premium of Rs.26250000/- and justification for issue of share at a premium of Rs.700/- per share.
iii) Copy of return filed with the office of Registrar of Companies at Chandigarh for issuing of shares at a premium of Rs.700/- per share. iv) Copy of Balance Sheet, Profit & Loss A/c alongwith Audit Report including all schedules and computation of assessable income for the A.Y.2009-10. v) Copies/statements of Bank Accounts being maintained by the Co. for the period under consideration.
The Ld. AR of the assessee attended the assessment proceeding on 27th March, 2015 and filed written submissions objecting the proceeding. However, it is admitted fact that the Assessing Officer without disposing of the objections of the assessee proceeded with the assessment proceeding, and finally added Rs.2,97,50,000/- in the income of the assessee. The re- assessment order was challenged before the Ld. CIT(A) by raising ten grounds. By ground No.1 raised before the Ld. CIT(A), it was emphasized with the proceedings initiated by the Ld. AO are bad in law and without any justification and/or in excess of jurisdiction and consequently reassessment order passed by him u/s 147 should be quashed and annulled. However, the Ld. CIT(A) uphold the assessment order passed by the Assessing Officer without meeting out the ground No.1 specifically. Therefore, the assessee is in appeal before us.
ITA No.03/Asr/2017 (A.Y.2009-10) 4 Libra Automobiles Ltd. vs. CIT-IV, Jalandhar
At the outset, the Learned Counsel for the appellant Sh. Gungeet Singh Syal, Ld. Advocate submitted that the re- assessment proceedings have been started by the Assessing Officer by issuing a relevant notices according to the Act and the assessee specifically filed written submission vide letter dated 25th March, 2015 objecting to the proceedings, which was never been disposed of by the Assessing Officer and even otherwise the Ld. CIT(A) also failed to pass a reasoned order on this particular aspect. Therefore, in view of the judgment rendered in the case of GKN Driveshafts (India) Ltd. vs. DCIT [2003] 259 ITR 19 (SC), the appropriate directions are required to be passed in disposing the said objections of the assessee.
On the other hand, the Ld. DR relied upon the order passed by the authorities below as well as the judgment rendered by the Apex Court in the case of M/s Home Finders Housing Ltd. Versus Income Tax Officer Corporate Ward 2(3) { Special Leave to Appeal (C) No(s). 12721/2018, decided on 18- 05-2018} [94 taxman.com 84 (SC)]. and submitted that non- compliance of direction of Supreme Court in GKN Driveshafts (India) Ltd. v. ITO [2002] 125 Taxman 963, to the effect that on receipt of objection given by assessee to notice under section 148, Assessing Officer is bound to dispose off the objections by passing a speaking order, would not make reassessment order void ab initio.
ITA No.03/Asr/2017 (A.Y.2009-10) 5 Libra Automobiles Ltd. vs. CIT-IV, Jalandhar
Having heard the rival submissions of the parties and gone through the material available on record, we realized that the assessee vide letter dated 25th March, 2015 specifically raised the objections qua initiations of the proceedings u/s 147 of the Act. As it is clearly reflects from the order passed by the Assessing Officer as well as the Ld. CIT(A) that the said objections were neither addressed by the Assessing Officer nor adjudicated by the Ld. CIT(A). For the sake of convenience and brevity submissions made qua non-disposal of objections as reflects in top para of page no.28 of the order of Ld. CIT(A) ,are reproduced herein below for the sake of convenience and brevity. “Non disposal of objections by the AO. The assessee had filed letter dated 25.03.2015 wherein it had raised certain objections to the reasons recorded by the AO (Page 18 of paper book). The AO without disposing the said objections proceeded to frame the impugned Assessment. The Courts have consistently held that the precondition is jurisdiction conferring on the AO to reopen the assessment and their non fulfillment renders the initiation itself ab- initio void. Where such action of executive authority acting without jurisdiction subjects or is likely to subject a person to lengthy proceedings and unnecessary harassment, Courts, issue appropriate orders or directions to prevent such consequences. The Courts have consistently warned the department not to harass taxpayers by reopening assessments in a mechanical and casual manner. The AOs are repeatedly directe to strictly comply with the law laid down in GKN Driveshafts (India) Ltd. vs. DCIT (2003) 259 ITR 19 (SC) as regards disposal of objections to reopening assessment. The order passed by the AO is in contravention of the order of the Apex Court as the objections of the assessee were not disposed-off by passing a speaking order.”
