2015 (7) TMI 718 - AT - Income Tax

Reopening of assessment - Unexplained source of cash receipts - Held that - In the instant case, it is not in dispute that the assessee filed his objections against the issuance of notice u/s 148 of the Act vide his letter dated 11.11.2009 which was received by the office of the Assessing Officer on 16.11.2009. Thereafter, the Assessing Officer passed the impugned re-assessment order on 20.11.2009, disposing off the objections to re-assessment proceedings of the assessee in the order itself. Thus, these facts show that the objections raised by the assessee against the issuance of notice u/s 148 of the Act were not disposed off by the Assessing Officer by passing a speaking order thereon and allowing reasonable time to the assessee after communicating the fate of the objections before proceeding with the re-assessment. Respectfully following the decision of General Motors India P. Ltd. vs. DCIT 2012 (8) TMI 714 - GUJARAT HIGH COURT we are of the considered view that the impugned order of re-assessment passed by the Assessing Officer without disposing off the objections raised by the assessee against the issuance of notice u/s 148 by a separate order is liable to be quashed. - Decided in favour of assessee.

Summary

Issues involved:
1. Validity of reassessment proceedings under section 147 of the Income Tax Act.
2. Disposal of objections raised by the assessee against the initiation of reassessment proceedings.

Analysis:

Issue 1: Validity of reassessment proceedings under section 147 of the Income Tax Act

The appeal was filed by the Revenue against the order of the Commissioner of Income-Tax (Appeals)-IV, Ahmedabad dated 08.03.2011. The Revenue challenged the deletion of an addition of Rs. 70,00,217 made due to the assessee's failure to explain the source of cash receipts earned during the accounting year. The Authorised Representative of the assessee supported the order of CIT(A) under Rule 27 of the Income Tax Appellate Tribunal Rules, 1963. The objections raised by the assessee against the initiation of reassessment proceedings were considered. The CIT(A) upheld the initiation of reassessment proceedings by the Assessing Officer, stating that the reopening of the assessment was justified. However, the assessee argued that the reassessment order was passed without disposing off the objections separately, as required by law.

Issue 2: Disposal of objections raised by the assessee against the initiation of reassessment proceedings

The Hon'ble Gujarat High Court's decision in General Motors India P. Ltd. v. DCIT was cited, emphasizing the importance of the Assessing Officer deciding the objections to the notice under section 148 separately and communicating the decision to the assessee before passing the reassessment order. The Tribunal found that in this case, the objections raised by the assessee were not disposed off separately, and the reassessment order was passed without allowing reasonable time after communicating the fate of the objections. Citing the Gujarat High Court's ruling, the Tribunal held that the reassessment order passed without disposing off the objections separately is liable to be quashed. Consequently, the reassessment order dated 20.11.2009 was quashed, rendering the grounds of appeal raised by the Revenue on the merits of the addition moot and hence dismissed.

In conclusion, the appeal of the Revenue was dismissed, and the Tribunal pronounced the order on Friday, the 10th of April, 2015 at Ahmedabad.