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Income Tax Appellate Tribunal, BANGALORE BENCH “ C ”
Before: SHRI VIJAYPAL RAO & SHRI JASON P. BOAZ
IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH “ C ” BEFORE SHRI VIJAYPAL RAO, JUDICIAL MEMBER AND SHRI JASON P. BOAZ, ACCOUNTANT MEMBER I.T.A. No.926/Bang/2014 (Assessment Year : 2004-05) Asst. Commissioner of Income Tax, Vs. Shri M.R. Seetharam (Ind.) Circle 6(1), Bangalore. Gokula House, Gokula Mathikere, Bangalore-560 054 PAN AGDPS 5886M Appellant Respondent. C.O. No. 74/Bang/2015 (In I.T.A. No.926/Bang/2014) (Assessment Year : 2004-05) Shri M.R. Seetharam (Ind.) Vs. Asst. Commissioner of Income Tax, Bangalore-560 054 Circle 6(1), Bangalore. Cross Objector Respondent. I.T.A. No.927/Bang/2014 (Assessment Year : 2004-05) Asst. Commissioner of Income Tax, Vs. Shri M.R. Seetharam (HUF.) Circle 6(1), Bangalore. Gokula House, Gokula Mathikere, Bangalore-560 054 PAN AAHHS 7342J Appellant Respondent.
C.O. No. 75/Bang/2015 (In I.T.A. No.927/Bang/2014) (Assessment Year : 2004-05) Shri M.R. Seetharam (HUF) Vs. Asst. Commissioner of Income Tax, Bangalore-560 054 Circle 6(1), Bangalore. Cross Objector Respondent. Assessee / Cross Objector By : Shri V. Chandrashekar, Advocate. Respondent By : Shri Anurag Sahay, CIT-III (D.R)
2 ITA Nos.926 & 927/Bang/2014 & C.O. Nos.74 & 75/Bang/2015 Date of Hearing : 3.9.2015. Date of Pronouncement : 9.10.2015. O R D E R Per Bench : These appeals by Revenue are directed against the order of the Commissioner of Income Tax (Appeals)-II, Bangalore dt.24.03.2014 in respect of Sri M.R. Seetharam (Indl) and M.R. Seetharam, HUF for Assessment Year 2004-05. The assessee's have also preferred Cross Objections (‘C.O.’ in short) in respect of the aforesaid orders of the CIT (Appeals) – II, Bangalore. Since these appeals and C.Os were heard together and are inter- connected, they are being disposed off hereunder, by way of this order. Revenue’s appeals for Assessment Year 2004-05 in the case of Mr. M.R. Seetharam – Individual in ITA No.926/Bang/2014 and Assessee's C.O. No.74/Bang/2015. 2. The facts of the case, briefly, are as under :- 2.1 The assessee, an individual engaged in real estate, filed his return for Assessment Year 2004-05 on 12.1.2005 declaring total income of Rs.5,68,81,556 and agricultural income of Rs.2,00,000. The return was processed under Section 143(1) of the Income Tax Act, 1961 (in short 'the Act') and the case was taken up for scrutiny. The assessment was completed under Section 143(3) of the Act vide order dt.22.12.2006, wherein the income of the assessee was determined at Rs.6,74,73,557. 2.2 A search under Section 132 of the Act was conducted in the case of one Sri Sohanraj as well as M/s. Mehta Associates, Bangalore on 10.10.2009 wherein it was found
3 ITA Nos.926 & 927/Bang/2014 & C.O. Nos.74 & 75/Bang/2015 that the assessee was a partner in the above firm, which was the sole C&F Agent of Manikchand Gutka for the State of Karnataka. As per information gathered in the search of the Sohanraj Group of cases, the assessee in the case on hand had received Rs.7,16,22,000 in cash from these parties in the period relevant to Assessment Year 2004-05. In this regard, the Assessing Officer initiated re-assessment proceedings under Section 147 of the Act in order to bring to tax in the assessee's hands the amount of Rs.7,16,22,000 which had not been disclosed by the assessee and Notice under Section 148 of the Act was issued to the assessee on 31.3.2011 after obtaining the approval of the CIT-III, Bangalore. 2.3 A perusal of the impugned order of the learned CIT (Appeals) indicates that in response to the notice issued under Section 148 of the Act on 31.3.2011, the assessee vide letter dt.26.4.2011 requested that the original return filed under Section 139(1) for Assessment Year 2004-05 be treated as the return of income filed in response to the notice issued for Assessment Year 2004-05 and requested that he be provided / furnished with a copy of the reasons recorded by the Assessing Officer for initiating re- assessment proceedings under Section 147 and issue of notice under Section 148 of the Act. However, from the records before us, it appears that the assessee was not provided with copy of the reasons recorded by the Assessing Officer for initiating re-assessment proceedings under Section 147 of the Act. The Assessing Officer concluded the re- assessment proceedings under Section 143(3) rws 147 of the Act vide order dt.30.12.2011
