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TMI Blog2020 (10) TMI 557X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal dated 21.11.2014. 2. On the facts and circumstances of the case and in law, whether the Ld. CIT(A) was justified in holding that reopening was not valid without appreciating that the matter was remanded back to the file of the AO by Hon'ble Tribunal vide its order dated 21.11.2014 merely because the Hon'ble Tribunal was of the view that the order of Ld. CIT(A) was passed without hearing the assessee on merits and as such the validity of reassessment has never been questioned by the Hon'ble Tribunal. 3. On the facts and circumstances of the case and in law, whether the Ld. CIT(A) was justified in holding that reopening was not valid and thus adjudicated upon the issue of reassessment without appreciating that the Hon'ble Tribunal had never admitted the additional ground of the assessee challenging the reasses; .lent proceedings and hence, the order of Ld. CIT(A) has travelled beyond the scope outlined by Hon'ble Tribunal. 4. On the facts and circumstances of the case and in law, whether the Ld. CIT(A) was justified in quashing the order passed in pursuance of the order u/s 254 of the Act by holding that reopening itself was not valid without appre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ards financial expenses, consisting of interest payable on term loan & other loans to banks. It is observed that only a provision has been made in the books for interest and no actual payment had been made during the year under consideration. In accordance with the provisions of section 43B of the Income tax Act, interest claimed at Rs. 1,62,32,388/- is not allowable" 5. Notice under section 148 was issued on 26.03.2010 which was served upon the assessee on 27.03.2010. The assessee filed a letter dated 28.04.2010 requesting the AO to furnish the reasons for reopening which were duly supplied to the assessee on 11.05.2010. Finally the assessment was framed under section 143(3) read with section 147 of the Act vide order dated 16.12.2010 assessing the total income at Rs. 9,84,75,170/-. The assessment was reopened primarily for the reason that the profit on sale of assets of Rs. 10,82,65,830/- was shown below the line in the P&L account and adjusted against the brought forward losses. The AO came to the conclusion that in this manner the income has escaped assessment. In the first round of litigation the issue of reopening was not challenged even before Ld. CIT(A). However, assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee had filed an additional ground before the Tribunal, a copy of which is also placed on records before me. The tribunal vide its order dated 21.11.2014 in ITA o. 3588/Mum/2012 has observed that all in issues contested by the assessee are restored to the file of the AO with the direction to examine them afresh. Thus , it cannot be said that the appellant was not entitled to challenge the issue of the reopening before the AO now . In any case, the appellant has relied upon the decision in the case of Inventors Industrial Corporation Ltd. v/s CIT 194 ITR 548 (Bom.) and P.V.Doshi v/s. CIT 113 ITR 22 (Guj.) wherein it has been held that there cannot be any waiver to examine validity of the jurisdiction of the Assessing, an assessee is entitled to raise the jurisdictional issue at any stage. Hence, even the appellant is entitled to challenge the reopening is held in the aforesaid decisions of the Hon'ble High Courts. Before me , the appellant has claimed that originally , the AO recorded reason in writing which are different from the set of reasons which have been provided by the AO to the appellant in the course of set aside proceedings. I have noticed that vide letter dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment. It was explained that the income was not offered since such income was legally not taxable in the year under appeal and that if the liabilities payable to bank are considered no income arise on sale of the assets as held in the decision of several Courts. In my view all the facts were duly disclosed in audited accounts filed before the AO. Therefore there was no new tangible material available to the AO for initiating reopening. The reopening of the assessment is only on the basis of the material which was already on record at the time of the original assessment and which has been scrutinized before passing the assessment order. The decision in case of CIT v/s Kelvinator of India Ltd 320 ITR 561 would be relevant to the present issue. In the said case, the Hon'ble Supreme Court has stated that the AO has no power to review earlier assessment. The Hon'ble Supreme Court also observed that the AO has power to reopen provided there is a tangible material to come to conclusion that there is escapement of income from the assessment. Unless a tangible material is brought on record, the AO can not reopen the assessment on the basis of information and details which are al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xmann.com 260, Adani Exports v/s DCIT 240 ITR 224 (Guj.), Rajalakshmi Textile processors ltd, v/s. CIT 235 ITR 178 (Mad.) , CIT v/s Ram Mangatrarn 312 ITR 100 (P & H), and Waldies Ltd v/s. ITO 246 ITR 29 (Cal.) I am therefore of the considered opinion that reopening initiated by the AO is not tenable in law. Accordingly I allow this ground of appeal in favor of the appellant and hold that reopening is invalid and the reassessment called out pursuant to that is also invalid . This ground of appeal is allowed." 