TaxTMI 
TaxTMI 
2017 (11) TMI 1915
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.... on decision of Supreme Court, this court added the following substantial question of law:- Whether under the facts and circumstances of the case the ld. Tribunal was justified in not declaring the reassessment proceedings and the consequential assessment order passed thereto as nullity ? 3. The facts of the case are that the appellant is a limited company incorporated under the Companies Act, 1956 and engaged in the business of manufacturing of electronics energy meters besides doing work on job basis. The return of income declaring total income of Rs. 2,79,230/- was filed by the assessee which was processed u/s 143(1) of the IT Act, 1961. Thereafter the re-assessment proceedings were initiated u/s 148 and the assessment stood completed u/s 143(3)/148 at total income of Rs. 49,79,230/- by making addition of Rs. 47,00,000/- on account of share application money as unexplained cash credit u/s 68 of the Act. The ld. CIT(A) dismissed the appeal of the assessee. 4. Counsel for the appellant has contended that the present appeal is arising out of the judgment and order of the tribunal whereby tribunal has upheld the contention of the appellant and remitted back the matter....
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....resh Assessment, consequent to the order of Tribunal under Section 254 of the Act, would have to be passed within one year from the end of the financial year in which the order under Section 254 of the Act, was passed by the Tribunal and received by the Commissioner of Income Tax. 2. In Pr. Commissioner of Income Tax-2 vs. Sagar Developers (GUJHC)[2016] 72 taxmann.com 321, it has been held as under :- 27. In the result, the question is answered in favour of the Revenue. The impugned respective judgments of the Tribunal would stand modified by providing that the respective orders of assessment though should stand set aside it would be open for the Assessing Officer to frame fresh assessment after first disposing of the objections of the assessees. Needless to clarify the provisions for time limit for framing the assessment as may be applicable would apply. 3. In GKN Driveshafts (India) Ltd. vs. Income Tax Officer and Ors. (SC)[2003] 259 ITR 19 (SC) it has been held as under :- 5. 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 ....
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....ssued within one year from the date of filing of block return. Omission on the part of the assessing authority to issue notice under Section 143(2) cannot be a procedural irregularity and the same is not curable and, therefore, the requirement of notice under Section 143(2) cannot be dispensed with. The other important feature that requires to be noticed is that the Section 158 BC(b) specifically refers to some of the provisions of the Act which requires to be followed by the assessing officer while completing the block assessments under Chapter XIV-B of the Act. This legislation is by incorporation. This Section even speaks of subsections which are to be followed by the assessing officer. Had the intention of the legislature was to exclude the provisions of Chapter XIV of the Act, the legislature would have or could have indicated that also. A reading of the provision would clearly indicate, in our opinion, if the assessing officer, if for any reason, repudiates the return filed by the assessee in response to notice under Section 158 BC(a), the assessing officer must necessarily issue notice under Section 143(2) of the Act within the time prescribed in the proviso to Section 143(2....
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....rs India (P) Ltd. vs. Deputy Commissioner of Income Tax (GUJHC) [2013] 354 ITR 244, it has been held as under :- 23. From the aforesaid discussion, we are of the considered opinion that writ petition under Art. 226 of the Constitution of India is maintainable where no order has been passed by the AO deciding the objection filed by the assessee under s. 148 of the Act and assessment order has been passed or the order deciding an objection under s. 148 of the Act has not been communicated to the assessee and assessment order has been passed or the objection filed under s. 148 has been decided along with the assessment order. If the objection under s. 148 has been rejected without there being any tangible material available with the AO to form an opinion that there is escapement of Income from assessment and in absence of reasons having direct link with the formation of the belief, the writ Court under Art. 226 can quash the notice issued under s. 148 of the Act. The writ petition filed by the petitioner is maintainable. The AO is mandated to decide the objection to the notice under s. 148 and supply or communicate it to the assessee. The assessee gets an opportunity to chall....
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....oice vs. Income Tax Officers,[2010] 326 ITR 153 (Karnataka), it has been held as under :- 8. In view of the order passed in I.T.A. No. 102 of 2002 and other connected matters between CIT Vs. Dr. N. Thippa Setty [2010] 322 ITR 525 (Karn), dated April 9, 2008, we are of the view that the order passed by the authorities have to be quashed on the ground that there is no compliance with the provisions of the section 147 of the Act, for these assessment years. Accordingly, we answer the questions of law framed. Accordingly, the appeal is allowed. 8. In Commissioner of Income Tax vs. Amit K. Jain (GUJHC) [2016] 388 ITR 113, it has been held as under :- 6. We have heard learned counsel for the parties. We are aware of the decision of the Apex Court which has been referred by the Bombay High Court. Nonetheless, while block assessment is to be made, the Assessing Officer is having knowledge about the statutory provision and while issuing notice he should have mentioned in it about his source of power and should have referred to time which is required to be given for the purpose of filing of return under section 158BC of the Act. The words mentioned in the notice are '....
