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TMI Blog2020 (12) TMI 1242X X X X Extracts X X X X X X X X Extracts X X X X ..... :- 8-12-2020 - SHRI C.N. PRASAD, J. Appellant by : Shri Dinkle Hariya Respondent by: Shri Sanjay J. Sethi ORDER C.N. PRASAD, J. 1. This appeal is filed by the assessee against the order of the Learned Commissioner of Income Tax (Appeals) 48, Mumbai [hereinafter in short Ld.CIT(A) ] dated 29.06.2018 for the A.Y. 2011-12. 2. Assessee has raised the following grounds in his appeal: - 1. Breach of principles of natural justice 1.1 The Learned Commissioner of income -tax (Appeals) -48, Mumbai [ Ld. CIT (A) ] erred in not granting proper, sufficient adequate opportunity of being heard to the Appellant while framing the assessment. 1.2 It is submitted that in the facts the circumstances of the case, in law, the assessment so framed be held as and illegal, as the is framed in breach of the principles of natural justice and without application of mind to the factual and legal aspects involved in the appeal WITHOUT PREJUDICE TO THE ABOVE 2. THE REASSESSMENT ORDER WAS _BAD_IN LAW AND WITHOUT JURISDICTION 2.1 The Ld. CIT (A) erred in confirming the validity and legality of the reassessment order passed by the A.O. 2.2 It is submitte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and preliminary objections on reopening of assessment and these objections were never disposed off by the Assessing Officer before framing the assessment, therefore, rendering the assessment order bad in law. 4. Ld. Counsel for the assessee placed reliance on the following decisions: - (i) DCIT v. M/s. Firstsource Solutions Ltd., in ITA.No. 3985 3986/Mum/2016 dated 22.05.2019. (ii) Maharashtra State Power Generation Co. Ltd., v. Addl. CIT in ITA.No. 2043/Mum/2011 dated 31.07.2019. Referring to these two decisions Ld. Counsel for the assessee submits that the Tribunal following the decisions of the Hon'ble Supreme Court in the case of GKN Driveshafts (India) Ltd., v. ITO [259 ITR 19] and the decision of the Hon'ble Jurisdictional High Court in the case of KSS Petron Pvt. Ltd., v. ACIT in ITA.No. 224 of 2014 dated 03.10.2016 setaside the Assessment Order as there was no separate order passed by the Assessing Officer dealing with the preliminary objections filed by the assessee in reopening the assessment. 5. Ld. Counsel for the assessee also placed reliance on the decision of the Hon'ble Bombay High Court at Goa Bench in the case of Fomento Resorts Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed, we understand that such action is contrary to the specific directions issued by the CBDT. In any case, and otherwise also, we believe that the law is quite well settled in this regard and it has been emphatically held that no addition can be made to the income of an assessee, merely on the basis of a statement, without any corroborative evidence found during the search supporting such addition. ii. In any case, the statement of Shri Jasmin Ajmera was taken in coercion, pressure and undue influence and given In stress and utter duress. Therefore, we believe such statement is not a valid statement in the eyes of law and consequently, is not binding on the person who gave the statement and least binding on any third party. Further, the entire statement stood fully retracted by Shri Jasmin Ajmera in his detailed affidavit dated 02/08/2013 and 14/08/2015, submitted to the department, Shri Jasmin Ajmera In his affidavits, have very exhaustively dealt with the entire chain of events which transpired during the course of the search, as well as, has also placed on record the manner in which he was pressurized, threatened and also the circumstances under which this so called confes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would like to draw your kind attention that, It is also a matter of elementary knowledge that in a screen based computerized trading mechanism, transactions of purchase and sale of shares of a particular company gets automatically concluded when offer of purchase of the shares at a particular price for a particular quantity placed by a broker on behalf of a willing purchaser is match by / accepted by another broker acting on behalf of holder of the shares who accepts to sell at that price and or vis-e-versa. The important thing is that the transaction is concluded automatically through the stock exchange mechanism on the matching parameters of price and up to that quantity only without any description / choice of the selling broker / buying broker. In fact, the very purpose behind this mechanism is to bring transparency and not to give any such discretion,' choice to the brokers / clients. Most Importantly, neither the selling person nor his broker is aware about who is the actual purchaser of the share. As such, when we sold the shares through our broker, we were not even aware about the person purchasing the shares much less we had no means to know that. 4. None of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aterial on which you intend to rely while framing assessments in our case. You will appreciate that it is only after knowing the exact material on which you intend to rely, and the reason thereof, that any reply can be filed by us In defence. Otherwise, dumping 6000 to 7000 pages, that too, in a pen drive form, does not serve any purpose. In order to