Ii. Whether The Tribunal Was Right In Nottaking Cognizance Of The Fact That Reassessment Wasbased On Change Of Opinion Sans Any Fresh Tangiblematerial? v. Whether, On The Facts And In Thecircumstances Of The Case, The Tribunal Was Rightin Not Holding That Issue Of Notice Under Section147 And Reassessment Is Not Ju

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 17.07.2020 THE HON'BLE MR.JUSTICE T.S.SIVAGNANAM&THE HON'BLE MRS.JUSTICE V.BHAVANI SUBBAROYAN Shri Gopal Yadav Selvakumar65 Vellore Main Road,1[st] Street, Arcot, 6325033 ... Appellant The Income Tax Officer,Ward II, Vellore. ... Respondent Tax Case Appeal is filed under Section 260A of the IncomeTax Act, 1961 against the order dated 22.06.2018 made inI.T.A.No.111/Chny/2018 on the file of the Income Tax AppellateTribunal, 'A' Bench, Chennai, for the assessment year 2011 –2012 arising against the order of the Commissioner of IncomeTax (Appeals)-13, Chennai-34, daed 18/09/2017 in ITA NO.19/CIT(A)-13/2011-12, against the Assessment order of the Income TaxOfficer, Ward-2, Vellore (PAN ) dated 30.03.2016against the original Assessment order of the Income TaxOfficer, Ward I(2) Vellore, Assessment Year 2011-12, (PANBTSPS5973E), dated 14.03.2013. (Judgment was delivered by T.S.SIVAGNANAM.J)This appeal by the assessee filed under Section 260A ofthe Income Tax Act, 1961 (the 'Act' for brevity), is directedagainst the order dated 22.06.2018 passed by the Income TaxAppellateTribunal,'A'Bench,Chennai,inI.T.A.No.111/Chny/2018, for the assessment year 2011 - 2012. 2. The tax case appeal was admitted on the followinghttps://hcservices.ecourts.gov.in/hcservices/substantial questions of law : “i. Whether, on the facts and in thecircumstances of the case, the Tribunal was rightin law in remitting the matter back to the file ofthe Commissioner for consideration on merits alonewithout adjudicating upon the specific grounds onthe validity of the assumption of jurisdictionunder Section 147 of the Income Tax Act, 1961? ii. Whether the Tribunal was right in nottaking cognizance of the fact that reassessment wasbased on change of opinion sans any fresh tangiblematerial? Iii. Whether, on the facts and in thecircumstances of the case, the Tribunal was rightin not holding that the reassessment was invalid inview of non disposal of objections of the appellantagainst reassessment under Section 147 vide aseparate order before passing the order ofassessment? iv. Whether the Tribunal was right indirecting the Commissioner of Income Tax (Appeals)to adjudicate the issue on merits alone with regardto the addition made under Section 69 of the IncomeTax Act, 1961, when the validity of thereassessment under Section 147 after completion ofscrutiny assessment under Section 143(3) itself waschallenged by the appellant before the Tribunal?And v. Whether, on the facts and in thecircumstances of the case, the Tribunal was rightin not holding that issue of notice under Section147 and reassessment is not justified whenproceeding under Section 154 is pending for thesame assessment?” 3. We have heard Mr.Salai Varun, learned counselappearing for the appellant/assessee and M/s.V.Pushpa, learnedStanding Counsel appearing for the respondent/revenue. 4. The assessee is an individual and a partner of a firmunder the name and style of M/s.Gokulam Auto Finance &Consultancy. The assessee's case was taken up for limitedscrutiny in so far as the deposits in the savings backaccount, to which, the assessee stated that the deposit orfunds belonging to the above said partnership firm, wherein,he and his wife were the partners. Assessment was completedunder Section 143(3) of the Act, by order dated 14.03.2013with an addition of Rs.27,000/-. The assessment was reopenedby issuance of notice under Section 148 of the Act onhttps://hcservices.ecourts.gov.in/hcservices/21.10.2014. The assessee's case was that the reopening is not 4. The assessee is an individual and a partner of a firmunder the name and style of M/s.Gokulam Auto Finance &Consultancy. The assessee's case was taken up for limitedscrutiny in so far as the deposits in the savings backaccount, to which, the assessee stated that the deposit orfunds belonging to the above said partnership firm, wherein,he and his wife were the partners. Assessment was completedunder Section 143(3) of the Act, by order dated 14.03.2013with an addition of Rs.27,000/-. The assessment was reopenedby issuance of notice under Section 148 of the Act onhttps://hcservices.ecourts.gov.in/hcservices/21.10.2014. The assessee's case was that the reopening is not valid in law as it is a clear case of change of opinion. Thecontention advanced by the assessee was not accepted and thereassessment proceedings were completed on 30.03.2016determining the total taxable income as Rs.54,43,060/-.Aggrieved by the same, the assessee preferred an appeal beforethe Commissioner of IncomeTax (Appeals) - 13, Chennai. 