M/S T.V. VENKATASWAMY & CO,BANGALORE vs. ITO, BANGALORE

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ITA 1374/BANG/2013Status: DisposedITAT Bangalore23 December 2016AY 2003-045 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the failure of the AO to dispose of the assessee's objections by a separate order before framing the reassessment order invalidates the reassessment proceedings. Consequently, the issue on merits becomes academic.

What were the facts?

The assessee filed objections regarding the validity of reassessment proceedings before the Assessing Officer (AO). The AO did not pass a separate order disposing of these objections before framing the reassessment order.

What were the issues?

Whether reassessment proceedings are valid when the AO fails to dispose of the assessee's objections by a separate order prior to passing the reassessment order.

Which sections of the Income-tax Act were involved?

Section 147,Section 148

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Cases cited in this judgment(2)Show list

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

Before: SHRI A.K.GARODIA, AM (SMC)

For Appellant: Ms. Preethi Patil, Advocate
For Respondent: Shri Kamaladhar, Advocate

This is assessee’s appeal directed against the order of the ld. CIT(A), LTU, Bangalore dated 28-06-2013 for the assessment year 2003-04.

2.

The assessee has raised the following grounds:

“1. The order of the ld. CIT(A) is opposed to law and facts of the case.

2. The ld. CIT(A) was in error in holding that the order of the assessment is valid in spite of the fact that the objections filed to the assumption of jurisdiction were not disposed of by a separate order as required by the decision of the Supreme Court in 259 ITR 19 read in the light of various High Court judgments.

3.

It should have been appreciated that a separate order disposing of the objections prior to the completion of the assessment should have been passed to clothe the assessment order with validity.

4. Mere participation in the assessment proceedings even though the AO has not disposed of the objections through a separate order cannot confer jurisdiction to make a valid assessment as per the decision in 259 ITR 19 etc.

5. Even otherwise having regard to the recording there was no independent application of mind to arrive at a reasonable belief that any income had escaped assessment and hence proceedings u/s 147 are invalid.

6.

The ld.CIT was in error after accepting the correctness of the decision in 317 ITR (AT) in deciding the issue against the appellant regarding the manner of making assessment.

7.

The ld. CIT wholly misdirected himself in applying the provisions which came into force on 01-04-2004 while deciding the appeal in this year.

8.

The ld. CIT was in error in stating that the assessee had not followed the method of computation as per an AOP and in stating that there can be no share from an AOP under the IT Act and the very concept of AOP presumes indefiniteness in the shares. In fact such shares were determinate as noticed by the department itself by the earlier assessment years.

9.

No part of the income from property was liable to tax in the hands of the firm as such having regard to the provisions of Sec.185 of the Act and it was correctly distributed among the partners by the assessee as per the profit sharing proportion consistently followed and adopted by the department after the last reconstitution with effect from 12-09-1995 for various years.

10.

The CIT was in error in stating that the return was filed in the status of a registered forum.

11.

The appellant craves for leave to add to delete from or amend the grounds of appeal”.

3. Regarding the issue raised by the assessee as per ground no.1 to 5 in respect of validity of re-assessment proceedings, it was submitted by the ld. AR of the assessee that on page-36 -42 of the paper book is the letter filed by the assessee before the AO on 29-06-2015 in which the assessee has raised various objections regarding the validity of re-assessment proceedings. She submitted that no separate order was passed by the AO to dispose of these objections as per the judgment of the Hon’ble Apex Court rendered in the case of GKN Drive Shaft (Ind.) Ltd. as reported in 259 ITR

19. She further submitted that under these facts, the re-assessment order framed by the AO is to be quashed as per the judgment of the Hon’ble Karnataka High Court rendered in the case of M/s Kothari Metals Vs ITO 377 ITR 581(Kar.). Regarding the issue on merit, she reiterated the same contentions which were raised before the ld. CIT(A).

4.

The ld. DR of the revenue supported the orders of the authorities below.

5.

I have considered the rival submissions. First, I decide the validity of the re-assessment proceedings because, if it is found that the re- assessment order passed by the AO is not legally valid then, the issue on merit becomes academic. On this aspect i.e. on the aspect of validity of re- assessment proceedings, I find that the objections were raised by the assessee before the AO regarding validity of the re-assessment proceedings.

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