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TMI Blog2021 (7) TMI 75X X X X Extracts X X X X X X X X Extracts X X X X ..... of honourable jurisdictional High Court is binding upon the subordinate courts and tribunals. We find that learned CIT appeals has erred not following the binding order of honourable jurisdictional High Court and instead of referring to a Delhi High Court decision in this regard. Assessing Officer is wrong in observing that assessee has not filed objection to reopening. The objection to reopening was intimated to Assessing Officer and the objections have not been disposed off. This, as per the ratio of Hon'ble Jurisdictional High Court decision as referred above is fatal to the assessment. Hence, we set aside the orders of authorities below and decide the issue in favour of assessee. - I.T.A. No. 7369/Mum/2019, I.T.A. No. 7396/Mum/2019, I .T.A. No. 7397/Mum/2019 - - - Dated:- 9-6-2021 - Shri Shamim Yahya (AM) And Shri Amarjit Singh (JM) For the Assessee : Shri Dinkle Hariya For the Department : Shri Anoop ORDER PER SHAMIM YAHYA (AM) :- These are appeals by two assessees belonging to the same group against respective orders of learned CIT appeals. Since the issues are common and connected and the appeals were heard together these are being cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CE TO THE ABOVE 4.1 The Ld. CIT (A) erred in confirming the addition made by the A.O. of ₹ 1,42,135/- u/s. 69 of the Act, on account of alleged estimated unexplained expenses. 4.2 While doing so, the Ld. CIT (A) erred in: (i) Basing his action only on surmises, suspicion and conjecture; (ii) Taking into account irrelevant and extraneous considerations; and (iii) Ignoring relevant material and considerations as submitted by the Appellant. 4.3 It is submitted that in the facts and the circumstances of the case, and in law, no such addition was called for. 4.4 Without prejudice to the above, assuming - but not admitting - that some addition was called for, it is submitted that the computation of the addition made by the A.O. is arbitrary, excessive and not in accordance with the law. LIBERTY 5. The Appellant craves leave to add, alter, delete or modify all or any the above ground at the time of hearing. 3. At the outset learned counsel of the assessee stated that in these appeals the assessing officer has passed the order without disposing of the assessee's objection to the reopening. Hence learned counsel of the assessee pleaded that the jurisd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce on the decision of the Hon'ble Bombay High Court at Goa Bench in the case of Fomento Resorts Hotels Ltd., v. ACIT in Tax Appeal No. 63 of 2007 dated 30.08.2019and submitted that it has been held by the Hon'ble Bombay High Court that the Assessing Officer has to pass a separate order disposing off the preliminary objections and he cannot dispose off the objections while passing the Assessment Order itself. 6. On the other hand, Ld. DR strongly supported the orders of the Authorities below. 7. We have heard the rival submissions, perused the orders of the authorities below. In this case the Assessing Officer issued notice u/s.148 of the Act dated 25.02.2016 for reopening of assessment u/s. 147 of the Act. Assessing Officer also issued notice u/s. 143(2) of the Act calling for the details and objections. Assessee vide letter dated 28.07.2016 submitted detailed preliminary objections for reopening of assessment and not to proceed further and these objections are as under: - With reference to your above Notice, we have to submit as under:- 1.Vide your Notice dated 16.07.2016 you have called upon us to explain as to why the Long Term Capital (LTG), gain earned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also placed on record the manner in which he was pressurized, threatened and also the circumstances under which this so called confession in the form of statement was extracted from him iii.Shri Jasmin Ajmera has retracted from the statement/ confession so extracted. We say that in the given circumstances, the so called statement has absolutely no evidentiary value, on fact, as well as in law. iv.In any case, the statement of Shri Jasmin Ajmera is not bindingon us and we have not confessed any such disclosure, we saythat in the given circumstances, even this so called statement hasabsolutely no evidentiary value, on fact, as well as in law.In view of the above, It is submitted that your reliance on the statement of Shri Jasmin Ajmera is not valid, on fact, as well as in law. B. Search proceeding against Shri Shirish C. Shah It appears that your observation is also based on the alleged information gathered in course of search action against one Shri Shirish C. Shah. Your good office has provided us data collected by you from BSE Ltd. with respect to the transactions in the shares of Prraneta Industries Ltd., now known as Adhaar Venture India Ltd. [ Prraneta ] for the pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the shares much less we had no means to know that. 4.None of the regulatory authorities, like SEBI, BSE, RBI etc. has even suggested, much less held, that these transactions were bogus. In other words, the transactions are accepted to be proper and genuine by the concerned regulatory authorities, without any such regulatory authorities taking any adverse view. in fact, the very same company, Prraneta Industries Ltd. has recently come out with public preferential issue of shares, which Is possible only after getting clearance of regulatory authorities. Reference copies enclosed for ready reference. Prraneta is registered as NBFC with RBI (copy enclosed). If you still intend to hold otherwise, it is your duty to bring cogent material in support thereof. 