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Income Tax Appellate Tribunal, BENCH “F” MUMBAI
Before: SHRI SAKTIJIT DEY, JM & SHRI RAJESH KUMAR, AM
O R D E R आदेश आदेश आदेश PER RAJESH KUMAR, A. M: This is an appeal filed by the assessee against the order of ld. CIT(A)— 2, Mumbai, dated 22.3.2016 for the assessment year 2004-05. 2. Grounds of appeal raised by the assessee are as under : “The appellant, being aggrieved by the Order of the learned Commissioner of Income-tax (Appeals)-2, Mumbai [hereinafter referred to as the "C!T(A)"] dated March 22, 2016, places for your consideration the following grounds of appeal:-
The Learned C!T(A) erred in confirming the action of the Assessing Officer in reopening the assessment completed under section 143(3) of the Income Tax Act, 1961 without considering the facts and circumstances of the case.
The learned C!T(A) erred in holding that the reopening of the assessment under section 147 of the Act was justified failing to appreciate that based on the reasons recorded by the Assessing Officer no valid belief that income had escaped assessment on account of failure to furnish full and true particulars could ever have been formed.
3. The learned C!T(A) erred in not holding that the issuance of notice under section 148 by the Assessing Officer beyond a period of four years from the relevant assessment year without any failure on part of the appellant to disclose fully and truly all material facts necessary for the assessment for that assessment year was bad in law.
4. The learned C!T(A) erred in not holding that recording proper reasons justifying failure on part of the appellant to disclose fully and truly all material facts was necessary for the assessment for that assessment year;
5. The learned CIT(A) erred in not holding that Chetan Shah had not confessed that his firm's dealings with the appellant were bogus and hence the formation of belief by the Assessing Officer that income of the appellant had escaped assessment was not justified.
6. The learned CIT(A) erred in not holding that the reassessment order passed without addressing the appellant's objections is bad in law and ought to be quashed.
7. Without prejudice to grounds 1 to 4, the learned CIT(A) erred in confirming the action of Assessing Officer in making disallowance of expenses incurred on purchase of promotional items of Rs.8,97,150. 7.1 The learned CIT(A) erred in rejecting the ground that there was no statement/evidence from Mr. Chetan Shah, Proprietor of M/s. Suraj Enterprises claiming that his firm's dealings with the appellant were not genuine.
3 7.2 The learned CIT(A) erred in not holding that an opportunity to cross examine Mr. Chetan Shah, Proprietor of M/s. Suraj Enterprises on the dealings that his firm had with the appellant should have been given to the appellant.
7.3 The learned CIT(A) erred in not appreciating the fact that the appellant had submitted invoices and bank details to support the genuineness of the transactions.
7.4 The learned CIT(A) erred in not holding that the impugned order passed by the learned DCIT based on conjectures and surmises is bad in law and ought to be quashed”.
We shall first deal with grounds of appeal no.6 whereby the assessee seeks to challenge the validity of the assessment order passed under section 143(3) read with section 147 of the Act on the ground of non disposal of appellant’s objections by the AO.
The facts in brief are that the assessment in this case was completed under section 143(3) of the Act was framed vide order dated 28.12.2007. Thereafter AO received the information from the DGIT(Inv),Mumbai and Sales Tax Department, Government of Maharashtra vide letter No.DDIT(Inv)
(U)-3/147/2010-11 dated 22.4.2010 regarding the payment made by the assessee to Shri Chetan P Shah, a hawala operator. The said hawala operator admitted in the search action on him that he along with the associate concerns was engaged in the business of providing bogus purchase entries to various parties after deducting commission therefrom. The AO thereafter recorded the reasons for reopening of the assessment and accordingly 4 issued notice under section 148 of the Act dated 21.6.2010 to the assessee. The assessee vide letter dated 15.12.2010 objected to the reopening of the assessment under section 148 of the Act which is reproduced by the AO in para 2 of the assessment order. The AO proceeded to frame the assessment u/s 143(3) r.w.s.147 of the Act without disposing of the objections filed against the re-assessment proceedings by the assessee by framing the assessment vide order dated 29.12.2010 passed under section 143(3) r.w.s.147 of the Act assessing the total income of the assessee at Rs.8,97,150/- after adding to the income of the assessee the payments allegedly to hawala operators by the assessee. The issue was specifically raised by the assessee before the ld.CIT(A) which was not adjudicated by the First Appellate Authority.
