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TMI Blog2017 (11) TMI 1915X X X X Extracts X X X X X X X X Extracts X X X X ..... owing substantial question of law:- Whether under the facts and circumstances of the case the ld. Tribunal was justified in not declaring the reassessment proceedings and the consequential assessment order passed thereto as nullity ? 3. The facts of the case are that the appellant is a limited company incorporated under the Companies Act, 1956 and engaged in the business of manufacturing of electronics energy meters besides doing work on job basis. The return of income declaring total income of Rs. 2,79,230/- was filed by the assessee which was processed u/s 143(1) of the IT Act, 1961. Thereafter the re-assessment proceedings were initiated u/s 148 and the assessment stood completed u/s 143(3)/148 at total income of Rs. 49,79,230/- by making addition of Rs. 47,00,000/- on account of share application money as unexplained cash credit u/s 68 of the Act. The ld. CIT(A) dismissed the appeal of the assessee. 4. Counsel for the appellant has contended that the present appeal is arising out of the judgment and order of the tribunal whereby tribunal has upheld the contention of the appellant and remitted back the matter for reassessment which will give a second inning to the Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould 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. 2. In Pr. Commissioner of Income Tax-2 vs. Sagar Developers (GUJHC)[2016] 72 taxmann.com 321, it has been held as under :- 27. In the result, the question is answered in favour of the Revenue. The impugned respective judgments of the Tribunal would stand modified by providing that the respective orders of assessment though should stand set aside it would be open for the Assessing Officer to frame fresh assessment after first disposing of the objections of the assessees. Needless to clarify the provisions for time limit for framing the assessment as may be applicable would apply. 3. In GKN Driveshafts (India) Ltd. vs. Income Tax Officer and Ors. (SC)[2003] 259 ITR 19 (SC) it has been held as under :- 5. We see no justifiable reason to interfere with the order under challenge. However, we clarify that when a notice under Section 148 of the Income Tax Act is issued, the proper course of action for the notice is to file return and if he so desires, to seek reasons for issuing notices ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssue notice under Section 143(2) cannot be a procedural irregularity and the same is not curable and, therefore, the requirement of notice under Section 143(2) cannot be dispensed with. The other important feature that requires to be noticed is that the Section 158 BC(b) specifically refers to some of the provisions of the Act which requires to be followed by the assessing officer while completing the block assessments under Chapter XIV-B of the Act. This legislation is by incorporation. This Section even speaks of subsections which are to be followed by the assessing officer. Had the intention of the legislature was to exclude the provisions of Chapter XIV of the Act, the legislature would have or could have indicated that also. A reading of the provision would clearly indicate, in our opinion, if the assessing officer, if for any reason, repudiates the return filed by the assessee in response to notice under Section 158 BC(a), the assessing officer must necessarily issue notice under Section 143(2) of the Act within the time prescribed in the proviso to Section 143(2) of the Act. Where the legislature intended to exclude certain provisions from the ambit of Section 158 BC(b) it h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. From the aforesaid discussion, we are of the considered opinion that writ petition under Art. 226 of the Constitution of India is maintainable where no order has been passed by the AO deciding the objection filed by the assessee under s. 148 of the Act and assessment order has been passed or the order deciding an objection under s. 148 of the Act has not been communicated to the assessee and assessment order has been passed or the objection filed under s. 148 has been decided along with the assessment order. If the objection under s. 148 has been rejected without there being any tangible material available with the AO to form an opinion that there is escapement of Income from assessment and in absence of reasons having direct link with the formation of the belief, the writ Court under Art. 226 can quash the notice issued under s. 148 of the Act. The writ petition filed by the petitioner is maintainable. The AO is mandated to decide the objection to the notice under s. 148 and supply or communicate it to the assessee. The assessee gets an opportunity to challenge the order in a writ petition. Thereafter, the AO may pass the reassessment order. We hold that it was not open to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her connected matters between CIT Vs. Dr. N. Thippa Setty [2010] 322 ITR 525 (Karn), dated April 9, 2008, we are of the view that the order passed by the authorities have to be quashed on the ground that there is no compliance with the provisions of the section 147 of the Act, for these assessment years. Accordingly, we answer the questions of law framed. Accordingly, the appeal is allowed. 