AI Drafter 
TaxTMI 
TaxTMI 
2015 (8) TMI 930
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....t aside the impugned notice under Section 148 of the Act for AY 200910 and Special Civil Application No.4194 of 2015 has been preferred by the petitioner challenging the impugned notice under Section 148 of the Act, by which, the assessment for AY 200708 has been reopened. 2.2. As the controversy in both these petitions is in a narrow compass, the facts necessary for determination of the present Special Civil Applications are narrated, which are as under: Special Civil Application No.4193 of 2015 3.0. That the petitioner filed return of income for AY 200910 at Rs. 4,43,44,610/with its Assessing Officer at Mumbai. That the Assessing Officer passed a scrutiny assessment order under Section 143(3) of the Act on 30th December 2011. That thereafter, the AO has issued the notices under Sections 148 of the Act dated 14.03.2014 and has reopened the assessment for AY 200910 stating that he has reasoned to believe that income had escaped assessment and asking the petitioner to file return within a period of 30 days from the service of the said notice. That thereafter, vide communication dated 08.12.2014 AO called upon the petitionerassessee to furnish in writing and verified in the ....
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....That the return was accepted by the department under Section 143(1) of the Act. That thereafter, AO has issued and served upon the impugned notice under Section 148 of the Act to the petitioner for AY 200708 dated 21.03.2014 to reopen the assessment for AY 200708 stating that he has reason to believe that income had escaped the assessment and asking the petitioner to file return within a period of not less than 30 days. That by communication dated 08.12.2014, AO at Ahmedabad addressed a letter to the petitioner stating that in response to notice under Section 148 issued by the AO at Mumbai, the petitioner had not filed the return and asked the petitioner to file the return as early as possible. That the petitioner by its letter dated 22.12.2014 requested the AO to treat its section 139 return as the one in compliance of Section 148 notice. The petitioner was requested to supply the copy of reasons recorded while reopening the assessment for AY 200708. That AO by his letter dated 12.01.2015 supplied the copy of the reasons recorded to the petitioner. That the petitioner raised the objection against reopening of the assessment for AY 200708 and against the reasons recorded, vide obje....
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....e case of Sahakari Khand Udyog Mandal Ltd (supra). It is vehemently submitted that in the aforesaid decision the Division Bench has never observed and / or directed that the assessee has to file return pursuant to notice under Section 148 of the Act within a period not less than 30 days from the date of receipt of notice under Section 148 of the Act and if the return pursuant to notice under Section 148 of the Act is not filed within a period not less than 30 days, the AO need not decide / dispose of the objections on merits. It is submitted that on the contrary in para 14(4) the Division Bench has specifically observed that requirement and timeframe for supplying the reasons without being demanded by the assessee would be applicable only if the assessee files his return of income within the period permitted in the notice for reopening and likewise the time frame for the Assessing Officer to dispose of the objections would apply only if the assessee raises objections within the time provided. It is submitted that the Division Bench further clarified this, however, would not mean that if in either case, the assessee misses the time limit, the procedure provided by the Supreme Court ....
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....arties have tried to make submission on merits, however for the reasons stated herein after, this Court proposes to remand the matters to the AO, we deem it proper not to enter into the merits and / or observe anything on merits with respect to the reopening of the respective assessments. 7.0. Having heard the learned advocates for the respective parties and considering the impugned orders by the AO disposing of the objections, it appears that the AO has disposed of the said objections without deciding it on merits and solely on the ground that as the assessee has not filed the return pursuant to the notice issued under Section 148 of the Act within a period not less than 30 days from the date of receipt of the notice under Section 148 of the Act. That while disposing of the said objections on the aforesaid ground, the AO has relied upon and considered the decision of the Division Bench of this Court in the case of Sahakari Khand Udyog Mandal Ltd (supra). However, on considering the directions issued by the Division Bench of this Court in the case of Sahakari Khand Udyog Mandal Ltd (supra), it appears that AO has misread and / or misinterpreted the directions issued by the Divis....
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....sons and shall reproduce the directions contained in subpara 1 to 4 hereinabove giving reference to this judgment of the High Court. 6.The Chief Commissioner of Income Tax and Cadre Controlling Authority of the Gujarat State, shall issue a circular to all the Assessing Officers for scrupulously carrying out the directions contained in this judgment." 8.1. From the aforesaid, it does not appear that any observation has been made by the Division Bench and / or any direction is issued by the Division Bench that assessee has to file return of income in response to the notice under Section 148 of the Act within a period not less than 30 days. What is observed / directed by the Division Bench is that if the assessee when files his return of income in response to notice under Section 148 of the Act, the AO shall supply the reasons recorded by him for issuing such notice within 30 days of the filing of the return by the assessee without waiting for the assessee to demand such reasons. The Division Bench has further observed and directed that once the assessee receives such reasons, he would be expected to raise his objections, if he so desires, within 60 days of receipt of such reasons ....
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....he following words:- ...However, we clarify that when a notice under section 148 of the Incometax Act is issued, the proper course of action for the notice is to file a return and if he so desires, to seek reasons for issuing notices. The Assessing Officer is bound to furnish reasons within a reasonable time. On receipt of reasons, the notice is entitled to file objections to issuance of notice and the Assessing Officer is bound to dispose of the same by passing a speaking order. In the instance case, as the reasons have been disclosed in these proceedings, the Assessing Officer has to dispose of the objections, if filed, by passing a speaking order, before proceeding with the assessment in respect of the abovesaid five assessment years." 8.3. In a subsequent decision in the case of Garden Finance Ltd. v. Asstt. CIT reported in (2004) 268 ITR 48 (Guj.) (FB), the effect of Supreme Court decision in the case of G.K.N. Driveshaft (India) Ltd. (Supra) came up for consideration and by a majority opinion it has been thus laid down by this Court as under: "What the Supreme Court has now done in the G.K.N. Case (2003)259 ITR 19 is not to whittle down the principle laid down by the....
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....hus, considering the aforesaid decision of the Hon'ble Supreme Court in the case of GKN Driveshafts (India) Ltd (supra) and the decision of the Full Bench of this Court in the case of Garden Finance Limited (supra) and the decision in the case of Arvind Mills Ltd. (Supra) and the decision of the Division Bench in the case of Sahakari Khand Udyog Mandal Ltd (supra) impugned orders disposing of the objections without deciding the objections on merits cannot be sustained and same deserve to be quashed and set aside. The impugned orders passed by the AO disposing of the objections are absolutely on misinterpretation and / or misreading of the decision of the Division Bench in the case of Sahakari Khand Udyog Mandal Ltd (supra). As observed herein above in the case of Sahakari Khand Udyog Mandal Ltd (supra) the Division Bench has never provided / prescribed/ stipulated any time limit for the assessee to file return of income pursuant to notice under Section 148 of the Act, more particularly within a period not less than 30 days and failure to file return of income within a period not not less than 30 days, AO need not decide the objections on merits. Such interpretation by the AO is....