5. The assessee contended that mere audit objection couldnot form basis to reopen the completed assessment and referedto the decision in the case of Smt.Shalu Sachdeva Vs. ACIT(2015) Taxmann.com and CIT Vs. Mettur Chemical and IndustrialCorporation (2000) 242 ITR 119). Further It was also contendedthat the Assessing Officer had no reason to believe to reopenthe assessment and the reopening amounts to change of opinion.Further, it was contended that the reassessment is void, sincethe Assessing Officer did not dispose off the objectionsraised by the assessee for the reassessment in their letterdated 27.06.2015 and followed the guidelines laid down by theHon'ble Apex Court in G.K.N Drive Shaft India Ltd. Vs. ITO(2013) 259 ITR 19. 6. Further, the assessee also stated about the existenceof books of accounts and submitted that the finding of theAssessing Officer that there were no books of accounts isincorrect. Further, it was contended that the entries relatingto outstanding interest and bank interest which are also otheradditions made by the Assessing Officer in the assessment areentries relating to the firm which is assessed separately asan entity and that cannot be a reason for reopening theindividual assessee's assessment. Further, It was contendedthat the assessment order is void as it is passed after thetime limit prescribed under the Act since it is passed anddispatched only on 05.04.2016 with a predetermined additionentered on 30.03.2016. 7. The CIT(A) dismissed the assessee's appeal insofar asthe reopening of assessment is concerned, and on the merits,the CIT(A) held that the assessee has not raised any ground ofappeal that is to presume that the assessee has not pressedthe ground of addition made by the Assessing Officer on theissue of addition of Rs.1,51,79,950/-. Accordingly, confirmedthe addition. The net result being the appeal dismissed intoto. The assessee preferred an appeal before the Tribunalraising all the issues and the Tribunal remanded the matter toCIT(A) to adjudicate the issue on merits. 8. So far as the validity of the reopening is concerned,we find that the Tribunal did not render any specific finding.After carefully going through the impugned order, we find thatthe Tribunal ought to have adjudicated all the grounds raisedby the assessee that is whether the reopening is valid in lawand whether there were materials in the hands of the AssessingOfficer for reopening the assessment. So the assessee is righthttps://hcservices.ecourts.gov.in/hcservices/in contending that the audit objection cannot be the basis for reopening. The Assessing Officer has not recorded any reasonsas to why he came to the conclusion that the income chargeableto income tax has escaped assessment and what was the beliefwhich led to issuance of notice under Section 148 of the Act. 8. So far as the validity of the reopening is concerned,we find that the Tribunal did not render any specific finding.After carefully going through the impugned order, we find thatthe Tribunal ought to have adjudicated all the grounds raisedby the assessee that is whether the reopening is valid in lawand whether there were materials in the hands of the AssessingOfficer for reopening the assessment. So the assessee is righthttps://hcservices.ecourts.gov.in/hcservices/in contending that the audit objection cannot be the basis for reopening. The Assessing Officer has not recorded any reasonsas to why he came to the conclusion that the income chargeableto income tax has escaped assessment and what was the beliefwhich led to issuance of notice under Section 148 of the Act. 9. Factually, whether the assessee had produced thebooks of accounts and such other material as we find that theTribunal did not consider these issues. We deem it appropriateto set aside the order passed by the Tribunal and remand thematter back to the Tribunal for fresh consideration. 10. Accordingly, the appeal filed by the assessee isallowed and the order dated 22.06.2018 passed by the IncomeTaxAppellateTribunal,'A'Bench,Chennai,inI.T.A.No.111/Chny/2018, is set aside and the appeal isrestored to the file of the Tribunal to hear the matter afreshand in accordance with law. The assessee is entitled to raiseall the contentions both factual and legal before the Tribunalwhich shall be decided on merits. 11. In the light of the remand order, the question ofanswering the substantial questions of law does not arise andthey are left open. No costs. Consequently, the connectedmiscellaneous petition is closed. Sd/-Assistant Registrar //True copy// Sub Assistant Registrar raja To 1.The Income Tax Appellate Tribunal, 'A' Bench, Chennai. 2.The Commissioner of Income Tax (Appeals)-13, Chennai-34. 3. The Income Tax Officer, Ward-III, Vellore. +1cc to Mr.M.Swaminathan, Advocate SR.No.24904 RSK(CO)GMY(27/08/2020)