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TMI Blog2021 (9) TMI 1343X X X X Extracts X X X X X X X X Extracts X X X X ..... mself to be assessed to tax as the mandatory conditions for assumption of jurisdiction under section 148 of the Act did not exist or have not been complied and consequently the order of assessment is bad in law and liable to be cancelled on the facts and circumstance of the case. l) The assessment is also bad in law as no notice under 148 has been served on the appellant and consequently the order of assessment is bad in law. m) The assessment is also bad in law as no proper sanction under section 151 of the Act as contemplated in law has been obtained and consequently the order of assessment is bad in law and liable to be cancelled on the facts and circumstance of the case. n) The assessment order is further bad in law as the objections to the reasons under section 148 have not been disposed of by a speaking order and hence contrary to law and on this count also the assessment is liable to be cancelled on the facts and circumstance of the case. 4. Grounds on asset being agricultural land and not capital asset a) The assessing officer and the CIT (A) are not justified in law in treating the property sold as a capital asset and not as agricultural land on the facts and cir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... b) The authorities below were not justified in not adopting the appellants share of the amount shown in the sale deed at Rs. 10,50,000/- as the full value of consideration for the purpose of computing capital gains on the facts and circumstance of the case. c) The authorities below failed to appreciate that the section 50C is not applicable to the facts of the case as the land sold is not a capital asset but agricultural land on the facts of the case. d) Without prejudice the authorities below ought to have referred to the valuation officer to determine the full value of consideration as per Section 50 of the Act on the facts and circumstance of the case. e) The authorities below failed to appreciate that the proviso to section 50 C has been held to be clarificatory and hence the value on the date of the agreement alone should have been considered as full value of consideration for the purpose of computing capital gains on the facts and circumstance of the case. f) Without prejudice the Learned assessing officer was not justified in computing the entire capital gains in the hands of the appellant when five persons are party to the sale deed and thus assessing in excess of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by recording the reasons and issued notice u/s. 148 on 29.3.2016. The assessee filed objections for reopening of the assessment vide his submissions dated 24.10.2016. 3. Now the contention of the ld. AR is that the assessee duly filed objections for reopening the assessment on 24.10.2016. These objections were not disposed by passing a speaking order. According to the ld. AR, the AO is bound to dispose of the objections filed by the assessee prior to proceeding with the assessment. When the AO failed to pass such order, the assessment order is liable to be quashed. He relied on the following judgments:- 4. The ld. DR supported the findings of the CIT(Appeals) and further relied on the judgment of the Hon'ble Supreme Court in the case of Home Finders Housing Ltd. v. ITO, 94 taxmann.com 84 / 256 Taxman 59 (SC) and submitted that the assessment order cannot be quashed. 5. We have heard both the parties and perused the material on record. In this case, assessment was reopened by issuing notice u/s. 148 dated 29.3.2016 served on the assessee on 30.3.2016. Later there was change of incumbent of AO, so process was continued vide letter dated 26.7.2016 and followed by one more letter d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment passed cannot be sustained. The Hon'ble Court held that if the assessee desires to seek the reasons for issuing the notice, the Assessing Officer is bound to furnish the reasons and upon the receipt of such reasons, the assessee is entitled to file the objections to the issuing of the notice and the Assessing Officer thereafter is bound to dispose of the same by passing a speaking order. If the AO does not dispose off the objections prior to proceedings with the assessment and passes an order of assessment, such order of assessment cannot be sustained and is liable to be quashed. Learned DR however placed reliance on the order of the CIT(A) from the decision referred to in the order of CIT(A). Learned Counsel for the assessee however brought to our notice that Hon'ble Madras High Court has taken a contrary view to the view taken in the case referred to by the CIT(A) in the impugned order and in this regard referred to the decision of Hon'ble Madras High Court in the case of Jayanthi Natarajan 401 ITR 215 and Pentafour Employees' Welfare Foundation 312 CTR 35 (Madras). 9. We have given a careful consideration to the rival submissions. The facts are undisputed that the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sustained. It was held that if the assessee decides to seek reasons for issuing notice, the AO is bound to furnish the reasons and upon receipt of such reasons, the assessee is entitled to file objections to the issuing of notice and the AO thereafter is bound to dispose of the same by passing a speaking order. If the AO does not dispose of the objections prior to proceedings of assessment and passes an order of assessment, such order of assessment cannot be sustained and liable to be quashed. 9. The main contention of the ld. AR is that the AO has to dispose of the objections raised by the assessee for reopening the assessment by a separate speaking order and thereafter he has to frame the assessment order. For this purpose, he relied on the judgment of Supreme Court in GKN Driveshafts (India) Ltd. (supra). There are divergent views of different High Courts on this issue as to whether the matter is required to be reconsidered at the AO's level for deciding the objections by a separate speaking order or the assessment order is liable to be quashed for want of separate and speaking order of the AO. The contention of the ld. DR is that if the objections of the assessee for reopening ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ars." 6.1 In a subsequent decision in the case of Garden Finance Ltd. v. CIT (Asst.) [2004] 268 ITR 48 (Guj), the effect of the Supreme Court decision in the case of GKN Driveshafts [2003] 259 ITR 19 came up for consideration and by a majority opinion it was laid down by the Hon'ble Court: "What the Supreme Court has now done in the GKN Driveshafts (India) Ltd.'s case [2003] 259 ITR 19 is not to whittle down the principle laid down by the Constitution Bench of the apex court in Calcutta Discount Co. Ltd. case [1961] 41 ITR 191 but to require the assessee first to lodge preliminary objection before the Assessing Officer who is bound to decide the preliminary objections to issuance of the reassessment notice by passing a speaking order and, therefore, if such order on the preliminary objections is still against the assessee, the assessee will get an opportunity to challenge the same by filing a writ petition so that he does not have to wait till completion of the reassessment proceedings which would have entailed the liability to pay tax and interest on reassessment and also to go through the gamut of appeal, the second appeal before Income-tax Appellate Tribunal and then ref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce dated March 3, 2008, issued under section 148 of the Act, has already expired on December 31, 2008, in the peculiar facts and circumstances of the case it would serve the ends of justice if the respondent authority is directed to abide by the following schedule : (i) The respondent authority shall dispose of the preliminary objections raised by the petitioner within a period of 4 (four) weeks from by passing a speaking order in accordance with law; (ii) Thereafter, the respondent authority shall undertake reassessment proceedings, if necessary, and shall complete the same within a period of 4 (four) weeks thereafter, i.e., the date of disposal of the preliminary objections; (iii) No extension of time shall be sought for by either side in the fact situation of the present case; (iv) The aforesaid schedule shall not preclude the rights of the petitioner to challenge the order disposing of the preliminary objections, if lie said order is required to be so challenged." 6.4 Recently, Hon'ble jurisdictional High Court in their decision dated 16.2.2012 in Sak Industries Pvt. Ltd. in W.P.(C) 7933/2010 restored the matter to the file of the AO, the reassessment proceedings havi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith the assessee that merely because the AO had not considered his objection to the notice u/s. 148, the entire assessment becomes bad in law. On a similar issue, Their Lordships of the Hon'ble Supreme Court in the case of GKN Driveshafts India Ltd. v. ITO & Ors. (2003) (supra) at page 20 held as under: ".... 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." 12. In the present case also, although the AO recorded the reasons and supplied the same to the assessee, but he had not disposed of the objections raised by the assessee by passing a speaking order. We therefore deem it appropriate to set aside the impugned order of the ld. CIT(Appeals) and remand the case back to the file of the AO to dispose of the objections filed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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