5.As such, your listing down names of various parties who supposed to have purchased the shares sold by us has absolutely no bearing on our case, as we are not at all concerned with the names of the purchasers, much less we also would not have the knowledge as to why such person purchased the said shares. Therefore, in any case, we had absolutely no concern with the alleged group purchasing the said shares, much less their r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ine the person and/or the author who has prepared the data, apart from this being a normal and essential requirement of the principle of natural justice, as the data appears to be incorrect, so far as the transactions relating to us. (iii) The rest of the details are incoherent and in no way are connected with us. Many of the scanned pages are loose sheets, rough pages and scribblings, which do not make any sense.(iv) In the circumstances, we say that no adverse inference can be raised on the basis of the material provided to us on fact as well as in law. This is, of course, without prejudice to our preliminary objection to let us know the precise material that you intend to rely upon ultimately and the reason thereof so as to enable us to give meaningful reply thereon. III. AFFIDAVITS FILED BY THE DIRECTORS OF THE COMPANIES ALLEGED TO BE MANAGED AND CONTROLLED BYSHIRISH SHAH:- 1.At the outset, we fail to understand in what way such affidavits are sought to be used against us. Therefore, we request you to let us know the exact relevance of these affidavits in our case, so as to give meaningful reply thereafter. 2. Strictly without prejudice to the above and under pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ou are depending to bring at correct facts on record. The above are our preliminary submissions/objections on the issue. If you still intend to proceed further, we request that the same be Intimated to us, along with the reasons thereof, to enable us to make further submissions, on fact as well as in law. Needless to say that, in the meanwhile, if any further information/explanation is required, on the preliminary aspect the same shall be readily furnished upon intimation. 8.However, the Assessing Officer without disposing off the preliminary objections proceeded and completed the assessment and while completing the assessment adverted to the objections filed by the assessee. 9.In the case of Maharashtra State Power Generation Co. Ltd., v. Addl. CIT (supra) the Tribunal considering the decision of the Hon'ble Supreme Court in the case of GKN Driveshafts (India) Ltd., v. ITO (supra) and the decision of the Hon'ble Jurisdictional High Court in the case of KSS Petron Pvt. Ltd., v. ACIT (supra) and also the decision of the Coordinate Bench in the case of DCIT v. First source Solutions Ltd (supra) quashed the reassessment order passed u/s. 143(3) r.w.s. 147of the Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . AO for disposal of assessee s objection against reassessment proceedings. However, the fact that the assessee had raised objections against the reopening of the assessment and the same was not disposed-off by Ld. AO, remain uncontroverted. Nothing on record would establish that the assessee s objections against reopening of assessment were ever considered and rejected by Ld. AO at any point of time, during reassessment proceedings. 3. After due consideration of factual matrix, we find that the binding judicial precedent in the shape of cited decision of Hon ble Bombay High Court squarely applies to the fact of the case. The relevant observation of Hon ble court, for ease of reference, could be extracted in the following manner: - 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 Officer to pass afurther/fresh order. If this is permitted, it would give a licence to the Assessing Officer to pass orders on reopening notice, without jurisdiction (without compliance of the law in accordance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... [supra], after considering the contrary case-laws as cited by the revenue, has concluded the matter in the following manner: - 7. We have considered rival submissions and perused the material on record. Undisputed factual position, as culled out from the material on record, clearly reveals that in the course of re assessment proceedings, though, the assessee had raised objections challenging the validity of re opening of assessments under section 147 of the Act, however, the Assessing Officer has not disposed of the objections independently by way of separate orders before completion of assessment proceedings under section 143(3) r/w 147 of the Act. The Hon'ble Supreme Court in GKN Driveshafts India Ltd. (supra) has held that before completion of the assessment, the Assessing Officer is duty bound to dispose of the objections of the assessee separately. Therefore, the Assessing Officer in the instant appeal has not followed the due judicial process while dealing with the objections of the assessee. For that reason, the impugned assessment orders are legally unsustainable. Now the issue which arises is, whether in such circumstances, the re assessment orders passed have to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is as under:- The Special Leave Petition is dismissed. Pending application stands disposed of . 