7. The Ld. DR vehemently submitted before the Bench that the Ld. CIT(A) has wrongly adjudicated the jurisdictional issue of reopening under section 147 of the Act in favour of the assessee by ignoring the fact that in the first round of litigation the assessee never challenged the said issue of reopening before Ld. CIT(A) and the additional ground filed before the Tribunal challenging the reopening was never admitted and adjudicated. Therefore the Ld. CIT(A) has no jurisdiction to decide this issue. 8. The Ld. DR. submitted that the Tribunal has set aside the matter to the file of the AO to examine the issues afresh. Therefore, the scope of assessment before the AO in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... angible material available with AO to reopen the assessment. In this regard, reliance is placed on the following decisions wherein the Hon'ble Courts have quashed the reassessment proceedings carried out on the basis of audit objection without application of mind and without tangible material: i. Xerox Modicorp Ltd v. DCIT [350 ITR 308 (Del.)]. ii. PCIT v. S. Chand & Co. Ltd [100 taxmann.com353(SC)] iii. FIS Global Business Solutions India (P.) Ltd. v. ACIT [102 taxmann.com 471(Del)] confirmed by Hon'ble Supreme Court in ACIT v. FIS Global Business Solutions India (P.) Ltd. [104 taxmann.com 169 (SC)] iv. Air India v. V.K. Srivastava, CIT &Ors [213 ITR 739(Bom)] v. CIT v. v. Indian Sugar & General Industry Export Import Corpn. Ltd [170 Taxman 229(Del)]. vi. GMR Holdings (P) Ltd v. DCIT [149 TTJ 338(Bang)]. vii. CIT v. Akot Ginning & Pressing Factory Ltd [66 taxmann.com 80(Bom)] viii. ACIT v. Nanavati Constructions [ITA No. 2424/Mum/2017] dated 19.12.2019. ix. DCIT v. IDBI Federal Life Insurance Co Pvt. Ltd. [ITA No. 5290/Mum/2017] dated 15.01.2019 x. CIT v. Kelvinator of India Ltd [320 ITR 561 (SC) The ld. AR prayed that the reopening of assessment be quashed as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd. v/s CIT (supra) wherein the Hon'ble Court has held that the assessee can challenge the issue of reopening for the first time in the second round of litigation even though this was not challenged in the first round of litigation. In the case of PV Doshi vs. CIT, Gujarat (supra) the Hon'ble Gujarat High Court has held the same ratio. The assessee is also squarely covered by the decision of co-ordinate bench of the Tribunal in the case of Rina S. Mehta vs. DCIT(supra) , National Thermal Power Co. Ltd. vs. CIT (supra) and various other decisions cited by the assessee's counsel as have been mentioned hereinabove. Therefore we hold that there is no bar in raising the legal issue of jurisdiction in the second round before the Ld. CIT(A). As regards the merit of reopening, we find that the said profit on sale of assets Rs. 10,82,65,830/- was shown below the line in the P&L account and adjusted against the brought forward losses. The said P&L account was before the AO in the original assessment proceedings which culminated in framing assessment under section 143(3) of the Act vide order dated 19.12.2008 and thus there is no new and independent tangible material before the AO to re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ). Therefore, we are of the view that reopening of assessment proceedings is not based upon any new tangible material and there being no application of mind on the part of the AO. Therefore, we do not find any infirmity in the order of Ld. CIT(A) on this issue. Further, we note that assessee has also filed objections to reopening for the first time in the set aside proceedings before the AO vide letter dated 13.10.2015 and AO observed that objections could not be disposed off in the second round of litigation. The said non disposal of objections by way of speaking order rendered the entire assessment proceedings as invalid and void. The case of the assessee is squarely covered on this issue by various decisions of the co-ordinate benches and jurisdictional high court namely i)Hindustan Unilever Ltd. v DCIT (supra) ii) Multiple Images v. ITO (supra) , iii) Bayer Material Science Pvt. Ltd. v. DCIT (supra) and iv)KSS Petron Pvt. Ltd. v. ACIT (supra). In all the above decisions it has been held that 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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