TMI Blog2012 (7) TMI 172X X X X Extracts X X X X X X X X Extracts X X X X ..... ons recorded" and decide the issue afresh which was grossly violated - notice had already been issued and served upon the assessee prior to the recording of reasons, the entire proceedings initiated under Section 148 has no legs to stand - decided in favour of assessee. - IT Appeal Nos. 2759 & 2760 (Mum.) of 2011 - - - Dated:- 11-5-2012 - P.M. JAGTAP, AMIT SHUKLA, JJ. Vijay Mehta for the Appellant. M. Rajan for the Respondent. ORDER Amit Shukla, Judicial Member ITA No.2759/Mum/2011(A.Y. 1996-1997) : This appeal has been filed against the order dated 25-2-2011, passed by the CIT(A)-30, Mumbai for the quantum of assessment determined under Section 143(3), r.w.s. 147 r.w.s. 254 for the assessment year 1996-1997 on the following grounds :- "1. The learned CIT(A) erred in law and in facts in upholding the order passed by the Assessing Officer u/s.143(3) r.w.s. 147 r.w.s.254 of the Income Tax Act, 1961, which is illegal and bad in law. 2. The learned CIT(A) erred in law and in facts in upholding the order of the Assessing Officer passed in violation of the principles of natural justice. 3. The learned CIT(A) erred in law and in facts in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore the ITAT, contending that "reasons recorded" for re-opening the assessment has not been provided at any stage. The ITAT vide order dated 26-12-2005 passed in in ITA No. 3392/M/2002, restored the matter back to the Assessing Officer with the direction to provide "reasons recorded" for re-opening of the case and to give adequate opportunity of hearing to the assessee and decide the issue afresh not only the validity of the re-opening under Section 147, but also on merits. 3. In the second round of proceedings, the Assessing Officer did not comply with the directions of the ITAT. He neither supplied copy of "reasons recorded" nor adjudicated the validity of the proceedings u/s. 148 and instead, completed the assessment on the same figure vide order dated 8-12-2006, captioned as "143 (3) r.w.s. 147 r.w.s. 254" of the Income Tax Act. The assessee aggrieved by this second order, filed an appeal before the CIT(A), who vide order dated 21-1-2008 also dismissed the appeal of the assessee without verifying the fact that copy of "reasons recorded" have not been made available to the assessee as per directions of the ITAT, nor he himself called upon for such records from the Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ( b ) Ramchand S Bachani Rs. 85,00,000 5. Construction Cost- ( a ) Expenditure directly incurred till 30-10-96 Rs. 1,00,000 ( b ) Paid to contractor Rs. 24,00,000 Rs. 2,20,49,204 As seen above, the assessee has claimed Rs. 25 lakhs as cost of construction - ( a ) Expenditure directly incurred on construction till 30-10-96 Rs. 1,00,000 ( b ) Paid to contractors for construction work Rs. 24,00,000 Rs. 25,00,000 for new residential house at Hari Niwas. But since the same was in possession of the assessee since July, 1972, section 54 of the I.T. Act is not applicable. In this context the assessee has neither purchased of new house one year before or two year after the date of transfer nor has constructed the residential house within a period of 3 years after the transfer took place. Hence, notice u/s 148 was issued on 10-2-2000 to ascertain details of the aforesaid facts and was served on the assessee on 14.2.2000." ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sions of the Act as explained above. We therefore, pray that the notice u/s 148 ought to have quashed. On the above propositions, reliance is placed on the following decisions :- ( a ) UOI v. Rai Singh Deb Singh Bist [88 ITR 200 (SC)] ( b ) Johri Lal (HUF) v. CIT [88 ITR 439 (SC)] ( c ) Travancore Electro Chemical Ind. Lt. v. ITO [31 ITR 159 (Cochin)]. 8. In view of the above, we pray that the assessment made in the present case may kindly be quashed as illegal and incorrect." 6 . Learned CIT (A) rejected the said objections of the assessee in the following manner :- "2.4 I have carefully gone through the reasons recorded by the A.O., submissions made by the A.R. of the appellant and the facts of the case. At the outset, I find that the instructions of the order of the Hon. ITAT have been followed in as much as the reasons for reopening the case have been provided to the appellant. Besides, I also find that the case was originally reopened without any infirmity. I find that notice dated 10.2.2000 was duly served on the appellant on 14.2.2000. This is perfectly in terms of provisions of section 147 of the Act. In fact I find that it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsidered view, there is no infirmity in the notice issued by the A.O. u/s. 148 of the I.T. Act as claimed by the appellant. I find that reasons recorded by the A.O. and the notice issued u/s. 148 are in order and therefore the grounds of appeal in this regard raised by the appellant are dismissed." Aggrieved by the aforesaid order and finding, the assessee has now come before us. 7. Learned AR appearing on behalf of the assessee reiterated the same objections that provisions of Section 148(2) has been blatantly violated, which is evident from the bare reading of the "reasons recorded", wherein it has been stated that the notice under Section 148 was issued on 10-2-2000 and was served on the assessee on 14-2-2000.From this observation, he submitted that the reasons have been recorded post service of the notice under Section 148 and as such the entire proceedings as have been initiated by issuance of notice under Section 148 dated 10-2-2000 is void ab initio and without jurisdiction. On the other hand, learned Senior DR relied upon the findings of the CIT(A) as given in para 2.4 2.5, which have been reproduced above. 8. We have heard the rival submissions and carefully ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to tax has escaped assessment for any assessment year. Secondly , before making the assessment, re-assessment or recomputation under Section 147, the Assessing Officer shall serve a notice under Section 148 upon the assessee in accordance with the provisions of law, requiring him to furnish the return within a period prescribed therein. Thirdly , the Assessing Officer shall before issuing any notice under Section 148, shall "record his reasons." Fourthly , notice has to be issued within the time limit prescribed under Section 149. If any of these steps are lacking or has not been followed, the very basis for assuming jurisdiction under Section 147 gets vitiated and consequently the entire proceedings are rendered void ab initio . Section 148(2) exclusively provides that "The Assessing Officer shall, before issuing any notice under this section, record his reasons for doing so". The word "shall" and "record his reasons" appearing in the said section makes it mandatory that the Assessing Officer has to record the 'reasons' before serving a notice under Section 148. If this mandatory requirement of the law is not fulfilled, the entire proceedings become without jur ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
