TMI Blog2006 (11) TMI 166X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer while completing the reassessment and hence the order of the reassessment is bad in law. It is clear that the Assessing Officer has to furnish reasons, within a reasonable time and on receipt of the same, the assessee can file objection to the issue of notice and the Assessing Officer is bound to dispose of the same by a speaking order, before proceeding with the reassessment. In the present case, the objections have not been considered at all by the Assessing Officer before proceeding with the reassessment. Reassessment order was completed without considering the objections to the reopening of the assessment. It is nothing but a procedural defect and, therefore, it could not be held that the reassessment is a nullity in law. Since we are of the view that these are only irregularities committed by the Assessing Officer (i.e.) not considering the objections as well as not issuing notice u/s 143(2) of the Act, before completing the reassessment, we set aside the order of the Tribunal as well as the lower authorities with a direction to the Assessing Officer to consider the matter afresh, particularly the objections given by the assessee for reopening and issue notice u/s 143( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee may rely in support of the return as held by the Allahabad High Court in the case of Rajmani Devi v. CIT [1937] 5 ITR 631? 5. Whether, on the facts and circumstances of the case, the Appellate Tribunal was right in law in concluding that valuation of closing net asset with the help of the chartered accountant firm be construed as a valuation of the plant and machinery by item-wise and detract from the concept of slump sale? 6. Whether, on the facts and circumstances of the case, the Appellate Tribunal was right in law in remanding the assessment relating to the assessment year 1999-2000 to the Assessing Officer to tax depreciable assets under section 50 of the Income-tax Act? 7. Whether, on the facts and circumstances of the case, the Appellate Tribunal was right in law in ignoring that the consideration received by the assessee in a slump sale would be outside the purview of capital gains under section 45 of the Act, as held by the Madras High Court in the case of CIT v. K. P. V. Shaik Mohammed Rowther and Co. [1995] Tax LR 675 following the judgment of the apex court in the case of CIT v. B. C. Srinivasa Setty [1981] 128 ITR 294? 8. Whether, on the facts and circumstanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment as well as various disallowances and additions made by the Assessing Officer. The Commissioner of Income-tax (Appeals) confirmed the order of the Assessing Officer. Aggrieved, the assessee filed an appeal before the Income-tax Appellate Tribunal (hereinafter referred to as the Tribunal ). The Appellate Tribunal upheld the reopening of the assessment, and in respect of additions and disallowances, remanded the matter to the Assessing Officer with a direction to redo the assessment and the appeal was allowed partly. 3. Learned senior counsel appearing for the assessee submitted that the reassessment order passed by the Assessing Officer is wrong, illegal and without basis on the ground that the Assessing Officer failed to consider the objections given by the assessee in response to the notice issued under section 148 of the Act, and also reassessment was completed without giving statutory notice under section 143(2) of the Act and relied on the following judgments to support his contention. (a) CIT v. M. Chellappan [2006] 281 ITR 444 (Mad) ; (b) Vipan Khanna v. CIT [2002] 255 ITR 220 (P H) ; and (c) GKN Driveshafts (India) Ltd. v. ITO [2003] 259 ITR 19 (SC). 4. It is also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y communicated during the course of the reopening proceedings. The Assessing Officer, by letter dated December 7, 2004, further directed the assessee to file the return and produce records on December 16, 2004. In consequence of the said notice, the assessee immediately sent a letter dated December 18, 2004, to the Assessing Officer and objected again for reopening the assessment and requested the Assessing Officer to treat the original return filed on December 31, 1999, as return to the notice issued under section 148 of the Act. Later, the Assessing Officer sent a letter dated December 20, 2004, enclosing the reasons recorded for reopening, for the assessment year 1999-2000 and posted the case for hearing on December 24, 2004, at 3.30 p.m. Immediately, the assessee sent his objections for reopening the assessment stating that no income has escaped assessment and requested the Assessing Officer to drop the proceedings. Further, a letter was also sent by the assessee on January 5, 2005, objecting for reopening and submitted that no income has escaped assessment and requested not to proceed with section 148 of the Act since all the materials and evidence were available to the office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing him to furnish within such period, as may be specified in the notice, a return of his income or the income of any other person in respect of which he is assessable under this Act during the previous year corresponding to the relevant assessment year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed ; and the provisions of this Act, shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139. 