TMI Blog2016 (10) TMI 348X X X X Extracts X X X X X X X X Extracts X X X X ..... (D.R) ORDER Per Shri Vijay Pal Rao, J. M. These four appeals by four related assesses and arising from reassessment / assessment framed under Section 147/148 and further under Section 143(3) r.w.s. 254 of the Income Tax Act, 1961 (in short 'the Act') for the Assessment Year 2003-04. Since common issues are raised in all four appeals arising from identical circumstances therefore, for the purpose of recording the fact, the appeal in ITA No.559/Bang/2010 is taken as lead matter. 2. The assessee filed its return of income on 31.3.2004 declaring total income of ₹ 22,51,307. The assessment was completed under Section 143(3) of the Act on 7.3.2005 accepting the income returned. Subsequently, the Assessing Officer issued notice under Section 148 on 26.12.2005 and completed the reassessment on 30.6.2006 determining the total income of assessee at ₹ 3,54,98,250. The matter was carried to the CIT (Appeals) and then to this Tribunal. Vide its composite order dt.5.1.2007 the Tribunal set aside the assessment orders for reconsideration of the Assessing Officer in the light of judgment of Hon'ble Supreme Court in the case of GKN Driveshafts (India) Ltd. Vs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s.148 of the Act is on the erroneous appreciation of the position of law and consequently assessment requires to be annulled. 3[B] The authorities below have erred in holding that the appellant has booked expenditure in connection with the purchase of land from the farmers on the basis of the agreement to sell without transferring the lands in the name of the appellant, which is incorrect, as the appellant never booked any expenditure in connection with the land but only shown the advances paid, etc., as investment by way of the acquisition of the land and has not shown land as a asset and thus the re-opening of the assessment made on wrong facts is bad in law and consequent assessment made requires to be annulled. 4[A] Without prejudice to the above, the authorities below are not justified in assessing a sum of ₹ 3,32,58,944/- as Business Income of the appellant under the facts and in the circumstances of the case. 4[B] The authorities below failed to appreciate that the appellant has not carried on any business of real estate or acted as real estate commission agent and the property was sought to be purchased by the appellant and the members of the gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer to follow the procedure prescribed by the Hon'ble Supreme Court in the case of GKN Driveshafts (India) Ltd. (supra). The Assessing Officer instead of following the law and procedure as provided in the said decision of the Hon'ble Supreme Court as well as the directions of this Tribunal had proceeded with the assessment and decided the objections vide composite assessment order dt.31.12.2008. Therefore, the assessment completed by the Assessing Officer without first deciding the objections against the reasons for reopening is bad in law. The learned Authorised Representative asserted that the Assessing Officer has committed an illegality in not deciding the objections against the reopening of the assessment separately and prior to the completion of the assessment. Therefore the order passed by the Assessing Officer is in violation of the decision of the Hon'ble Supreme Court in the case of GKN Drive Shaft India Ltd. (supra) as well as the specific directions of the Tribunal in setting aside the reassessment. Hence it is urged that the composite order dt.31.12.2008 is illegal and without jurisdiction and liable to be quashed. In support of his contentio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be provided to the assessee and the objections as made by the assessee are required to be dealt with the Assessing Officer. In the present case, other than providing the reasons recorded the Assessing Officer had not dealt with the objections though the assessee had filed their objections. In the light of the decision of the Supreme Court cited supra, this matter requires to be remanded to the Assessing Officer to apply the principle enunciated by the Supreme Court (supra) by considering the objections and after hearing the assessee pass a detailed order with regard to objections and proceed in accordance with law in regard to assessment. The assessments are set aside for the above reasons. Before we part we may observe that the Bombay High Court in the case of Allana Cold Storage Ltd. Vs. ITO and others (2006) 287 ITR 1 has quashed the assessment where the Assessing Officer did not follow the procedure of considering the objections and dealing with the same in the order the Delhi High Court in the case of Smt. Kamlesh Sharma Vs. ITO (2006) 287 ITR 337 had set aside the assessment and directed the Assessing Officer to consider and pass a speaking order on the assessee's objecti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und to decide the preliminary objections to issuance of the re-assessment notice by passing a speaking order and, therefore, if such order on the preliminary objections is still against the assessee, the assessee will get an opportunity to challenge the same by filing a writ petition so that he does not have to wait till completion of the re-assessment proceedings which would have entailed the liability to pay tax and interest on re- assessment and also to go through the gamut of appeal, the second appeal before Income-tax Appellate Tribunal 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 re-assessment notice under section 148 has been considerably softened by the Apex Court in GKN case (2003) 259 ITR 19 in the year 2003. In my view, therefore, the GKN 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 provides for challenge to the reassessment notice in two stages, that is,- (i) raising preliminary objections before the Assessing Officer and in case of fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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. It was held by the Hon'ble High Court that the Assessing Officer is mandated to decide the objections to the notice under Section 148 and supply or communicate it to the assessee so that the assessee get an opportunity to challenge the order in a writ petition. Thereafter the Assessing Officer may pass the reassessment order. It was firmly held by the Hon'ble High Court that it was not open to the Assessing Officer to decide the objections to the notice under Section 148 by a composite assessment order. The Assessing Officer was required to first decide the objections of the assessee filed under Section 148 and serve a copy of the order on the assessee. After giving some reasonable time to the assessee for challenging his order it was open to him to pass an assessment order. 7. This view was again reiterated by the Hon'ble High Court in the case of Pushpak Bullion P. Ltd. Vs. DCIT (supra) in para 8.1 as under : 8.1. From the aforesaid, it does not appear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ithin 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 in the case of Sahakari Khand Udyog Mandal Ltd (supra), however in any case before the order of assessment under Section 143(3) r/w Section 147 of the Act. However, at this stage also, the AO must give reasonable time to the assessee to challenge the order disposing of the objection by way of petition under Article 226 of the Constitution of India. Thus it is settled proposition of law on the point that the Assessing Officer is bound to first decide the objections of the assessee against notice 148, communicate the same to the assessee and allow the assessee reasonable time to challenge the order of the Assessing Officer deciding the objections thereafter, the Assessing Officer may pass the reassessment/assessment. However this was not done by the Assessing Officer in the case of the assessee and decided the objection under Section 148 of the Act by a composite assessment order dt.31.12.2008 which is in gross violation of law laid down by the Hon'ble Sup ..... X X X X Extracts X X X X X X X X Extracts X X X X
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