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M/s. Jayanthi Natarajan Versus Assistant Commissioner of Income Tax

2017 (9) TMI 1042 - MADRAS HIGH COURT

Reopening of assessment - reasons to believe - whether the respondent was duty bound to pass a separate speaking order on the objections raised by the petitioner for reopening? - Held that:- The Hon'ble Supreme Court in the case of GKN Driveshafts (India) Ltd. (2002 (11) TMI 7 - SUPREME Court) held 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 Ass .....

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order. - Admittedly, in the instant case, this has not been done by the respondent, but the respondent seeks to sustain the impugned assessment order stating that in the first few paragraphs of the order, he has dealt with objections and disposed of accordingly. Unfortunately, the manner in which the respondent has decided the issue is wholly unsustainable in law. The purpose for passing a separate speaking order on the objections is with a view to afford an opportunity to the assessee to qu .....

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ed, which goes to the root of the matter, thereby, vitiates the entire proceedings. - Decided in favour of assessee. - W.P.No.1905 of 2017 & W.M.P.No.1925 of 2017 - Dated:- 14-9-2017 - T. S. Sivagnanam, J. For Petitioner : Mr.Suhrith Parthasarathy For Respondent : M/s. Hema Muralikrishnan ORDER The petitioner has filed this Writ Petition challenging an assessment order under the provisions of the Income Tax Act, 1961, (Act) for the assessment year 2009-10, as being arbitrary, unjust and illegal. .....

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s income tax assessment for the assessment year 2009-10, on the ground that income had escaped assessment within the meaning of Section 147 of the Act. 3. The petitioner by letter dated 04.04.2016, requested the respondent to furnish reasons for reopening. Before the petitioner could receive the reasons for reopening, a notice, dated 23.08.2016, was issued under Section 143(2) of the Act, directing the petitioner to submit revised computation with sale and other agreements/records in hard copy f .....

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ointed out that the proviso to Section 147 of the Act is clear in that, when more than four years have lapsed from the end of the relevant assessment year, where a scrutiny assessment has already been made under Section 143(3), it is necessary for the Income Tax Department to show that the assessee had failed to truly and fully disclose all material facts in order to invoke jurisdiction under Section 147 of the Act. In spite of such specific objection, the respondent failed to pass a speaking or .....

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rough the registered sale deed, dated 04.09.2008. Furthermore, the respondent completely disregarded the fact that the Commissioner of Income Tax (Appeals) has expressly held in the case of one of the co-owners of the property, that capital gains had not arisen in the assessment year 2009-10, but in the assessment year 2007-08. On the above grounds, the petitioner challenges the impugned assessment order. 4. Mr.Suhrith Parthasarathy, learned counsel for the petitioner submitted that as per the m .....

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n of the Bombay High Court in the case of IOT Infrastructure and Energy Services vs. ACIT, reported in 329 ITR 547 and Rabo India Finance Ltd. vs. DCIT, reported in 346 ITR 81. It is further submitted that the petitioner is entitled to challenge an order passed by the assessing officer disposing of the objections raised to the notice for reopening by approaching this Court and in the instant case, without passing such speaking order, the objections have been disposed of in the impugned assessmen .....

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ussion, the assessment has been completed. In the initial part of the assessment order, the correctness of reopening has been affirmed by proper rebuttal to the objections against reopening. Further, there is no requirement in terms of Section 147 of the Act to pass a separate or distinct order while disposing of the objections for reopening and it only insisted that the objections should be necessarily brought on record and countered in a speaking manner and in the impugned assessment order, th .....

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st of construction space received by the petitioner which comes to ₹ 3,55,78,630/- 7. It is further submitted that the petitioner by omitting to offer true and correct capital gains in the appropriate year, has failed to disclose all materials at the time of original assessment and therefore, the assessing authority was correct in assuming jurisdiction under Section 147 of the Act, even after the lapse of 4 years. It is further submitted that since the petitioner has an alternate remedy of .....