4 ITA Nos.926 & 927/Bang/2014 & C.O. Nos.74 & 75/Bang/2015 wherein the income of the assessee was determined at Rs.12,87,03,560; which included an addition of the said amount of Rs.7,16,22,000 under Section 69A/69 of the Act. 3. Aggrieved by the order of assessment dt.30.12.2011 for Assessment Year 2004-05, the assessee preferred an appeal before the CIT (Appeals) – II, Bangalore, challenging the said re-assessment order on various grounds, including challenging the validity of the said re-assessment order passed without supplying the assessee the reasons recorded by the Assessing Officer for initiation of re-assessment proceedings which were sought for by the assessee. The learned CIT (Appeals) allowed the assessee's appeal, by cancelling the re-assessment order passed under Section 143(3) rws 147 of the Act dt.30.12.2011 holding the same to be bad in law as the same was passed without supply of copy of the reasons recorded by the Assessing Officer, for initiating re-assessment proceedings under Section 147 of the Act, to the assessee which were sought by him vide letter dt.26.11.2011. This fact of non-supply of copy of reasons recorded is also evident from the assessee's letter filed on 23.12.2011 before the Assessing Officer. In coming to the finding she did, the learned CIT (Appeals), inter alia, relied on the following decisions of the co-ordinate bench in the cases of :- (i) Synopsis International Ltd. V DDIT in ITA No.549/Bang/2011 dt.10.12.2012; and (ii) Suez Tractabel SA V DDIT in ITA No.656/Bang/2009 dt.7.6.2013. 4.1 Aggrieved by the order of the CIT (Appeals) – II, Bangalore dt.24.3.2014 for Assessment Year 2004-05, Revenue has preferred this appeal raising the following grounds :-
5 ITA Nos.926 & 927/Bang/2014 & C.O. Nos.74 & 75/Bang/2015 “ 1. The order of the learned CIT (Appeals) is opposed to law and facts of the case. 2. On the facts and in the circumstances of the case the learned CIT (Appeals) erred in holding that the reassessment is bad in law because the assessee was not formally provided with the reason of reopening despite the fact that the assessee was very well aware of the reasons of reopening throughout the reassessment proceedings and the assessee had appeared & co-operated in the reassessment proceedings and the same cannot be held bad in law as per the provisions of section 292BB. 3. For these and other grounds that may be urged at the time of hearing, it is prayed that the order of the CIT (Appeals) in so far as it relates to the above grounds may be reversed and that of the Assessing Officer may be restored. 4, The appellant craves leave to add, alter, amend and / or delete any of the ground mentioned above.” 4.2 The Grounds at S.Nos.1, 3 & 4 of revenue’s appeal are general in nature and therefore no adjudication is called for thereon. 4.3 In Ground No.2, Revenue challenges the cancellation of the re-assessment order by the learned CIT (Appeals) on the ground that the non-supply of reasons recorded is not fatal by virtue of the provisions of section 292BB of the Act, in view of the fact that the assessee was aware of the reasons for re-opening the assessment and had appeared and co-operated in the re-assessment proceedings. 5. The assessee has filed cross objection, in respect of the impugned order of the CIT (Appeals) – II, Bangalore dt.24.3.2014 for Assessment Year 2004-05, which are as under :-
“ The order of the learned Commissioner of Income-tax [Appeals] in as far as it is against the Respondent / Cross Objector is opposed to law, facts, equity, and weight of evidence and circumstances of the case.
6 ITA Nos.926 & 927/Bang/2014 & C.O. Nos.74 & 75/Bang/2015 2. The order passed by the learned Commissioner of Income-tax [Appeals] is just and proper and the same requires to be upheld under the facts and circumstances of the case.
