ITO, WD-4(1), KOLKATA, KOLKATA vs. M/S RST HOLDINGS (P) LTD., KOLKATA

The main grievance of the revenue is against the action of the Ld. CIT(A) in annulling the assessment orders passed in pursuance of the ITAT’s order dated 01.09.2011.

This is the second round before this Tribunal. Brief facts of the case for both the years are that the original assessment u/s. 143(3) of the Act was done after reopening the assessments by issuance of notice u/s. 148 of the Act. When the matter travelled up to the Tribunal in the first round, the Tribunal noted that the assessee had objected to the reopening suggested by the AO. However, the Tribunal took note of the fact that the AO has not disposed of the objections raised by the assessee as directed by the Hon’ble Supreme Court in GKN Driveshaft (India) Ltd. Vs. ITO & Ors. (2003) 259 ITR 19 (SC). Therefore, the Tribunal vide order dated 01.09.2011 remanded the matter back to the file of the AO to first decide the objection raised by the assessee against the reopening and thereafter to proceed in accordance to law. Thereafter, pursuant to the Tribunal’s direction,

We have heard rival submissions and gone through the facts and circumstances of the case. We note that the Tribunal vide order dated 01.09.2011 had remanded the original assessment order pursuant to reopening, back to the file of AO, and directed the AO to first dispose of the challenge/objection raised by the assessee against reopening of the assessment as held by the Hon’ble Supreme Court in GKN Driveshaft (India) Ltd. Pursuant to the same, the AO, has passed the order on 20.12.2012 without addressing the objection raised by the assessee against the reopening of the assessment. This is in flagrant violation of the Hon’ble Supreme Court’s direction in GKN Driveshaft (India) Ltd. (supra). The Ld. DR could not bring to our notice as to whether the AO has disposed of the challenge raised by the assessee against the reopening. Without doing so, the order passed by the AO is unsustainable. It has to be remembered that as per Article 141 of the Constitution, the law laid by the Hon’ble Supreme Court is binding on all courts. The AO while framing the assessment is acting as a quasi judicial authority and is bound to follow the decision of the Hon’ble Supreme Court. Violation of the same makes the order of assessment fragile in the eyes of law and, therefore, we uphold the action of the Ld. CIT(A) for both the assessment years in question and consequently dismiss both the appeals of the revenue.