TMI Blog2016 (7) TMI 1480X X X X Extracts X X X X X X X X Extracts X X X X ..... ls of the assessee are directed against the respective orders of the Commissioner of Income Tax (Appeals)-1, Chennai, dated 23.12.2015 and pertain to assessment years 2007- 08 and 2008-09. Since common issue arises for consideration in both the appeals, we heard both the appeals together and disposing of the same by this common order. 2. Sh. T. Banusekar, the Ld. representative for the assessee, submitted that the first issue arises for consideration in both the appeals is with regard to reopening of assessment under Section 147 of the Income-tax Act, 1961 (in short 'the Act'). According to the Ld. D.R., for the assessment year 2007-08, the assessment was reopened after expiry of four years. It is not the case of the Assessing Officer that there was any negligence on the part of the assessee in furnishing inaccurate particulars before completing the original assessment. In fact, the original assessment was completed. For the assessment year 2008-09, the assessment was reopened within four years. According to the Ld. representative, the assessee, a non-banking financial company, borrowed loan from several banks. The loan was settled by making one-time payment. The one-tim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that cannot be a reason to reopen the assessment under Section 147 of the Act. The Madras High Court found that reopening of assessment on the basis of subsequent judgment of Apex Court would amount to change of opinion. Therefore, according to the Ld. representative, reopening of assessment on the basis of the High Court judgment is nothing but change of opinion, therefore, reopening of assessment is invalid. 5 I.T.A. Nos.410 411/Mds/16 4. Sh. T. Banusekar, the Ld. representative for the assessee, has also placed his reliance on the judgment of Delhi High Court in CIT v. Orient Craft Ltd. (2013) 354 ITR 536 and submitted that on identical set of facts, the Delhi High Court found that even though no assessment was made under Section 143(3) of the Act, reopening of assessment would amount to change of opinion. The Ld. representative has also placed his reliance on the judgment of Apex Court in CIT v. Kelvinator of India Ltd. (2010) 320 ITR 561 and the judgment of Full Bench of Delhi High Court in CIT v. Kelvinator of India Ltd. (2002) 256 ITR 1. 5. Placing reliance on the judgment of Gujarat High Court in General Motors India Pvt. Ltd. v. DCIT (2013) 354 ITR 244, the Ld. re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e on the judgment of Bombay High Court in CIT v. Adbhut Trading Co. (2011) 338 ITR 94 and submitted that once the Profit Loss account prepared by the assessee was certified by the authorities under the Companies Act, it is not open to the Assessing Officer to contend that the Profit Loss account has not been prepared in accordance with law under the provisions of Companies Act. In this case, the Profit Loss account was certified by the authorities prescribed under the Companies Act. Therefore, the Assessing Officer now cannot contend that the Profit Loss account was not prepared in accordance with law under the Companies Act. Placing reliance on the judgment of Madras High Court in CIT v. Vijayashree Finance Investment Co (P) Ltd. (2008) 216 CTR 191, the Ld. representative submitted that while computing income under Section 115J of the Act, the power of the Assessing Officer is to examine whether the book profit as computed was certified by the authorities under the Companies Act as having been properly maintained in accordance with the Companies Act. The A.O. thereafter has limited power to increase or reduce as provided for in the Explanation to the said Section. To put ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Loss account, according to the Ld. D.R., the book profit was not computed as per the provisions of Companies Act. Therefore, the judgment of Apex Court in Apollo Tyres Ltd. (supra) may not be applicable at all. When it was found that the accounts were not prepared in the manner provided in Parts II and III of Schedule VI to the Companies Act, 1956, the Assessing Officer can go beyond the book profit as per the audited accounts. Therefore, according to the Ld. D.R., it is not correct to say that the Assessing Officer cannot recompute the book profit. According to the Ld. D.R., since the accounts were not maintained as per the provisions of Companies Act and one-time settlement and waiver of loan by the banking institutions were not routed through Profit Loss account, the Assessing Officer has rightly recomputed the book profit. 10. Referring to reopening of the assessments, the Ld. Departmental Representative submitted that no assessment order was passed under Section 143(3) of the Act. In fact, the returns of income were processed under Section 143(1) of the Act. Placing reliance on the judgment of Apex Court in ACIT v. Rajesh Jhaveri Stock Brokers P. Ltd. (2007) 291 ITR 50 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 20.09.2011, that the one-time settlement cannot be subjected to taxation. The issue now before this Tribunal is with regard to computation of book profit under Section 115JB of the Act. The Assessing Officer claims that even though one-time settlement was not taxable in view of the decision of this Bench dated 20.09.2011, the same has to be included for the purpose of computing book profit. Therefore, she reopened the assessment by issuing notice under Section 148 of the Act. 13. The assessee now claims before this Tribunal that the reopening of assessment is not valid. According to the Ld. representative, for the assessment year 2007-08, the assessment was reopened after expiry of four years, therefore, the reopening is bad in law. For the assessment year 2008-09, the Ld. representative for the assessee contends that the reopening of assessment was due to change of opinion. The assessee also claims that in response to notice under Section 148 of the Act, an objection was filed for reopening of assessment. For the assessment year 2007-08, the objection was filed before the Assessing Officer on 04.07.2014 and for the assessment year 2008- 09, the objection was filed on 19.03.20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e speaking order of the Assessing Officer under section 148 of the Act. The position in law is thus well settled. After a notice for re-assessment has been issued an assessee is required to file the return and seek reasons for issuance of such notice. The Assessing Officer is then bound to supply the reasons within a reasonable time. On receipt of reasons, the assessee is entitled to file preliminary objections to issuance of notice and the Assessing Officer is under a mandate to dis pose 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 the 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 148 of the Act and assessment order has been passed or the order deciding an objection under section 148 of the Act has not been communicated to the assessee and assessment order has been passed or the objection filed under section 148 has been decided along ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sposed of, the impugned assessment dated 31.12.2010 was void ab initio. In fact, the Delhi Bench of this Tribunal has observed as follows at para 8 of its order:- 8. In view of the above decisions, we find that the Assessing Officer is mandated to decide the objection to the notice under sec. 148 of the Act and supply or communicate it to the assessee. Thereafter, the assessee gets an opportunity to challenge the order in a writ petition. Thereafter, the Assessing Officer may pass the reassessment order. It is not open to the Assessing Officer to decide the objection raised against notice under sec. 148 by a composite assessment order. Thus, the Assessing Officer was required to first decide the objection of the assessee filed under sec. 148 and serve a copy of the order on assessee. And after giving some reasonable time to the assessee for challenging his order, it is open to him to pass an assessment order. Since such compliance has not been made by the Assessing Officer in the present case, we hold that the impugned assessment order dated 03.10.2008 as not valid and the same is held as void ab initio. 15. In view of the above, this Tribunal is unable to uphold the order ..... X X X X Extracts X X X X X X X X Extracts X X X X
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