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Income Tax Appellate Tribunal, “B” BENCH, PUNE
Before: SHRI ANIL CHATURVEDI, AM & SHRI VIKAS AWASTHY, JM
आदेश / ORDER
PER VIKAS AWASTHY, JM :
This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals)-9, Pune dated 05-02-2016 for the assessment year 2009-10.
The assessee in appeal has assailed the findings of Commissioner of Income Tax (Appeals) by raising following ground/additional ground :
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“1. On the facts and in the circumstances of the case and in law, the Lower Authorities has erred in making an addition of Rs.1,21,76,325/- on account of alleged bogus transaction by disregarding the fact that the concerned material has been rejected and purchase returns entries were passed in next year. Such additions resulting into double addition of same transaction and therefore needs to be deleted in its entirety.” Additional Ground : “1. “On the facts and in the circumstances of the case and in law, the learned Assessing Officer erred in passing the order u/s. 143(3) r.w.s. 147 without following the procedure as your appellant has specifically requested for giving the reasons of re-opening of assessment to Learned Assessing Officer and same has not been provided till completion of Assessment. Therefore the entire re-assessment proceedings are band in law.”
Shri Pramod Shingte appearing on behalf of the assessee submitted that re-opening of assessment has been done in an erroneous manner. The ld. AR contended that the assessment for assessment year 2009-10 has been reopened merely on the basis of information received from the Sales Tax Department. There is no independent application of mind by the Assessing Officer. The assessee had made specific request to Assessing Officer for providing reasons for reopening. However, the same were never communicated to the assessee. Thus, the legal right of assessee to file objections against reopening was usurped by the Department. The ld. AR contended that the Hon’ble Bombay High Court in the case of Commissioner of Income Tax Vs. Videsh Sanchar Nigam Ltd. reported as 21 taxmann.com 53 has held that where reasons recorded for reopening of assessment, though repeatedly asked by the assessee were not furnished, the assessment order is bad in law.
The ld. AR to further support his contentions placed reliance on the decision of Hon’ble Jurisdictional High Court in the case of Commissioner of Income Tax Vs. Trend Electronics reported as 61 taxmann.com 308
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wherein the reasons for reopening of assessment were not furnished even on the specific request of assessee, the reassessment in such case was held to be bad in law. The ld. AR pointed that the assessee had asked for the reasons for reopening vide letter dated 11-03-2013, 06-09-2013 and 07-10-2013. However, the Assessing Officer did not provide reasons for reopening to the assessee and passed the assessment order on 09-10- 2015.
3.1 On merits the ld. AR submitted that the assessee had filed original return of income u/s. 139(1) of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) for the assessment year 2009-10 on 17-07-2009 declaring total income of Rs.2,16,17,440/-. Thereafter, the assessee filed revised return of income on 12-03-2013 declaring income of Rs.4,15,55,520/-, thus, additional income of Rs.1,99,38,083/- was disclosed. The additional income declared by the assessee was in respect of alleged bogus purchases. The assessee in assessment year 2010-11 declared the balance amount of alleged bogus purchases i.e. Rs.1,21,36,825/-. The ld. AR submitted that the amount of Rs.1,21,36,825/- was declared in the next assessment year as the said purchases were made during the Financial Year 2009-10. The assessee without disputing the genuineness of purchase transactions has voluntarily offered the entire amount to tax during assessment years 2009-10 and 2010-11. This fact was brought to notice of Assessing Officer during reassessment proceedings. The Assessing Officer without appreciating the submissions of assessee and the fact that Rs.1,21,76,825/- has been offered to tax in the immediately next assessment year has made addition of the said amount in the assessment year 2009-10. Thus, the amount of Rs.1,21,76,825/- has been brought to
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tax twice. The ld. AR submitted that the Commissioner of Income Tax (Appeals) also failed to appreciate the fact that the amount has been offered to tax by the assessee in assessment year 2010-11 and confirmed the addition. The ld. AR prayed for setting aside the impugned order and allowing the appeal of assessee on both the grounds.
On the other hand Shri M.K. Verma representing the Department vehemently defended the impugned order. The ld. DR filed report from the Assistant Commissioner of Income Tax dated 30-08-2018. The ld. DR pointed that though the reasons as sought by the assessee vide letter dated 06-09-2013 were not furnished to the assessee but the assessee was aware of reasons for reopening which is evident from letter dated 11-03-2013 filed by the assessee.
