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2025 (5) TMI 961

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..... ct, ignoring the fact that the assessee failed to fulfil the condition under section 11(1)(c) of the Act by making foreign donations of Rs. 27,67,50,000/- during AY 2013-14 to Harward Business School, USA and hence cannot be treated as application for charitable purpose in India? 2. Whether on the facts and circumstances of the case, the Ld. CIT(A) has erred in allowing the exemption to the assessee u/s 11(1)(c) of the Act, ignoring the fact that the Harward Business School, USA is not promoting any "international welfare in which India is interested? 3. Whether on the facts and circumstances of the case, the Ld. CIT(A) has erred in allowing the exemption to the assessee u/s 11(1)(c) of the Act, ignoring the fact that the CBDT vide its order dated 10.11.2015 explicitly mentions that such 'purpose' falling u/s 11(1)(c) is subject to verification during course of assessment proceedings and that the assessee has failed to bring it on record during the reassessment proceedings?" 2.1. The Assessee has filed application under Rule 27 of the Income Tax (Appellate Tribunal) Rules, 1963 [for short 'ITAT Rules'] On the issue of validity of reassessment proceeded decided again .....

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..... under Rule 27 of the ITAT Rules. 8. During the course of hearing, Learned Authorized Representative for the Assessee vehemently contended that in the present case the objection filed by the Assessee against the initiation to reassessment proceedings were not disposed off by the Assessing Officer. After the objections were filed the Assessing Officer issued notice under Section 142(1) on 21/03/2022 and proceeded to frame assessment without following the procedure laid down by the Hon'ble Supreme Court in the case of (GKN Driveshaft India) Limited Vs. ITO: GKN Driveshafts (India) Ltd. vs. Income-tax Officer [2002] 125 Taxman 963 (SC)/[2003] 259 ITR 19 (SC))[25-11-2002] was not followed by the Assessing Officer. Placing reliance upon the judgment of the Hon'ble Bombay High Court, the Learned Authorized Representative for the Assessee submitted that the Assessing Officer did not have jurisdiction to proceed with the assessment proceedings and therefore, the order passed by the Assessing Officer was bad in law. 9. Per Contra, the Learned Departmental Representative supported the order passed by the Assessing Officer and CIT(A). However, the Learned Departmental Representative could n .....

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..... ment (d) the objections raised by the notice/Assessee must be disposed off by the Assessing Officer by passing a speaking order before proceedings with the assessment. 10.3. We note that in the present case the Assessee has acted in accordance with the judgment of the Hon'ble Supreme Court in the case of GKN Driveshaft (India) Limited (supra). In the present case notice under Section 148 of the Act was issued on 05/01/2021, and in response to the same the Assessee filed return of income on 01/02/2021 and requested for reasons recorded for reopening the assessment. Thereafter, notice under Section 142(1) of the Act was issued on 10/02/2021 whereby reasons recorded for reopening the assessment were communicated to the Assessee. The Assessee filed objections to reopening of assessment vide letter dated 11/05/2021. However, the Assessing Officer instead of disposing off the objection raised by the Assessee by a speaking order, proceeded to issue notice under Section 142(1) of the Act on 21/03/2022. Thus, the Assessing Officer failed to follow the procedure for reopening the assessment as laid down by the Apex Court in the case of GKN Driveshaft (India) Limited (supra). During the .....

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..... edure also involves breaching the principles of natural justice and fair play. 13. The assessing officer in Fomento Resorts & Hotels Ltd (supra) made a similar combined order. Neither were the assessee's objections disposed of by a separate order, nor was the assessee granted any reasonable opportunity of questioning the order disposing of the objections. In such circumstances, the Court, after analysing the decision of the Hon'ble Supreme Court in GKN Driveshaft (supra) and following its earlier precedents in KSS Petron Private Ltd Vs The Assistant Commissioner of Income Tax Circle 10(2) and M/s Bayer Material Science (P) Ltd Vs Deputy Commissioner of Income-tax-10(3) quashed the combined order on the ground of want of compliance with jurisdictional parameters. 14. Accordingly, we cannot accept Mr Suresh Kumar's contention about there being no infirmity in the impugned consolidated order dated 31 March 2022, given the above decisions referred to by us rendered in substantially similar facts. 15. The Petitioner has, no doubt, instituted an Appeal after the filling of this Petition. However, Mr Pardiwalla clarified that this was only to protect from the bar of l .....

