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Income Tax Appellate Tribunal, “A” BENCH, PUNE
Before: SHRI D. KARUNAKARA RAO, AM & SHRI VIKAS AWASTHY, JM
आदेश / ORDER
PER VIKAS AWASTHY, JM :
This appeal by the Revenue is directed against the order of Commissioner of Income Tax (Appeals)-12, Pune dated 31-08-2015 for the assessment year 2009-10.
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The facts germane to the present appeal are: The assessee is a part of Bhutada Group of Latur, wherein search and seizure action u/s. 132 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) was carried out by the Department on 28-08-2008. Consequent to the search, assessment was completed for the impugned assessment year on 31-12- 2010. During the course of assessment the Assessing Officer raised doubt over the valuation of factory building. The Assessing Officer made reference to the DVO u/s. 142A of the Act for valuation. Since, the Assessing Officer had not received DVO’s report and the assessment was near time barring, the Assessing Officer finalized the assessment on 31-12-2010. The Assessing Officer received DVO’s report on 29-07-2011 determining the value of building at Rs.2,37,30,000/-, as against Rs.36,98,840/- declared by the assessee. The Assessing Officer issued notice u/s. 148 for reopening the assessment. In reassessment proceedings the Assessing Officer made addition of Rs.2,00,31,160/- on account of difference in the value of property declared by assessee and the value determined by DVO. Aggrieved by the assessment order dated 30- 03-2014 passed u/s. 143(3) r.w.s. 147 of the Act, the assessee filed appeal before the Commissioner of Income Tax (Appeals). Apart from challenging addition on merits, the assessee raised objection against reassessment proceedings initiated by the Assessing Officer without supplying copy of reasons recorded for reopening assessment and without issuing notice u/s. 143(2) of the Act.
The Commissioner of Income Tax (Appeals) held the reassessment order to be null and void as the Assessing Officer failed : (i) To supply copy of reasons recorded for reopening the assessment,
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(ii) To issue notice u/s. 143(2) after appellant had filed letter that original return may be treated as return filed in response to notice u/s. 148, (iii) To bring any tangible material on record to show that any construction was carried out during FY 2008-09 before making reference u/s. 142A of the Act.
Now, the Revenue is in appeal before the Tribunal against the findings of Commissioner of Income Tax (Appeals).
Shri Nikhil Pathak appearing on behalf of the assessee submitted at the outset that the facts of the present case are similar to the facts of the group concern M/s. Kirti Agrovet Ltd. The ld. AR pointed that this fact has been endorsed by the Commissioner of Income Tax (Appeals) in para 6 of the impugned order. The Commissioner of Income Tax (Appeals) in the case of M/s. Kirti Agrovet Ltd. held reassessment proceedings to be invalid as the Assessing Officer failed to supply the copy of reasons recorded for reopening the assessment, reassessment proceedings were carried out without issuing notice u/s. 143(2) and there was no tangible material to reopen assessment. The Department filed appeal against the order of Commissioner of Income Tax (Appeals) in ITA No. 1029/PUN/2015 for assessment year 2009-10. The Tribunal dismissed the appeal of Department vide order dated 26-05-2017. The ld. AR furnished the copy of Tribunal order in the case of Asstt. Commissioner of Income Tax Vs. M/s. Kirti Agrovet Ltd. in ITA No. 1029/PUN/2015 for assessment year 2009-10 decided on 26-05-2017.
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Ajay Modi representing the Department vehemently defended the action of Assessing Officer in reopening the assessment u/s. 147, as well as the assessment order.
