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Income Tax Appellate Tribunal, DELHI BENCH ‘SMC-3’ : NEW DELHI
Before: SHRI H.S. SIDHUSHRI AMIT JAIN,
Date of hearing : 23-08-2016 Date of Order : 02-09-2016
ORDER
PER H.S. SIDHU, JM
The Assessee has filed the Appeal against the impugned Order dated 12.10.2015 passed by the Ld. CIT(A), Dehradun relevant to assessment year 2005-06.
The grounds raised
by the Assessee read as under:-
1. That in facts and circumstance of the case, the Learned CIT has erred wrongly that the provisions of section 292BB is covered for the A.Y. 2005-06 wherein reasons of recording for reopening the assessment has not been furnished to the appellant even on written demand till the completion of the assessment is bad at law.
2. That in facts and circumstances of the case, CIT(A) has failed to appreciate that the provisions of section 292BB is not retrospective but applicable from A.Y. 2008 - 09 as per ITAT, Delhi Special Bench Judgment in the case of Kuber Tobacco Products.
That in facts and circumstances of the case, framing of the assessment by the ITO without furnishing the reasons for reopening the assessment is not sustainable in law when the appellant has duly asked to furnish the reasons, ignoring the same is arbitrary and illegal.
That in facts and circumstances of the case, the assessee receive the amounts from close friends after withdrawing from the Bank accounts during the A.Y. 2004 - 05 for the construction of the Building, adding back the same in the A.Y. 2005 - 06 is against principal of accounting and law.
That in facts and circumstances of the case, the credit of the amount which has been spent during the A.Y. 2004 - 05 on the Building as admitted by AO in the assessment order may please be given and the addition to that extent may please be reduced.
That the addition to the returned income as sustained by the ld. CIT (A) may please be deleted.
That in fact and circumstance of the case, appellant be permitted to add or delete any grounds of appeal.
3. The brief facts of the case are that the assessee is deriving income from business of civil construction work. The return of income for A.Y. 2005-06 was filed on 16.03.2006 declaring taxable income of Rs. 1,34,120/- and the same was processed u/s 143(1) of I.T. Act, 1961 on 21.03.2006 resulting a refund Rs. 240/-. During the course of assessment proceeding for A.Y.2004-05 which was completed on 02.12.2011, the assessee has filed an affidavit dated 20.10.2011 alongwith written reply that he had purchased a piece-of land jointly with his brother Shri Sachin Jain at Village- Falasu, Pargana-Parwadoon, Teh. Rishikesh,Distt- Dehradunon 05.07.2002 on an investment of Rs. 1,80,500/- and the covered area of said land is 0.436 Hectare. The construction of building was made jointly with his brother during the F.Y.2004-05 and the building was given on lease to Moksh Anand Asharamt (MAA Society) @Rs. 2,000/- per annum. AO observed that on perusal of ITR of the assessee for A.Y.2005-06 shows that the assessee did not declared any investment in construction of building, than the proceedings uls 147 of the I.T.Act have been initiated with the prior approval of joint commissioner of Income Tax, Hardwar Range, Hardwar, and notice u/s 148 dated 19.03.2012 was issued and served upon the assessee. The incumbency has changed and notice uls 142(1) along with a letter dated 14.08.2012 issued to the assessee which was duly served to the assessee on 17.08.2012. Assessee filed written reply dated 27.08.2012, submitted that the return already filed on 16.03.2006 vide receipt no. 8346 may be treated as return of income in response of notice uls 148. The case was selected for scrutiny and notice u/s 143(2), 142(1) along with questionnaire dated 28.08.2012 was issued for 11.09.2012. In response of these notices Assessee’s counsel attended the proceedings from time to time and filed written reply and requisite details. After considering the same, the AO assessed the income of the assessee at Rs. 16,74,120/- by making various addition totaling to Rs. 15,40,000/- vide his order dated 20.3.2013 and passed the assessment order u/s. 147/143(3) of the I.T. Act, 1961.
4. Against the Order of the Ld. AO, assessee appealed before the Ld. CIT(A), who vide impugned order dated 12.10.2015 has partly allowed the the appeal of the assesseee.
5. Aggrieved with the aforesaid order of the Ld. CIT(A), Assessee is in Appeal before the Tribunal.
6. At the time of hearing, Ld. Counsel of the assessee has argued the legal ground challenging the assumption of jurisdiction u/s. 148 of the Act. He stated that AO initiated notice u/s. 148 of the I.T. Act, 1961 on 19.3.2012 and in reply to the same assessee replied vide his letter dated 27.8.2012 stating therein that income tax return dated 16.3.2006 for the assessment year 2005-06 filed vide receipt no. 8337 in Income Tax Ward- 1, Rishikesh may be treated as the return in reply to notice u/s. 148. He submitted that it was also stated in the reply that the copy of record and document and reason for opening of the case u/s. 148 be supplied. He stated that ITO concerned continued with the assessment proceedings without supply any record for reopening the case and / or reason for reopening the case. He stated that since the AO had not complied with the mandatory provisions, therefore, assessment order passed u/s. 147/143(3) dated 20.3.2013 was void abinitio as laid down by the Hon’ble Court of India and the Tribunal. This point was also specifically raised before the CIT(A) and the Ld. CIT(A) vide para no. 20 of his impugned order categorically admits that AO has not supplied the copy of the reasons recorded to the assessee. Ld. Counsel for the assessee stated that non- supply of copy of reasons recorded is contrary to the provisions of law as laid down by the Hon’ble Apex Court in the case of GNK Driveshafts (India) ltd. vs. ITO reported in 259 ITR 19 (SC). Therefore, he requested that by following the decision of the Hon’ble Apex Court, as aforesaid, the reassessment may be quashed being bad in law.
