M/S.areva T & D India Limited, (Formerly Known As Alstom Ltd.,) New v. The Assistant Commissioner Of Income Tax, Company Circle I (1)

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 08.11.2006 CORAM THE HON'BLE MR.JUSTICE R.BALASUBRAMANIAN&THE HON'BLE MR.JUSTICE P.P.S.JANARTHANA RAJA M/s.Areva T & D India Limited,(formerly known as ALSTOM Ltd.,)New No.457, Anna Salai, Teynampet,Chennai-600 018...Appellant Vs. The Assistant Commissioner of Income Tax,Company Circle I (1),121, Nungambakkam High Road,Chennai-600 034...Respondent Appeal under Section 260A of the Income Tax Act, 1961 againstthe order of the Income Tax Appellate Tribunal, Chennai, 'A' Benchdated 21.07.2006 in I.T.A. No.2236/Mds/2005 for the assessment year1999-2000 against the order of the Commissioner of Income Tax(Appeals) III, Chennai 600 034 dated 3.10.2005 made in ITANo.92/2005-2006 against the order of the Assistant Commissioner ofIncome Tax, Company circle I (1) Chennai-34 dated 28.3.2005 made inPA/GIR No.AXI-061 for the Assessment year 1999-2000. P.P.S.Janarthana Raja, J.This appeal is filed under Section 260A of the Income Tax Act,1961 by the assessee against the order of the Income Tax AppellateTribunal, Chennai, 'A' Bench dated 21.07.2006 passed in I.T.A.No.2236/Mds/2005. On 21.08.2006, this Court admitted the appealand formulated the following substantial questions of law:- https://hcservices.ecourts.gov.in/hcservices/ 1. Whether on the facts and in thecircumstances of the case the AppellateTribunal was right in law in treating theletter dated 20.12.2004 by the assessingofficer is equivalent to a notice prescribedunder Section 143(2) of the Income Tax Act,1961 when the letter is nothing but furnishingthe reasons for reopening the assessment? 2. If the answer to the above question is inaffirmative then on the facts and circumstancesof the case was the Appellate Tribunal right inlaw in holding that the appellant filed itsReturn of Income by its letter dated 18.12.2004itself, whereas the Appellant filed its returnonly on 17.1.2005 which was admitted by theAssessing Officer in his assessment order? 3. Whether on the facts and circumstances ofthe case the Appellate Tribunal was right inlaw in concluding that a notice under Section143(2) can be issued before the assessee filesa return of income? 4. Whether on the facts and circumstances ofthe case the Appellate Tribunal was right inlaw in concluding that the letter dated20.12.2004 of the respondent had not closed anyone of the options to the Appellant namely (i)to attend his office; (ii) to produce anyevidence and (iii) cause to be produced anyevidence on which the assessee may rely insupport of the return as held by the AllahabadHigh Court in the case of Rajamani Devi v. CIT[5 ITR 631]? 5. Whether on the facts and circumstances ofthe case the Appellate Tribunal was right inlaw in concluding that Valuation of Closing NetAsset with the help of Chartered AccountantFirm be construed as a valuation of the plantand machinery by item-wise and detract from theconcept of slump sale? 6. Whether on the facts and circumstances ofthe case the Appellate Tribunal was right inlaw in remanding the assessment relating to theassessment year 1999-2000 to the assessingofficer to tax depreciable assets under section50 of the Income Tax Act? 7. Whether on the facts and circumstances ofthe case the Appellate Tribunal was right inlaw in ignoring that the consideration receivedby the Assessee in a slump sale would beoutside the purview of capital gains under Section 45 of the Act, as held by the MadrasHigh Court in the case of CIT v. KPV. ShaikhMohammed Rowther & Co., [1995 Tax LR 675]following the judgment of the Apex Court in thecase of B.C.Srinivasa Setty? 6. Whether on the facts and circumstances ofthe case the Appellate Tribunal was right inlaw in remanding the assessment relating to theassessment year 1999-2000 to the assessingofficer to tax depreciable assets under section50 of the Income Tax Act? 7. Whether on the facts and circumstances ofthe case the Appellate Tribunal was right inlaw in ignoring that the consideration receivedby the Assessee in a slump sale would beoutside the purview of capital gains under Section 45 of the Act, as held by the MadrasHigh Court in the case of CIT v. KPV. ShaikhMohammed Rowther & Co., [1995 Tax LR 675]following the judgment of the Apex Court in thecase of B.C.Srinivasa Setty? 8. Whether on the facts and circumstances ofthe case the Appellate Tribunal was right inlaw in setting aside the issue of Non-competefees received by the assessee for freshverification, ignoring the settled principle oflaw that in the relevant assessment year, itwas a non-taxable capital receipt? 9. Whether on the facts and circumstances ofthe case the Appellate Tribunal was right inlaw in remanding the assessment to theassessing officer to verify fresh additions toBook profits of a sum of Rs.4,89,08,241/-representingprovisionforcontractcontingencies? 