Gujarat Industrial Security Force ... vs Assessee

1. The Learned CIT (A) has grossly erred in Jaw and on the facts in not adjudicating the ground challenging action of AO in framing assessment u/s.143 (3) r.w.s. 147 of the Act ITA No. 2725/Ahd/2010 Gujarat Industrial Security Force Society v. DCIT AY 2004-05

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without disposing off the objections raised by the appellant by passing a speaking order and erred further in not appreciating the fact that all the relevant material was disclosed in the original return of income and mere change of opinion does not empower the Assessing Officer to reopen concluded assessment. The order of Id, CIT (A) being unjust, unfair and against principles of Natural Justice deserves to be quashed.

2. The learned CTT (A) has grossly erred in law and on facts in confirming action of the AO in disallowing a sum of Rs. 43, 12, 725A under the provisions of section 2(24)(x) r.w.s.

36(1)(va) of the act. Both the lower authorities have erred in not correctly appreciating the fact that out of total disallowance a sum of Rs. 1,97,618/- was Employer's contribution that falls under the provisions of section 43B of the Act. Both the lower authorities erred in not appreciating the fact that the contributions disallowed were deposited before due date of filing of return of income and further erred in not following the ratio of various judgments and decisions relied upon by the appellant. The order of ld. CIT (A) ought be quashed and disallowance deserves to be deleted.

3. The Learned CIT (A) has erred in law and on facts in confirming action of AO in disallowing provision of Rs. 90, 2127- made for payment of bonus by the appellant. Ld. CIT (A) ought to have allowed the same.

4. The Learned CIT (A) has erred in law and on facts in confirming action of AO in disallowing Rs.1,16,910/- as prior period expenses of ESIC contribution without appreciating the fact that out of the total a sum of Rs. 94, 0277- pertaining to February & March 2003 were allowable on payment basis under provisions of section 43B of the Act. The order of Id. CIT (A) ought to be quashed and expenses be allowed.

5. Initiation of penalty u/s 271(l)(c) of the Act is not justified.

ITA No. 2725/Ahd/2010 Gujarat Industrial Security Force Society v. DCIT AY 2004-05

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2. With regard to Ground No.1, the ld. Authorized Representative pointed out that the Assessing Officer has erred in not disposing off the objections raised by the assessee before passing the re-assessment order as per law as laid down by the Hon'ble Supreme Court in the case of GKN Driveshafts (India) Ltd vs. ITO, reported in [2003] 259 ITR 19 (SC). The stand of the assessee has been that the reassessment order without dealing with the objections is a nullity and therefore same is to be quashed. He further submitted that similar view has been taken by the Hon'ble Gujarat High Court in the case of Gujarat Motors India Ltd v. DCIT (354 ITR 244) (Guj.). Subsequently, the same issue has been decided by Hon'ble ITAT, "B" Bench, Ahmedabad in the case of M/s. Bharuch Enviro Infrastructure Ltd vs. DCIT in ITA Nos. 731 & 732/Ahd/2007 for Assessment Years 2000-01 & 2001-02, by observing as under:-

"8. We have heard the rival submissions and perused the material on record. It is an undisputed fact that the reasons for re-opening of assessment u/s. 147 of the Act was recorded on 31.03.2005 and the same were communicated to the Assessee by ACIT vide letter dated 09.01.2006. In response to the notice for reopening, Assessee vide its letter dated 11.01.2006 had objected to initiation of re-assessment. Before us, ld. A.R. submitted that that the Assessee's objection to reassessment proceedings were not passed by a separate order but were disposed by the A.O in the assessment order dated 22.03.2006 passed u/s. 143(3) r.w.s. 147 of the Act and this fact has not been controverted by Revenue. We find that the Hon'ble Gujarat High Court in the case of General Motors India Pvt. Ltd. (supra) has held as under:-

ITA No. 2725/Ahd/2010 Gujarat Industrial Security Force Society v. DCIT AY 2004-05

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"23 ....... A.O is mandated to decide the objection to the notice u/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 A.O may pass the re-assessment order. We hold that it was not open to the A.O to decide the objection to notice u/s/ 148 by a composite assessment order.