6.1 Ld. Counsel of the assessee further stated Learned CIT(A) has erred wrongly in applying the provisions of 292BB in the A.Y. 2005-06 though as per the ITAT, Delhi Special Bench Judgment in the case of Kuber Tobacco Products the provisions of section 292BB is not retrospective but are applicable only from the A.Y. 2008-09. Hence, on this account also both the authorities are erred and accordingly, their orders deserve to be quashed.
7. On the contrary, Ld. DR relied upon the order passed by the CIT(A) and stated that he has passed a well reasoned order, which needs to be upheld.
I have heard both the parties and perused the relevant records available with us, especially the orders of the revenue authorities and the case law cited by the assessee’s counsel on the issue in dispute. In my view, it is very much necessary to reproduce the contents of the reply dated 27.8.2012 of the assessee in response to the notice issued u/s. 148 of the I .T. Act, 1961 dated 19.3.2012 submitted before the Assessing Officer.
8.1 In response to the notice dated 19.3.2012, assessee filed his reply dated 27.8.2012 in Hindi Language, the English version thereof is as under:-
“Sewa Mai The Income Tax Officer, Ward-1, Rishikesh.
Subject: Letter Aayakar Adhikari/Ward 1/RSK/148/2012-13/14.08.2012 Dear Sir, In reference to the letter regarding Income Tax return dated 16.03.2006 for the assessment year 2005-06 receipts no. 8337 Income Tax ward-1 Rishikesh was deposited and the xerox copy is enclosed herewith wherein Income of Rs. 1,34,120/- is declared the same may be treated in reply to notice u/s. 148.
It is also requested the assessment of the tax payer which has been opened, the copy of record & document be supplied and reason for open of the case u/ s 148. Please reply the same.
Sd/- Amit Jain PAN No. ADRPJ3989P” 8.2 For the sake of clarity, we are further reproducing the relevant portion of para 20 of the impugned order passed by the Ld. CIT(A) wherein the Ld. CIT(A) has categorically mentioned that the reasons recorded for reopening of the case were not supplied to the Assessee.
“……….Thus, it is quite clear that the Assessing Officer did not supply the assessee with the copy of the reasons on the basis of which the case was reopened. On the face of it, the case of the assessee would seem to be covered by the judgments cited by the counsel ………….”
8.3 After carefully going through all the documents available with me, especially the reply to the notice u/s. 148 of the I.T. Act and the order of the Hon’ble Apex Court in the case of GNK Driveshafts (India) ltd. vs. ITO reported in 259 ITR 19 (SC) as cited by the ld. Counsel of the Assessee, I find that the Hon’ble Apex Court in the case of GKN Driveshafts (India) Ltd. vs. ITO 259 ITR 19 (2003) has held that “it is clear that the completion of assessment/re-assessment without furnishing the reasons recorded by the AO for initiation of proceedings under section 147/148 of the Act is not sustainable in law as it is incumbent on the AO to supply them within reasonable time. I note that on the anvil of this judgment, on the request of the Assessee, the AO is bound to furnish the reasons recorded for initiation of proceedings under section 147 of the Act within a reasonable period of time so that the assessee could file its objections thereto and the AO was to dispose of the same by passing a speaking order thereon, which the AO has not done. I also note that even as per the rules of natural justice, the assessee is entitled to know the reasons on the basis of which the AO has formed an opinion that income assessable to tax has escaped assessment. The furnishing of reasons to the assessee is to enable/facilitate it to present its defence and objections to the initiation of proceedings under section 147/148 of the Act. Therefore, I am of the considered opinion that there was no justifiable reasons for the AO to deprive the assessee of the recorded reasons by him for initiating proceedings under section 147/148 of the Act. Therefore, in my considered opinion, the reopening in question is not sustainable in the eyes of law, hence, the same is quashed.
8.4 Even otherwise, I note that Ld. CIT(A) has erred in applying the provisions of 292BB in the instant A.Y. 2005-06, however, in view of the ITAT, Delhi Special Bench Judgment in the case of Kuber Tobacco Products (P) Ltd. reported in (2009) 120 TTJ 0577 (SB), the provisions of section 292BB is not retrospective and the same are applicable only from the A.Y. 2008-09. 8.5 In the background of the aforesaid discussions and the precedents relied upon, as aforesaid, I allow the assessee’s appeal on legality aspect without proceeding to adjudicate on merits by quashing the orders of the authorities below.
In the result, Assessee’s appeal is allowed.
Order pronounced in Open Court on this 02-09-2016.