2. The facts leading to the above questions of law are asunder:The assessee is a company engaged in the business ofmanufacture of heavy electric equipment including High Voltage andMedium Voltage Switchgears, transformers, control panels, rotatingmachines, industrial fans, relays, cubicle gear panels and energymeters. The assessee also executes projects involving transmissionand distribution of power and other turnkey projects. Further thecompany also trades in ceiling fans, pumps, capacitors and motors.The relevant assessment year is 1999-2000 and the correspondingaccounting year ended on 31.03.1999. The assessee filed Return ofincome on 31.12.1999 declaring loss of Rs.55,04,29,430/-. TheReturn was processed under Section 143(1)(a) of the Income-tax Act(hereinafter referred to as the "Act") on 29.03.2000. Later,notice under Section 148 of the Act was issued since income hadescaped assessment. This was issued on 17.11.2003 and the timelimit to complete the reopened assessment expires on 31.03.2005.Later, reassessment was completed under Section 143(3) read with147 of the Act, on 28.03.2005. While completing the reassessment,the Assessing Officer disallowed the loss claimed by the assesseeand made additions and disallowances and finally determined ataxable income of Rs.6.06 Crores under the normal provisions of theIncome-tax Act and Rs.15.9 Crores, being book profits under specialprovision under Section 115JA and demanded a tax of Rs.7.69 Croreswhich is inclusive of Rs.3.59 Crores being the interest leviedunder Section 234A & 234B and further interest under Section 234Dof Rs.60.77 lakhs, in all totalling Rs.9.94 Crores. Aggrieved bythe order, the assessee filed an appeal to the Commissioner ofIncome-tax (Appeals), disputing the reopening of the assessment aswell as various disallowances and additions made by the Assessing Officer. The C.I.T.(A) confirmed the order of the AssessingOfficer. Aggrieved, the assessee filed an appeal before theIncome-tax Appellate Tribunal (hereinafter referred to as the"Tribunal"). The Appellate Tribunal upheld the reopening of theassessment, and in respect of additions and disallowances, remandedthe matter to the Assessing Officer with a direction to redo theassessment and the appeal was allowed partly. Officer. The C.I.T.(A) confirmed the order of the AssessingOfficer. Aggrieved, the assessee filed an appeal before theIncome-tax Appellate Tribunal (hereinafter referred to as the"Tribunal"). The Appellate Tribunal upheld the reopening of theassessment, and in respect of additions and disallowances, remandedthe matter to the Assessing Officer with a direction to redo theassessment and the appeal was allowed partly. 3.Learned Senior Counsel appearing for the assesseesubmitted that the reassessment order passed by the AssessingOfficer is wrong, illegal and without basis on the ground that theAssessing Officer failed to consider the objections given by theassessee in response to the notice issued under Section 148 of theAct, and also reassessment was completed without giving statutorynotice under Section 143(2) of the Act and relied on the followingjudgments to support his contention. a) 281 ITR 444 (Mad.) in the case of Commissioner of Income-tax Vs.M.Chellappan and Another. b) 255 ITR 220 (P&H) in the case of Vipan Khanna Vs. Commissionerof Income-tax and Others.c) 259 ITR 19 (SC) in the case of GKN Driveshafts (India) Ltd. Vs.Income-tax Officer and others.It is also further submitted that in respect of the merits of thecase, the Tribunal was wrong in remanding the matter to theAssessing Officer and when all the materials are available in therecord, they ought to have decided the issue without remanding thesame. Hence, the order passed by the Tribunal is without basis andjustification. In respect of Question No.9, it is submitted thathe is not pressing the same and hence the same stands rejected asnot pressed. 4.Learned Standing Counsel appearing for the Revenuesubmitted that the Tribunal considered all the materials andevidence and came to the conclusion that reopening of theassessment is valid in law. It is alternatively contended that merenon-considering the objections for reopening as well as non-issuance of notice under Section 143(2) of the Act, will not makethe reassessment a nullity in law, which is validly initiated underSection 148 of the Act. The learned Standing Counsel alsosubmitted that if at all, it is only a procedural defect committedby the Assessing Officer which amounts to only irregularity andrelied on the following judgments to support her contention.i)90 ITR 197 (All.), in the case of Sant Baba Mohan Singh Vs.Commissioner of Income-tax, U.P. ii) 165 ITR 501 (Raj.), in the case of Commissioner of Income-taxVs. Gyan Prakash Gupta. In respect of the merits of the case, it is stated that theTribunal correctly remanded the matter with a direction to theAssessing Officer to redo the assessment. Hence the order of theTribunal is in confirmity with law. 5.Let us now examine the merits of the rival contentions.The assessee filed Return of income dated 22.12.1999 on 31.12.1999.The said Return was processed under Section 143(1)(a) of