TaxTMI 
TaxTMI 
2020 (2) TMI 68
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....s recorded for issue of notice u/s 148 of the Income Tax Act, 1961 2011-12 TPL Plastech Ltd. (PAN AAACT 1968P) citing Ref:- ACIT-ll(3)(l)/Notice u/s 148/2016-17." Filing objection after a span of almost one month from the date of receipt of notices u/s. 143(2) & 142(1) is not tenable. Hence, the objection was not disposed of." 2. "Whether in law and on the facts and in the circumstances of the case, the Ld. CIT(A) erred in appreciating the fact that the assessee used the assets previously used by its parent company, had not disclosed the same and was still claiming additional depreciation in violation of provisions of the Act." 3. "Whether in law and on the facts and in the circumstances of the case, the Ld. CIT(A) erred in appreciating the fact that the assessee had purchased new plant and machinery worth Rs. 9,27,41,361/- from the manufacturing division of Time Technoplast Ltd. which was duly supported by the documentary evidence and claimed the additional depreciation as per the provisions of the Act." 4. "The appellant prays that the order of the CIT (A) on the above grounds be set aside and that of the A.O. be restored." 1.2 We have caref....
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....ng presumption on the part of Ld. AO that used machinery was purchased by the assessee. In support, copies of purchase invoices were furnished and the attention was drawn to the fact that excise duty was charged in the invoices itself because goods could not be removed out of the factory without charging excise duty as the excise duty was levied on manufacture. In case of old machinery, no excise duty would be charged. 2.5 However, the said submissions could not find favour with the Ld. AO, who concluded that the assessee could not furnish any irrefutable and clinching evidence to differentiate between the old and new machinery. The assessee failed to furnish one to one reconciliation and mapping of depreciation claimed with item-wise and block-wise plant and machinery. Accordingly, the additional depreciation of Rs. 338.34 Lacs claimed by the assessee u/s 32(1)(iia) was disallowed and added to the income of the assessee. 3.1 Before first appellate authority, the assessee assailed the stand of learned AO on legal grounds as well as on merits by way of elaborate written submissions, which have already been extracted on page nos. 3 to 14 of the impugned order. The assessee in i....
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.... in the case of manufacturing and not in case of old machinery. The attention was also drawn to confirmatory letter of machinery supplier i.e. M/s Time Technoplast Ltd., verifying the same along with the statement showing bifurcation of old and new machinery as purchased by the assessee. It was submitted that Ld. AO failed to appreciate that the description of the assets was clearly mentioned in the invoices. However, no notice u/s 133(6) was ever issued to the holding company to verify the submitted details. The Ld. AO chose not to take any action against submissions made by assessee but chose to make additions for the simple reason that the assessee was not able to furnish the details of the books of account of another entity. Therefore, the approach adopted by Ld. AO was absurd and no addition could be sustained on that basis. In the above background, it was submitted that the assessee had provided all the evidences as asked for by Ld. AO in discharging the onus of proving the genuineness of said claim of additional depreciation. But Ld. AO did not make any inquiry in order to prove that the transaction was not genuine and merely rejected the evidences without commenting on the ....
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....ctually transferred to the assessee company. Thus, the same cannot be considered to be a tangible material in order to form a reasonable belief that income of the assessee had escaped assessment. Moreover, the availability of tangible material in the possession of AO at the time of recording is a sine qua none, before the AO can record reasons for reopening of the case. Thus, in view of these facts, I am satisfied that the reopening is bad in law and need to be quashed. The following cases are in support of the appellant: a) In the case of Bombay Stock Exchange Ltd. (writ petition no.2468 dt. 12.06.2014) (89 CCH 118), ; b) The Mumbai ITAT in the case of Motilal R.Todi (supra) c) In the case of CIT vs. Shri Atul Kumar Swami in ITA No.112/2014 dated 18-03- 2014 reported at 52 Taxmann.com 47; d) General Machinery & Technical Services Ltd. Vs. ACIT (ITA No. 1176/Mum/2011) 4. Further, the only information which the AO had was that certain assets were alienated during the year by Time Technoplast Ltd. and no enquiry whatsoever was conducted by the AO in order to form a belief that these alienated assets were actually transferred to the appella....
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....opy reasons recorded has filed an objection against the same before the AO on 02/11/2016. Copy of the same was provided during the course of appellate proceedings. However, no speaking order was passed by the AO in order to dispose-off the objections so raised and proceeded to pass the reassessment order u/s 147. Further, no reference of the same was made by the AO in his assessment order. Thus in view of the these facts, I am of the opinion that the AO has grossly erred in law as any objection filed against the reasons for reopening need to be disposed-off by the AO before proceeding to complete the reassessment proceedings. The following cases are in support of the appellant: a) The Apex Court in the case of GKN Driveshafts (India) Ltd. v/s D.C.I.T. (2003) 259 ITR 19 (SC) has laid down the procedure to challenge the reassessment proceedings and held as follows: "We see no justifiable reason to interfere with the order under challenge. However, we clarify that when a notice under section 148 of the Income Tax Act is issued, the proper course of action for the noticee is to file return and if he so desires, to seek reasons for issuing notices. The Assessing Officer is boun....
