BHUPINDERPAL WALIA,MUMBAI vs. ITO 19(3)(1), MUMBAI

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ITA 21/MUM/2016Status: DisposedITAT Mumbai25 October 2017AY 2006-073 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the AO should have adjudicated the assessee's objections to the notice under Section 148 by passing a speaking order before proceeding with the assessment. The matter was restored to the AO for this purpose.

What were the facts?

The assessee contended that the Assessing Officer (AO) and Commissioner (Appeals) failed to address objections raised against the notice issued under Section 148. The Revenue conceded that the issue should be remitted back to the AO.

What were the issues?

Whether the AO properly adjudicated the assessee's objections to the notice issued under Section 148 before proceeding with the assessment.

Which sections of the Income-tax Act were involved?

Section 148,Section 143(3)

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Cases cited in this judgment(1)Show list

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Income Tax Appellate Tribunal, “B” BENCH, MUMBAI

This appeal by the assessee is arising out of the order of Commissioner of Income Tax (Appeals)-32, Mumbai, [in short CIT(A)] in appeal No. CIT(A)-32, Mumbai/IT-173/19(3)(1)/14-15 dated 17-11-2015. The Assessment was framed by Income Tax Officer, Ward-19(3)(1), Mumbai (in short ITO or AO) for the assessment year 2006-07 vide order dated 26-03-2014 under section 143(3) of the Income Tax Act, 1961(hereinafter ‘the Act’).

2.

At the outset, the assessee stated that neither the CIT(A) nor the AO has dealt with the objections raised by the assessee against the issuance of notice u/s. 148 of the Act and reasons recorded thereof. The assessee, in person present before us, drew our attention to the following ground no.3:

Bhupinderpal Walia (A.Y:2006-07) “The learned cit(a) erred in not appreciating that in the facts and circumstances of the appellant's case and in law, the assessment in reference is bad-in-law, in as much as the notice u/s 148 under which the learned AO assumed the jurisdiction was bad in law and the assessment in reference was made without properly following the procedure to deal with the objections raised by the appellant.”

When this was pointed out to the learned senior DR, whether the Assessing Officer has adjudicated the objections raised by the assessee vide its letter dated 05.09.2013? The learned DR fairly conceded that the issue can be remitted back to the file of the Assessing Officer for adjudicating the objections of the assessee in the first instance and, thereafter, in case the objections are rejected, the AO will deal with the issues on merits also. On this the learned counsel for the assessee fairly agreed.

3.

After hearing both the parties and going through the facts in entirely, we are of the view that the Assessing Officer should have dealt with the objections raised for issuance of notice u/s. 148 of the Act and the reasons recorded thereof. This procedure is laid down by Hon’ble Supreme Court in the case of GKN Driveshafts (India) Ltd. vs ITO 259 ITR 19 (SC), wherein it has been held as under:

“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 return and if he so desires, to seek reasons for issuing notices. The Assessing Officer is bound to furnish reasons within a reasonable time.

Bhupinderpal Walia (A.Y:2006-07) On receipt of reasons, the notice 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.”

In terms of the decision of the Hon’ble Supreme Court, the Assessing Officer is directed that he will dispose of the objections qua re-opening and reasons recorded thereof and only then proceed for framing of assessment. The matter is restored to the file of the Assessing Officer with the above directions.

In the result, the appeal of assessee is allowed for statistical 4. purposes.

Order pronounced in the open court on 25-10-2017.

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