the Act on29.03.2000. Later, the Assessing Officer issued a notice underSection 148 of the Act dated 17.11.2003, directing the assessee tofile Return on the ground that he has reason to believe that incomewhich is chargeable to tax for the assessment year 1999-2000, hasescaped assessment within the meaning of Section 147 of the Act.The assessee, by letter dated 19.12.2003, objected to the reopeningof the assessment and requested the Assessing Officer to furnishreasons for reopening. The Assessing Officer sent a letter dated24.12.2003 stating that the provision of law does not make itnecessary to communicate the reasons to the assessee but the samewould be definitely communicated during the course of the reopeningproceedings. The Assessing Officer, by letter dated 7.12.2004,further directed the assessee to file the Return and producerecords on 16.12.2004. In consequence of the said notice, theassessee immediately sent a letter dated 18.12.2004 to theAssessing Officer and objected again for reopening the assessmentand requested the Assessing Officer to treat the original Returnfiled on 31.12.1999 as Return to the notice issued under Section148 of the Act. Later, the Assessing Officer sent a letter dated20.12.2004 enclosing the reasons recorded for reopening, for theassessment year 1999-2000 and posted the case for hearing on24.12.2004 at 03.30 p.m. Immediately, the assessee sent hisobjections for reopening the assessment stating that no income hasescaped assessment and requested the Assessing Officer to drop theproceedings. Further letter was also sent by the assessee on05.01.2005 objecting for reopening and submitted that no income hasescaped assessment and requested not to proceed with Section 148 ofthe Act since all the materials and evidence were available to theOfficer on record along with the Return of income filed originally.Another letter dated 17.01.2005 was sent by the assessee to theAssessing Officer, requesting to drop the proceedings and the samereads as follows:"Without prejudice to our all our submissions,since you feel that there is no optionavailable to us but to file our return onceagain, we are enclosing the return in responseto your notice u/s 148. Since the contents ofthe return are exactly the same as per theoriginal return, we are not duplicating thestatement of assessable income and otherrelevant annexures. The Assessing Officer completed the assessment on 28.03.2005without considering the objections of the assessee to the reopeningof the assessment. It is seen from the ressessment Order that theAssessing Officer considered only the Return filed on 17.01.2005 https://hcservices.ecourts.gov.in/hcservices/ and while completing the assessment, he also levied interest underSection 234A of the Act on the basis of the said Return, whichreads as under: "Add: Interest u/s 234A From Dec.03 to Jan.05 57,33,686" The Assessing Officer completed the assessment on 28.03.2005without considering the objections of the assessee to the reopeningof the assessment. It is seen from the ressessment Order that theAssessing Officer considered only the Return filed on 17.01.2005 https://hcservices.ecourts.gov.in/hcservices/ and while completing the assessment, he also levied interest underSection 234A of the Act on the basis of the said Return, whichreads as under: "Add: Interest u/s 234A From Dec.03 to Jan.05 57,33,686" 6.The argument of the Counsel for the assessee is that theAssessing Officer was not justified in completing the reassessmentwithout issuing notice under Section 143(2) of the Act, as well asnot considering the objections given by the assessee to thereopening of the assessment. In the present case, there is validissue of notice under Section 148 of the Act for initiation ofreassessment proceedings and issue of such notice is not indispute. Not sending the notice under Section 143(2) of the Act aswell as not considering the reasons given by the assessee to thereopening of the assessment, will make the reassessment order nulland void or it will amount to only irregularity in completing thereassessment. If it is nullity, the whole assessment made by theAssessing Officer is bad and the same has to be annulled. If it ismere procedural irregularity, the reassessment will have to be setaside and the same must go before the Assessing Officer forreconsidering the matter afresh for following the procedurecontemplated under the provision. Section 148 of the Act, reads asfollows: Issue of notice where income has escapedassessment.148.