SHRI.B.R.KRISHNAMURTHY,TUMKUR vs. ITO-WARD-2, TUMKUR

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ITA 1706/BANG/2016Status: DisposedITAT Bangalore24 January 2018AY 2010-113 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal found that the assessee had not raised objections against the reopening of assessment before the AO and CIT(A) as per the GKN Driveshafts judgment. Therefore, the matter was restored to the AO for fresh consideration.

What were the facts?

The assessee's appeal challenges the assessment order and the rejection of their explanation regarding a cash deposit and withdrawal. The assessee claimed the transaction belonged to their HUF, but the AO and CIT(A) did not accept this.

What were the issues?

Whether the reopening of assessment under Section 147/148 was valid, and whether the assessee's objections to the reopening should have been considered by the AO.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 147,Section 148,Section 69

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, “SMC-C” BENCH : BANGALORE

Before: SHRI ARUN KUMAR GARODIA

For Appellant: Shri K. Kiran Kumar, Advocate
For Respondent: Shri Vimal Anand, Addl. CIT (DR)
Hearing: 18.01.2018Pronounced: 24.01.2018

O R D E R

Per Shri A.K. Garodia, Accountant Member

1.

This appeal is filed by the assessee which is directed against the order of ld. CIT(A) – 7, Bangalore dated 17.08.2016 for Assessment Year 2010-11.

2. The grounds raised by the assessee are as under. “1. The order of assessment made u/s.143(3) r.w.sec.147 of the Income-tax Act, 1961, is without jurisdiction and, therefore, liable to be annulled.

2.

The initiation of proceeding u/ss.147 /148 of the Income-tax Act, 1961, to gather materials as to the source for the cash deposit of Rs.32,00,000 to CaveryKalpatharuGrameena Bank, is without jurisdiction.

3. Both CIT (A) and the Assessing Officer have erred in rejecting the explanation that the deposit of cash of Rs.32,00,000 with CaveryKalpatharuGrameena Bank and its withdrawal within 29 days of the said deposit were made by and belongs to Hindu Undivided Family of which Mr.B.R.Krishnamurthy (appellant) was the kartha.

Page 2 of 3 4. Since - a) the additions (credits) to capital account have been declared as income; b) the Assessing Officer verified during the course of assessment all the 'assets and liabilities' of the assessee; c) the assessee as karth of HUF has confirmed the transaction that the deposit to bank of Rs.32,00,000 and its withdrawal within 29 days from the date of deposit, as pertains to HUF; d) the there was no asset found during the course of survey as representing the impugned addition of Rs.32,00,000; the Assessing Officer as well as CIT(A) ought to have accepted the determination of income on the basis of net increase in wealth/capital as basis for determining income of the assessee u/s.69 of the Income- tax Act, 1961.

5. Since Rs.32,00,000 was not the money earned by the assessee, the addition of the same without exercising discretion u/s.69 of the Income-tax Act, 1961, is an error.”

3.

It was submitted by ld. AR of assessee that reopening is bad in law. At this juncture, the bench wanted to know as to whether the assessee has obtained the reasons recorded by the AO for reopening. In reply, it was submitted by ld. AR of assessee that the reasons recorded by AO are available on page no. 74 of the paper book. The bench also wanted to know as to whether any objection was raised by assessee against reopening before AO as per the judgement of Hon’ble Apex Court rendered in the case of GKN Driveshafts (India) Ltd. vs. ITO &Ors. as reported in 259 ITR 19. In reply, it was submitted by him that assessee has not raised any objection before the AO but this is a legal issue which can be raised at any stage and therefore, it should be decided. The ld. DR of revenue supported the order of CIT(A).

4.

I have considered the rival submissions. I find that as per the judgement of Hon’ble Apex Court rendered in the case of GKN Driveshafts (India) Ltd. Vs. ITO &Ors. (supra), in case of reassessment, the assessee is supposed to file the return of income in pursuance to the notice issued u/s. 148 and thereafter, if assessee so desires, he may seek copy of reasons recorded by the AO for issuing notice u/s 148. The assessing officer is bound to furnish reasons within

Page 3 of 3 a reasonable time. On receipt of reasons, the assessee 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 and thereafter, he should proceed to frame the assessment. In the present case, the assessee has obtained the reasons recorded by the AO but thereafter, the assessee has not raised any objection against the validity of reopening before the AO & CIT (A). The assessee has raised such objection before the Tribunal. Under these facts, I feel that this issue should go back to the file of AO for fresh decision. Accordingly, I set aside the order of CIT(A) and restore the matter back to the file of AO with the direction that the assessee may raise objection before the AO against validity of reopening and if the assessee does so, then the AO should pass a speaking order for disposing of the objections raised by the assessee. If it is found that objections are not valid then he should frame assessment afresh and if the objections are found valid, nothing remains to be done. In view of this decision, no adjudication is called for regarding the grounds raised by the assessee on merit.

5.

In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the open court on the date mentioned on the caption page.

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