8. In Commissioner of Income Tax vs. Amit K. Jain (GUJHC) [2016] 388 ITR 113, it has been held as under :- 6. We have heard learned counsel for the parties. We are aware of the decision of the Apex Court which has been referred by the Bombay High Court. Nonetheless, while block assessment is to be made, the Assessing Officer is having knowledge about the statutory provision and while issuing notice he should have mentioned in it about his source of power and should have referred to time which is required to be given for the purpose of filing of return under section 158BC of the Act. The words mentioned in the notice are 'within fifteen days' whereas the provision mandates the time of "not less than fifteen days". In view of the decisions of the Supreme Court referred more particularl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion. No copy of any document relating to the sale instance was furnished by the Appropriate Authority to the appellant along with the notice, or at any time whatsoever. 5. There is no doubt in our minds that on both counts there has been a gross breach of the principles of natural justice because adequate opportunity to meet the case made out in the notice was not given to the appellant. 6. Having regard to the statutory limit within which the Appropriate Authority has to act and his failure to act in conformity with the principles of natural justice, we do not think we can remand the matter to the Appropriate Authority. We must set his order aside. 10. In Jayanthi Natarajan vs. Assistant Commissioner of Income Tax, Non Corporate Circle 1(1) (MADHC), it has been held as under :- 17. The law declared by the Hon'ble Supreme Court is of binding character and is a source of law and to itself, which will bind all authorities. GKN Driveshafts (India) Ltd., (supra), lays down a law and failure to comply would render the assessment order as without jurisdiction (Nand Kishore v. State of Punjab reported in (1995) 6 SCC 614 and Nair Services Society v. State of Kerala reported i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by Shri Naphade, if accepted, will allow respondent No. 2 to retain the benefits under the sub-lease. It will also allow the petitioners to get away easily when the Courts below have found that they have not acted bona fide. 14. In Umesh Kumar Misra son of Sri Ram Raj Misra vs. Union of India (UOI) through Secretary, Ministry of Home Affairs, (ALLHC)(2006) ILR 3AII1211, it has been held as under :- 7. It is also a settled principle that no person can claim any right arising out of his wrong doing i.e. a person having done wrong, cannot take advantage of his own wrong. 5. Mr. Singhi, counsel for the respondent has relied on Section 153(3) of the Income Tax Act and contended that basic argument of assessee is contrary to spirit of Section 153(3), if such an argument is accepted, it is contrary to law declared by the Supreme Court itself on which the assessee has based his argument in GKN Driveshafts (supra) where the Supreme Court itself has remanded back the matter for reassessment. He has relied upon the following decisions: 1. In, Arvind Mills Ltd. vs. Assistant Commissioner of Wealth Tax (GUJHC) (2004) 270 ITR 0467, it has been held as under :- 3. It is, however, no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Feb., 2004, made under Section 17 r/w Section 16(3) of the Act is hereby quashed and set aside. The respondent is directed to abide by the directions issued by this Court in its order dt. 3rd March, 2004, in Special Civil Application No. 2736 of 2004 (supra), more particularly, para Nos. 4 and 5 which are reproduced hereunder for the sake of convenience. "4. The above principle laid down in respect of the notice for reassessment under the IT Act would apply with full force to the notice for reassessment under Section 17 of the WT Act as well. The petitioner company had already filed its return in response to the impugned notice and requested for furnishing reasons, which request has been acceded to only very recently and the petitioner has thereafter submitted its objections on 19th Feb., 2004. The AO is, therefore, now required to dispose of the objections by passing a speaking order as per the aforesaid decision of the Hon'ble Supreme Court. 