The ld. AR vehemently submitted before us that the order passed by the ld CIT(A) is liable to be annulled in view of the fact that assessment order is itself bad in law and is liable to be quashed on the ground that non- disposal of the objections filed by the assessee during the course of re- assessment proceeding vide letter dated 15.12.2010 by the AO. The ld. AR relied on the decision of the jurisdictional High Court in the case of Bayer Matrial Science (P) Ltd V/s DCIT (2016) 66 taxmann.com 335 (Bom) and prayed that in view of the above said ratio by the jurisdictional High Court ,
On the other hand, the ld. DR argued that there is no mention on the face of the assessment order whether the AO has disposed of the objections filed by the assessee or not. The ld. DR requested the Bench that some time may be allowed to verify the said facts, whether the AO has disposed the objection of the assessee or not and requested for a week’s time for ascertaining the facts. The same was allowed to the ld DR. However, the ld. DR admitted that if there is non-disposal of the objection of the assessee, the appeal be restored to the file of the AO for disposal of the objections and verification of facts and for framing of the assessment denovo after disposing of the objections .
We have carefully considered the rival submissions and perused the material placed before us including the impugned orders and the case law referred to and relied upon by the assessee. The undisputed facts of the case are that the assessment was reopened u/s 148 of the Act after AO formed a belief that income has escaped assessment upon receipt of information from DDIT(Inv) Mumbai and Sales Tax Deptt. Govt of Mahahrashtra and thereafter the re-assessment was framed vide order dated 29.12.2010 u/s 143(3) r.w.s. 148 of the Act without having disposed off the objections filed by the assessee against the reasons recorded on the basis of 6 which the re-assessment proceedings were initiated and notice u/s 148 of the Act was issued. The perusal of the assessment order reveals that though the assessee vide letter dated 15.12.2010 filed before the AO various objections but there is no mention of these objections being disposed before the framing of the re-assessment order. Even the ld DR could not place any evidence to controvert the argument of non disposal of the objections filed by the assessee. In our opinion, the objections filed by the assessee during the reassessment proceedings has to be disposed off failing which the re- assessment order so passed by the AO is nullity. The case of the assessee is squarely covered by the decision of the jurisdictional High Court (supra) wherein it has been held :
11. In the present facts, we find that the draft Assessment order was passed on 30th March, 2015 without having disposed of the Petitioner's objections to the reasons recorded in support of the impugned notice. The reasons were supplied to the Petitioner only on 19th March, 2015 and the Petitioner had filed the objections to the same on 25th March, 2015. This passing of the draft Assessment order without having disposed of the objections is in defiance of the Supreme Court's decision in GKN Driveshafts (India) Ltd. (supra). Thus, the draft Assessment order dated 30th March, 2015 is not sustainable being without jurisdiction. This for the reason that it has been passed without disposing of the objections filed by the Petitioner to the reasons recorded in support of their impugned notice. Accordingly, we set aside the draft Assessment order dated 30th March, 2015. We are not dealing the validity of the reasons in support of the impugned notice in the present facts as the time limit to pass the Assessment order as provided under 4th Proviso to sub-section(2) of Section 153 of the Act has already expired when the petition was filed Court, set aside the assessment order passed u/s 143(3) r.w.s. 147 of the Act. Resultantly, the ground of raised by the assessee is allowed.
Since we have quashed the assessment order passed u/s 143(3) r.w.s.
147 of the Act , the other grounds raised by the assessee on merits need not to be adjudicated.