We have heard the submissions made by representatives of rival sides and have perused the orders of authorities below. We have also considered the decision of Co-ordinate Bench in the case of Asstt. Commissioner of Income Tax Vs. M/s. Kirti Agrovet Ltd. (supra). From perusal of impugned order it is unambiguously clear that the factual matrix of both the cases i.e. the present assessee and M/s. Kirti Agrovet Ltd. is similar. The Commissioner of Income Tax (Appeals) in both the cases has held reassessment proceedings invalid for similar reasons. The Co-ordinate Bench of the Tribunal has upheld the findings of Commissioner of Income Tax (Appeals) in the case of Asstt. Commissioner of Income Tax Vs. M/s. Kirti Agrovet Ltd. (supra) by observing as under : “6. We have heard the submissions made by the representatives of rival sides and have perused the orders of the authorities below. We have also considered the decisions on which the ld. AR of the assessee has placed reliance to support his submissions. Reassessment proceedings have been initiated against the assessee on the basis of DVO’s report. Admittedly, the Assessing Officer has not provided reasons for reopening the assessment before initiating assessment proceedings. The assessee vide letter dated 23- 04-2013 requested Assessing Officer to provide a copy of reasons recorded for issuance of notice u/s. 148 of the Act. Ostensibly, the reasons were provided to the assessee on 09-09-2014 after the passing of reassessment order on 31-03-2014. It is a well settled law that the Assessing Officer is duty bound to provide a copy of the reasons for reopening to the assessee within a reasonable time. On receipt of reasons, the assessee has right to file objections against issuance of notice and the Assessing Officer is bound to dispose of the same by passing a speaking order [GKN Driveshaft Ltd. Vs. ITO (supra)]. 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 has further directed that minimum four weeks time should be granted to the assessee after service of order deciding objections before the Assessing Officer proceeds with the assessment. 7. The Hon’ble Bombay High Court in a recent decision rendered in the case of KSS Petron Private Ltd. Vs. The Assistant Commissioner of Income Tax in Income Tax Appeal No. 224 of 2014 decided on 03-10-2016 has set
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aside reassessment proceedings were the Assessing Officer has not followed the proper procedure as mandated for disposing of the objections of the assessee. The Hon’ble Court held :
“8 We note that once the impugned order finds the Assessment Order is without jurisdiction as the law laid down by the Apex Court in GKN Driveshafts (supra) has not been followed, then there is no reason to restore the issue to the Assessing Office to pass a further/fresh order. If this is permitted, it would give a licence to the Assessing Officer to pass orders on re-opening notice, without jurisdiction (without compliance of the law in accordance with the procedure, yet the only consequence, would be that in appeal, it would be restored to the Assessing Officer for fresh adjudication after following the due procedure. This would lead to unnecessary harassment of the Assessee by reviving stale/ old matters.”
Similar view has been taken by the Hon’ble Jurisdictional High Court in the case of Commissioner of Income Tax Vs. Trend Electronics (supra). The Hon’ble Court held :
“8. ..........It is axiomatic that power to reopen a completed assessment under the Act is an exceptional power and whenever revenue seeks to exercise such power, they must strictly comply with the prerequisite conditions viz. Reopening of reasons to indicate that the Assessing Officer had reason to believe that income chargeable to tax has escaped assessment which would warrant the reopening of an assessment. These recorded reasons as laid down by the Apex Court must be furnished to the assessee when sought for so as to enable the assessee to object to the same before the Assessing Officer. Thus in the absence of reasons being furnished, when sought for would make an order passed on reassessment bad in law. The recording of reasons (which has been done in this case) and furnishing of the same has to be strictly complied with as it is a jurisdictional issue. This requirement is very salutary as it not only ensures reopening notices are not lightly issued.”
Thus, in view of the fact that the Assessing Officer has failed to provide reasons for reopening and usurped the opportunity of assessee to file objections, the Commissioner of Income Tax (Appeals) has rightly held reopening as invalid.
