R.B. Construction, Baroda vs Department Of Income Tax

ी एन0एस0 सैनी, लेखा सद य एवं ी कुल भारत, या%यक सद य के सम& BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER आयकर अपील सं./ ITA No.1537/Ahd/2011 %नधा)रण वष)/Assessment Year: 2002-03

ACIT, M/s. R.B. Construction, Central Circle-2, Vs Navkar Flat, Behind Kidney Baroda. Hospital, Nadiad.

PAN : AACFR 3677 A

अपीलाथ,/ (Appellant) -.यथ,/ (Respondent)

Revenue by : Shri Nimesh Yadav, Sr. DR. Assessee(s) by: Shri S.N. Soparkar, AR

सन ु वाई क तार ख/ Dateof Hearing : 06/04/2015 घोषणा क तार ख / Date of Pronouncement: 10/04/2015

आदे श/O R D E R

PER SHRI N.S. SAINI, ACCOUNTANT MEMBER:

This is an appeal filed by the Revenue against the order of the Commissioner of Income-Tax (Appeals)-IV, Ahmedabad dated 08.03.2011.

2. The Revenue has taken following grounds of appeal:-

1. The learned CIT(A) erred in law and on facts in deleting the addition of Rs.27,39,485/-, which was made as unexplained cash.

2. The learned CIT(A) further erred in law and on facts in deleting the addition of Rs.34,77,952/-, which was made out of unexplained cash receipts.

ITA No.1537/Ahd/2011 RB Construction For AY 2002-2003 2

3. On the facts and in the circumstances of the case, the Ld. CIT(A) ought to have upheld the order of the Assessing Officer.

4. It is, therefore, prayed that the order of the ld. CIT(A) may be set aside and that of the Assessing Officer be restored to the above extent.

3. At the outset, the Authorised Representative of the assessee submitted that he is supporting the order of CIT(A) under Rule 27 of the Income Tax Appellate Tribunal Rules, 1963 which provides that the respondent, though he may have not appealed, may support the order appealed against on any of the ground decided against him. He pointed out from Form No.35, being the appeal memo, filed before the CIT(A) that he had challenged initiation of the reassessment proceedings before the CIT(A) by raising the following grounds :-

"1. (a) On the facts and in the circumstances of the case, the learned Assessing Officer had no jurisdiction to initiate reassessment proceedings and to frame reassessment order under section 147 of the I.T. Act.

(b) The reassessment proceedings initiated u/s. 147 of the I.T. Act are also illegal being time barred on account of the fact that such proceedings are bad in law in terms of the provisions of section 149(1)(b)."

4. He pointed out from the order of CIT(A) dated 08.03.2011 that this ground was decided by the CIT(A) against the assessee by observing as under:-

"2.12 Considering the facts of the case and following the aforesaid decisions of the Hon'ble Supreme Court and different Hon'ble High Courts including that of the Hon'ble Gujrat High Court as referred to above, I am of the considered opinion that the Assessing Officer was having definite information of escapement of income. Whether finally it was determined as escaped income or not was not to be considered while ITA No.1537/Ahd/2011 RB Construction For AY 2002-2003 3

reopening the assessment. The Assessing Officer was therefore, justified in reopening the assessment and such of his action is sustainable in the eyes of law. The reopening of the assessment in case of the assessee is hereby sustained and held to be in order. The first ground of appeal is accordingly dismissed."

5. The Authorised Representative of the assessee further submitted that the assessee has raised objections to the issuance of notice u/s 148 of the Act vide letter dated 11.11.2009 which was received in the office of the Assessing officer on 16.11.2009. He has placed a copy of the said letter on record. He further submitted that the impugned order was passed without disposing off the objections of the assessee separately and without waiting for reasonable time before passing the impugned re-assessment order and therefore, the re-assessment order is liable to be quashed. The AR of the assessee relied upon the order of the Hon'ble Gujarat High Court in the case of General Motors India P. Ltd. v. DCIT, [2013] 354 ITR 0244 (Guj.). He further submitted that this Bench of the Tribunal in the case of Shri Rameshbhai Babulal Shah vs. ACIT vide order dated 28.11.2014 in ITA No.1406/Ahd/2011 in A.Y. 2002-03, following the order of Hon'ble Gujarat High Court in the case of General Motors India P. Ltd. (supra), quashed the re-assessment order on the ground that the assessee's objections to the re-assessment proceedings were not disposed off by the Assessing Officer by passing a separate order, but was disposed off in the assessment order dated 20.11.2009 itself, passed u/s 143(3) r.w.s. 147 of the Act.

