TMI Blog2014 (11) TMI 46X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the order - Non-consideration of same is not justified and smacks arbitrariness – thus, the objections dismissed by the AO in a composite order is not proper, therefore the assessment so framed vide order dated 18/01/2013 deserves to be quashed on this ground alone - CIT(A) has not decided the specific ground in respect of assessment being time barred, non-compliance of the mandatory provisions of sections 147 & 151 of the Act – thus, the order of the CIT(A) is set aside – Decided in favour of assessee. - I.T.A. No. 2648/Ahd/2013 - - - Dated:- 30-10-2014 - Shri Anil Chaturvedi And Shri Kul Bharat,JJ. For the Appellant : Shri S. N. Soparkar with Ms. Urvashi Shodhan, ARs For the Respondent : Shri B. Kulshrestha, Sr. DR ORDER Per Shri Kul Bharat, Judicial Member : This appeal by the Assessee is directed against the order of the Ld.Commissioner of Income Tax(Appeals)-I, Ahmedabad CIT(A) in short) dated 16/08/2013 pertaining to Assessment Year (AY) 2006-07. The Assessee has raised the following grounds of appeal:- 1. Ld.CIT(A) erred in law and on facts in confirming action of AO in reopening of assessment u/s.147 of the Act beyond the period of fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cts in confirming disallowance by AO of ₹ 68,84,921/- additional depreciation claimed u/s.32(1)(iia) of the Act. Ld.CIT(A) erred in not appreciating the fact that additional depreciation as claimed was allowable on captive power plant. It be so held now. 7. Ld.CIT(A) erred in law and on facts in confirming action of AO adopting income at ₹ 19,96,66,450/- as per order dated 31.12.2008 already quashed by the Hon ble ITAT at the time of framing reassessment by AO. Ld.CIT(A) erred in holding that AO correctly adopted income assessed in original order by disallowing excess claim of exemption u/s.10B of the Act Ld.CIT(A) ought to have deleted addition of ₹ 19,96,66,450/- made on the basis of the order already quashed by Hon ble ITAT. It be so held now. 8. Ld.CIT(A) erred in law and on facts in justifying action of AO in adopting income of the appellant at returned income as increased by disallowance of ₹ 2,29,68,915/- claimed as exemption u/s.10B of the Act. Ld.CIT(A) erred in adjudicating on issues on which no addition is made by AO in the reassessment proceedings. The order of ld.CIT(A) traversing beyond the order of AO against the legal principles deserve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owing the judgement of Hon ble Gujarat High Court. 4. On the contrary, ld.Sr.DR Shri B.Kulshrestha supported the orders of the authorities below on these issues. He submitted that there is no illegality in the order of the ld.CIT(A) and same requires to be affirmed. 5. We have heard the rival submissions, perused the material available on record and gone through the orders of the authorities below as well as the judgements relied upon by the ld.counsel for the assessee. The undisputed fact is that before the ld.CIT(A), the assessee in Ground Nos.1, 2, 3, 4 7 challenged the reopening of the assessment on the basis that the assessment had been reopened after four years and there is no default or failure on the part of the assessee to disclose fully and truly material facts as envisaged in the first proviso to section 147 of the Act. It was further urged before the ld.CIT(A) that the mandatory provisions of sections 147 151 of the Act are not complied with. It was also submitted before the ld.CIT(A) that the assessment order is not a speaking order and such order is illegal and void ab initio. It was also submitted before the ld.CIT(A) that re-assessment order passed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 143(1) no opinion of expressed by the AO. In that case the Hon'ble Supreme Court examined in detail the provisions of Section 143(1) and it observed as under: It is to be noted that substantial changes have been made to section 143(1) with effect from June 1,1999. Up to March 31,1989, after a return of income was filed the Assessing Officer could make an assessment under section 143(1) without requiring the presence of the assessee or the production by him of any evidence in support of the return. Where the assessee objected to such an assessment or where the officer was of the opinion that the assessment was incorrect or incomplete or the officer did not complete the assessment under section 143(1), but wanted to make an inquiry, a notice under section 143(2) was required to be issued to the assessee requiring him to produce evidence in support of his return. After considering the material and evidence produced and after making necessary inquiries, the officer had power to make assessment under section 143(3). With effect from April 1,1989, the provisions underwent substantial and material changes. A new scheme was introduced and in the new substituted section 143(1) pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e a demand notice issued under section 156, that did not per se preclude the right of the Assessing Officer to proceed under section 143(2). That right is preserved and is not taken away. Between the period from April 1,1989, and March, 31,1989, the second proviso to section 143(1) (a), required that where adjustments were made under the first proviso to section 143(1) (a), an intimation had to be sent to the assessee notwithstanding that no tax from April, 1,1998, the second proviso to section 143(1) (a) was substituted by the Finance Act, 1997, which was operative till June, 1,1999. The requirement was that intimation was to be sent to the assessee whether or not any adjustment had been made under the first proviso to section 143(1) and notwithstanding that no tax or interest was found due from the assessee concerned. Between April 1, 1998, and May 31,1999, sending of an intimation under section 143(1)(a) was mandatory. Thus, substituted for assessment that two different concepts emerged. While making an assessment, the Assessing Officer is free to make any addition after grant of opportunity to the assessee. By making adjustments under the first proviso to section 143(1)(a), n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lhi). It may be noted above that under the first proviso to the newly substituted section 143(1), with effect from June 1,1999, except as provided in the provision itself, the acknowledgment of the return shall be deemed to be an intimation under section 143(1) where (a) either no sum is payable by the assessee, or (b) no refund is due to him. It is significant that the acknowledgment is not done by any Assessing Officer, but mostly by ministerial staff. Can it be said that any assessment is done by them? The reply is an emphatic no . The intimation under section 143(1) (a) was deemed to be a notice of demand under section 156, for the apparent purpose of making machinery provisions .relating to recovery of tax applicable. By such application only recovery indicated to be payable in the intimation became permissible. And nothing more can be inferred from the deeming provision. Therefore, there being no assessment under section 143(l)(a), the question of change of opinion, as contended, does not arise 4.3 In view of the above it is clear that no opinion was expressed by the AO during the A.Y. 2006-07. While reopening such cases what is required is the satisfaction on the par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icer to decide the objection to notice under section 148 by a composite assessment order. The Assessing Officer was required to, first decide the objection of the assessee filed under section 148 and serve a copy of the order on the assessee. And after giving some reasonable time to the assessee for challenging his order, it was open to him to pass an assessment order. This was not done by the Assessing Officer, therefore, the order on the objection to the notice under section 148 and the assessment order passed under the Act deserves to be quashed. 6.2. In view of the above binding precedent, we are of the considered view that the objections dismissed by the AO in a composite order is not proper, therefore the assessment so framed vide order dated 18/01/2013 deserves to be quashed on this ground alone. Moreover, we find that the ld.CIT(A) has not decided the specific ground in respect of assessment being time barred, non-compliance of the mandatory provisions of sections 147 151 of the Act. Under these facts, without going to the merit of the case, we cannot confirm the assessment made by the AO and, accordingly, the assessment order so passed is quashed following the judgem ..... X X X X Extracts X X X X X X X X Extracts X X X X
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