ITA No.03/Asr/2017 (A.Y.2009-10) 6 Libra Automobiles Ltd. vs. CIT-IV, Jalandhar
6.1 The procedure to be followed when a notice under Section 148 of the said Act is issued has been settled by the decision of the Supreme Court in the case of GKN Driveshafts (India) Ltd v. Income-Tax Officer and Ors. (2003) 259 ITR 19 in the following words:-
We see no justifiable reason to interfere with the order under challenge. However, we clarify that when a notice under section 148 of the Income-tax Act is issued, the proper course of action for the noticee is to file a return and if he so desires, to seek reasons for issuing notices. The Assessing Officer is bound to furnish reasons within a reasonable time. On receipt of reasons, the noticee is entitled to file objections to issuance of notice and the Assessing Officer is bound to dispose of the same by passing a speaking order. In the instant case, as the reasons have been disclosed in these proceedings, the Assessing Officer has to dispose of the objections, if filed, by passing a speaking order, before proceeding with the assessment in respect of the above said five assessment years.
According to mandate of the Apex Court in the aforesaid case, the Noticee on receipts of reasons recorded by the Assessing Officer u/s 147 of the Act, is entitled to file objection(s) to issuance of notice and filed, if any, then the Assessing Officer is bound to dispose off the same by passing a
ITA No.03/Asr/2017 (A.Y.2009-10) 7 Libra Automobiles Ltd. vs. CIT-IV, Jalandhar
speaking order before proceeding with the assessment proceedings. We are in agreement with the argument of the Ld. DR qua non-compliance of direction of Supreme Court in GKN Driveshafts (India) Ltd. v. ITO [2002] 125 Taxman 963, to the effect that on receipt of objection given by assessee to notice under section 148, Assessing Officer is bound to dispose off the objections by passing a speaking order, would not make reassessment order void ab initio in view of the judgment titled as M/s Home Finders Housing Ltd. Versus Income Tax Officer Corporate Ward 2(3) { Special Leave to Appeal (C) No(s). 12721/2018, decided on 18-05-2018} [94 taxman.com 84 (SC)]. In the instant case, no speaking order has been passed by the Assessing Officer but he directly proceeded to pass the re- assessment order which is un-doubtly contrary to the directions of the Apex Court. As the Assessing Officer is bound to dispose off the objection(s) of the assessee by passing speaking order before proceeding with the re-assessment, hence, the appropriate course should be to restore back the matter to the file of the Assessing Officer with a direction to dispose off the assessee’s objections by passing speaking order thereon and thereafter, to proceed with the reassessment proceeding, if required, as per law.
ITA No.03/Asr/2017 (A.Y.2009-10) 8 Libra Automobiles Ltd. vs. CIT-IV, Jalandhar
We, therefore, set aside the impugned order passed by the Ld CIT(A) with direction to the Assessing Officer for passing a speaking order on assessee’s objections and thereafter can proceed further, if required, as per law.
In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the open Court on 29.06.2018.
Sd/- Sd/- (SANJAY ARORA) (N.K.CHOUDHRY) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated:29.06.2018 /PK/ Ps. Copy of the order forwarded to: (1) Libra Automobiles Ltd., Jalandhar (2) The Dy. CIT-IV, Jalandhar (3) The CIT(A), Jalandhar (4) The CIT concerned (5) The SR DR, I.T.A.T., Amritsar True copy By order