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PUSHPAK BULLION PVT. LTD Versus DEPUTY COMMISSIONER OF INCOME TAX

2015 (8) TMI 930 - GUJARAT HIGH COURT

Validity of reopening of assessment - Held that:- AO has disposed of the said objections without deciding it on merits and solely on the ground that as the assessee has not filed the return pursuant to the notice issued under Section 148 of the Act within a period not less than 30 days from the date of receipt of the notice under Section 148 of the Act.

Thus, considering the aforesaid decision of the Hon'ble Supreme Court in the case of GKN Driveshafts (India) Ltd (2002 (11) TMI 7 - S .....

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bsolutely on misinterpretation and / or misreading of the decision of the Division Bench in the case of Sahakari Khand Udyog Mandal Ltd (2014 (6) TMI 149 - GUJARAT HIGH COURT) - Decided in favour of assessee. - SPECIAL CIVIL APPLICATION NO. 4193 of 2015 With SPECIAL CIVIL APPLICATION NO. 4194 of 2015 - Dated:- 7-5-2015 - MR. M.R. SHAH AND MR. S.H.VORA, JJ. FOR THE PETITIONER : MR MANISH J SHAH, ADVOCATE FOR THE RESPONDENT : MR NITIN K MEHTA, ADVOCATE JUDGMENT (PER : HONOURABLE MR.JUSTICE M.R. SH .....

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s raised against the initiation of reassessment proceedings. 2.1. Special Civil Application No.4193 of 2015 has been preferred by the petitioner to quash and set aside the impugned notice under Section 148 of the Act for AY 200910 and Special Civil Application No.4194 of 2015 has been preferred by the petitioner challenging the impugned notice under Section 148 of the Act, by which, the assessment for AY 200708 has been reopened. 2.2. As the controversy in both these petitions is in a narrow com .....

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has reopened the assessment for AY 200910 stating that he has reasoned to believe that income had escaped assessment and asking the petitioner to file return within a period of 30 days from the service of the said notice. That thereafter, vide communication dated 08.12.2014 AO called upon the petitionerassessee to furnish in writing and verified in the prescribed manner information called for as per annexures to the said communication on the points or matters specified therein before him at his .....

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ised the objection against reopening of the assessment for AY 200910 vide his objection dated 16.02.2015. By impugned order dated 27.02.2015, the AO has disposed of the said objections without dealing anything on merits and solely on the ground that the petitioner had not filed return of income within a period of 30 days from receipt of the notice under Section 148 of the Act, objections on merits are not required to be dealt with or considered. That the AO while disposing of the objection has o .....

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f Sahakari Khand Udyog Mandal Ltd vs. ACIT reported in (2015)370 ITR (Guj). 3.1. Hence, as the objections raised by the petitioner against the reopening of the assessment for AY 200910 has not been decided and dealt with by the AO on merits and without considering the objections on merits the AO has disposed of / overruled the said objection, the petitioner has preferred present Special Civil Application under Article 226 of the Constitution of India challenging notice under Section 148 of the A .....

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for AY 200708 stating that he has reason to believe that income had escaped the assessment and asking the petitioner to file return within a period of not less than 30 days. That by communication dated 08.12.2014, AO at Ahmedabad addressed a letter to the petitioner stating that in response to notice under Section 148 issued by the AO at Mumbai, the petitioner had not filed the return and asked the petitioner to file the return as early as possible. That the petitioner by its letter dated 22.12. .....

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er dated 27.02.2015 the AO has disposed of the said objection without dealing anything on merits and solely on the ground that the petitioner had not filed return of income within a period of 30 days from receipt of the notice under Section 148 of the Act, objections on merits are not required to be dealt with or considered. That the AO while disposing of the objection has observed that as the petitionerassessee has not complied with the notice under Section 148 of the Act within the stipulated .....

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itioner against the reopening of the assessment for AY 200708 has not been decided and dealt with by the AO on merits and without considering the objections on merits, the AO has disposed of the said objection, the petitioner has preferred present Special Civil Application under Article 226 of the Constitution of India challenging notice under Section 148 of the Act as well as order disposing of the objections against reopening of the assessment for AY 200708. 5.0. Shri J.P. Shah, learned advoca .....

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notice under Section 148 of the Act within a period not less than 30 days from receipt of the notice under Section 148 of the Act. It is submitted that by not deciding / disposing of the objection on merits on the aforesaid ground, the AO has misinterpreted the directions issued by the Division Bench of this Court in the case of Sahakari Khand Udyog Mandal Ltd (supra). It is vehemently submitted that in the aforesaid decision the Division Bench has never observed and / or directed that the asses .....

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asons without being demanded by the assessee would be applicable only if the assessee files his return of income within the period permitted in the notice for reopening and likewise the time frame for the Assessing Officer to dispose of the objections would apply only if the assessee raises objections within the time provided. It is submitted that the Division Bench further clarified this, however, would not mean that if in either case, the assessee misses the time limit, the procedure provided .....

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ndia) Ltd (supra). 5.3. It is further submitted by Shri Shah, learned advocate for the petitionerassessee that after receipt of the reasons recorded for reopening by the assessee, once assessee raises objection against the reopening and reasons recorded, the AO is bound to dispose of the same on merits before proceedings further with the reassessment proceedings and / or before passing the reassessment order. Making above submissions and relying upon the decision of the Hon'ble Supreme Court .....

