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2017 (9) TMI 1042

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..... one 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 question such an order, if he is aggrieved. The respondent by passing the 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). 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 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 .....

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..... Driveshafts (India) Ltd. v. ITO, reported in 259 ITR 19 (SC). While so, the respondent on 21.12.2016, passed an assessment order, where while disposing of the petitioner's objections, merely holds that the argument that the transfer of immovable property occurred during assessment year 2007-08, was incorrect and that the actual conveyance was undertaken only through 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 mandate of the Hon'ble Supreme Court in the case of GKN Driveshafts (India) Ltd., (supra), the assessing officer is required to dispose of the objections placed to the reopening of the assessment with a speaking order and in the petitioner's case, the respondent failed to dispose of the objections raised by the petitioner .....

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..... ed 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 challenging the impugned assessment by way of an appeal, writ petition is not maintainable. In support of her contention, the learned counsel relied on the decision of the Division Bench of this Court in the case of Areva T D India Ltd. vs. Assistant Commissioner of Income-tax reported in 2007 165 Taxman 123 ( Madras) and the decision of the High Court of Gujarat in the case of Principal Commissioner of Income-tax-2, Vadodara vs. Sagar Developers reported in [2016] 72 Taxman.com 321. 8. In 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 o .....

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..... a letter dated 04.04.2016, requesting the respondent to furnish the reasons for reopening. However, even before the reasons for reopening were furnished, the respondent issued 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 objections vide letter dated 28.09.2016, the gist of which is as follows: I along with four others, viz. M/s Gay Travels Limited, B.S.Adityan and M/s VMD Enterprises, and Mr.Balasubramainan Adityan were joint owners of an extent of land admeasuring 15.17 acres in Perungudi village, Tambaram Taluk, Kancheepuram District. We had entered into a joint development agreement on 25.12.2004 with M/s RMS Infotech Private Limited for the development of the property. By virtue of the development agreement M/s RMS Infotech Private Lim .....

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..... India) Ltd.,(supra), 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 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. This procedure has been carved out by the Hon'ble Supreme Court in GKN Driveshafts (supra), which binds not only the 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 the respondent, but the respondent seeks to sustain the impugned assessment order stating that in the firs .....

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..... o, it has to be held that the entire proceedings are vitiated. 16. In Sona Builders (supra), the Writ Petitions were filed by the appellant therein and the transferer impugning the order of compulsory purchases. It was contended that no reasonable opportunity had been given to them to meet the case in the notice with reference to the sale. The writ petition was dismissed and confirmed by the Division Bench. On appeal, the Hon'ble Supreme Court found that there has been a gross breach of principles of natural justice because adequate opportunity to meet the case made out in the notice was not given to the appellant therein and having regard to the statutory limit within which the appropriate authority has to act and it is failure to act in conformity with the principles of natural justice, the Hon'ble Supreme Court refused to remand the matter to the appropriate authority and set aside the order. 17. The law declared by the Hon'ble Supreme Court is of binding character and is a source of law and to itself, which will bind all authorities. GKN Driveshafts (India) Ltd.,(supra), lays down a law and failure to comply would render the assessment order as without jurisdi .....

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