TMI Blog2020 (10) TMI 557X X X X Extracts X X X X X X X X Extracts X X X X ..... VER LTD) [ 2018 (1) TMI 1506 - ITAT MUMBAI] and M/S. BAYER MATERIAL SCIENCE PVT LTD.[ 2016 (3) TMI 179 - BOMBAY HIGH COURT]. Assessment framed without disposing of the objections by way of speaking order is invalid and has to be quashed. In view of the above facts and circumstances and the ratio laid down in the various decisions, we hold that the order of Ld. CIT(A) is correct and pursuant to the ratio laid down by various judicial forums. Accordingly the order of CIT(A) is upheld by dismissing the appeal of the revenue. - ITA No.5291/M/2017, CO No.42/M/2019 (Arising out of ITA No.5291/M/2017) - - - Dated:- 6-10-2020 - Shri Rajesh Kumar, Accountant Member And Shri Amarjit Singh, Judicial Member For the Assessee : Shri Dharmesh Shah, A.R. For the Revenue : Shri Sandeep Raj, D.R. ORDER PER RAJESH KUMAR, ACCOUNTANT MEMBER: The above titled appeal by the Revenue and cross objection by the assessee have been preferred against the order dated 10.04.2017 of the Commissioner of Income Tax (Appeals) [hereinafter referred to as the CIT(A)] relevant to assessment year 2006-07. ITA No.5291/M/2017 2. The various ground raised by the Revenue are as u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nds of appeal, the Revenue has raised only one issue that the Ld. CIT(A) is not justified in holding the reopening of assessment as invalid by Ld. CIT(A) by ignoring the fact that the said issue was never raised in the first round of litigation. 4. The facts in brief are that the assessment was framed under section 143(3) on 19.12.2008 accepting the total declared loss by the assessee. Thereafter, the case of the assessee was reopened under section 147 of the Act recording the following reasons: 3. The case was selected for scrutiny. The assessment was completed u/s.143(3) of the l.T. Act on 19-12-2008 assessing total loss at ₹ 1,92,78,249/-. Thereafter the case was re-opened u/s. 147 of the I.T. Act recording the following reasons: It is seen that the entire assets of the assessee company had been sold through auction by the leading financial institution i.e. Assets Reconstruction Company (I) Ltd(ARCIL) Others in November, 2005 for total sale consideration of ₹ 19,25,00,000/- to M/s. Jai Corporation Ltd. The assessee company has shown ₹ 10.82,65,830/- as profit on sale of assets in the profit and loss account below the line and the said profit had be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y short term capital gain of ₹ 10,15,21,034/- and interest disallowance under section 43B ₹ 1,62,32,388/-. Needless to mention that the loss as per return of income filed by the assessee ₹ 1,92,78,249/- was adjusted and set off against short term capital gain. Thereafter, the assessee challenged the order of AO before Ld. CIT(A) challenging therein the order of AO on jurisdictional issue or reopening the assessment and on merit also. The Ld. CIT(A) held the reopening to be invalid by observing and holding as under: Under this ground of appeal the appellant is disputing validity of reopening initiated by the AO and the consequential assessment u/s 254 r.w. u/s 148, r.w. u/s 143 (3). On perusal of the order of the ITAT in Appeal No. 3588 MUM/12 dtd. 21/11/2014. It is observed that in point no. 6 on page 51 of the paper book it is stated that Subject to the payment of the cost stated above, all the issues contested before us are restored to the file of the AO with the direction to examine them afresh affording the necessary opportunity of being heard to the assessee and take appropriate decision in accordance with the law. Accordingly, the order passed by Id. CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for verification and clarification. Through the submissions have been perused by the AO, no clarification has been provided in the remand report dated 17.03.2017. The appellant has also claimed in the written submission that the objections of the appellant for reopening off the assessment have not been disposed of. It was submitted before me that vide letter dated 08.10.2015, the appellant had filed the objections to reopening before the AO. In response to the same vide letter dated 13.10.2015, the AO has merely observed that your objections cannot be entertained at this stage. No reasons have been given for not entertaining the objections of the appellant to the reopening of the assessment. The appellant has objected to reopening by contesting that the reason were not based on any tangible material available to him pursuant to the original assessment completed. The appellant has objected to the reopening on the ground that the assessment was reopened by the AO was on account of change of opinion. I find that the original assessment was completed u/s.143(3) on 19.12.2008 . From the body of the order, it is evident that the profit and loss account filed by the assessee was sc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT 