2016 (10) TMI 348

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....e income returned. Subsequently, the Assessing Officer issued notice under Section 148 on 26.12.2005 and completed the reassessment on 30.6.2006 determining the total income of assessee at Rs. 3,54,98,250. The matter was carried to the CIT (Appeals) and then to this Tribunal. Vide its composite order dt.5.1.2007 the Tribunal set aside the assessment orders for reconsideration of the Assessing Officer in the light of judgment of Hon'ble Supreme Court in the case of GKN Driveshafts (India) Ltd. Vs. ITO 259 ITR 19 (SC). In pursuant to the set aside order of this Tribunal the Assessing Officer passed the assessment order on 31.12.2008 determined the total income of the assessee as it was assessed in the reassessment. The assessee has again challenged the action of the Assessing Officer before the CIT (Appeals) but could not succeed, as the CIT (Appeals) did not find any error or illegality in the order passed by the Assessing Officer as per the directions of the Tribunal. Aggrieved by the impugned order, the assessee filed these appeals before this Tribunal and raised the common grounds. The grounds raised in the case of ITA No.1559/Bang/2010 are reproduced as under : " 1.....

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....nd consequent assessment made requires to be annulled. 4[A] Without prejudice to the above, the authorities below are not justified in assessing a sum of Rs. 3,32,58,944/- as "Business Income" of the appellant under the facts and in the circumstances of the case. 4[B] The authorities below failed to appreciate that the appellant has not carried on any business of real estate or acted as real estate commission agent and the property was sought to be purchased by the appellant and the members of the group for setting up a Hotel and Software Park and there was no intention to resell the lands as part of any real estate business and the understandings reached during the year signifying no-objection for the sale of the lands by the Vendors in favour of Mis. Wipro are only executory in nature and contingent and it is not a deed of assignment but only an agreement to assign and the same did not result or vest the appellant with an indefeasible right to receive the alleged gains as income liable to tax during the previous year relevant to the assessment year under appeal. 5.* The authorities below are not justified in making the addition without considering the s....

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....egality in not deciding the objections against the reopening of the assessment separately and prior to the completion of the assessment. Therefore the order passed by the Assessing Officer is in violation of the decision of the Hon'ble Supreme Court in the case of GKN Drive Shaft India Ltd. (supra) as well as the specific directions of the Tribunal in setting aside the reassessment. Hence it is urged that the composite order dt.31.12.2008 is illegal and without jurisdiction and liable to be quashed. In support of his contention, the learned Authorised Representative has relied upon the following decisions : (i) Pushpak Bullion Pvt. Ltd. Vs. DCIT 371 ITR 81 (Guj) (ii) General Motors India P. Ltd. Vs. DCIT (2013) 354 ITR 244 (Guj) (iii) G N Mohan Raju Vs. ITO (2015) 167 TTJ (Bang) 236. 5. On the other hand, the learned Departmental Representative has submitted that the procedure provided by the Hon'ble Supreme Court in the case of GKN Drive Shaft India Ltd. (supra) has been duly complied with by the Assessing Officer as directed by the Tribunal. He has further contended that as per the directions of the Tribunal the Assessing Officer was required....

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.... assessments are set aside for the above reasons. Before we part we may observe that the Bombay High Court in the case of Allana Cold Storage Ltd. Vs. ITO and others (2006) 287 ITR 1 has quashed the assessment where the Assessing Officer did not follow the procedure of considering the objections and dealing with the same in the order the Delhi High Court in the case of Smt. Kamlesh Sharma Vs. ITO (2006) 287 ITR 337 had set aside the assessment and directed the Assessing Officer to consider and pass a speaking order on the assessee's objections. The above clearly shows that this is a curable procedure not followed by the Assessing Officer which he must necessarily follow and accordingly we so direct." Thus it is clear that the reassessment was set aside for passing the detailed order with regard to the objections and to proceed in accordance with law in regard to the reassessment. Hence the Assessing Officer was required to dispose of the objections against the reopening vide separate order and prior to the assessment order. The legal proposition on this point has been analysed in various cases by the Hon'ble High Courts. In the case of General Motor India Pvt. Ltd. Vs. D....

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.... to me that the rigour of availing of the alternative remedy before the Assessing Officer for objecting to the re-assessment notice under section 148 has been considerably softened by the Apex Court in GKN case (2003) 259 ITR 19 in the year 2003. In my view, therefore, the GKN case (2003) 259 ITR 19 (SC) does not run counter to the Calcutta Discount Co. Ltd. case (1961) 41 ITR 191 (SC) but it merely provides for challenge to the reassessment notice in two stages, that is,- (i) raising preliminary objections before the Assessing Officer and in case of failure before the Assessing Officer, (ii) challenging the speaking order of the Assessing Officer under section 148 of the Act." 9. The position in law is thus well settled. After a notice for re-assessment has been issued an assessee is required to file the return and seek reasons for issuance of such notice. The Assessing Officer is then bound to supply the reasons within a reasonable time. On receipt of reasons, the assessee is entitled to file preliminary objections to issuance of notice and the Assessing Officer is under a mandate to dispose of such preliminary objections by passing a speaking order, be....

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....ing Officer to decide the objections to the notice under Section 148 by a composite assessment order. The Assessing Officer was required to first decide the objections of the assessee filed under Section 148 and serve a copy of the order on the assessee. After giving some reasonable time to the assessee for challenging his order it was open to him to pass an assessment order. 7. This view was again reiterated by the Hon'ble High Court in the case of Pushpak Bullion P. Ltd. Vs. DCIT (supra) in para 8.1 as under : " 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 fu....