8.It is a fairly well settled legal position that dismissal of SLP in limine at the stage of admission without a speaking or reasoned order does not constitute a binding precedent under Article 141 of the Constitution of India. This principle has been well propounded in case of Kunhayammed Vs. State of Kerala 2001(129) ELT 11 (S.C.). Aforesaid view was again affirmed by the hon ble Supreme Court incase of Khoday Distilleries Ltd. Vs. Shree Mahadeshwara Sahakara Sakkare Karkhane Ltd. while disposing of Civil Appeal no.2432 of 2019 in judgment dated. 01.03.2019. Therefore, it cannot be said that in the aforesaid decision, the Hon'ble Supreme Court has laid down the proposition that non disposal of objections against the validity of proceedings initiated under section 147 of the Act is a procedural irregularity which can be cured if the Assessing Officer is given an opportunity to dispose of the objections of the assessee and thereafter complete the assessment. Moreover, the decision of the Hon'ble Supreme Court in GKN Driveshafts India Ltd. (supra) has not been overruled ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... holding the assessment orders passed to be legally unsustainable. Accordingly, grounds raised in both the appeals are dismissed. Respectfully following the cited binding judicial precedents, the action of Ld. first appellate authority in upholding the reassessment proceedings, could not be said to be in accordance with law. Therefore, we quash the reassessment order dated 29/12/2009 passed by Ld. Assessing Officer. In view of the same, dealing into the merits of the case become merely academic in nature and therefore, we refrain from dealing the same. Ground No. 1 stands allowed which makes other grounds of appeal infructuous. 10.In the case of Fomento Resorts Hotels Ltd., v. ACIT (supra) (supra) the Hon'ble Bombay High Court held as under: 13.In the present case, the Appellants did lodge their objections vide letter dated 14th April, 2003. By a further letter dated 25th March, 2004, the Appellants requested the Assessing Officer to dispose of such objections by passing a speaking order before proceeding with the reassessment in respect of the Assessment Year 1997-98. However, the Assessing Officer, without proceeding to dispose of the objections raised by the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ral justice. In the light of that, no fault could be found with the order of the learned ITAT and as such no substantial question of law arises as well. Appeal dismissed. 16.The Respondent, instituted a Special Leave to Appeal (Civil) No.5711/2007 which was, however, dismissed by the Hon ble Apex Court vide order dated 16/7/2007, by observing that there were no merits. 17.Accordingly, for the aforesaid reasons, we are unable to accept Ms. Linhares s contention based upon the any alleged variance between the provisions of the said Act and the provisions of the Income Tax Act, in so far as applicability of the principles in GKN Driveshafts (India) Ltd. (supra) is concerned.1 8.The moot question is, therefore, the disposal of the objections by the Assessing Officer in his assessment order dated 26th March, 2004 constitutes sufficient compliance with the procedure prescribed by the Hon ble Supreme Court in the case of GKN Driveshafts (India) Ltd. (supra) or, whether it was necessary for the Assessing Officer to have first disposed of the Appellant s objections by passing a speaking order and only upon communication of the same to the Appellants, proceeded to reopen the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... By the impugned order it held that the Assessing Officer was not justified in finalizing the Assessment, without having first disposed of the objections of the appellant. This impugned order holds the Assessing Officer is obliged to do in terms of the Apex Court's decision in GKN Driveshafts (India) Ltd., v/s. ITO 259 ITR 19. In the aforesaid circumstances, the order of the CIT(A) and the Assessing Officer were quashed and set aside. However, after having set aside the orders, it restored the Assessment to the Assessing Officer to pass fresh order after disposing of the objections to reopening notice dated 28th March, 2008, in accordance with law. 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 Officer to pass a further/fresh order. If this is permitted, it would give a licence to the Assessing Officer to pass orders on reopening notice, without jurisdiction (without compliance of the law in accordance with the procedure), yet the only consequence, would be that in appeal, it would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his assessment order noted that assessee did not file the objection to the reopening. However learned CIT(A) in his order has noted this aspect. He has also reproduced one of the letters by the assessee to the assessing officer wherein objections to reopening were duly raised. 5. However learned CIT(A) is of the opinion that honourable Supreme Court decision in GKN Driveshaft does not hold that the reassessment will be bad if objection are not disposed of. In this regard, on this premise he has rejected the assessee s contention that assessment is bad in as much as objections to reopening have not been disposed off. However we note that the above view of the learned CIT appeals is not in accordance with honourable Bombay High Court decision in the case of Fomento Resorts Hotels Ltd. (supra) dealt with in the above said order of the ITAT. It is settled law the order of honourable jurisdictional High Court is binding upon the subordinate courts and tribunals. We find that learned CIT appeals has erred not following the binding order of honourable jurisdictional High Court and instead of referring to a Delhi High Court decision in this regard. 6. Accordingly it is clear that t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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