9. It is evident from the above provision that the Assessing Officer shall serve on the assessee, a notice requiring him to furnish the return within such time, in the prescribed form and verified in the prescribed manner. In the present case, this part of the provision is satisfied. As regards the second part of the provision, the wordings shall, so far as may be, apply means, other procedural aspect of the machinery provision to the extent possible should be followed. The second part deals with procedure or machinery provision for completing the reassessment proceedings. In this case, the assessee sent a letter dated December 18, 2004, which reads as under : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osing the return in response to the notice under section 148 of the Act stating that the contents of the said return are exactly the same as per the original return. Since there was no difference in the contents of the original return as well as the return enclosed by the assessee to its letter dated January 17, 2005, the Assessing Officer thought that it was not necessary to give another notice of hearing under section 143(2) of the Act. The following distinguishing features emanate from the above facts : (i) The original return as well as the subsequent return filed in response to the notice under section 148 of the Act, are the same and there is no difference in the contents of both the returns. (ii) The assessee himself participated in all the proceedings objecting to the reassessment. (iii) Objections of the assessee were not considered by the Assessing Officer. (iv) There is a valid reopening of the assessment, but there are procedural irregularities committed by the Assessing Officer in completing the reassessment. 14. Taking into consideration the above factors, we are of the view that only irregularities are committed by the Assessing Officer, while completing the reassess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stion of law arises for our consideration in these appeals. 17. It is evident from the fact that this court was of the view that no substantial question of law arises out of the order of the Tribunal, and dismissed the same at the time of admission, by relying on the Punjab and Haryana High Court judgment reported in Vipan Khanna v. CIT [2002] 255 ITR 220. We find the facts involved in the present case are entirely different from the facts involved in the above judgment and because of the distinguishing features in the present case, the above referred to judgment will not help the assessee. 18. In the case of Vipan Khanna v. CIT [2002] 255 ITR 220 (P H), the assessee filed a writ petition in which it was contended that, requiring the assessee to produce his books of account to furnish information on various points, was not warranted in proceedings under section 147 of the Act. Initially, the assessee had not challenged the validity of reassessment proceeding, but raised the issue during the course of argument. The finding given is that the assessee claimed depreciation in the return at the rate of 50% and the assessee had nowhere disputed the fact that the admissible rate of deprec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to make a fresh assessment was without jurisdiction, and further it was argued that once the assessment was completed without notice, it amounts to nullity in law and the assessment should be annulled. The court rejected the contention and held as follows (page 199) : That is a power to be exercised where the assessment proceeding is a nullity in the sense that the Income-tax Officer had no jurisdiction ab initio to take the proceeding. A proceeding is a nullity when the authority taking it has no jurisdiction either because of want of pecuniary jurisdiction or of territorial jurisdiction or of jurisdiction over the subject-matter of the proceeding. A proceeding is a nullity when the authority taking it has no power to have seisin over the case. The omission of the Income-tax Officer to issue a notice under section 23(2) does not affect the ab initio jurisdiction enjoyed by the Income- tax Officer in respect of the proceeding. The Income-tax Officer had seisin over the case, he had overall jurisdiction over the case and in that sense had power to initiate the proceeding. The omission to issue a notice under section 23(2) merely prevents the Income-tax Officer from making an assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so relied on the Supreme Court judgment in the case of GKN Driveshafts (India) Ltd. v. ITO reported in [2003] 259 ITR 19 to support his contention that objections were not considered by the Assessing Officer while completing the reassessment and hence the order of the reassessment is bad in law. The Supreme Court considered the scope of reopening of the assessment and held as follows (page 20) : We see no justifiable reason to interfere with the order under challenge. However, we clarify 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 disclosed in these proceedings, the Assessing Officer has to dispose of the objections, if filed, by passing a speaking order, before proceeding with the assessment in respect of the abovesaid five assessment years. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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