(1)Beforemakingtheassessment,reassessment or recomputation under section 147,the Assessing Officer shall serve on theassessee a notice requiring him to furnishwithin such period, as may be specified in thenotice, a return of his income or the income ofany other person in respect of which he isassessable under this Act during the previousyear corresponding to the relevant assessmentyear, in the prescribed form and verified in theprescribed manner and setting forth such otherparticulars as may be prescribed; and theprovisions of this Act, shall, so far as may be,apply accordingly as if such return were areturn required to be furnished under section139." It is evident from the above provision that the Assessing Officershall serve on the assessee, as notice requiring him to furnish theReturn within such time, in the prescribed form and verified in theprescribed manner. In the present case, this part of the provisionis satisfied. As regards the second part of the provision, thewordings "shall, so far as may be, apply" means, other proceduralaspect of the machinery provision to the extent possible should befollowed. The second part deals with procedure or machinery provision for completing the reassessment proceedings. In thiscase, the assessee sent a letter dated 18.12.2004 which reads asunder: "Given the above submissions, we request yourgoodself to TREAT THE ORIGINAL RETURN AS FINALAND HAVING SUBMITTED IN RESPONSE TO THE NOTICESERVED UNDER SECTION 148 and oblige. We alsosubmit that since the original return was filedu/s 139(1) within due dates, provisions ofSection 139(8) shall not apply." provision for completing the reassessment proceedings. In thiscase, the assessee sent a letter dated 18.12.2004 which reads asunder: "Given the above submissions, we request yourgoodself to TREAT THE ORIGINAL RETURN AS FINALAND HAVING SUBMITTED IN RESPONSE TO THE NOTICESERVED UNDER SECTION 148 and oblige. We alsosubmit that since the original return was filedu/s 139(1) within due dates, provisions ofSection 139(8) shall not apply." The above letter clearly indicates that the assessee has nointention to file a Return in response to the notice, but herequested the Assessing Officer to treat the Original Return filed,as Return in response to the notice under Section 148 of the Act.In response to this letter, the Assessing Officer sent a letterdated 20.12.2004 and posted the case on 24.12.2004 at 03.30 p.m.Further to the said letter, the assessee also sent replies dated24.12.2004 and 05.01.2005 objecting to the reopening of theassessment and contended that no income has escaped assessment.Further, the assessee also sent another letter dated 17.01.2005enclosing the Return in response to the notice under Section 148 ofthe Act, which reads as follows:"Without prejudice to our all our submissions,since you feel that there is no optionavailable to us but to file our return onceagain, we are enclosing the return in responseto your notice u/s 148. Since the contents ofthe return are exactly the same as per theoriginal return, we are not duplicating thestatement of assessable income and otherrelevant annexures." From the above facts, it is clear that the Assessing Officer issuednotice dated 20.12.2004 to the assessee requesting the assessee toappear on 24.12.2004 at 03.30 p.m. The above hearing notice wasserved because of the assessee's reply dated 18.12.2004,requesting the Assessing Officer to treat the Return dated22.12.1999 filed on 31.12.1999, as Return filed in response to thenotice under Section 148 of the Act. Another factor in this caseis that the assessee had continuously appeared and participated inall the reassessment proceedings. It is not the case of theassessee that no proper opportunity was given in this case. Theonly contention is that there was no notice under Section 143(2) ofthe Act before completing the reassessment. Another relevantfactor that must be taken into account is that the assessee, byletter dated 17.01.2005, sent a letter enclosing the Return inresponse to the notice under Section 148 of the Act stating thatthe contents of the said Return are exactly the same as per theoriginal Return. Since there was no difference in the contents ofthe original Return as well as the Return enclosed by the assessee https://hcservices.ecourts.gov.in/hcservices/ to its letter dated 17.01.2005, the Assessing Officer thought thatit was not necessary to give another notice of hearing underSection 143(2) of the Act. The following distinguishing featuresemanate from the above facts: i) Original Return as well as subsequent Return filed in responseto notice under Section 148 of the Act, are same and there is nodifference in the contents of both the Returns. ii) The assessee himself participated in all the proceedingsobjecting to the reassessment. iii) Objections of the assessee, were not considered by theAssessing Officer. iv) There is a valid reopening of the assessment, but there areprocedural irregularities committed by the Assessing Officer incompleting the reassessment. https://hcservices.ecourts.gov.in/hcservices/ to its letter dated 17.01.2005, the Assessing Officer thought thatit was not necessary to give another notice of hearing underSection 143(2) of the Act. The following distinguishing featuresemanate from the above facts: i) Original Return as well as subsequent Return filed in responseto notice under Section 148 of the Act, are same and there is nodifference in the contents of both the Returns. ii) The assessee himself participated in all the proceedingsobjecting to the reassessment. iii) Objections of the