DEPUTY COMMISSIONER OF INCOME-TAX vs. P3 PROPERTIES,, PUNE

The Revenue in appeal for assessment year 2008-09 has assailed the order of Commissioner of Income Tax (Appeals) by raising following grounds : 1. “On the facts and the circumstances of the case and in law, the Ld. CIT(A) was not justified in allowing the appeal of the assessee on the ground non- rebuttal of assessee's objection against notice u/s. 148 issued for the purpose of re-assessment and the same has been accepted without any verification. 2. On the facts and the circumstances of the case and in law, the Ld.CIT(A) ignored the fact that the re-assessment order framed u/s. 148 duly complied with the decision of the Hon’ble Apex Court in the case of G K N Driveshafts (India) Ltd. 3. The order of the Ld. CIT(A) may be vacated and the assessing officer be restored. 4. The appellant craves leave to add, alter amend and modify any of the above grounds of appeal.”

The brief facts of the case as emanating from records are: The assessee firm is engaged in construction of buildings and development of housing projects. A search action u/s. 132 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) was carried out on the assessee on 11- 01-2008. Notice u/s. 153A of the Act was issued to the assessee on 29-09- 2008 for assessment years 2008-09 and 2009-10. In reply to notice the assessee filed its return of income claiming deduction u/s. 80IB(10) of the Act in both the assessment years. The assessments for assessment years 2008-09 and 2009-10 were completed u/s. 153A r.w.s. 143(3) of the Act on 31-12-2009 allowing assessee’s claim of deduction u/s. 80IB(10) of the Act. Thereafter, second search was conducted on the assessee on 07-09-2011. The case of the assessee was reopened u/s. 147 of the Act. In response to notice u/s. 148, the assessee vide letter dated 30-03-2013 declared the

Shri Achal Sharma representing the Department submitted that the Commissioner of Income Tax (Appeals) has erred in holding that the Assessing Officer has not disposed of objections filed by the assessee against reasons recorded for reopening in assessment years 2008-09 and 2009-10. The Assessing Officer has considered the objections filed by the assessee and vide order dated 21-03-2014 has disposed of the same before passing the assessment orders. The Commissioner of Income Tax (Appeals) has wrongly assumed that the Assessing Officer has not disposed of the objections filed by the assessee. The Assessing Officer before

On the other hand Shri Nikhil Pathak appearing on behalf of the assessee fairly admitted that the objections filed by the assessee against reasons recorded for reopening were disposed of by the Assessing Officer vide separate order dated 21-03-2014. The ld. AR contended that the Assessing Officer has violated the time line set out by the Hon’ble Bombay High Court in the case of Asian Paints Ltd. Vs. Deputy Commissioner of Income Tax & Anr. reported as 296 ITR 90 in passing the assessment orders. The ld. AR submitted that the notice u/s. 148 was issued to the assessee on 22-03-2013 for the impugned assessment years. The assessee vide letter dated 30-03-2013 declared the income as was returned by the assessee in response to notice u/s. 153A. The assessee sought reasons for reopening of the assessment vide letter dated 30-03-2013. The same were supplied to the assessee on 26-08-2013. The assessee filed objections against reopening of the assessment on 10-09-2013 and vide order dated 21-03-2014 the Assessing Officer disposed of the objections raised by the assessee against reopening of assessment. The order disposing of the objections was served on the assessee on 25-03-2014. On the very next day i.e. 26-03-2014 the Assessing Officer passed the assessment order. The ld. AR submitted that the Hon’ble Jurisdictional High Court in the case of Asian Paints Ltd. Vs. Deputy Commissioner of Income Tax & Anr. (supra) has held that if the Assessing Officer does not accept the objections filed by the assessee, he shall not proceed further in the matter within a period of four weeks from the date of service of the order on objections. The Hon’ble High Court has allowed the window of four weeks time to the

We have heard the submissions made by representatives of rival sides and have perused the orders of authorities below. The Revenue in appeal for both the assessment years has assailed the action of Commissioner of Income Tax (Appeals) in holding the reassessment proceedings as bad in law on the ground that the objections filed by the assessee against reopening are not disposed of. From the perusal of documents on record we observe that the Commissioner of Income Tax (Appeals) has failed to take note of the fact that the objections filed by the assessee against reopening of assessment u/s. 147 were disposed of by the Assessing Officer vide order dated 21-03-2014. Therefore, we are of considered view that the reason given by the Commissioner of Income Tax (Appeals) for setting aside the assessment orders is against the facts.

However, we observe that the Assessing Officer has violated the time line laid down by the Hon’ble Jurisdictional High Court in passing the assessment orders. Before proceeding further it would be relevant to have glance at the date and events necessary for the adjudication of the issue in hand :

The Hon’ble Supreme Court of India in the case of GKN Driveshafts (India) Ltd. Vs. Income Tax Officer & Ors. (supra) has held that when a notice u/s. 148 of the Act is issued, the proper course of action for the assessee is to file return and if he so desires seek reasons for issuing notice. The Assessing Officer is duty bound to furnish reasons within 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.

In the present case, we observe that the assessee, as well as the Assessing Officer have complied with the necessary course as set out by the Hon’ble Apex Court in performing their respective parts starting from issuance of notice u/s. 148 to disposal of reasons. However, we observe that the Assessing Officer has violated the directions of Hon’ble Jurisdictional High Court in the case of Asian Paints Ltd. Vs. Deputy Commissioner of Income Tax & Anr. (supra) in not allowing four weeks time to the assessee before passing the assessment order after rejecting the objections. The time line set out by the Hon’ble Bombay High Court in

In the present case we observe that objections against reopening were disposed of by the Assessing Officer on 21-03-2014. The said order was served on the assessee on 25-03-2014. The Assessing Officer passed the assessment order on 26-03-2014 i.e. on the very next day of service of

In the result, both the appeals by the Revenue are dismissed.