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and grant the reliefs as prayed for. 6.0. Shri Nitin Mehta, learned advocate has appeared on behalf of revenue and has tried to support the impugned order, by relying upon the affidavit in reply. It is vehemently submitted that while disposing of the objections raised by the assessee against reopening of the respective assessments, the AO has considered and followed the decision of the Division Bench of this Court in the case of Sahakari Khand Udyog Mandal Ltd (supra). It is submitted that as f .....

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his Court proposes to remand the matters to the AO, we deem it proper not to enter into the merits and / or observe anything on merits with respect to the reopening of the respective assessments. 7.0. Having heard the learned advocates for the respective parties and considering the impugned orders by the AO disposing of the objections, it appears that the AO has disposed of the said objections without deciding it on merits and solely on the ground that as the assessee has not filed the return pu .....

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Ltd (supra), it appears that AO has misread and / or misinterpreted the directions issued by the Division Bench of this Court in the case of Sahakari Khand Udyog Mandal Ltd (supra). 8.0. In the case of Sahakari Khand Udyog Mandal Ltd (supra) the Division Bench had an occasion to consider the various difference stages from the date of notice under Section 148 of the Act to the reassessment order and ultimately after considering the decision of the Hon'ble Supreme Court in the case of GKN Dri .....

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essee to demand such reasons. 2. Once the assessee receives such reasons, he would be expected to raise his objections, if he so desires, within 60 days of receipt of such reasons. 3. If objections are received by the Assessing Officer from the assessee within the time permitted hereinabove, the Assessing Officer would dispose of the objections, as far as possible, within four months of date of receipt of the objections filed by the assessee. 4. This is being done in order to ensure that suffici .....

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This, however, would not mean that if in either case, the assessee misses the time limit, the procedure provided by the Supreme Court in the case of GKN Driveshafts (India) Ltd (supra) would not apply. It only means that the time frame provided hereinabove would not apply in such cases. 5. In the communication supplying the reasons recorded by the Assessing Officer, he shall intimate to the assessee that he is expected to raise the objections within 60 days of receipt of the reasons and shall r .....

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essee has to file return of income in response to the notice under Section 148 of the Act within a period not less than 30 days. What is observed / directed by the Division Bench is that if the assessee when files his return of income in response to notice under Section 148 of the Act, the AO shall supply the reasons recorded by him for issuing such notice within 30 days of the filing of the return by the assessee without waiting for the assessee to demand such reasons. The Division Bench has fu .....

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at requirement and the timeframe for supplying the reasons without being demanded by the assessee would be applicable only if the assessee files his return of income within the period permitted in the notice for reopening and likewise the time frame for the Assessing Officer to dispose of the objections would apply only if the assessee raises objections within the time provided hereinabove. The Division Bench has also further observed and clarified that this however, would not mean that if in ei .....

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arified even in case the assessee misses the time limit, the procedure provided by the Supreme Court in the case of GKN Driveshafts (India) Ltd (supra) shall be followed. It is true that on receipt of notice under Section 148 of the Act, the assessee is required to file return within time prescribed in such notice and / or within reasonable time and simultaneously asked for the reasons recorded for reopening and AO is bound to dispose of such objections within time provided by the Division Bench .....

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ing with objections raised against a notice under Section 148 of the Act in the following words:- …However, we clarify that when a notice under section 148 of the Incometax Act is issued, the proper course of action for the notice is to file a return and if he so desires, to seek reasons for issuing notices. The Assessing Officer is bound to furnish reasons within a reasonable time. On receipt of reasons, the notice is entitled to file objections to issuance of notice and the Assessing Of .....

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of G.K.N. Driveshaft (India) Ltd. (Supra) came up for consideration and by a majority opinion it has been thus laid down by this Court as under: What the Supreme Court has now done in the G.K.N. Case (2003)259 ITR 19 is not to whittle down the principle laid down by the Constitution Bench of the Apex Court in Calcutta Discount Co. Ltd. case (1961) 41 ITR 191 but to require the assessee first to lodge preliminary objection before the Assessing Officer who is bound to decide the preliminary objec .....

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ribunal and then reference / tax appeal to the High Court. Viewed in this light, it appears to me that the rigour of availing of the alternative remedy before the Assessing Officer for objecting to the reassessment notice under section 148 has been considerably softened by the Apex Court in G.K.N. case (2003) 259 ITR 19 in the year 2003. In my view, therefore, the G.K.N. case (2003) 259 ITR 19 (SC) does not run counter to the Calcutta Discount Co. Ltd. case (1961) 41 ITR 191 (SC) but it merely p .....

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he Division Bench has observed and held as under: 9. The position in law is thus well settled. After a notice for reassessment has been issued an assessee is required to file the return and seek reasons for issuance of such notice. The Assessing Officer is then bound to supply the reasons within a reasonable time. On receipt of reasons, the assessee is entitled to file preliminary objections to issuance of notice and the Assessing Officer is under a mandate to dispose of such preliminary objecti .....

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g Mandal Ltd (supra) impugned orders disposing of the objections without deciding the objections on merits cannot be sustained and same deserve to be quashed and set aside. The impugned orders passed by the AO disposing of the objections are absolutely on misinterpretation and / or misreading of the decision of the Division Bench in the case of Sahakari Khand Udyog Mandal Ltd (supra). As observed herein above in the case of Sahakari Khand Udyog Mandal Ltd (supra) the Division Bench has never pro .....

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d (supra). As observed herein above, it is true that on receipt of notice under Section 148 of the Act, the assessee is required to file return of income pursuant to notice under Section 148 of the Act within the time prescribed in the notice and / or within extended period and / or within reasonable period and assessee may in a given case request the AO to treat the original return as return of income pursuant to the notice under Section 148 of the Act and simultaneously may request for reasons .....

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