provide us a proper and fair opportunity of being heard and to enable us to give meaningful reply, for ourselves, we have to request you to identify and let us know the exact pages / papers / documents which you intend to actually rely and also let us know as to in what way and for what purpose they are sought to be so relied upon. 2. However, strictly without prejudice to the above and under protest, we give our very preliminary and brief observations, upon going cursorily through the contents of the pen drive, hereinbelow: (1) In any case, many of the documents are rough notings /scribblings / chits, etc., which otherwise also have no evidentiary value, being 'dumb' documents. (ii) We are not aware who has prepared these data/documents/chits etc. and we would like to cross - examine the person and/or the auth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eclarations and Affidavits. iii) In any case, as mentioned earlier, if you still intend to rely upon any of these affidavits/declarations, you are requested to let us know how and in what manner you intend to so rely and also give us an opportunity to cross - examine such persons. iv) In any case, the affidavits / declarations do not cover many other companies/ Individuals, who have alleged to have purchased shares sold by us on automated exchange platform. v) Please let us know what actions have been taken against the deponents as well as the concerned companies as well as against Shirish C. Shah. For example, whether the income supposed to have been received by them from Shirish C. Shah has been declared / assessed in their case? vi) In this background, these loose papers / affidavits cannot be called any material, much less cogent material, to rebut the preliminary presumption about correctness of the transaction. Please note that said Shirish C. Shah was nowhere concerned with our transactions of sale nor was he ever been contacted for any such transactions. Please provide us an opportunity of cross - examining said Shirish Shah and all the individual ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s relied on by the appellant. Though as per decisions of the Hon'ble Supreme Court and other decisions, it was obligatory on the part of the AO to first dispose-off, by passing a speaking order, appellant s objections raised against reopening of the assessment. However, the Assessing Officer s action of not disposing off appellant s objections was a procedural irregularity only which did not affect the legality of the assessment order passed. In the above decisions relied upon by the appellant, the assessment order passed was not held to be invalid on account of not disposing off the assessee s objections raised against re-opening of the assessment. In those cases the assessment order was set aside to the file of the AO for first disposing off the objections by passing a speaking order and then frame assessment order. Therefore, on account of this irregularity, the assessment order passed by the AO cannot be held to be invalid. As per existing provisions of the Act, the undersigned has no power to set aside the assessment order passed by the AO. Therefore, appellant s objections/arguments on this issue are not acceptable. In the above background, Ld. CIT-DR pleaded for res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibunal dated 14th August, 2013, the Assessing Officer has not passed any order of reassessment. Time was granted on the last occasion to enable the Respondent to respond to the affidavit dated 19thSeptember, 2006 of the Director of the Appellant Company. The Respondent is unable to dispute the facts stated in the affidavit dated 19th September, 2016 filed by the Director of the Appellant Company. The time to pass a order on the notice dated 28th March, 2008, even consequent to the impugned order of the Tribunal, has lapsed. 11.Therefore, on the above facts and law, the substantial question of law is answered in the negative i.e. in favour of the Appellant-Assessee and against the Respondent Revenue. This decision has subsequently been followed by the co-ordinate bench of the Tribunal in number of cases, few of which could be tabulated as follows: - 1. DCIT M/s. National Bank for Agriculture and Rural Development [ITA No.4964/Mum/2014 (A.Y.2004-05) dated 28/10/2016] 2. Baldev Ramratan Sharma Vs. ACIT [ITA No.1909/Mum/2017 (A.Y.2009-10) dated 28/08/2018] 3. DCIT V/s Firstsource Solutions Ltd. [ITA Nos. 3985- 86/Mum/2016 dated 22/05/2019] 4. The co-o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r on account of non disposal of objection raised by the assessee. It is relevant to observe, post conclusion of hearing of the appeal, the learned Departmental Representative has submitted a note citing certain decisions in support of the proposition that non disposal of objection is a procedural irregularity, hence, the assessment order should be set aside for enabling the Assessing Officer to dispose of the objections and pass a fresh assessment order. The first decision relied upon by the learned Departmental Representative is, Home Finders Housing Ltd. v/s ITO, [2018] 94 taxmann.com 84 (SC). This is a matter arising out of a judgment delivered by the Hon ble Madras High Court holding that non disposal of objection before completion of assessment is a procedural irregularity which can be cured by setting aside