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Income Tax Appellate Tribunal, SMC “A” BENCH : BANGALORE
Before: SHRI VIJAY PAL RAO
IN THE INCOME TAX APPELLATE TRIBUNAL SMC “A” BENCH : BANGALORE
BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER
ITA Nos.4, 5, 6 & 8/Bang/2015 Assessment years : 2006-07 & 2008-09
M/s. Aman Gold Plaza, Vs. The Income Tax Officer, J.M. Building, Main Road, Ward 1, Puttur – 574 201. Puttur. PAN: AAKFA 8963C APPELLANT RESPONDENT
Appellant by : Ms. Vanaja, Advocate & Shri Srinivas Kamath, CA Respondent by : Ms. Renuka Devi, Jt. CIT(DR)
Date of hearing : 18.07.2016 Date of Pronouncement : 27.07.2016 O R D E R These four appeals by the assessee are directed against the respective orders of the CIT(Appeals) arising from the reassessment order for the AYs 2006-07 and 2008-09 and consequential penalty u/s. 271A & 271B B for the AY 2006-07.
First the appeals in ITA Nos. 4 & 8/Bang/2015 arising against the reassessment order are taken up. The assessee has raised various grounds in these appeals, however, at the time of hearing, the assessee has also filed an additional ground, which reads as under:-
ITA Nos.4 to 6 & 8/Bang/2015 Page 2 of 6
“On the facts and circumstances of case, reasons recorded u/s. 148 of the Act is not furnished and is not according to the provisions of the Act and therefore Assessment Order is invalid and is liable to be quashed.”
I have heard the ld. AR as well as the ld. DR and considered the relevant material on record on the issue of admission of additional ground. As it is clear from the issue raised in the additional ground that the assessee has challenged the validity of section 148 notice issued by the AO and non-furnishing of the reasons recorded by the AO, despite a specific request made by the assessee.
Since the issue in the additional ground is purely legal in nature and goes to the root of the matter, therefore I find that this issue does not require any investigation of new facts or the existing facts on record. Accordingly, in view of the judgment of the Hon’ble Supreme Court in the case of National Thermal Power Co. Ltd. v. CIT, 229 ITR 383 (SC), the additional ground raised by the assessee is admitted for adjudication.
The ld. AR of the assessee has submitted that during the pendency of the appeals before the CIT(Appeals), the assessee vide its letter dated 9.12.2013 has requested the AO to furnish the reasons recorded for initiating proceedings u/s. 148 of the Act. The ld. AR of the assessee has submitted that till date the AO has not furnished the reasons recorded for reopening of the assessment and therefore, the assessee has not been given an opportunity to raise its objection against the notice issued u/s.
ITA Nos.4 to 6 & 8/Bang/2015 Page 3 of 6
Thus, the ld. AR of the assessee has contended that the
reassessment for these two assessment years is not sustainable in law, as
the AO has not furnished the reasons recorded for reopening of the
assessment of the assessee.
On the other hand, the ld. DR has submitted that the assessee
never raised any issue of validity of reopening either before the AO or
before the CIT(Appeals). The assessee has for the first time raised this
issue before this Tribunal and that too by way of this additional ground,
therefore, when the assessee has not raised any objection against the
validity of the section 148 notice as well as reassessment, it cannot be
permitted to raise such an issue at this stage. Further, as this issue is not
emanating from the orders of the authorities below, therefore it cannot be
adjudicated at this stage.
Having considered the rival submissions as well as the relevant
material on record, I find that the assessee requested for supply of reasons
recorded vide letter dated 9.12.2013, however, it has been stated at Bar by
the ld. AR for the assessee that till date, the AO has not supplied the
reasons recorded for reopening of the assessment. Therefore, the
assessee was not given an opportunity to raise objection against the notice
issued u/s. 148 as well as consequential validity of the reassessment.
Though the assessee did not raise the validity of notice u/s. 148, however,
I find that prior to 9.12.2013 the assessee did not even request the AO for
ITA Nos.4 to 6 & 8/Bang/2015 Page 4 of 6
furnishing of the reasons recorded for reopening, therefore, the authorities
below had no occasion to consider the issue of validity of notice issued u/s.
148 and consequential validity of the reassessment. Since this issue is
purely legal in nature and goes to the root of the matter, therefore, once the
assessee requested for supply of reasons, the AO is duty bound to furnish
the same. As the reasons have not been furnished to the assessee,
therefore the assessee was deprived from raising the issue of validity of
notice u/s. 148. It is settled proposition of law as laid down by the Hon’ble Supreme Court in the case of G.K.N. Driveshafts (India) Ltd. v. ITO, 259 ITR 19 (SC), that the AO is duty bound to supply the reasons recorded for
reopening of the assessment by issuing a notice u/s. 148 of the Act which
was sought for by the assessee. It is also settled proposition of law that
after the reasons supplied by the AO, the assessee has raised objections
against the notice u/s. 148, and the AO is required to first decide the
objections raised by the assessee against the notice issued u/s. 148 and
only after disposing of the objections raised by the assessee against the
notice u/s. 148, the AO can proceed to complete the reassessment u/s. 147
of the Act. Therefore, it is a mandatory requirement that the objections
raised by the assessee are to be disposed of first and thereafter the
assessment/reassessment has to be completed by the AO.
In the case in hand, since the reasons have not been supplied to the
assessee till date, therefore the Assessing Officer is directed to supply the
reasons recorded for reopening of the assessment for the AYs 2006-07
ITA Nos.4 to 6 & 8/Bang/2015 Page 5 of 6
and 2008-09 and after receiving the reasons supplied by the AO, the
assessee is required to file its objections against the notice u/s. 148 within
a period of one month. The AO is therefore required to first dispose of the
objections raised by the assessee against the notice u/s. 148 and only after
disposing of the objections of the assessee on the reasons recorded by a
speaking order, the AO can proceed to complete the assessment/
reassessment. Accordingly, in the facts and circumstances of the case and
in the interest of justice, the impugned orders of the authorities below for
these two assessment years are set aside to the record of the Assessing
Officer for first disposing of the objections to be raised by the assessee on
receipt of the reasons recorded by the AO for reopening of the
assessments and then complete the assessment/reassessment.
ITA Nos.6 & 7/Bang/2015 are appeals arising from the levy of
interest u/s. 271B and 271A respectively for the AY 2006-07. I have heard
the ld. AR as well as the ld. DR and considered the relevant material on
record. Since the penalty u/s. 271A/271B are consequential to the
reassessment framed by the AO and in view of the assessments for these
two assessment years set aside to the record of the AO, the matter of levy
of penalty being consequential in nature, these appeals are also set aside
to the record of the AO for taking proper steps as per the outcome of the
set aside proceedings.
ITA Nos.4 to 6 & 8/Bang/2015 Page 6 of 6
In the result, all the four appeals are allowed for statistical purposes.
Pronounced in the open court on this 27th day of July, 2016.
Sd/-
(VIJYA PAL RAO ) Judicial Member Bangalore, Dated, the 27th July, 2016.
/D S/
Copy to:
Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR, ITAT, Bangalore. 6. Guard file
By order
Assistant Registrar, ITAT, Bangalore.