2019 (3) TMI 79

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.... initiated without providing the reasons for reopening of assessment to the assessee and as such the proceedings were bad in law. 1 (b). That on the facts and in the circumstances of the case and in law, the Ld. CIT(Appeals) erred in confirming the action of the AO in initiating the reassessment proceedings under section 147 of the Act without appreciating that the said proceedings were initiated on the basis of review of the same set of facts/details which were already on records before the AO at the time of completion of original assessment under section 143(3) of the Act and hence, the proceedings were bad in law in view of the well settled decision of the Hon'ble Supreme Court. 1 (c). That on the facts and in the circumstances of the case and in law, the Ld. CIT(Appeals) erred in confirming the action of the AO in initiating the reassessment proceedings under section 147 of the Act without appreciating that the said proceedings were initiated on the basis of audit objections and without independent application of mind by the AO. 2. That on the facts and in the circumstances of the case and in law and without prejudice to Ground No. 1(a),1(b)&1(c) ....

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....building and the entire amount of such expense was claimed as business expenses. As the house was partly used for let out and partly for business as stated above, the proportionate expenses on repairs was required to be disallowed u/s 38 of the I.T. Act. However, no such disallowance was made in the assessment. The AO noted that if the same formula as adopted by the assessee while computing disallowance of depreciation in respect of let out portion of such building as detailed above is taken into account, the amount of disallowance u/s 38 came to Rs. 15.51 lakhs as detailed below: Rs.44.45 lakhs x9044.63 Sq.mt. 191 days= Rs. 11.57 lakhs 18588.82 Sq.mt. Rs.44.45 lakhs x 3548 sq. Mt 166 days = Rs. 3.94lakhs 18588.82 sq. mt Total = Rs. 15.51 lakhs Thus, as per AO, there was an excess allowance of business expenses to the extent of Rs. 15.51 lakhs which resulted in an underassessment of business income. Therefore, the assessee was issued notice u/s 148 of the I.T. Act, 1961 on 5/9/2011. 5. In response to the said notice U/s 148 of the Act, the assessee submitted before the AO that the depreciation on building is allowable as a business expenditure u/s 3....

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....dings under section 147 of the Act is bad in law since reasons for reopening of assessment was not provided to the assessee. The counsel drew our attention to the provisions of section 148 of the Act, which reads as under: "Section:148(1) Before making the assessment, reassessment or re computation under section 147, the Assessing Officer shall serve on the assessee a notice requiring him to furnish within such period, as may be specified in the notice, a return of his income or the income of any other person in respect of which he is assessable under this Act during the previous year corresponding to the relevant assessment year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed; and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139 ." In the light of the above provisions of the Act, the ld Counsel submitted before us that before initiating the reassessment proceedings under section 147 of the Act a notice under section 148 must be served upon the assessee requiring him to furnish any particulars or deta....

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....e under section 148 of the Act, secondly, the reasons for reopening of assessment was not provided to the assessee and thirdly, the information was available before the AO at the time of framing the assessment U/s 143 (3) of the Act in respect of issue of proportionate depreciation on building, therefore, it is a review of already completed assessment U/s 143(3) of the Act. Hence, the ld Counsel submitted before the Bench that the proceeding initiated under section 147/148 of the Act is bad in law. 9.On the other hand, the Ld. DR for the Revenue has primarily reiterated the stand taken by the Assessing Officer, which we have already noted in our earlier para and is not being repeated for the sake of brevity. 10. We have given a careful consideration to the rival submissions and perused the materials available on record, we note that the AO has passed the reassessment order under section 147/143(3) the Act dated 30-12-2011, disallowing the proportionate of depreciation expenses on building in respect of let out portion such building to the tune of Rs. 15,51,000/- on the contention that the building was partly let out and partly used for business. We note that at the appellate ....

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....hetty (supra), the Hon'ble Jurisdictional High Court, held as follows: "The service of notice on the assessee was a condition precedent to the assumption of jurisdiction by the Income Tax Officer under section 34. No consent can confer jurisdiction upon a court if the court has no jurisdiction. The failure to give the requisite notice deprives the Income-tax Officer of his jurisdiction to assess under section 34." We note that the ratio of the aforesaid judgment of the Hon'ble Apex Court is squarely applicable to the instant case of the assessee since the order under section 147 of the Act for the assessment year was passed by the AO without serving notice under section 148 of the Act on the assessee, and as such, the assessment order is liable to be quashed. 11. We note that in the assessee`s case under consideration the reassessment proceedings was based on review of the same set of facts/details which were already on record before AO at the time of completion of original assessment under section 143(3) of the Act.We note that the assessee had debited an amount of Rs. 44.45 lacs to its Profit & Loss account under the head "Repairs - Building" in schedule XV....

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.... building. Thus, the AO has reviewed the same set of documents which were on records before him at the time of completion of original assessment under section 143(3) of the Act before initiating reassessment proceedings. We note that the assessee had filed its return of income on 31-10-2007 and revised the same on 30-03-2009. The audited Accounts and Tax Audit Report had been filed along with the Return of Income, and the same were available on record before the AO at the time of original assessment. Further, the computation of Total Income clearly stating the proportionate disallowance of depreciation has also been filed before the AO. On perusal of the same it could be seen that all the information and details on the basis of which the AO has reasons to believe that income has escaped assessment were duly submitted in the course of the assessment proceedings and were available before the AO at the time of completion of assessment proceedings under section 143(3) of the Act. The AO has merely reviewed the same set of documents and concluded that that there was escapement of tax which is not tenable. It is well settled that the AO cannot reopen a concluded assessment merely on r....