Case Law Details
Shri Gulab L. Bodke Vs ITO (ITAT Pune)
The assessee in present appeal has challenged the validity of assessment order primarily on the ground that the reasons for reopening were not provided to the assessee. A perusal of documents on record indicates that the reasons for reopening were not furnished to the assessee. The Revenue has not brought on record any document indicating that the reasons for reopening were ever furnished to the assessee. The Hon’ble Supreme Court of India in the case of GKN Driveshafts (India) Ltd. Vs. Income Tax Officer & Ors. (supra) has categorically held that the Assessing Officer is bound to furnish the reasons within a reasonable time on the request of assessee. In the present case we find that the assessee while replying to the notice u/s. 148 dated 20-03-2015 had specifically asked for the reasons for reopening vide communication dated 21-04-2015. Again notice u/s. 148 was issued to the assessee on 24-03-2015 the assessee vide communication dated 27- 10-2015 asked for the reasons for reopening. However, on both the occasions the Assessing Officer has failed to provide the reasons for reopening to the assessee.
The ld. DR has pointed that the assessee has not complied with the notice u/s. 148 as no return of income was filed in response to the notice u/s. 148 of the Act. The return dated 31-03-2013 which the assessee had requested to treat as return of income in response to the notice u/s. 148 was filed beyond the period of one year form the end of the assessment year. Hence, the same is nonest. We do not find merit in the submissions of ld. DR. Though the said return was filed by the assessee beyond the period of time frame as specified u/s. 139(5) of the Act, however, the same was filed much prior to the completion of assessment. Even if the said return was not considered by the Assessing Officer for the purpose of assessment, the same could have been treated as return in response to the notice u/s. 148 as requested by the assessee. Further, we find that the Assessing Officer never communicated to the assessee that the return filed on 31-03-2013 cannot be considered in proceedings u/s. 148 of the Act. Hence, the objections raised by the Department against the return dated 31-03-2013 are unsustainable. The Assessing Officer has passed the assessment order in violation of directions of Hon’ble Supreme Court of India in the case of GKN Driveshafts (India) Ltd. Vs. Income Tax Officer & Ors. (supra). The Hon’ble Jurisdictional High Court in the case of Commissioner of Income Tax Vs. Videsh Sanchar Nigam Ltd. (supra) has held that where the assessment order has been passed without providing the reasons for reopening to the assessee the reassessment order is not sustainable.
Hon’ble Jurisdictional High Court in the case of KSS Petron Private Ltd. Vs. Assistant Commissioner of Income Tax (supra) has held that when the assessment order is without jurisdiction and in violation of law laid down by the Hon’ble Apex Court in the case of GKN Driveshafts (India) Ltd. Vs. Income Tax Officer & Ors. (supra) there is no reason to restore the issue to the file of Assessing Officer to pass fresh order.
Accordingly, the impugned order is set aside.
FULL TEXT OF THE ITAT JUDGEMENT
This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals)-6, Pune dated 30-08-2017 for the assessment year 2009-10.
2. The brief facts of the case as emanating from records are : The assessee filed his original return of income for the impugned assessment year on 2 1-08-2009 declaring income of Rs.3,25,898/-. Thereafter, the assessee filed revised return of income on 31-03-2013 further disclosing Capital Gain on sale of land at Gahunj, Pune. In the revised return of income the assessee admitted total income of Rs.20,46,850/-. The case of the assessee was reopened and first notice u/s. 148 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) was issued to the assessee on 20-03-2015. In response to the aforesaid notice the assessee filed submissions on 21-04-2015 requesting the Assessing Officer to consider the return filed on 3 1-03-2013 as return in response to the notice u/s. 148 of the Act. The assessee vide same communication requested the Assessing Officer to provide the reasons for reopening the assessment. Thereafter, the assessee received another notice u/s. 148 dated 24-03- 2015. The assessee vide communication dated 27-10-2015 reiterated his earlier stand to treat the return filed on 31-03-2013 as return in response to the notice u/s. 148 of the Act. The assessee again asked for the reasons for reopening. The Assessing Officer without providing the reasons for reopening issued notice u/s. 143(2) to the assessee on 28-10-2015 and proceed with the assessment. The Assessing Officer passed assessment order u/s. 143(3) r.w.s. 147 of the Act on 18-03-20 16 making addition of Rs.36,8 1,753/- on account of Long Term Capital Gains on sale of land.
Aggrieved by the assessment order dated 18-03-2016, the assessee filed appeal before the Commissioner of Income Tax (Appeals) challenging the validity of reassessment proceedings as well as additions on merits. The Commissioner of Income Tax (Appeals) upheld the validity of reassessment proceedings and also confirmed the addition made by
Assessing Officer. The first appeal of assessee was dismissed in toto. Now, the assessee is in second appeal before the Tribunal assailing the order of Commissioner of Income Tax (Appeals) by raising following grounds/additional grounds :
“1. The learned CIT(A) erred in law and on facts in confirming jurisdiction u/s. 148 of the Income Tax Act, 1961.