Without Prejudice to the learned Commissioner of Income-tax [Appeals] failed to adjudicate all the grounds raised by the Respondent / Cross Objector under the facts and circumstances of the case.
Without prejudice the order of re-assessment passed under section 147 of the Act is bad in law and void-ab-intio as the mandatory conditions to invoke the provision of section 147 did not exist and thereby issuing the notice under section 148 was not present under the facts and circumstances of the case.
Without prejudice if at all any reasons are recorded by the learned assessing officer, though the same was not furnished to the Respondent / Cross Objector the said reasons utmost may be considered and regarded as reason to suspect and under no stretch of imagination the same cannot be construed as reason to believe which is a basic ingredient for a valid assumption of re-assessment under the facts and circumstances of the case.
Without prejudice the Respondent / Cross Objector contends that no proper procedure has been followed by the learned assessing officer for issuance of notice under section 148 of the Act, as envisaged in the statute.
Without Prejudice the Respondent / Cross Objector contends that the process initiated and adopted as per section 148 of the Act by the learned assessing officer is bad in law as no proceedings can be initiated under section 148 if the information based on which the assessment is re-opened is pursuant to a search.
Without prejudice the Respondent / Cross Objector contends that no proper procedure has been followed by the learned assessing officer for issuance of a notice under the provisions of section 148 of the Act as envisaged under the statue under the facts and circumstances of the case.
7 ITA Nos.926 & 927/Bang/2014 & C.O. Nos.74 & 75/Bang/2015 9. Without Prejudice the Respondent / Cross objector denies himself liable to be taxed on a total income determined by the learned assessing officer of Rs. 13,90,95,557/-/- as against the reported income by the Respondent / Cross Objector of Rs. 5,68,81,556/- under the facts and circumstances of the case.
Without Prejudice the learned assessing officer is not justified in law in adding a sum of Rs. 7,16,22,000/- under section 69A / 69 of the Income Tax Act, under the facts and circumstances of the case.
Without Prejudice the learned Assessing Officer is not correct in making addition under a specific section of the Act. Section 69 and 69A of the Income tax Act are deeming provisions and has to be strictly construed. The learned Assessing Officer has erred in not clearly specifying under which section the addition has been made. The learned Assessing Officer further failed to appreciate that in the scheme of the Act more so in respect of deemed income there is no question of alternatives and ought to have been specific to the relevant section of the Act on which addition is made under the facts and circumstances of the case.
Without Prejudice the Assessment Order suffers from grave violation of principles of natural justice and the learned Assessing Officer has relied upon certain statements recorded without even putting the same to the Respondent / Cross Objector for his rebuttal. The Respondent / Cross Objector was entitled for cross examination which the same was denied by the learned Assessing Officer and the learned assessing officer proceeded to use the statement against the Respondent / Cross Objector without even giving an opportunity which is against the settled principles of law and thus the Order passed on such grave violation of principles of natural justice deserves to be cancelled on the facts and circumstances of the case.
Without Prejudice the learned Assessing Officer is not justified in law in charging the interest under section 234 A, 234 B and 234 C of the Act and further the calculation of interest under section 234 A, 234 B and 234 C of the Act is not in accordance with law since the rate, method of calculation, quantum is not discernable from the Order of assessment on the facts and circumstances of the case.
8 ITA Nos.926 & 927/Bang/2014 & C.O. Nos.74 & 75/Bang/2015 14. The Appellant craves leave to add, alter, delete, substitute or modify any of the grounds urged above.