We have heard the submissions made by representatives of rival sides and have perused the orders of authorities below. We will first take up the jurisdictional issue of validity of reopening of assessment u/s. 147 r.w.s. 148 of the Act. The Hon’ble Supreme Court of India in the case of GKN Driveshafts (India) Ltd. Vs. Income Tax Officer reported as 259 ITR 19 has in an unambiguous manner has laid down the chronology of events to be followed in case of reassessment. After issuance of notice u/s. 148 of the Act, the assessee is required to file return of income and seek reasons for issuing notice u/s. 148 of the Act. The Assessing Officer is duty bound to supply the copy of reasons for reopening to the assessee, within a reasonable time. On furnishing of the reasons, the assessee has right to file objections, if he so desires. The Assessing Officer is bound to dispose of the objections vide separate speaking order and thereafter proceed with the assessment proceedings u/s. 147 of the Act.
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In the present case it is an undisputed fact that the assessee has asked for the reasons recorded for reopening the assessment after filing return of income in response to notice u/s. 148 of the Act. The documents on record show that the assessee has repeatedly asked the Assessing Officer for providing the reasons for reopening. The ld. AR has drawn our attention to page 33 of the paper book, wherein the assessee has pointed to the Assessing Officer that reasons have not been provided to him which were asked by the assessee vide letter dated 11-03-2013. The ld. DR has furnished a copy of the communication dated 30-08-2018 from the Assistant Commissioner of Income Tax, Circle 10, Pune wherein he has admitted that copy of the reasons recorded for issuance of notice u/s. 148 for assessment year 2009-10 were not provided to the assessee. Thus, in view of categoric admission of the Assessing Officer in not providing the copy of reasons to the assessee, we are of considered view that it has resulted in miscarriage of justice. The assessee has lost opportunity to file objections against reopening of assessment. The action of Assessing Officer in not providing the assessee with reasons for reopening despite specific request is against the mandate of Hon’ble Apex Court.
The Hon’ble Bombay High Court in the case of Commissioner of Income Tax Vs. Videsh Sanchar Nigam Ltd. (supra) has upheld the decision of Tribunal where the reassessment proceedings were held to be bad in law when the reasons recorded for reopening of assessment were not provided by the Assessing Officer to the assessee despite repeated requests.
In the case of Commissioner of Income Tax Vs. Trend Electronics (supra), under similar set of facts where the reasons for reopening were not
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provide to the assessee despite specific request, the reassessment order was held to be bad in law. The relevant extract of the observations of Hon’ble High Court are as under : “8. We find that the impugned order merely applies the decision of the Apex Court in GKN Driveshafts (India) Ltd. (supra). Further it also follows the decision of this Court in Videsh Sanchar Nigam Ltd. (supra) in holding that an order passed in reassessment proceedings are bad in law in the absence of reasons recorded for issuing a reopening notice under Section 148 of the Act being furnished to the assessee when sought for. It is axiomatic that 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 prerequisite 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 Apex Court 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 (which has been done in this case) and furnishing of the same has 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 ease the same have been issued on some misunderstanding/misconception, the assessee is given an opportunity to 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. In issues such as this, i.e. where jurisdictional issue is involved the 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 also do not appreciate the stand of the revenue, that the respondent-assessee had asked for reasons recorded only once and therefore seeking to justify non-furnishing of reasons. We expect the state to act more responsibly.”
Thus, in view of the facts of the case and the decisions of Hon’ble Jurisdictional High Court discussed above, we find merit in the additional ground raised by the assessee. The Assessing Officer passed without providing reasons for reopening to the assessee despite specific request from assessee, is not sustainable in law and has to be set aside. Accordingly, we hold reassessment proceedings u/s. 147 r.w.s. 148 as bad in law. Thus, the additional ground raised by the assessee is allowed.
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Since, we have allowed the jurisdictional issue in the present appeal, we would not travel to the ground raised on merits as it has become academic.
In the result, the impugned order is set aside and the appeal of assessee is allowed.
Order pronounced on Friday, the 07th day of September, 2018.
Sd/- Sd/- (अननऱ चतुवेदी / Anil Chaturvedi) (ववकास अवस्थी / Vikas Awasthy) ऱेखा सदस्य / ACCOUNTANT MEMBER न्यानयक सदस्य / JUDICIAL MEMBER ऩुणे / Pune; ददनाांक / Dated : 07th September, 2018 RK आदेश की प्रनतलऱवऩ अग्रेवर्त / Copy of the Order forwarded to : अऩीऱाथी / The Appellant. 1. प्रत्यथी / The Respondent. 2. आयकर आयुक्त (अऩीऱ) / The CIT(A)-9, Pune 3. प्रधान आयकर आयुक्त / The Pr. CIT-5, Pune 4. ववभागीय प्रनतननधध, आयकर अऩीऱीय अधधकरण, “बी” बेंच, 5. ऩुणे / DR, ITAT, “B” Bench, Pune. गार्ड फ़ाइऱ / Guard File. 6. //सत्यावऩत प्रनत // True Copy// आदेशानुसार / BY ORDER,
ननजी सधचव / Private Secretary, आयकर अऩीऱीय अधधकरण, ऩुणे / ITAT, Pune