Assessing Officer was required to first decide the objection of the Assessee filed u/s. 148 and serve a copy of the order of the Assessee and after giving 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 A.O therefore the order on the objection to the notice u/s. 148 of the assessment order passed under the Act deserved to be quashed".

9. Before us, Revenue has not brought any contrary binding decision of Hon'ble Apex Court or Hon'ble jurisdictional High Court in support of 5 ITA No 731 & 732/AHD/2007 . A.Ys. 2000-01 & 2001-02 its contention that the order disposing of the objections of the Assessee to reassessment proceedings along with the assessment order is in order and therefore valid as per law. We therefore, respectfully following the aforesaid decision of Hon'ble Gujarat High Court in the case of General Motor India Pvt. Ltd. (supra) quash the assessment order dated 22.03.2006. Since the re-assessment itself has been quashed, the grounds raised on merits are not decided. In the result, the appeal of Assessee is allowed."

2.1 In this regard, the ld. Counsel for the assessee submitted that he has raised this legal submission by way of written submissions filed on 15.07.2010, which reads as under:-

"(i) The ld. Assessing Officer has erred in law and facts of the case is reopening of assessment u/s 147 of the Act.

Under the facts and circumstances of the case the action of reopening is without jurisdiction and not permissible either ITA No. 2725/Ahd/2010 Gujarat Industrial Security Force Society v. DCIT AY 2004-05

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in law or on fact. The present proceedings, therefore, are required to be quashed.

(ii) The ld. Assessing Officer has erred in law and on facts of the case by not following law laid down by the Supreme Court in GKN Driveshaft (India) Ltd. by not disposing off the objection raised by the Appellant and therefore also the present proceedings are required to be quashed.

(iii)

(iv)...."

2.2 The ld. Counsel for the assessee further pointed out that inspite of the fact that the legal issue was raised, the same has not been disposed off by the CIT(A) before upholding the re- assessment order, which is contrary to the ratio laid down by the Hon'ble Supreme Court in the case of GKN Driveshaft (India) Ltd (supra) and the same has been followed by the Hon'ble Gujarat High Court in the case of General Motors India Ltd (supra). Further the same ratio has been followed by ITAT, Ahmedabad Bench in the case of Bharuch Enviro Infrastructure Ltd (supra). Agreeing to the contention of the assessee, we are of the view that the objections raised by the assessee should be disposed off by the lower authorities which has not been done so in this case which is not justified. Therefore, in the interest of justice, we set aside the orders of the lower authorities and restore the matter back to the file of the Assessing Officer with the direction to decide this issue as per facts and law, after providing due opportunity of hearing to the assessee.

ITA No. 2725/Ahd/2010 Gujarat Industrial Security Force Society v. DCIT AY 2004-05

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2.3 Since we are restoring the appeal on preliminary legal issue, we are also restoring other issues raised on merit in the assessee's appeal to the file of the Assessing Officer with the direction to decide the same as per facts and law, after providing due opportunity of hearing to the assessee.

2.4 Since we are setting aside the issue to the file of Assessing Officer on preliminary objection, so we are refraining to comment on the merit of the issue at hand.

3. As a result, the appeal of the assessee is allowed for statistical purposes.

Order pronounced in the Court on 30th of April, 2015 at Ahmedabad.

Sd/- Sd/-

(ANIL CHATURVEDI) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 30/04/2015 *BT

आदे श क ूितिल)प अमे)षत/Copy षत of the Order forwarded to :

1. अपीलाथ, / The Appellant

2. ू-यथ, / The Respondent.

3. संबंिधत आयकर आयु. / Concerned CIT

4. आयकर आयु.(अपील) / The CIT(A),

5. )वभागीय ूितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad

6. गाड फाईल / Guard file.

आदे शानुसार/ BY ORDER, //TRUE COPY// उप/ उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपीलीय अिधकरण, अिधकरण, अहमदाबाद / ITAT, Ahmedabad