For the above and other grounds that may be urged at the time of the hearing of the appeal, the Appellant prays that the appeal may be allowed in the interest of equity and justice.” 6. Condonation of Delay of 4 days in filing the Cross Objections by the assessee. 6.1 Admittedly there is a delay of 4 days on the part of the assessee in filing the C.O. before the Tribunal. In this regard, along with the C.O., the assessee has filed an Affidavit dt.11.5.2015 sworn to before a Notary accompanied by the petition for condontation of the delay of 4 days in filing the C.O. before the Tribunal. It was submitted therein that the notice of Revenue’s appeal which was received by the assessee on 7.4.2015 was misplaced by his staff. It is submitted that when the listing of Revenue’s appeal was noticed by the assessee's counsel, enquiries revealed that the cross objection required to be filed has not yet been filed. It is prayed that the delay of 4 days be condoned as it as neither intentional nor willful or deliberate and the assessee would be put to great hardship if the same delay is not condoned. In support of the assessee's plea for condonation of delay in filing the C.O., the assessee placed reliance on the decision of the Hon'ble Apex Court in the following cases :- (i) Collector, Land Acquisition V MST Katiji & Others (1987) 167 ITR 471. (ii) Concord of India Insurance Co. Ltd. (118 ITR 507). 6.2 We have heard both the learned Departmental Representative for Revenue and the learned Authorised Representative for the assessee in the matter. Taking into account the
9 ITA Nos.926 & 927/Bang/2014 & C.O. Nos.74 & 75/Bang/2015 facts and circumstances of the case and the reasons cited in the petition for condonation of delay, we are of the view that the substantial interest of equity and justice would be served if the said delay of 4 days in filing the C.O. be condoned as the delay appeared to be neither undue, nor deliberate or intentional. We accordingly, condone the delay of 4 days in filing the C.O. and admit the C.O. for adjudication. 7.0 The Revenue’s appeal and the assessee's C.O. are taken up together for disposal. 7.1 We have heard the rival contentions of both the learned Departmental Representative for Revenue and the learned Authorised Representative for the assessee. The learned Departmental Representative contended that though it is evident that the assessee was not supplied with a copy of the reasons recorded by the Assessing Officer for initiation of re-assessment proceedings under Section 147 of the Act and sought for vide his letter dt.26.4.2011, the assessee was well aware of the reasons for re-opening of the assessment for Assessment Year 2004-05 under Section 147 of the Act. The learned Departmental Representative contends that since the assessee was impliedly aware of the reasons recorded and had also participated and co-operated in the assessment proceedings, the non-supply to the assessee of the copy of reasons recorded by the Assessing Officer was not fatal to the re-assessment and the defect, if any, is covered by the provisions of Section 292BB of the Act. The learned Departmental Representative also placed reliance on the decision of the Hon'ble Allahabad High Court in the case of CIT V Shyam Cold Storage in ITA No.28/2011 in support of the contention that the provisions of Section 292BB of the Act cure the defect of non-supply of reasons.
10 ITA Nos.926 & 927/Bang/2014 & C.O. Nos.74 & 75/Bang/2015 7.2 We have carefully perused the contents of the copy of assessee's letter filed on 23.12.2011, placed before us and relied on by Revenue. We find that the above referred letter is merely written by the assessee as a reply to a questionnaire/requirement by the Assessing Officer. In the said letter, the assessee has neither acknowledged the fact that he is aware of the reasons recorded by the Assessing Officer nor has he waived the right to receive the same. The said letter, it appears, merely gives details of transactions the assessee had with the Manikchand Dhariwal Group. 7.3.1 We do not concur with the contentions of Revenue that non-supply of copy of the reasons recorded by the Assessing Officer, for initiation of re-assessment proceedings under Section 147 of the Act, as requested for by the assessee is not fatal to the re- assessment proceedings / order. The Hon'ble Apex Court in the case of GKN Drive Shafts (India) Ltd. in 259 ITR 19, laid down the law that it is mandatory for supply of the copy of the reasons recorded, if asked for by the assessee; provided the assessee has complied with his duty of filing a return of income in response to the notice under Section 148 of the Act. In the case on hand, the learned CIT (Appeals) in the impugned order at paras 3.4 to 3.10, after examining the records of assessment has rendered a finding that the assessee has complied with the obligations cast upon him by the notice under Section 148 of the Act and has also sought for the reasons recorded by the Assessing Officer for initiating re-assessment proceedings under Section 147 of the Act. The learned CIT (Appeals) observed that the Assessing Officer, however, has failed to furnish the assessee with a copy of the reasons so recorded and this failure on the part of the
