M/S.RAO COMPUTERS CONSULTANTS PVT. LTD.,BANGALORE vs. DEPUTY COMMISSIONER OF INCOME-TAX, BANGALORE

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ITA 301/BANG/2017Status: DisposedITAT Bangalore24 March 2017AY 2009-201010 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the AO was bound to dispose of the assessee's objections by passing a speaking order before proceeding with the reassessment. Since it was unclear if a speaking order was passed, the matter was remanded to the AO.

What were the facts?

The assessee's assessment was reopened under Section 147. The assessee filed objections challenging the reopening, but the Assessing Officer (AO) proceeded to pass assessment orders without disposing of these objections with a speaking order. The CIT(A) also did not decide this issue.

What were the issues?

Whether the AO erred in passing assessment orders without disposing of the assessee's objections to the reopening with a speaking order.

Which sections of the Income-tax Act were involved?

Section 147,Section 148

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, BANGALORE BENCH, ‘A’, BANGALORE

Before: SHRI A.K GARODIASHRI LALIET KUMAR

For Appellant: Shri C.R Nulvi, C.A Assessee by : Ms. Swapna Das, JCIT

PER LALIET KUMAR, JUDICIAL MEMBER

1.

This appeal is by the assessee which is directed against the order passed by the Commissioner of Income-tax (Appeals) – V dated 29/12/2016 for the assessment years 2009-10 and 2010-11.

2.

The following common grounds were raised by the assessee in appeal No.301 and 302,:

3.

First of all, we will take up the issue of ground No.5 raised by the assessee in appeal No. 301/Bang/2017 and also in ground No. of ITA No.302/Bang/2017.

The brief facts of the case are as under:

4.

The assessee company is claimed to have been engaged in the business of computer consultancy. The assessee company has filed return of income for the Asst. Year 2009-10 on 16.9.2009 declaring a loss of Rs.50,25,735/- and claiming a refund of Rs.71,73,650/-. Similarly the assessee company filed return of income for the asst. year 2010-11 on 27.9.2010 declaring a loss of Rs.28,44,164/- and claimed refund of Rs.26,54,310/-. The case was processed u/s 143(1) on 7/2/2011 and refund of Rs.78,20,930/- along with the interest was charged in favour of the assessee for asst. year 2009-10 . In respect to asst. year 2010-11 the assessment u/s 143(3) was completed on 10/5/2012.

Both the cases were selected for reopening u/s 147 of the Income- tax Act and notice u/s 148 of the Act dated 30/3/2014 was issued by the AO. In response to the notice, the assessee filed original return u/s 148 of the Act on 29/5/2014 and requested the AO to for reasons recorded for reopening the assessment u/s 147. In response to letter of the assessee, the AO provided the reasons for reopening the assessment for the assessment year 2009-10 and 2010-11 on 9/6/2014. The reasons recorded were as under:-

5.

The assessee filed objections for the reasons recorded for reopening of the assessment u/s 147 vide letter dated 16/6/2014 in respect of both the assessment years. The AO without disposing the objections of the assessee had completed the assessment proceedings and passed the assessment order on 4.2.2015

6.

Feeling aggrieved by the order passed by the AO, the assessee filed the appeal before the CIT(A) and raised specific ground no 2 before the CIT(A) in form No.35 as under:-

Ground 2:

On the facts and circumstance of the case and under the provisions of the law, the AO erred in passing the order u/s 143(3) r.w.s 148 without passing the speaking order on the objections raised by the appellant before framing assessment.

7.

The learned AR of the assessee submitted that the learned CIT(A) has not decided this issue while passing the order under appeal. Feeling aggrieved by the order passed by the Commissioner the present appeal was filed by the assessee on various grounds as mentioned herein above, however at present we are only deciding the ground number 5 raised in the present appeal.

8.

Before us, the learned AR has submitted that the AO was required to decide the objections raised by the assessee challenging the reopening of the assessment proceedings and should not have passed the assessment order. The learned AR relied upon the judgment of Hon’ble Supreme Court and High Court in the case of GKN Drive Soft (Supra) and General Motors India Pvt. Ltd. Vs. DCIT (Supra) to say that the proceedings initiated by the AO and the learned CIT(A) were without jurisdiction as speaking order contemplated in GKN Drive Soft (Supra) was not passed by the learned AO and CIT(A).

9.

On the other hand, the learned DR has submitted that the objections raised by the learned assessee was duly considered by the AO in the order passed by the AO.

10.

We have heard the rival contentions of the parties and perused the material on record. In our view, the mandate is clear to the AO from the Hon’ble Supreme Court in the matter of GKN Drive Soft (Supra), where the Hon’ble Supreme Court has held that the passing of the speaking order while disposing of the objections of the assessee are necessary before framing the reassessment proceedings. Hon’ble Court 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 notice 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.

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.

In the present case, the objections were filed by the assessee on 16/2/2014 and the assessment order passed was on 4/2/2015. The Bench is not in a position to find out from the available record whether the objection of the assessee raised vide letter dated 6/6/2014 were disposed of by speaking order by the AO or not therefore, we deem it appropriate to remand the matter to the file of the AO with a directions to find out from the assessment folder as to whether the speaking order dealing with the objections dated 16/6/2014 was passed by the AO or not. In case no such order is passed, the necessary action for disposing of the objections be initiated by the AO.

11.

As the entire reopening proceedings is subject to passing of the speaking order on the objections, therefore, we are not adjudicating any other ground pressed before us and, as a result, we restore back both the appeals to the file of the AO in the light of the above said directions.

12.

Hence, both the appeals are allowed for statistical purposes.

13.

In the result, the appeals of the assessee are allowed for statistical purposes.

Order pronounced in the open court on 24th March, 2017.

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