55 Taxman.com 391 cited by the appellant, the court held that there should be a relation of a link with objective fact in the form of information or facts external to the materials on the records. Such external facts or material constitute the driver, or the key which enable the authority to legitimately re-open the completed assessment. Even the other decision cited by the appellant supports the case and the argument made in the submissions. In view of the above, I am of the view that the re-opening is not valid as it is not based on any tangible material brought on record by the AO. The perusal of the assessment order also shows that reopening of the assessment was on account of objections raised by the audit party and to give effect to the pending objections. Before me, the appellant has also submitted that the AO has not independently applied his mind while reopening the assessment and the same has been done only pursuant to objections raised by the audit party and to give effect to the said objection. It has been argued that the audit Objections cannot be considered to be the external tangible material for the purpose of reopening as held by the Hon'ble Delhi High Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lude issue raised by way of additional ground of appeal. Hence, it cannot be said that the issue was not raised in 1st round. In any case, the issue of reopening of assessment is a jurisdictional issue and can be raised in 2nd round of litigation. To support the same, the ld AR placed the reliance on the following decisions : i. Inventors Industrial Corporation Ltd. v. CIT [194 ITR 548 (Bom.)] ii. P.V. Doshi v. CIT [113 ITR 22 (Guj)] iii. National Thermal Power Co. Ltd. v. CIT [229 ITR 383(SC)] iv. Rina S. Mehta v. DCIT [ITA No. 3120/Mum/2015] dated 17.07.2019. v. Hemal Knitting Industries v. ACIT [127 ITD 160 (Chn TM)] vi. RamilabenRatilal Shah v. CIT [282 ITR 176(Guj)] vii. Shrimant F. P. Gaekwad (Decd.) v. ACWT [3 ITR(T) 476(Ahmd)] Hence, it is prayed that issue of reopening of assessment may kindly allowed to be taken up in terms of the ratio laid in the aforementioned decisions. 10. As regards merits of reopening of the assessment, it is submitted that the reopening of assessment is done without application of mind and without any tangible material available with assessing officer. To support the same, the ld. AR submitted that the reasons provided t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld AR relied on the following decisions : i. Hindustan Unilever Ltd. v DCIT [ITA No. 3701/Mum/2016] dated 01.01.2018. ii. Multiple Images v. ITO [ITA No. 958/Mum/2016] dated 02.08.2018. iii. Bayer Material Science Pvt. Ltd. v. DCIT [66 Taxmann.com 335 (Bom.) iv. KSS Petron Pvt. Ltd. v. ACIT [ITA no. 224 of 2014 (Bom)] dated 03.10.2016. The ld AR prayed that on this count that the reopening of assessment be quashed as the same is without disposing off objections raised by the assessee. 12. We have heard the rival submissions of both the parties and perused the material on record. The undisputed facts are that the case of the assessee was reopened under section 147 of the Act. In the first round of litigation, the jurisdictional issue was neither raised before the AO nor before the Ld. CIT(A). However, an additional ground was raised before the Tribunal for the first time in the 1st round of litigation. But, there is no mention of admission or adjudication thereof in the Tribunal order vide which the Tribunal has restored all the issues back to the file of the AO to be decided afresh. Thus the issue before us is whether the issue of reopening can be raised in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 143(3) read with section 147 of the Act dated 16.12.2010 which reads as under: The assessment was reopened u/s. 148 on the premises that the audit objection raised vide ITRA/LAP XXIII/DCIT 8(3)/AQ-16 was pending and remedial action as per Board Instruction No.9/2006 dated 08.01.2006 to protect the interest of revenue had to be taken. Accordingly, the case was reassessed after giving due effect to the audit query. The Revenue Audit shall be intimated in due course of time. 13. Thus, it is apparent from the above that assessment is reopened on the basis of audit objection which is nothing but a borrowed satisfaction of the audit party and not AO s own satisfaction. In our opinion there is no application of mind by the AO while recording the reasons under section 148(2) of the Act. The case of the assessee finds support from the decision of Hon ble Delhi High Court in the case of Xerox Modicorp Ltd v/s DCIT 350 ITR 308 wherein it has been held that note of the audit party can not constitute any tangible material. In the case of PCIT vs. Chand Co. Ltd. (supra) the Hon ble Supreme Court dismissed the SLP filed by the Revenue. In this case the Hon ble High Court has he ..... X X X X Extracts X X X X X X X X Extracts X X X X
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