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2016 (10) TMI 348 - ITAT BANGALORE

2016 (10) TMI 348 - ITAT BANGALORE - TMI - Validity of reopening of assessment - procedures to be followed - Held that:- 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 th .....

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G.R. Reddy, CIT-I (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 .....

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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. ITO 259 ITR 19 (SC). In pursuant to the set aside order of this Tribunal the Assessing Officer passed the assessment order on 31.12.2008 determined the total income of the assessee as it was assessed in the reassessment. The assessee has again challenged the action of the Assessing Officer befor .....

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ht of evidence, probabilities, facts and circumstances of the case. 2[A] The order of reassessment is bad in law for want of requisite jurisdiction, as the mandatory requirement to assume jurisdiction did not exist and have not been complied with and consequently, the reassessment requires to be cancelled. 2[B] The learned CIT[A] failed to appreciate that reason to believe should be bonafide and not on pretence and if the belief entertained by the A.O. were to be really bonafide, the learned A.O .....

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ccrues only on transfer and not on mere agreement to transfer property. The authorities below ought to have appreciated that the agreement dated 18/03/2002 entered into by the landlord with Mis. WIPRO in which the appellant was a confirming party could not be construed as an assignment deed but on the contrary, the same was merely an agreement to assign, which did not amount to a transfer giving raise to accrual of income either under the head "Capital Gains" or "Business" an .....

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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 .....

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e of the lands by the Vendors in favour of Mis. Wipro are only executory in nature and contingent and it is not a deed of assignment but only an agreement to assign and the same did not result or vest the appellant with an indefeasible right to receive the alleged gains as income liable to tax during the previous year relevant to the assessment year under appeal. 5.· The authorities below are not justified in making the addition without considering the statement of facts and grounds of ap .....

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nt's case and the impugned assessment is made for the second time. 8. Without prejudice to the above, the extent of interest charged u/s.234A[3], 234B[3] and 234C[3] are excessive and liable to be reduced substantially at any rate, the levy of interest shall be up-to the date of first re- assessment and not up-to the date of impugned re-assessment. 9. For the above and other grounds that may be urged at the time of hearing of the appeal, your appellant humbly prays that the appeal may be all .....

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n 148 and completed the reassessment in the first round. The Tribunal vide order dt.5.1.2007 set aside the reassessment in all the four cases and directed the 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 asses .....

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ng 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 contention, the learned Authorised Representative has relied upon the following decisions : (i) Pushpak Bullion Pvt. Ltd. Vs. DCIT 371 ITR 81 (Guj) (ii .....

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ose of the objections and not to redo the assessments on merits. Therefore the Assessing Officer has disposed off the objections raised by the assessee against the notice under Section 148 and consequently passed assessment order. He has relied upon the orders of the authorities below. 6. We have considered the rival submissions as well as the relevant material on record. The facts narrated in the foregoing paras show that the original assessment was completed under Section 143(3) of the Act. Th .....

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disposing off the objections of the assessee against the reopening. The matter was carried to this Tribunal and this Tribunal vide order dt.5.1.2007 set aside the reassessment and remanded the matter back to the record of the Assessing Officer to follow the procedure provided by the decision of Hon'ble Supreme Court in the case of GKN Driveshafts (India) Ltd. (supra) in para 2 as under : 2. It is transpired that all these cases are based on notice that was issued under Section 147 and the a .....

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d 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 .....

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wed by the Assessing Officer which he must necessarily follow and accordingly we so direct. Thus it is clear that the reassessment was set aside for passing the detailed order with regard to the objections and to proceed in accordance with law in regard to the reassessment. Hence the Assessing Officer was required to dispose of the objections against the reopening vide separate order and prior to the assessment order. The legal proposition on this point has been analysed in various cases by the .....

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arify that when a notice under section 148 of the Income-tax Act is issued, the proper course of action for the noticee 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 noticee is entitled to file objections to issuance of notice and the Assessing Officer is bound to dispose of the same by passing a speaking order. In the instant case, as the reasons have been disc .....

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t the Supreme Court has now done in the GKN 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 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 .....

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edy 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 .....

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ce and the Assessing Officer is under a mandate to dispose of such preliminary objections by passing a speaking order, before proceeding with the assessment in respect of the assessment year for which such notice has been issued." 24. From the aforesaid discussion, we are of the considered opinion that writ petition under Article 226 of the Constitution of India is maintainable where no order has been passed by the Assessing Officer deciding the objection filed by the assessee under Section .....

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nce of reasons having direct link with the formation of the belief, the writ Court under Article 226 can quash the notice issued under Section 148 of the Act. The writ petition filed by the petitioner is maintainable. The Assessing Officer is mandated to decide the objection to the notice under Section 148 and supply or communicate it to the assessee. The assessee gets an opportunity to challenge the order in a writ petition. Thereafter, the Assessing Officer may pass the reassessment order. We .....

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he 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 .....

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CIT (supra) in para 8.1 as under : 8.1. From the aforesaid, it does not appear that any observation has been made by the Division Bench and / or any direction is issued by the Division Bench that assessee 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 s .....

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ssing Officer would dispose of the objections, as far as possible, within four months of date of receipt of the objections filed by the assessee. That the Division Bench has also further clarified that requirement and the time-frame 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 object .....

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trictly adhered to by the AO to supply reasons recorded; by the assessee to file objections, if he so desire within 60 days and by the AO to dispose of the objections within four months. As further clarified 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 .....

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