2. Without prejudice to the above, the learned CIT(A) erred in law and on facts in confirming the valuation of land at Rs.20 Per Sq. Mt. as against that of Rs.240/- per Sq. Mt. claimed by the appellant and thereby making an addition of Rs.36,81, 753/- as additional income from Capital Gains.
3. The appellant craves leave to amend or alter any of the grounds of appeal or add to the same, if deemed necessary.”
Additional ground filed on 20-04-20 18
“The learned CIT(A) erred in confirming that reference to Valuation Officer u/s. 55A of the Income Tax Act, 1961 was not mandatory and failing which the impugned assessment was valid in eyes of law.”
Additional ground filed on 20-06-20 18
“The learned CIT(A) erred in confirming the action of the AO of relying on an independent Valuation Report in case of some other assessee for the purpose of adopting the value as on 01.04.1981 for determining capital gains.”
3. Shri V.L. Jain appearing on behalf of the assessee submitted that the assessment order passed u/s. 143(3) r.w.s. 147 is without jurisdiction as the Assessing Officer has not provided reasons for reopening to the assessee till the time of passing assessment order. The assessment order has been passed in violation of the law laid down by the Hon’ble Supreme Court of India in the case of GKN Driveshafts (India) Ltd. Vs. Income Tax Officer & Ors. reported as 259 ITR 19. The ld. AR submitted that in response to the first notice issued u/s. 148 on 20-03-2015, the assessee filed reply on 21-04-2015 requesting to treat the return of income filed on 31-03-2013 as return in response to the said notice and vide same communication the assessee requested the Assessing Officer to provide the reasons for reopening. The ld. AR submitted that the copy of the first notice u/s. 148 dated 20-03-2015 and reply to said notice dated 16-04- 2015 are at pages 16 and 18, respectively of the paper book. The ld. AR submitted that second notice u/s. 148 dated 24-03-2015 was served to the assessee. The assessee vide communication dated 27-10-2015 reiterated his stand and again asked for the copy of reasons for reopening. The copy of the notice u/s. 148 dated 24-03-2015 and the reply of the assessee dated 27-10-2015 are at pages 17 and 21, respectively of the paper book. The ld. AR submitted that without furnishing the copy of reasons for reopening the Assessing Officer proceeded with the assessment and issued notice u/s. 143(2) on 28-10-2015. The assessment order was passed on 18-03-20 16 u/s. 143(3) r.w.s. 147 of the Act. The ld. AR submitted that the Hon’ble Bombay High Court in the case of Commissioner of Income Tax Vs. Videsh Sanchar Nigam Ltd. reported as 340 ITR 66 has held that where the reasons recorded for reopening are not furnished to the assessee till the completion of assessment, the reassessment order is bad in law. The ld. AR further relied on the decision of Hon’ble Bombay High Court in the case of KSS Petron Private Ltd. Vs. Assistant Commissioner of Income Tax in Income Tax Appeal No. 224 of 2014 decided on 03-10-20 16 to contend that where the assessment order has been passed without disposing of objections of assessee against reopening, the assessment is bad in law. The ld. AR submitted that the Hon’ble High Court has further observed that there is no reason to restore the issue to the file of Assessing Officer for passing the reassessment order, as it would result in multiplicity of litigation.
4. On the other hand Shri Rajesh Gawli representing the Department vehemently supported the findings of Commissioner of Income Tax (Appeals) in upholding the validity of reassessment proceedings. The ld. DR submitted that the assessee had filed revised return of income on 31- 03-20 13 i.e. beyond the period of one year from the end of the assessment year. Hence, the revised return of income is nonest in the eye of law. The assessee requested the Assessing Officer to treat the nonest return as return in response to notice u/s. 148 of the Act. The request of the assessee could not have been accepted by the Assessing Officer as the return filed on 31-03-2013 had no legal sanctity. The ld. DR further submitted that initially the assessee did not respond to the notice issued on 24-03-20 15. It was only after the reminders issued on 11-08-2015 and 17-10-2015 that the assessee finally responded. In the notice u/s. 148 dated 24-03-2015 the assessee was given 30 days time to file the return of However, the assessee failed to comply with the conditions of the notice. Now, the assessee cannot agitate that the conditions set out by the Hon’ble Supreme Court of India in the case of GKN Driveshafts (India) Ltd. Vs. Income Tax Officer & Ors. (supra) were not complied by the Assessing Officer.