11 ITA Nos.926 & 927/Bang/2014 & C.O. Nos.74 & 75/Bang/2015 Assessing Officer, in our view, has prevented the assessee from filing his objections, if any, to the notice issued under Section 148 of the Act. This failure on the part of the Assessing Officer is in violation of the principles of natural justice and falls foul of the decision of the Hon'ble Apex Court in the case of GKN Drive Shaft (India) Ltd. (supra). It is mandatory that the Assessing Officer should furnish the copy of the reasons recorded for initiation of re-assessment proceedings under Section 147 of the Act exactly as it is recorded by the Assessing Officer and there is no question of inferring whether the assessee is aware of the reasons or not in the absence of such communication. 7.3.2 The learned CIT (Appeals) in the impugned order proceeded to cancel the order of assessment passed under Section 143(3) rws 147 of the Act dt.29.12.2011 following inter alia, the decisions of the Hon'ble Apex Court in G.K.N. Driveshaft (India) Ltd. (supra), the Hon'ble Allahabad High Court in the case of CIT V Shital Prasad Kharag Prasad (2006) 280 ITR 541, the co-ordinate benches of this Tribunal in the case of Synopsis International Ltd. (supra) and Suez Tractabel SA (supra), and of the Agra Bench of the ITAT in the case of ITO V Sikindar Lal Jain (45 SOT 113), etc; holding as under para 3.10 of the impugned order :- “ 3.10 The gist of the decisions of the Hon'ble Supreme Court in the case of GKN Driveshaft V. ITO (259 ITR 19), Hon'ble High Court of Allahabad in CIT V. Shital Prasad Kharag Prasad (280 ITR 541), Hon'ble ITAT, Bangalore in M/s. Synopsis International Ltd. V DDIT and M/s. Suez Tractable S.A. V. DDIT (supra), Hon'ble ITAT, Agra Bench in ITO V. Sikandar Lal Jain (45 SOT 113) is that it is imperative for the A.O. to furnish to an assessee the reasons for reopening the assessment under Section 147 of the Act if the assessee concerned asks for the same in writing and the failure on the part of the A.O. to furnish the reasons renders the assessment proceedings invalid and void ab initio. The Hon'ble ITAT, Delhi Bench
12 ITA Nos.926 & 927/Bang/2014 & C.O. Nos.74 & 75/Bang/2015 and Mumbai Bench in ITO V. Smt. Gurinder Kaur (102 ITD 189) and Datmatics Ltd. V. ACIT (110 ITD 24) have taken the same view in the light of the Hon'ble Supreme Court’s decision in GKN Driveshaft’s case. The decision of the Hon'ble ITAT in Suez Tractabel SA V. DCIT (143 ITD 614) is squarely applicable to the facts of the appellant’s case. Respectfully following the law laid down in the said decisions relating to the issue of a valid notice under Section 148 of the Act, I hereby cancel the reassessment order under appeal………” 7.3.3 The co-ordinate benches of this Tribunal while rendering their findings in the cases of Synopsis International Ltd. (supra) and Suez Tractabel S.A. (supra) have followed the principle laid down by the Hon'ble Apex Court in the case of GKN Driveshafts (India) Ltd (supra); which have been followed by the learned CIT (Appeals) in her order while cancelling the order of re-assessment passed under Section 143(3) rws 147 of the Act dt.29.12.2011. We have perused the judgment of the Hon'ble Allahabad High Court in the case of Shyam Cold Storage (supra), relied upon by Revenue, and with due respect find its facts not at all applicable to the facts of the assessee in the case on hand and therefore has no bearing in deciding this appeal. In view of the facts and circumstances of the case as discussed above and in consonance with the decisions of the co-ordinate benches of this Tribunal in the cases of Synopsis International Ltd. (supra) and Suez Tractabel S.A. (supra), relied upon by the learned CIT (Appeals) in the impugned order, we concur with and uphold the decision of the learned CIT (Appeals) in cancelling the order of re- assessment for Assessment Year 2004—05 dt.29.12.2011 passed under Section 143(3) rws 147 of the Act and consequently dismiss Revenue’s appeal in ITA No.926/Bang/2014. 8. In view of the fact that we have dismissed the Revenue’s appeal in ITA No.926/Bang/2014, we are of the view that the assessee's C.O. No.74/Bang/2015, which