the assessment order to the Assessing Officer for disposing of assessee s objection and thereafter completing the assessment. Against the aforesaid decision of the Hon ble Madras High Court, the assessee filed a Special Leave Petition (SLP) before the Hon'ble Supreme Court. The Hon'ble Supreme Court in the decision cited supra, dismissed the SLP in limine without ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dering the aforesaid submission of the assessee, the Commissioner set aside the assessment order with a direction to frame de novo assessment. During the fresh assessment proceeding assessee pleaded that the objection against reopening of assessment should be disposed of first. In the aforesaid factual context, the Hon'ble Jurisdictional High Court did not entertain assessee s plea. However, the Hon'ble Jurisdictional High Court in KSS Petron Pvt. Ltd. (supra), in no uncertain terms, has held that if the Assessing Officer before completion of assessment has not disposed of the objection, the assessment order cannot be restored back to the Assessing Officer for framing assessment de novo after disposal of the objections of the assessee. Though, the Hon'ble Madras High Court in case of Home Finders Housing Ltd. referred to earlier as well as the Hon'ble Gujarat High Court in MGM Exports v/s DCIT, [2010] 323 ITR 33 (Guj.) and PCIT v/s Sagar Developers, [2016] 72 taxmann.com 321 (Guj.) have held contrary view, however, we are bound by the decision of the Hon'ble Jurisdictional High Court in KSS Petron Pvt. Ltd. (supra). 9. In view of the aforesaid, we do not f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the first place, the provisions relating to reopening of assessment are almost pari materia. Secondly, in so far as Assessment Year 1995-96 is concerned, the Respondent applied the very same ruling in GKN Driveshafts (India) Ltd. (supra) to hold that the notice of reopening of assessment was ultra vires Section 11 of the said Act. This view, in the specific context of the said Act and incidentally in the specific context of this very Appellant, was upheld not only by this Court, but also by the Hon ble Supreme Court. This was in ETA No.1 and 5/PANJ/01 decided by the Tribunal on 4.4.2006. 15. The aforesaid decision of the ITAT was appealed by the Respondent vide Tax Appeal No.71/2006. This appeal was dismissed by this Court vide order dated 27th November, 2006, which reads thus : Heard the learned Counsel on behalf of the parties. This appeal is filed against the Order dated 4-4- 2006 of the ITAT wherein in para 7 the learned ITAT has come to the conclusion that the Assessing Officer is required to give reasons, when asked for by the Assessee. Giving of reasons has got to be considered as implicit in Section 11 of the Expenditure Tax Act, 1987. It is now well settled ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asons furnished to the Assessee. This Court held that the proceedings initiated by the Transfer Pricing Officer (TPO), on the basis of such a draft assessment order, were without jurisdiction and quashed the same. 21. Similarly, in the case of KSS Petron Private Ltd. (supra), this Court was concerned with the following substantial question of law : Whether on the facts and circumstances of the case and in law, the Tribunal was justified in restoring the issue to the Assessing Officer after having quashed/set aside the order dated 14th December, 2009 passed by the Assessing Officer without having disposed of the objections filed by the appellant to the reasons recorded in support of the reopening Notice dated 28th March, 2008 ? 22. In the aforesaid case, the Assessing Officer had purported to dispose of the objections to the reasons in the assessment order, consequent upon reopening of the assessment. This Court, however, held that the proceedings for reopening of assessment prior to disposing of the Asessee s objections by passing a speaking order, was an exercise in excess of jurisdiction. 23. KSS Petron Private Ltd. (supra), this is what the Division Bench ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be seen from the above decision of the Hon'ble Bombay High Court even if Assessing Officer disposed off the objections raised by the assessee in the Assessment Order while completing the re-assessment that is not in compliance with the decision of the Hon'ble Supreme Court in the case of GKN Driveshafts (India) Ltd., (supra) in other words the Assessing Officer shall pass a separate speaking order disposing off the preliminary objections raised by the assessee in reopening the assessment. In the case on hand before us since Assessing Officer failed to dispose off the preliminary objections of the assessee by way of a separate order, respectfully following the decision of the Hon'ble Bombay High Court in the case of Fomento Resorts Hotels Ltd. v. ACIT (supra), we quash the re-assessment order passed u/s. 143(3) r.w.s. 147 of the Act for the A.Y. 2011-12. The preliminary ground raised by the assessee is allowed. 12. As we have allowed preliminary ground raised by the assessee we are not inclined to go into other grounds and various contentions raised by the assessee on merits as it would render only an academic exercise. 13. In the result, appeal of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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