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TMI Blog2014 (7) TMI 346X X X X Extracts X X X X X X X X Extracts X X X X ..... d. vs. Income-tax Officer and others reported in [2003] 259 ITR 19. 4. Vide communication dated 6.10.2005, reasons for reopening were furnished, which states this-wise:- "Reasons for reopening the case u/s.147 of the I.T. Act. During the year the assessee has claimed total depreciation of Rs. 24,21,18,554/- as per Anx.2 enclosed along with the return of income. As per Anx-2, the assessee has claimed depreciation of Rs. 7,20,37,218/- on meters and capacitors. The depreciation has been claimed @ 100% of the cost. The issue of depreciation has been examined during the course of assessment proceedings for A.Y.2002-03. The assessee is claiming depreciation @100% as per Rule 5 Appendix-I, Part-III, 5B(e) to the I.T. Rules 1962 on the ground that meters are energy saving devices. The assessee is further of the view that the meters installed for the purpose of reading of energy consumption of the consumers also saves the energy. The view is not acceptable for the reasons mentioned below:- The aforesaid rule start with the phrase "Energy saving devices being- A. Specialized boilers and furnaces: B. Instrumentation and monitoring system for monitoring energy flows: C. Waste heat reco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above fact, I have reason to believe that income has escaped assessment to the extent of Rs. 5,40,27,913/-" 4.1 The objections were raised by the petitioner through the authorized representatives on 6.12.2005 challenging not only the proceedings on the ground of jurisdiction but also on merits. 5. Without dealing with such objections, however, on 7.11.2006 a show cause notice issued under section 142(1) was received by the petitioner on the ground that the depreciation on meters and capacitors were claimed by the petitioner at 100% of the cost which otherwise was entitled to only upto 25% of the cost. Aggrieved by issuance of such notice, the petitioner contended that this would mean that reassessment proceedings have been initiated without dealing with the objections against the reasons recorded and in complete disregard to the pronouncement of the Apex Court in the case of GKN Driveshafts (India) Ltd. vs. Income-tax Officer and others (surpa). 5.1 The petitioner addressed a letter dated 13.11.2006 inter alia objecting to such communication under section 142(1) urging to the respondent that a speaking order needs to be passed before proceeding with the assessment relying on Hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore, also at the initial stage as objections are not being disposed of earlier would not be the ground for the Court to intervene. Much time, according to him, has passed and that also should be one of the potent reasons for the Court not to interfere at this stage. 9. Heard learned advocates for both the sides. 10. The Apex Court in the case of GKN Driveshafts (India) Ltd. vs. Income-tax Officer and others (surpa) has confirmed the judgment of the Delhi High Court rendered in the case of 257 ITR 702. The Court laid down the procedure and the same has been also further modified by two judgments of this Court. The Apex Court directed that in the event of notice issued under section 148, proper cause of action on the part of the assessee is to file the return in pursuance of such notice and if he so desires to seek reasons for the notice, in such eventuality the assessing officer is bound to furnish the reasons within a reasonable time and on receipt of such reasons, the assessee would be entitled to file objections to the issuance of notice. Having received such objections the assessing officer is bound to dispose of the same by a speaking order in the words of the Apex Court :- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court rendered in the case of GKN Driveshafts (India) Ltd. vs. Income-tax Officer and others(surpa), the Court held that after notice for reassessment has been issued the assessee is required to file the return and seek reasons by issuance of such notice. The assessing officer is bound to supply the reasons within a reasonable time. On receipt of reasons, the assessee is entitled to file primarily objections to the issuance of notice and the assessing officer need to dispose of such primary objections by passing speaking order, without proceeding with the assessment in respect of assessment year for which such notice has been issued". The Court also held that while dealing with disposing of the said objections, by passing the speaking order, the respondent proceeded to pass the reassessment order on merits of the controversy once the Apex Court had directed that the assessing officer was bound to dispose of the objections by passing speaking order, it was not upon to the respondent to contend that in absence of any provision, the respondent would not have passed the speaking order". 14. The gist of the settled law, as rendered in the case of GKN Driveshafts (India) Ltd. vs. Incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... observed by communication dated 6.11.2006 that such objections would be disposed of at the time of framing the reassessment. Such approach on the part of the assessing officer itself is in flagrant violation of the very direction of the GKN Driveshafts (India) Ltd. vs. Income-tax Officer and others (supra)and as followed by this Court in the case of Arvind Mills Ltd. vs. Assistant Commissioner of Wealth Tax (No.2) (supra) and Garden Finance Ltd. vs. Assistant Commissioner of Income-tax (supra). Had the directions of these authorities been followed by the assessing officer, it could have saved a lot of hazard to the petitioner. CIT(Appeals) for the assessment year 2002-03 on the very issue recorded in the reasons of reopening and concluded in favour of the petitioner assessee on 9.5.2006. This aspect is no less significant, particularly, in wake of the developments that took place while such correspondence was exchanged between the parties. When the notice under section 142(1) was issued nearly after 11 months period on 7.11.2005, the respondent ought to have taken into account the objections raised by the petitioner, which also would make it possible for the assessing officer to c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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