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....n, it was necessary for the appellant to ascertain what the merits and demerits were of that property which had been auctioned, and to know what were the terms and conditions of the auction. No copy of any document relating to the sale instance was furnished by the Appropriate Authority to the appellant along with the notice, or at any time whatsoever. 5. There is no doubt in our minds that on both counts there has been a gross breach of the principles of natural justice because adequate opportunity to meet the case made out in the notice was not given to the appellant. 6. Having regard to the statutory limit within which the Appropriate Authority has to act and his failure to act in conformity with the principles of natural justice, we do not think we can remand the matter to the Appropriate Authority. We must set his order aside. 10. In Jayanthi Natarajan vs. Assistant Commissioner of Income Tax, Non Corporate Circle 1(1) (MADHC), it has been held as under :- 17. The law declared by the Hon'ble Supreme Court is of binding character and is a source of law and to itself, which will bind all authorities. GKN Driveshafts (India) Ltd., (supra), lays d....
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....d that no person can take advantage of his own wrong. In the instant case, respondent No. 2 in violation of the order of this Court, transferred the property by creating sublease in favour of petitioner. The approach suggested by Shri Naphade, if accepted, will allow respondent No. 2 to retain the benefits under the sub-lease. It will also allow the petitioners to get away easily when the Courts below have found that they have not acted bona fide. 14. In Umesh Kumar Misra son of Sri Ram Raj Misra vs. Union of India (UOI) through Secretary, Ministry of Home Affairs, (ALLHC)(2006) ILR 3AII1211, it has been held as under :- 7. It is also a settled principle that no person can claim any right arising out of his wrong doing i.e. a person having done wrong, cannot take advantage of his own wrong. 5. Mr. Singhi, counsel for the respondent has relied on Section 153(3) of the Income Tax Act and contended that basic argument of assessee is contrary to spirit of Section 153(3), if such an argument is accepted, it is contrary to law declared by the Supreme Court itself on which the assessee has based his argument in GKN Driveshafts (supra) where the Supreme Court itself ha....
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....otice and the AO is under a mandate to dispose of such preliminary objections by passing a speaking order, before proceeding with the assessment in respect of the assessment year for which such notice has been issued. 14. In the result, the impugned reassessment order dt. 9th Feb., 2004, made under Section 17 r/w Section 16(3) of the Act is hereby quashed and set aside. The respondent is directed to abide by the directions issued by this Court in its order dt. 3rd March, 2004, in Special Civil Application No. 2736 of 2004 (supra), more particularly, para Nos. 4 and 5 which are reproduced hereunder for the sake of convenience. "4. The above principle laid down in respect of the notice for reassessment under the IT Act would apply with full force to the notice for reassessment under Section 17 of the WT Act as well. The petitioner company had already filed its return in response to the impugned notice and requested for furnishing reasons, which request has been acceded to only very recently and the petitioner has thereafter submitted its objections on 19th Feb., 2004. The AO is, therefore, now required to dispose of the objections by passing a speaking order as per ....
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....reliminary objections by passing a speaking order and only thereafter proceed with the reassessment proceedings in accordance with law. Considering the fact that the normal period of limitation, for framing reassessment pursuant to notice dt. 3rd March, 2008 issued under s. 148 of the Act, has already expired on 31st Dec., 2008, in the peculiar facts and circumstances of the case it would serve the ends of justice if the respondent authority is directed to abide by the following schedule : (i) The respondent authority shall dispose of the preliminary objections raised by the petitioner within a period of four weeks from today by passing a speaking order in accordance with law; (ii) Thereafter the respondent authority shall undertake reassessment proceedings, if necessary, and shall complete the same within a period of four weeks thereafter, i.e., the date of disposal of the preliminary objections; (iii) No extension of time shall be sought for by either side in the fact situation of the present case; (iv) The aforesaid schedule shall not preclude the rights of the petitioner to challenge the order disposing of the preliminary objections, if the s....
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....as served with a copy of the impugned re-assessment order dated 9th February 2004. The petitioner thereupon preferred a rectification application under Section 35 of the Act requesting the respondent to withdraw the impugned reassessment order dated 9th February 2004, but, as averred in the petition, till the date of filing of the petition, the respondent has neither called the petitioner for hearing on the application dated 10th March 2004 nor withdrawn the impugned re-assessment order. In the affidavit in reply, the aforesaid averments are dealt with only by reiterating that the objections have been disposed of in the reassessment order itself. The aforesaid conduct of the respondent alongwith the facts stated hereinbefore clearly points out that the stand of the respondent appears to be that once a notice for re-assessment has been made, the respondent is bound to frame an order of re-assessment regardless of the fact as to whether such an order can be supported or not, in law or on facts. 14. In the result, the impugned re- assessment order dated 9th February 2004 made under Section 17 read with Section 16(3) of the Act is hereby quashed and set aside. The respondent i....
