M/S AMAN GOLD PLAZA,PUTTUR vs. ITO, PUTTUR

First the appeals in & 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:-

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.

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.

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 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. 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.

In the result, all the four appeals are allowed for statistical purposes.