5. Controverting the submissions made on behalf of the Department, the ld. AR submitted that the assessee promptly replied to the first notice dated 20-03-2015 issued u/s. 148 received on 25-03-2015. The assessee made submissions in response to the said notice on 21-04-2015. In so far as the second notice u/s. 148 dated 24-03-2015 is concerned, the Assessing Officer vide subsequent communication dated 17-10-2018 received on 24-10-2018 (at page 20 of the paper book) extended the time to furnish return of income for assessment year 2008-09. The assessee replied to the same on 27-10-2015 i.e. well within one week time. The ld. AR further submitted that the objection of the ld. DR that the revised return was filed beyond the time is liable to be rejected as the Pune Bench of the Tribunal in the case of G.C. Associates Vs. Deputy Commissioner of Income Tax reported as 80 TTJ 539 has held that the returns filed beyond time are not regarded as nonest but they are subjected to levy of interest and penalty wherever applicable. The Assessing Officer has to take cognizance of the returns if the same are filed before the assessment is completed and such returns cannot be branded as invalid.
6. We have heard the submissions made by representatives of rival sides and have perused the orders of authorities below. The assessee in present appeal has challenged the validity of assessment order primarily on the ground that the reasons for reopening were not provided to the assessee. A perusal of documents on record indicates that the reasons for reopening were not furnished to the assessee. The Revenue has not brought on record any document indicating that the reasons for reopening were ever furnished to the assessee. The Hon’ble Supreme Court of India in the case of GKN Driveshafts (India) Ltd. Vs. Income Tax Officer & Ors. (supra) has categorically held that the Assessing Officer is bound to furnish the reasons within a reasonable time on the request of assessee. In the present case we find that the assessee while replying to the notice u/s. 148 dated 20-03-2015 had specifically asked for the reasons for reopening vide communication dated 21-04-2015. Again notice u/s. 148 was issued to the assessee on 24-03-2015 the assessee vide communication dated 27- 10-2015 asked for the reasons for reopening. However, on both the occasions the Assessing Officer has failed to provide the reasons for reopening to the assessee.
7. The ld. DR has pointed that the assessee has not complied with the notice u/s. 148 as no return of income was filed in response to the notice u/s. 148 of the Act. The return dated 31-03-2013 which the assessee had requested to treat as return of income in response to the notice u/s. 148 was filed beyond the period of one year form the end of the assessment year. Hence, the same is nonest. We do not find merit in the submissions of ld. DR. Though the said return was filed by the assessee beyond the period of time frame as specified u/s. 139(5) of the Act, however, the same was filed much prior to the completion of assessment. Even if the said return was not considered by the Assessing Officer for the purpose of assessment, the same could have been treated as return in response to the notice u/s. 148 as requested by the assessee. Further, we find that the Assessing Officer never communicated to the assessee that the return filed on 31-03-2013 cannot be considered in proceedings u/s. 148 of the Act. Hence, the objections raised by the Department against the return dated 31-03-2013 are unsustainable. The Assessing Officer has passed the assessment order in violation of directions of Hon’ble Supreme Court of India in the case of GKN Driveshafts (India) Ltd. Vs. Income Tax Officer & Ors. (supra). The Hon’ble Jurisdictional High Court in the case of Commissioner of Income Tax Vs. Videsh Sanchar Nigam Ltd. (supra) has held that where the assessment order has been passed without providing the reasons for reopening to the assessee the reassessment order is not sustainable.
8. We further observe that the Hon’ble Jurisdictional High Court in the case of KSS Petron Private Ltd. Vs. Assistant Commissioner of Income Tax (supra) has held that when the assessment order is without jurisdiction and in violation of law laid down by the Hon’ble Apex Court in the case of GKN Driveshafts (India) Ltd. Vs. Income Tax Officer & Ors. (supra) there is no reason to restore the issue to the file of Assessing Officer to pass fresh order. The relevant extract of the judgment reads as under :
“8 We note that once the impugned order finds the Assessment Order is without jurisdiction as the law laid down by the Apex Court in GKN Driveshafts (supra) has not been followed, then there is no reason to restore the issue to the Assessing Office to pass a further/fresh order. If this is permitted, it would give a licence to the Assessing Officer to pass orders on re-opening notice, without jurisdiction (without compliance of the law in accordance with the procedure, yet the only consequence, would be that in appeal, it would be restored to the Assessing Officer for fresh adjudication after following the due procedure. This would lead to unnecessary harassment of the Assessee by reviving stale/ old matters.
9. In fact, to ensure that re-opening notices are disposed of, expeditiously the parliament itself has provided in Section 153(2) of the Act a period of limitation within which the Assessing Officer must pass an order on the notice of re-opening i e. within one year form the end of the financial year in which the notice was issued. In fact, Section 153(2A) of the Act as in force at the relevant time itself provides that an order of fresh Assessment, consequent to the order of Tribunal under Section 254 of the Act, would have to be passed within one year from the end of the financial year in which the order under Section 254 of the Act, was passed by the Tribunal and received by the Commissioner of Income Tax.”
9. Thus, in view of the facts of the case and the decisions discussed above, we find merit in ground No. 1 raised in the appeal by the assessee. Accordingly, the impugned order is set aside and ground No. 1 raised in the appeal by the assessee is allowed.
10. In so far as other grounds/additional grounds raised on merits of the addition, no arguments were made by the ld. AR of assessee. Hence, the same are dismissed.
11. In the result, the appeal of assessee is partly allowed.