6. On the other hand, the Departmental Representative supported the orders of the lower authorities.

7. We have heard the rival submissions and perused the orders of the lower authorities and material available on record. In the instant ITA No.1537/Ahd/2011 RB Construction For AY 2002-2003 4

case, the respondent assessee in terms of Rule 27 of the Income Tax Appellate Tribunal Rules, 1963 supported the order of CIT(A) on the ground that the impugned assessment order was bad in law as the reassessment was made without disposing off the objections raised by the assessee against the initiation of reassessment proceedings by a separate order. We find that, in the instant case, it is not in dispute that the assessee filed his objections against the issuance of notice u/s 148 of the Act vide his letter dated 11.11.2009 which was received by the office of the Assessing Officer on 16.11.2009. Thereafter, the Assessing Officer passed the impugned re-assessment order on 20.11.2009, disposing off the objections to re-assessment proceedings of the assessee in the order itself. Thus, these facts show that the objections raised by the assessee against the issuance of notice u/s 148 of the Act were not disposed off by the Assessing Officer by passing a speaking order thereon and allowing reasonable time to the assessee after communicating the fate of the objections before proceeding with the re-assessment. The Hon'ble Gujarat High Court in the case of General Motors India P. Ltd v. DCIT (supra) has held as under:-

"From the aforesaid discussion, we are of the considered opinion that the writ petition under article 226 of the Constitution of India is maintainable where no order has been passed by the Assessing Officer deciding the objection filed by the assessee under section 148 of the Act and assessment order has been passed or the order deciding an objection under section 148 of the Act has not been communicated to the assessee and assessment order has been passed or the objection filed under section 148 has been decided along with the assessment order. If the objection under section 148 has been rejected without there being any tangible material available with the Assessing Officer to form an opinion that there is escapement of income from assessment and in the absence of reasons having direct link with the formation of the belief, the writ court under article 226 can quash the notice issued under section 148 of the Act. The writ petition filed by the petitioner is maintainable. The Assessing Officer is mandated to decide the objection to the notice under section 148 and supply or ITA No.1537/Ahd/2011 RB Construction For AY 2002-2003 5

communicate it to the assessee. The assessee gets an opportunity to challenge the order in a writ petition. Thereafter, the Assessing Officer may pass the reassessment 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 the 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."

8. Therefore, respectfully following the above decision of the Hon'ble Jurisdictional High Court, we are of the considered view that the impugned order of re-assessment passed by the Assessing Officer without disposing off the objections raised by the assessee against the issuance of notice u/s 148 by a separate order is liable to be quashed. We order accordingly. Thus, this ground of appeal of the Revenue is dismissed.

9. As we have quashed the re-assessment order dated 20.11.2009, the grounds of appeal raised by the Revenue on the merits of the addition in this appeal have become infructuous and hence dismissed.

10. In the result, the appeal of the Revenue is dismissed.

Order pronounced in the Court on Friday, the 10th of April, 2015 at Ahmedabad.

Sd/- Sd/- (KUL BHARAT) ( N.S. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad; Dated 10/04/2015 PBN/* ITA No.1537/Ahd/2011 RB Construction For AY 2002-2003 6

आदे श क0 -%त1ल2प अ3े2षत/Copy of the Order forwarded to :

1. अपीलाथ / The Appellant

2. यथ / The Respondent.

3. संबं धत आयकर आयु!त / Concerned CIT

4. आयकर आयु!त(अपील) / The CIT(A)-IV, Ahmedabad

5. $वभागीय 'त'न ध, आयकर अपील य अ धकरण, अहमदाबाद / DR, ITAT, Ahmedabad

6. गाड- फाईल / Guard file.

ु ार/ BY ORDER, आदे शानस TRUE COPY उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपील य अ धकरण, अहमदाबाद / ITAT, Ahmedabad