2017 (10) TMI 1598 - AT - Income Tax

Reopening of assessment u/s 147 - Mandation of considering objections against reopening - whether the matter is required to be reconsidered at the level of the AO for deciding the objections by a speaking separate order or the assessment order is liable to be quashed for want of a separate order of Assessing Officer deciding the objections prior to the passing of the assessment / reassessment order? - HELD THAT - Assessee filed the objection against the Notice under Section 148 only on 28.3.2013 and the Assessing Officer was left with no option but to finalise the assessment before the expiry of limitation for completing the assessment on 31.3.2013. Assessing Officer has completed the assessment vide order dt.28.3.2013 whereby the objections of the assessee were also disposed off. Accordingly, we find that decisions relied upon by the ld. DR on this point are applicable in the facts of the present case and therefrom, we set aside the impugned order of the CIT (Appeals) as well as the assessment order and remit the matter to the record of the Assessing Officer for deciding the objections of the assessee by a separate speaking order and in case the objections of the assessee are rejected then after allowing the assessee a period of four weeks the Assessing Officer may pass the assessment order. Assessee has raised the objection against the reassessment on the ground that when the provisions of Section 153C are applicable in the case of the assessee then the Assessing Officer cannot resort to the provisions of Sections 147 and 148 - These objections of the assessee were not considered and decided by the CIT (Appeals) therefore, when the objections of the assessee are directed to be considered and decided by the Assessing Officer by a separate speaking order as the issue raised in the revenue s appeal, the objections raised by the assessee in the C.O. are also therefore set aside to the record of the Assessing Officer for considering and deciding the same along with the other objections.

Summary

Issues Involved:
1. Validity of reopening the assessment under Section 148 of the Income Tax Act, 1961.
2. Requirement for the Assessing Officer to dispose of objections against the notice under Section 148 by a separate speaking order.
3. Applicability of provisions under Section 153C in the case of the assessee.

Detailed Analysis:

1. Validity of Reopening the Assessment under Section 148:
The assessee, engaged in real estate development, filed a return of income for the Assessment Year 2006-07. The Assessing Officer (AO) proposed to reopen the assessment based on incriminating documents found during a search operation, indicating unaccounted payments to the assessee. The AO issued a notice under Section 148 and completed the reassessment, adding ?5 Crores to the income. The assessee challenged the validity of this reopening before the Commissioner of Income Tax (Appeals) [CIT(A)], who quashed the reassessment on the grounds that the AO did not dispose of the objections against the notice by a separate order.

2. Requirement for the Assessing Officer to Dispose of Objections by a Separate Speaking Order:
The core issue was whether the AO was required to dispose of the objections raised by the assessee against the notice under Section 148 by a separate speaking order before finalizing the reassessment. The CIT(A) quashed the reassessment for not adhering to this requirement. The revenue contended that due to time constraints, the AO had no option but to address the objections within the assessment order itself. The Tribunal considered various judicial precedents, including the Supreme Court's decision in GKN Driveshafts India Ltd. Vs. ITO, which mandated that the AO must dispose of objections by a separate speaking order before proceeding with the assessment. The Tribunal noted divergent views among High Courts but ultimately decided to set aside the CIT(A)'s order and the assessment order, remitting the matter back to the AO to first dispose of the objections by a separate speaking order and then proceed with the assessment if necessary.

3. Applicability of Provisions under Section 153C:
The assessee also raised an objection that the AO should have applied the provisions of Section 153C instead of Sections 147 and 148. This objection was not addressed by the CIT(A). Given the Tribunal's decision to remit the matter back to the AO for reconsideration, it directed the AO to also consider and decide on this specific objection along with other objections raised by the assessee.

Conclusion:
The Tribunal allowed both the revenue's appeal and the assessee's cross-objection for statistical purposes. It set aside the orders of the CIT(A) and the AO, directing the AO to dispose of the objections raised by the assessee against the notice under Section 148 through a separate speaking order. If the objections are rejected, the AO is to allow the assessee a period of four weeks before passing the assessment order. The Tribunal also directed the AO to consider the applicability of Section 153C as raised by the assessee in the cross-objection.