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n reply, the learned counsel for the petitioner would submit that the Writ Petition is maintainable, as the impugned assessment is without jurisdiction, as it is in blatant breach of the decision of the Hon'ble Supreme Court in GKN Driveshafts (India) Ltd.,(supra). It is reiterated that the reopening of the assessment in the instant case is not based on any new facts, but it is rather based on a change of opinion on facts. It is further submitted that the decision relied on by the Revenue in .....

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nch of this Court in the Case of N.Ahamed Ali vs. Income Tax Officer in Tax Case (Appeal) No.766 of 2014. dated 19.11.2014. Reference was made to the decision of the Division Bench of the High Court of Andhra Pradesh in the case of B.F.Dittia vs. Appellate Authority, Income Tax Department and the Income Tax Officer (Public Relations) reported in (2008) 307 ITR 158 (A.P), in which, the decision of the Hon'ble Supreme Court in Sona Builders vs. Union of India reported in (2001) 10 SCC 280 was .....

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ommissioner of Income Tax and another reported in (2008) 304 ITR (Mad), wherein, it was held that when a notice under Section 148, is without jurisdiction, especially in cases beyond four years, where there is no failure on the part of the assessee, to fully and truly disclose all material facts, the proceedings deserves to be quashed simplicitor. 9. Heard the learned counsels appearing for the parties and perused the materials placed on record. 10. The material facts as set out above, are not i .....

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a notice to the petitioner under Section 143(2) of the Act on 23.08.2016, directing the petitioner to submit revised computation. The petitioner's case is that she had absolutely no idea as to what was the transaction, which is being referred to by the respondent, as she had not been furnished the reasons on which, the income tax assessment had been reopened. Along with letter dated 01.09.2016, the respondent furnished the reasons for reopening. The petitioner submitted her detailed objectio .....

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Infotech Private Limited had undertaken to construct and deliver to the 5 joint owners including myself 40% of the saleable built-up area in the exclusive blocks of building. In consideration of the above, we the joint owners undertook to convey to RMS Infotech Private Limited 60% of the undivided interest in the schedule property. We had also executed a general power of attorney in favour of M/s RMS Infotech Private Limited on 12.05.2006 to develop the property. I further stated that in the ret .....

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t agreement/power of attorney was the effective date for transfer of property, I filed a revised return for the assessment year 2007-08 and paid the difference in tax to the tune of ₹ 11,51,422/-. 11. Thus, the petitioner represented that she has already offered capital gain tax on transfer of property in question during the assessment year 2007-08 and requested the respondent to drop the proceedings. Further, it was pointed out that in respect of one of the co-owners, the Commissioner of .....

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l for consideration namely, whether the respondent was duty bound to pass a separate speaking order on the objections raised by the petitioner for reopening. (2) If the answer to the above question is in the affirmative, should the matter be remanded to the respondent for fresh consideration or is it a ground to quash the entire proceedings? 13. The Hon'ble Supreme Court in the case of GKN Driveshafts (India) Ltd.,(supra), held that when a notice under Section 148 of the Income Tax Act is is .....

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assessee, but the revenue as well. It has been pointed out that on receipt of the reasons, the noticee is entitled to file objections to issuance of notice for reopening and if he files such objections, the Assessing Officer is bound to dispose of the same by passing a speaking order. Thus, the procedure, which was required to be followed by the respondent is to dispose of the petitioner's objections by passing a speaking order. 14. Admittedly, in the instant case, this has not been done by .....

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impugned order has taken away such valuable right from the petitioner inasmuch as the impugned proceedings is an order of assessment under Section 143(3) of the Act. Therefore, if an order of assessment has to be challenged, necessarily an appeal has to be preferred and only in rarest of rare case, Courts would entertain challenge to assessment orders in writ proceedings. Thus, the procedure adopted by the respondent is completely flawed, which goes to the root of the matter, thereby, vitiates .....

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jections to reopening notice in accordance with law, the Division Bench held that once the impugned order finds the assessment order is without jurisdiction, as the law laid down by the Apex Court in the case of GKN Driveshafts (India) Ltd., (supra), has not been followed, then there is no reason to restore the issue to the Assessing Officer to pass fresh/further orders and if this is permitted, it would give license to the Assessing Officer to pass orders on reopening notice, without jurisdicti .....

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