13 ITA Nos.926 & 927/Bang/2014 & C.O. Nos.74 & 75/Bang/2015 is supportive of the impugned order of the learned CIT (Appeals), is rendered infructuous, and is therefore accordingly dismissed. 9. In the result, both Revenue’s appeal and the assessee's C.O. for Assessment Year 2004-05 are dismissed. Revenue’s appeals for Assessment Year 2004-05 in the case of Mr. M.R. Seetharam – (HUF) in ITA No.927/Bang/2014 and Assessee's C.O. No.75/Bang/2015. 9. The facts of the case, briefly, are as under :- 9.1 The assessee, HUF engaged in real estate, filed its return of income for Assessment Year 2004-05 on 12.1.2005 declaring total income of Rs.11,83,431 and agricultural income of Rs.2,00,000. The return was processed under Section 143(1) of the Income Tax Act, 1961 (in short 'the Act') and the case was taken up for scrutiny. The assessment was completed under Section 143(3) of the Act vide order dt.22.12.2006, wherein the income of the assessee was determined at Rs.16,33,430. 9.2 A search under Section 132 of the Act was conducted in the case of one Sri Sohanraj as well as M/s. Mehta Associates, Bangalore on 10.10.2009 wherein it was found that Sri M.R. Seetharam was a partner in the above firm, which was the sole C&F Agent of Manikchand Gutka for the State of Karnataka. As per information gathered in the search of the Sohanraj Group of cases, Sri M.R. Seetharam had received Rs.7,16,22,000 in cash from these parties in the period relevant to Assessment Year 2004-05. In this regard, the Assessing Officer initiated re-assessment proceedings under Section 147 of the Act in order to bring to tax in the assessee's hands the amount of Rs.7,16,22,000
14 ITA Nos.926 & 927/Bang/2014 & C.O. Nos.74 & 75/Bang/2015 which had not been disclosed by the assessee and Notice under Section 148 of the Act was issued to the assessee on 29.3.2011 after obtaining the approval of the CIT-III, Bangalore. 9.3 A perusal of the impugned order of the learned CIT (Appeals) indicates that in response to the notice issued under Section 148 of the Act, the assessee vide letter dt.26.4.2011 requested that the original return filed under Section 139(1) for Assessment Year 2004-05 be treated as the return of income filed in response to the notice issued for Assessment Year 2004-05 and requested that he be provided / furnished with a copy of the reasons recorded by the Assessing Officer for initiating re-assessment proceedings under Section 147 and issue of notice under Section 148 of the Act. However, from the records before us, it appears that the assessee was not provided with copy of the reasons recorded by the Assessing Officer for initiating re-assessment proceedings under Section 147 of the Act. The Assessing Officer concluded the re- assessment proceedings under Section 143(3) rws 147 of the Act vide order dt.30.12.2011 wherein the income of the assessee was determined at Rs.7,48,05,435; which included addition of the said amount of Rs.7,16,22,000 under Section 69A/69 of the Act, on protective basis. 10. Aggrieved by the order of assessment dt.30.12.2011 for Assessment Year 2004- 05, the assessee preferred an appeal before the CIT (Appeals) – II, Bangalore, challenging the said re-assessment order on various grounds, including challenging the validity of the said re-assessment order passed without supplying the assessee the reasons recorded by
15 ITA Nos.926 & 927/Bang/2014 & C.O. Nos.74 & 75/Bang/2015 the Assessing Officer for initiation of re-assessment proceedings which were sought for by the assessee. The learned CIT (Appeals) allowed the assessee's appeal, by cancelling the re-assessment order passed under Section 143(3) rws 147 of the Act dt.30.12.2011 holding the same to be bad in law as the same was passed without supply of copy of the reasons recorded by the Assessing Officer, for initiating re-assessment proceedings under Section 147 of the Act, to the assessee which were sought by him vide letter dt.26.4.2011. This fact of non-supply of copy of reasons recorded is also evident from the assessee's letter filed on 23.12.2011 before the Assessing Officer. In coming to the finding she did, the learned CIT (Appeals), inter alia, relied on the following decisions of the co-ordinate bench in the cases of :- (i) Synopsis International Ltd. V DDIT in ITA No.549/Bang/2011 dt.10.12.2012; and (ii) Suez Tractabel SA V DDIT in ITA No.656/Bang/2009 dt.7.6.2013. 11.1 Aggrieved by the order of the CIT (Appeals) – II, Bangalore dt.24.3.2014 for Assessment Year 2004-05, Revenue has preferred this appeal raising the following grounds :- “ 1. The order of the learned CIT (Appeals) is opposed to law and facts of the case. 2. On the facts and in the circumstances of the case the learned CIT (Appeals) erred in holding that the reassessment is bad in law because the assessee was not formally provided with the reason of reopening despite the fact that the assessee was very well aware of the reasons of reopening throughout the reassessment proceedings and the assessee had appeared & co-operated in the reassessment proceedings and the same cannot be held bad in law as per the provisions of section 292BB. 3. For these and other grounds that may be urged at the time of hearing, it is prayed that the order of the CIT (Appeals) in so far as it relates to the above grounds may be reversed and that of the Assessing Officer may be restored.