5. The AO is accordingly required to decide the preliminary objections lodged by the petitioner to the notice for reassessment and pass a speaking order. Until such speaking order is passed, obviously the AO cannot undertake reassessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8, in the peculiar facts and circumstances of the case it would serve the ends of justice if the respondent authority is directed to abide by the following schedule : (i) The respondent authority shall dispose of the preliminary objections raised by the petitioner within a period of four weeks from today by passing a speaking order in accordance with law; (ii) Thereafter the respondent authority shall undertake reassessment proceedings, if necessary, and shall complete the same within a period of four weeks thereafter, i.e., the date of disposal of the preliminary objections; (iii) No extension of time shall be sought for by either side in the fact situation of the present case; (iv) The aforesaid schedule shall not preclude the rights of the petitioner to challenge the order disposing of the preliminary objections, if the said order is required to be so challenged. 4. In, Pr. Commissioner of Income Tax-2 vs. Sagar Developers (GUJHC) [2016] 72 taxmann.com 321, it has been held as under :- 5. For the purpose of this group of appeals, we frame following common substantial question of law: "Whether the Income Tax Appellate Tribunal was correct in law in setting aside the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aring on the application dated 10th March 2004 nor withdrawn the impugned re-assessment order. In the affidavit in reply, the aforesaid averments are dealt with only by reiterating that the objections have been disposed of in the reassessment order itself. The aforesaid conduct of the respondent alongwith the facts stated hereinbefore clearly points out that the stand of the respondent appears to be that once a notice for re-assessment has been made, the respondent is bound to frame an order of re-assessment regardless of the fact as to whether such an order can be supported or not, in law or on facts. 14. In the result, the impugned re- assessment order dated 9th February 2004 made under Section 17 read with Section 16(3) of the Act is hereby quashed and set aside. The respondent is directed to abide by the directions issued by this Court in its order dated 3rd March 2004 in Special Civil Application No. 2736 of 2004, more particularly, paragraph Nos. 4 and 5 which are reproduced hereunder for the sake of convenience:-- 15. The above principle laid down in respect of the notice for re-assessment under the Income-tax Act would apply with full force to the notice for re-assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent order. We hold that it was not open to the Assessing Officer to decide the objection to notice under section 148 by a composite assessment order. The Assessing Officer was required to, first decide the objection of the assessee filed under section 148 and serve a copy of the order on assessee. And after giving some reasonable time to the assessee for challenging his order, it was open to him to pass an assessment order. This was not done by the Assessing Officer, therefore, the order on the objection to the notice under section 148 and the assessment order passed under the Act deserves to be quashed." 17. Two things emerge from this judgment. Firstly, that the question whether after striking down the order of assessment on this ground further assessment should be permitted or not, was neither argued nor addressed by the Court. Second aspect is that, in case of General Motors India P. Ltd. v. DCIT (supra), the Court noticed the judgment of Division Bench of Arvind Mills Ltd. v. Assistant Commissioner of Wealth Tax reported in : 270 ITR 469 in which, the Division Bench had, under somewhat similar circumstances, while setting aside the order of reassessment, required the Assessi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to make a grievance before the High Court and to prevent the Assessing Officer from finalizing the assessment without disposing of the objections. 26. The issue can be looked from slightly different angle. Validity of the notice for reopening would depend on the reasons recorded by the Assessing Officer for doing so. Similarly, the order of reassessment would stand failed on the merits of the order that the Assessing Officer has passed. Neither the action of the Assessing Officer of supplying reasons to the assessee nor his order disposing of the objections if raised by the assessee would per se have a direct relation to the legality of the notice of reopening or of the order of assessment. To declare the order of assessment illegal and to permanently prevent the Assessing Officer from passing any fresh order of assessment, merely on the ground that the Assessing Officer did not dispose of the objections before passing the order of assessment, in our opinion would be not the correct reading of the judgment of Supreme Court in case of GKN Driveshafts (India) Ltd. v. Income Tax Officer and ors (supra). In such judgment, it is neither so provided nor we think the Supreme Court envis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore the Assessing Officer and in case of failure before the Assessing Officer, ii) challenging the speaking order of the Assessing Officer under section 148 of the Act (p. 87)." 