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..... ficer without having disposed of the objections filed by the appellant to the reasons recorded in support of the reopening Notice dated 28th March, 2008.?" In the above case the assessing officer, without disposing of the objections of the assessee, completed the assessment under Section 143(3) read with Section 147 of the Act. The issue travelled to the Tribunal. The Tribunal held that the assessing officer was bound to follow the procedure laid down by the Hon'ble Supreme Court in the case of GKN Driveshaft (India) Private Limited (supra). Since, the assessing officer had not disposed off the objections, the reassessment order was set aside and the assessing officer was directed to pass fresh assessment order after disposing off the objections. In appeal preferred by the assessee, the Hon'ble Bombay High Court answered the substantial question of law in favour of the assessee holding that in the facts of that case the Tribunal was not correct in restoring the issue back to the file of assessing officer for passing the fresh assessment. The relevant extract of the aforesaid judgment reads as under: "7 On further Appeal, the Tribunal passed the impugned order. By the impugned o .....

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..... pondent to respond to the affidavit dated 19th September, 2006 of the Director of the Appellant-Company. The Respondent is unable to dispute the facts stated in the affidavit dated 19th September, 2016 filed by the Director of the Appellant-Company. The time to pass a order on the notice dated 28th March, 2008, even consequent to the impugned order of the Tribunal, has lapsed. 11 Therefore, on the above facts and law, the substantial question of law is answered in the negative i.e. in favour of the Appellant- Assessee and against the Respondent-Revenue." (Emphasis Supplied) 10.5. In the case of Bayer Material Science (P.) Ltd. vs. Deputy Commissioner of Income-tax-10(3) [2016] 66 taxmann.com 335 (Bombay)/[2016] 237 Taxman 723 (Bombay)/[2016] 382 ITR 333 (Bombay)[27-01-2016], the Hon'ble Bombay High Court allowed the writ petition filed by the assessee holding that draft assessment order passed without disposing off the objections to reopening of assessment filed by the assessee was not sustainable and without jurisdiction. The relevant extract of the aforesaid judgment reads as under: "11. In the present facts, we find that the draft Assessment order was passed on 30th March .....

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..... al Science (P) Ltd. (supra) and KSS Petron Private Ltd. (supra) before the Division Benches of our High Court at Bombay. 20. In Bayer Material Science (P) Ltd. (supra), by a notice dated 6/2/2013, the Revenue sought to reopen the assessment in the year 2007-08. The Assessee filed a revised return of income and sought for reasons recorded in support of the notice dated 6.2.2013. The reasons were furnished only on 19.3.2015. The Assessee lodged objections to the reasons on 25th March, 2015. The Assessing Officer, without disposing of the Petitioner's objections, made a draft assessment order dated 30th March, 2015, since this was a matter involving transfer pricing. In such circumstances, the Division Bench of this Court, set aside the assessment order by observing that the Court was unable to understand how the Assessing Officer could, at all, exercise the jurisdiction and enter upon an inquiry on the reopening notice before disposing of the objections on the reasons furnished to the Assessee. This Court held that the proceedings initiated by the Transfer Pricing Officer (TPO), on the basis of such a draft assessment order, were without jurisdiction and quashed the same. 2 .....

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..... ead to unnecessary harassment of the Assessee by reviving stale/ old matters." 24. According to us, the rulings in Bayer Material Science (P) Ltd. (supra) and KSS Petron Private Ltd. (supra) afford a complete answer to the contentions raised by Ms. Linhares in defence of the impugned order. 25. Since, in the present case, the Assessing Officer has purported to assume the jurisdiction for reopening of the assessment, without having first disposed of the Assessee's objections to the reasons by passing a speaking order, following the law laid down in GKN Driveshafts (India) Ltd. (supra), Bayer Material Science (P) Ltd. (supra) and KSS Petron Private Ltd. (supra), we are constrained to hold that such assumption of jurisdiction by the Assessing Officer was ultra vires Section 11 of the said Act. The first substantial question of law will, accordingly, have to be answered in favour of the Appellant and against the Respondent-Revenue. 26. As noted earlier, in view of the aforesaid, there is no necessity to advert to the second substantial question of law, at least, in so far as this Appeal is concerned. The Appeal is, therefore, allowed and the impugned orders dated 26th Marc .....

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