The second reason given by the Commissioner of Income Tax (Appeals) for holding reassessment proceedings as invalid is framing of assessment order without issuing notice u/s. 143(2) of the Act. Notice u/s. 143(2) is prerequisite for carrying out scrutiny assessment proceedings. The Co-ordinate Bench of the Tribunal in the case of Precision Camshafts Ltd. Vs. The Asstt. Commissioner of Income Tax (supra) under similar circumstances, wherein under reassessment proceedings notice u/s. 143(2) was not issued to the assessee, the Tribunal held reassessment proceedings to be without jurisdiction. The Co-ordinate Bench while holding so placed reliance on the decision rendered in the case of ACIT Vs. Geno Pharmaceuticals Ltd. (2013)
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32 taxmann.com 162 (Bom). The relevant extract of the findings of the Tribunal are as under :
“11. The Hon’ble Bombay High Court in ACIT Vs. Geno Pharmaceuticals Ltd. (supra) has upheld the order of Tribunal in holding that the notice issued under section 143(2) of the Act is mandatory and in the absence of such service, the Assessing Officer cannot proceed to make an enquiry on return filed in compliance with notice issued under section 148 of the Act. In the facts of the case before the Hon’ble Bombay High Court, admittedly, no notice under section 143(2) of the Act had been issued while making the assessment under section 143(3) r.w.s. 147 of the Act. The Tribunal in the said case had relied on the judgment of Apex Court in R. Dalmia Vs. CIT (1999) 236 ITR 480 (SC) to conclude that the issue of notice under section 143(2) of the Act was mandatory. The Tribunal following the said judgment of the Apex Court had held that the notice under section 143(2) of the Act was mandatory and in the absence of said service, the Assessing Officer could not proceed to make an enquiry on the return filed in compliance with the notice issued under section 148 of the Act. The order of Tribunal was confirmed by the Hon’ble High Court.
Applying the said ratio to the facts of the present case and following the proposition laid down by the jurisdictional Hon’ble High Court in ACIT Vs. Geno Pharmaceuticals Ltd. (supra), we hold that in the absence of any notice being issued under section 143(2) of the Act after the reassessment proceedings are initiated against the assessee under section 148 of the Act and the assessee has filed the return of income or filed a letter stating that the return of income filed by it should be treated as filed in response to notice under section 148 of the Act, then reassessment order is vitiated. Once no notice under section 143(2) of the Act is issued to the assessee, then the reassessment order passed is null and void, since the issue of notice under section 143(2) of the Act in reassessment proceedings under section 147 / 148 of the Act is mandatory. We hold that reassessment order passed in the present case under section 143(3) r.w.s. 147 of the Act is null and void. We find no merit in the opinion of CIT(A) that where the assessee has only filed letter stating that original return of income filed by it should be treated as filed in response to notice under section 148 of the Act implies that no return of income has been filed in response to notice issued under section 148 of the Act, is misplaced. Reversing the order of CIT(A), we hold that the reassessment proceedings completed against the assessee are without any jurisdiction.”
Thus, in view of the facts of the case and the decisions discussed above, we do not find any infirmity in the order of Commissioner of Income Tax (Appeals) in holding reassessment proceedings as invalid and void. The impugned order is upheld and the appeal of the Department is dismissed.”
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Since, the facts in both the cases are identical, following the order of Co-ordinate Bench of the Tribunal, the appeal of Department is dismissed for same reasons. Accordingly, impugned order is upheld and the appeal of Revenue is dismissed.
In the result, the appeal of Revenue is dismissed.
Order pronounced on Friday, the 19th day of January, 2018.
Sd/- Sd/- (डी. करुणाकरा राव/D. Karunakara Rao) (ववकास अवस्थी / Vikas Awasthy) ऱेखा सदस्य / ACCOUNTANT MEMBER न्याययक सदस्य / JUDICIAL MEMBER ऩुणे / Pune; ददनाांक / Dated : 19th January, 2018 RK आदेश की प्रयिलऱवऩ अग्रेवषि / Copy of the Order forwarded to : अऩीऱाथी / The Appellant. 1. प्रत्यथी / The Respondent. 2. आयकर आयुक्त (अऩीऱ) / The CIT(A)-12, Pune 3. 4. The Pr. CIT, Central, Nagpur ववभागीय प्रयतयनधध, आयकर अऩीऱीय अधधकरण, “ए” बेंच, 5. ऩुणे / DR, ITAT, “A” Bench, Pune. गाडड फ़ाइऱ / Guard File. 6. //सत्यावऩत प्रयत // True Copy// आदेशानुसार / BY ORDER,
यनजी सधचव / Private Secretary, आयकर अऩीऱीय अधधकरण, ऩुणे / ITAT, Pune