6.2 In the case of Arvind Mills Ltd. (Supra), in para 9, the Division Bench after considering the decision of the Hon'ble Supreme Court in the case of G.K.N. Driveshafts (India) Ltd. (Supra) and the Garden Finance Ltd. (Supra) has observed and held as under: "9. The position in law is thus well settled. After a notice for reassessment has been issued an assessee is required to file the return and seek reasons for issuance of such notice. The Assessing Officer is then bound to supply the reasons within a reasonable time. On receipt of reasons, the assessee is entitled to file preliminary objections to issuance of notice and the Assessing Officer is under a mandate to dispose of such preliminary objections by passing a speaking order, before proceeding with the assessment in respect of the assessment year for which such notice has been issued." 6.3 Identical question came to be considered by the Division Bench of this Court in the case of Banaskantha District Oilseeds Growers Co-op Union Ltd. vs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... period of 3 weeks from today. On such deposit the Registry is directed to transmit the same to Gujarat State Legal Services Authority. 6. In Pr. Commissioner of Income Tax vs. Modinagar Rolls Ltd. (ALLHC) (2017) 99 CCH 0030, it has been held as under :- 23. There is no finding by the tribunal for holding the notice to be bad or illegal except for the fact that the objections of assessee filed against it were not decided. In view of the fact that the objections were not considered and decided and that no illegality in the notice was established, the tribunal erred in holding the notice to be bad. 24. The discussion above permits us to answer the second question partly in favour of the assessee and partly in favour of revenue and it is held that as the objections of the assessee respondent were left undecided the reassessment could not have been done and as such the tribunal has not erred in setting aside the order of assessment but the notice issued under Section 148 of the Act cannot be said to be illegal and bad in law without recording finding that it is contrary to law. This aspect has to be dealt with by the tribunal before passing a fresh order of reassessment. 25. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th March, 2012. When a date of hearing will be fixed and an order disposing of the objections will be passed on or before 16th March, 2012. In case of an adverse order, the Assessing Officer shall give 15 days time to the petitioner to take further steps, in accordance with law, and fix the next date of hearing accordingly. The learned counsel for the petitioner submits that they will not raise any objection with regard to the limitation period and a time period may be fixed for passing the reassessment order. Keeping in view of the aforesaid facts, it is directed that it will be open to the Assessing Officer to thereafter proceed with the assessment and pass a reassessment order on or before 15th May, 2012. The assessee must fully co-operate in the proceedings. The concerned Commissioner will examine the reassessment file in the present case and is at liberty to take appropriate action, if warranted. 9. In Home Finders Housing Limited vs. The Income Tax Officer, Corporate Ward 2(3) (MADHC), it has been held as under :- 15. An order passed within the period of limitation can always be questioned before the Court of law by raising very many grounds touching upon the merits of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e matter has to go back to the respondent for passing a speaking order on the objections and thereafter, to pass the final order of assessment. Accordingly, the writ petition is allowed and the impugned order of assessment is set aside and the matter is remitted back to the respondent to pass a speaking order on the objections raised by the petitioner, after giving an opportunity of hearing to them. Such exercise shall be done by the respondent within a period of four weeks from the date of receipt of a copy of this order. Thereafter, it is open to the respondent to pass the final order on merits and in accordance with law within a period of four weeks. No costs. Consequently, connected miscellaneous petitions are closed. 10. In R.K. Sawhney, Executor of The Estate of Late R.B. Nathu Ram vs. Commissioner of Income Tax, Delhi-II (DELHC) (1987) 166 ITR 0128, it has been held as under :- 8. Counsel submitted that at least the question whether the assessment dated September 10, 1979, is barred by limitation should be directed to be referred. We are unable to isolate this question for the reasons already mentioned. If the assessed is precluded from questioning the validity of the di ..... X X X X Extracts X X X X X X X X Extracts X X X X
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