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....the case of appellant was bad in law on the following grounds: a) Absence of fresh tangible material in order to form a reasonable belief that income of the appellant had escaped assessment; b) The notice u/s. 148 was issued only with the intention of making roving enquiries which is not permissible as per law; c) The AO didn't dispose-off the objection filed against the reasons for reopening; d) The claim of additional depreciation was allowed to the appellant during the course of original assessment proceedings and disallowing the same now in the absence of fresh tangible material is merely change of opinion which is not permissible as per law. Decision Ground No. 1 & 2. Thus, initiation of reassessment proceedings by the Assessing Officer itself was bad in law and the reassessment completed in pursuance thereof is liable to be quashed being invalid. Accordingly, the Ground No. 1 & 2 of the said appeal is allowed. Ground No. 3 & 4. As a result of the decision rendered above on the preliminary issue quashing/cancelling the assessment made by the Assessing Officer u/s. 143(3) read with section 147,....
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...., the Assessee is entitled to raise objections and the Assessing Officer is bound to dispose of such objections by passing a speaking order, before he proceed with reopening of the assessment. Mr. Dada submits that this decision was applied by the Respondent to the case of this very Appellants for the Assessment Year 1995-96. Such application was expressly upheld by this Court, as well as by the Hon'ble Apex Court in the case of this very Appellant. Mr. Dada submits that the Assessing Officer, without disposing of the objections raised by the Appellants, could not have proceeded to make the assessment, which has been done in the present case. He submits that such a course of action has been expressly held as impermissible by this Court in the cases of Bayer Material Science (P) Ltd. vs. Deputy Commissioner of Incometax- 10(3), and KSS Petron Private Ltd. vs. The Assistant Commissioner of Income Tax Circle 10(2). For all these reasons, Mr. Dada submits that the first substantial question of law is required to be answered in favour of the Appellant-Assessee and against the Respondent Revenue. 6. Mr. Dada adopted the submissions made by him in Tax Appeal No.32/2006 and other ....
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....ch of the law laid down by the Hon'ble Apex Court in GKN Driveshafts (India) Ltd. (supra), at least, in so far as requirement of furnishing of the reasons for reopening of the assessment is concerned. To that extent, therefore, we are unable to agree with the contention of Mr. Dada that this is a matter where the Assessing Officer failed to furnish the reasons for reopening of assessment whilst invoking the provisions of Section 11 of the said Act. 12. Hon'ble Supreme Court in GKN Driveshafts (India) Ltd. (supra) has, however, further held that once reasons are furnished, the Assessee is entitled to lodge his objections and the Assessing Officer is duty bound to dispose of such objections, by passing a speaking order. 13. In the present case, the Appellants did lodge their objections vide letter dated 14th April, 2003. By a further letter dated 25th March, 2004, the Appellants requested the Assessing Officer to dispose of such objections by passing a speaking order before proceeding with the reassessment in respect of the Assessment Year 1997-98. However, the Assessing Officer, without proceeding to dispose of the objections raised by the Appellants by passing a s....
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....les of natural justice. In the light of that no fault could be found with the order of the learned ITAT and as such no substantial question of law arises as well. Appeal dismissed." 16. The Respondent, instituted a Special Leave to Appeal (Civil) No.5711/2007 which was, however, dismissed by the Hon'ble Apex Court vide order dated 16/7/2007, by observing that there were no merits. 17. Accordingly, for the aforesaid reasons, we are unable to accept Ms. Linhares's contention based upon the any alleged variance between the provisions of the said Act and the provisions of the Income Tax Act, in so far as applicability of the principles in GKN Driveshafts (India) Ltd. (supra) is concerned. 18. The moot question is, therefore, the disposal of the objections by the Assessing Officer in his assessment order dated 26th March, 2004 constitutes sufficient compliance with the procedure prescribed by the Hon'ble Supreme Court in the case of GKN Driveshafts (India) Ltd. (supra) or, whether it was necessary for the Assessing Officer to have first disposed of the Appellant's objections by passing a speaking order and only upon communication of the same to the Ap....
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....Judgment: " 7. On further appeal, the Tribunal passed the impugned order. By the impugned order it held that the Assessing Officer was not justified in finalizing the assessment, without having first disposed of the objections of the appellant. This impugned order holds the Assessing Officer is obliged to do in terms of the Apex Court's decision in GKN Driveshafts (India) Ltd., v/s. ITO 259 ITR 19. In the aforesaid circumstances, the order of the CIT(A) and the Assessing Officer were quashed and set aside. However, after having set aside the orders, it restored the Assessment to the Assessing Officer to pass fresh order after disposing of the objections to reopening notice dated 28th March, 2008, in accordance with law. 8. We note that once the impugned order finds the Assessment Order is without jurisdiction as the law laid down by the Apex Court in GKN Driveshafts (supra) has not been followed, then there is no reason to restore the issue to the Assessing Officer to pass a further/fresh order. If this is permitted, it would give a licence to the Assessing Officer to pass orders on reopening notice, without jurisdiction (without compliance of the law in accor....