16 ITA Nos.926 & 927/Bang/2014 & C.O. Nos.74 & 75/Bang/2015 4, The appellant craves leave to add, alter, amend and / or delete any of the ground mentioned above.” 11.2 The Grounds at S.Nos.1, 3 & 4 of revenue’s appeal are general in nature and therefore no adjudication is called for thereon. 11.3 In Ground No.2, Revenue challenges the cancellation of the re-assessment order by the learned CIT (Appeals) on the ground that the non-supply of reasons recorded is not fatal by virtue of the provisions of section 292BB of the Act, in view of the fact that the assessee was aware of the reasons for re-opening the assessment and had appeared and co-operated in the re-assessment proceedings. 12. The assessee has filed cross objection, in respect of the impugned order of the CIT (Appeals) – II, Bangalore dt.24.3.2014 for Assessment Year 2004-05, which are as under :- 1. “ The order of the learned Commissioner of Income-tax [Appeals] in as far as it is against the Respondent / Cross Objector is opposed to law, facts, equity, and weight of evidence and circumstances of the case.
The order passed by the learned Commissioner of Income-tax [Appeals] is just and proper and the same requires to be upheld under the facts and circumstances of the case.
Without Prejudice to the learned Commissioner of Income-tax [Appeals] failed to adjudicate all the grounds raised by the Respondent / Cross Objector under the facts and circumstances of the case.
Without prejudice the order of re-assessment passed under section 147 of the Act is bad in law and void-ab-intio as the mandatory conditions to invoke the provision of
17 ITA Nos.926 & 927/Bang/2014 & C.O. Nos.74 & 75/Bang/2015 section 147 did not exist and thereby issuing the notice under section 148 was not present under the facts and circumstances of the case.
Without prejudice if at all any reasons are recorded by the learned assessing officer, though the same was not furnished to the Respondent / Cross Objector the said reasons utmost may be considered and regarded as reason to suspect and under no stretch of imagination the same cannot be construed as reason to believe which is a basic ingredient for a valid assumption of re-assessment under the facts and circumstances of the case.
Without prejudice the Respondent / Cross Objector contends that no proper procedure has been followed by the learned assessing officer for issuance of notice under section 148 of the Act, as envisaged in the statute.
Without Prejudice the Respondent / Cross Objector contends that the process initiated and adopted as per section 148 of the Act by the learned assessing officer is bad in law as no proceedings can be initiated under section 148 if the information based on which the assessment is re-opened is pursuant to a search.
Without prejudice the Respondent / Cross Objector contends that no proper procedure has been followed by the learned assessing officer for issuance of a notice under the provisions of section 148 of the Act as envisaged under the statue under the facts and circumstances of the case.
Without Prejudice the Respondent / Cross objector denies himself liable to be taxed on a total income determined by the learned assessing officer of Rs. 7,28,05,431/- as against the reported income by the Respondent / Cross Objector of Rs. 11,83,431/- under the facts and circumstances of the case.
Without Prejudice the learned assessing officer is not justified in law in adding a sum of Rs. 7,16,22,000/- protectively in the hands of the appellant by invoking the provisions of section 69A / 69 of the Income Tax Act, under the facts and circumstances of the case.
18 ITA Nos.926 & 927/Bang/2014 & C.O. Nos.74 & 75/Bang/2015 11. Without Prejudice the learned Assessing Officer is not correct in making addition under a specific section of the Act. Section 69 and 69A of the Income tax Act are deeming provisions and has to be strictly construed. The learned Assessing Officer has erred in not clearly specifying under which section the addition has been made. The learned Assessing Officer further failed to appreciate that in the scheme of the Act more so in respect of deemed income there is no question of alternatives and ought to have been specific to the relevant section of the Act on which addition is made under the facts and circumstances of the case.