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....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 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 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." 17. Two things emerge from this judgment. Firstly, that the question whether after striking down the order of assessment on this ground further a....
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....fficer proceeds to pass the final order of assessment without disposing of the objections raised by the assessee, he effectively deprives the assessee of an opportunity to question the notice for reopening itself. However, the assessee is not left without the remedy when the Assessing Officer proceeds further with the assessment without disposing of the objections. Even before the final order of assessment is passed it would always be open for the assessee to make a grievance before the High Court and to prevent the Assessing Officer from finalizing the assessment without disposing of the objections. 26. The issue can be looked from slightly different angle. Validity of the notice for reopening would depend on the reasons recorded by the Assessing Officer for doing so. Similarly, the order of reassessment would stand failed on the merits of the order that the Assessing Officer has passed. Neither the action of the Assessing Officer of supplying reasons to the assessee nor his order disposing of the objections if raised by the assessee would per se have a direct relation to the legality of the notice of reopening or of the order of assessment. To declare the order of assess....
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....ling of the alternative remedy before the Assessing Officer for objecting to the reassessment notice under section 148 has been considerably softened by the Apex Court in G.K.N. case : (2003) 259 ITR 19 in the year 2003. In my view, therefore, the G.K.N. 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 (p. 87)." 6.2 In the case of Arvind Mills Ltd. (Supra), in para 9, the Division Bench after considering the decision of the Hon'ble Supreme Court in the case of G.K.N. Driveshafts (India) Ltd. (Supra) and the Garden Finance Ltd. (Supra) has observed and held as under: "9. The position in law is thus well settled. After a notice for reassessment 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....
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....aforesaid extent. In the facts and circumstances of the case, more particularly when the Assessing Officer has not followed the binding decisions of the Hon'ble Supreme Court as well as Full Bench and Division Bench of this Court referred to hereinabove and has passed the reassessment order without dealing with and/or disposing of the objections raised by the petitioner, the petition is allowed with cost which is quantified at Rs. 5000/-, which shall be deposited by the concerned Officer with the Registry of this Court, within a period of 3 weeks from today. On such deposit the Registry is directed to transmit the same to Gujarat State Legal Services Authority. 6. In Pr. Commissioner of Income Tax vs. Modinagar Rolls Ltd. (ALLHC) (2017) 99 CCH 0030, it has been held as under :- 23. There is no finding by the tribunal for holding the notice to be bad or illegal except for the fact that the objections of assessee filed against it were not decided. In view of the fact that the objections were not considered and decided and that no illegality in the notice was established, the tribunal erred in holding the notice to be bad. 24. The discussion above permit....
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.... a speaking order on the objection as taken in the letter dt. 17th Sept., 2007, and to proceed with the assessment only thereafter. 8. In SAK Industries (P.) Ltd. Vs. Deputy Commissioner of Income Tax, [2012] 19 Taxmann.com 237 (Delhi), It has been held as under:- 14. We are informed that the Assessing Officer, i.e. respondent No.1, has now changed. The Assessing Officer will now pass a fresh order on the objections raised by the petitioner in terms of direction issued by the Supreme Court in GKN Driveshafts (India) Ltd. (supra). The petitioner will appear before the Assessing Officer on 5th March, 2012. When a date of hearing will be fixed and an order disposing of the objections will be passed on or before 16th March, 2012. In case of an adverse order, the Assessing Officer shall give 15 days time to the petitioner to take further steps, in accordance with law, and fix the next date of hearing accordingly. The learned counsel for the petitioner submits that they will not raise any objection with regard to the limitation period and a time period may be fixed for passing the reassessment order. Keeping in view of the aforesaid facts, it is directed that it will be....
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....s such forum is not granting time to pass the original order itself beyond the period of limitation and on the other hand, it is an order empowering the original authority to redo their exercise. Certainly, there is a vast difference between the stage and circumstances of the exercise of power "to do" and "redo". When the power "to do" is certainly to be exercised within the statutory period of limitation, the power to "redo" such exercise does not fall under the purview of limitation once again. Hence, I reject the contention of the petitioner on this aspect. 20. Considering all these aspects, I am of the view that the matter has to go back to the respondent for passing a speaking order on the objections and thereafter, to pass the final order of assessment. Accordingly, the writ petition is allowed and the impugned order of assessment is set aside and the matter is remitted back to the respondent to pass a speaking order on the objections raised by the petitioner, after giving an opportunity of hearing to them. Such exercise shall be done by the respondent within a period of four weeks from the date of receipt of a copy of this order. Thereafter, it is open to the respon....