Without Prejudice the Assessment Order suffers from grave violation of principles of natural justice and the learned Assessing Officer has relied upon certain statements recorded without even putting the same to the Respondent / Cross Objector for his rebuttal. The Respondent / Cross Objector was entitled for cross examination which the same was denied by the learned Assessing Officer and the learned assessing officer proceeded to use the statement against the Respondent / Cross Objector without even giving an opportunity which is against the settled principles of law and thus the Order passed on such grave violation of principles of natural justice deserves to be cancelled on the facts and circumstances of the case.
Without Prejudice the learned Assessing Officer is not justified in law in charging the interest under section 234 A, 234 B and 234 C of the Act and further the calculation of interest under section 234 A, 234 B and 234 C of the Act is not in accordance with law since the rate, method of calculation, quantum is not discernable from the Order of assessment on the facts and circumstances of the case.
The Appellant craves leave to add, alter, delete, substitute or modify any of the grounds urged above.
For the above and other grounds that may be urged at the time of the hearing of the appeal, the Appellant prays that the appeal may be allowed in the interest of equity and justice.”
19 ITA Nos.926 & 927/Bang/2014 & C.O. Nos.74 & 75/Bang/2015 13. Condonation of Delay of 4 days in filing the Cross Objections by the assessee. 13.1 Admittedly there is a delay of 4 days on the part of the assessee in filing the C.O. before the Tribunal. In this regard, along with the C.O., the assessee has filed an Affidavit dt.11.5.2015 sworn to before a Notary accompanied by the petition for condontation of the delay of 4 days in filing the C.O. before the Tribunal. It was submitted therein that the notice of Revenue’s appeal which was received by the assessee on 7.4.2015 was misplaced by his staff. It is submitted that when the listing of Revenue’s appeal was noticed by the assessee's counsel, enquiries revealed that the cross objection required to be filed has not yet been filed. It is prayed that the delay of 4 days be condoned as it as neither intentional nor willful or deliberate and the assessee would be put to great hardship if the same delay is not condoned. In support of the assessee's plea for condonation of delay in filing the C.O., the assessee placed reliance on the decision of the Hon'ble Apex Court in the following cases :- (i) Collector, Land Acquisition V MST Katiji & Others (1987) 167 ITR 471. (ii) Concord of India Insurance Co. Ltd. (118 ITR 507). 13.2 We have heard both the learned Departmental Representative for Revenue and the learned Authorised Representative for the assessee in the matter. Taking into account the facts and circumstances of the case and the reasons cited in the petition for condonation of delay, we are of the view that the substantial interest of equity and justice would be served if the said delay of 4 days in filing the C.O. be condoned as the delay
20 ITA Nos.926 & 927/Bang/2014 & C.O. Nos.74 & 75/Bang/2015 appeared to be neither undue, nor deliberate or intentional. We accordingly, condone the delay of 4 days in filing the C.O. and admit the C.O. for adjudication. 14.0 The Revenue’s appeal and the assessee's C.O. are taken up together for disposal. 14.1 We have heard the rival contentions of both the learned Departmental Representative for Revenue and the learned Authorised Representative for the assessee. We have already decided against Revenue on this issue in its appeal in ITA No.926/Bang/2014 in the case of M.R. Seetharam (Individual) at paras 7.1 to 7.3.3 thereof (supra), where the addition of Rs.7,16,22,000 under Section 69A/69 of the Act was made substantially. The facts being identical in the case on hand, where the additionhas been made protectively, we dismiss this appeal of revenue. 15. In view of the fact that we have dismissed the Revenue’s appeal in ITA No.927/Bang/2014, we are of the view that the assessee's C.O. No.75/Bang/2015, which is supportive of the impugned order of the learned CIT (Appeals), is rendered infructuous, and is therefore accordingly dismissed. 16. In the result, both Revenue’s appeal and the assessee's C.O. for Assessment Year 2004-05 are dismissed. 17. To sum up, the Revenue’s appeals and assessee's Cross Objections for Assessment Year 2004-05 are dismissed. Order pronounced in the open court on 9th October, 2015. Sd/- Sd/- (VIJAYPAL RAO) (JASON P BOAZ) Judicial Member Accountant Member * Reddy gp