assessee, were not considered by theAssessing Officer. iv) There is a valid reopening of the assessment, but there areprocedural irregularities committed by the Assessing Officer incompleting the reassessment. Taking into consideration the above factors, we are of the viewthat only irregularities are committed by the Assessing Officer,while completing the reassessment. Irregularity is want ofadherence to some prescribed Rule or mode of proceedings. Nullityis where there is a void Act or an Act having no legal force orvalidity. In this case, the Assessing Officer has not followed therule prescribed as well as there is failure to consider theobjections, which amounted to nothing but irregularities and hencethe same will not make the reassessment a nullity in law. 7.Learned Senior Counsel for the assessee relied on thisCourt judgment reported in 281 ITR 444 in the case of Commissionerof Income-tax Vs. M.Chellappan. This Tax Case (A) was filed by theRevenue under Section 260A of the Income-tax Act against the orderof the Income-tax Appellate Tribunal raising the followingsubstantial question of law:"Whether on the facts and in thecircumstances of the case, the Income-taxAppellate Tribunal was right in holding thatthe reopening of the assessment under Section147 of the Act and completion of assessmentwithout issue of notice under section 143(2) ofthe Act within 12 months is not valid?" In considering whether there is a substantial question of law ornot, this Court was of the view that no substantial question of lawarises out of the order of the Tribunal under Section 260A of theIncome-tax Act and hence dismissed the appeal filed by the Revenueand held as follows: "The Punjab and Haryana High Court in VipanKhanna v. CIT [2002] 255 ITR 220 held where nonotice under section 143(2) of the Act had beenserved on the assessee within the stipulatedperiod and the return as such had become final,in view of the amendment made in section 147 ofthe Act with effect from April 1, 1989, the https://hcservices.ecourts.gov.in/hcservices/ Assessing Officer could not only assess orreassess the escaped income in respect of whichproceedings under section 147 of the Act havebeen initiated, but also any other incomechargeable to tax which may have escapedassessment and which comes to his knowledgesubsequently, in the course of such proceedings.In the instant case, admittedly, no noticesunder section 143(2) of the Act were served onthe assessees within the stipulated period oftwelve months and, therefore, the proceedingsunder section 143 of the Act come to an end andthe matter becomes final. Hence applying theratio laid down by the Punjab and Haryana HighCourt in Vipan Khanna v. CIT [2002] 255 ITR 220,we are of the view that no substantial questionof law arises for our consideration in these appeals." Assessing Officer could not only assess orreassess the escaped income in respect of whichproceedings under section 147 of the Act havebeen initiated, but also any other incomechargeable to tax which may have escapedassessment and which comes to his knowledgesubsequently, in the course of such proceedings.In the instant case, admittedly, no noticesunder section 143(2) of the Act were served onthe assessees within the stipulated period oftwelve months and, therefore, the proceedingsunder section 143 of the Act come to an end andthe matter becomes final. Hence applying theratio laid down by the Punjab and Haryana HighCourt in Vipan Khanna v. CIT [2002] 255 ITR 220,we are of the view that no substantial questionof law arises for our consideration in these appeals." It is evident from the fact that this Court was of the view that nosubstantial question of law arises out of the order of theTribunal, and dismissed the same at the time of admission, byrelying on the Punjab and Haryana High Court judgment reported in255 ITR 220, in the case of Vipan Khanna Vs. CIT. We find thefacts involved in the present case are entirely different from thefacts involved in the above judgment and because of thedistinguishing features in the present case, the above referred tojudgment will not help the assessee. 8.In the case of Vipan Khanna Vs. CIT (P & H), reported in255 ITR 220, the assessee filed writ petition in which it wascontended that, requiring the assessee to produce his books ofaccount to furnish information on various points, was not warrantedin proceedings under Section 147 of the Act. Initially, theassessee had not challenged the validity of reassessmentproceeding, but raised the issue during the course of argument.The finding given is that the assessee claimed depreciation in theReturn at the rate of 50% and the assessee had nowhere disputed thefact that the admissible rate of depreciation to him was only 40%and this fact alone was sufficient for the Income-tax Officer toinitiate proceeding under Section 147 of the Act. Hence, the Courtheld that the initiation of proceeding under Section 147 was valid.From the letter dated 30[th] July 1998, the Assessing Officer wasseeking general information on other issues merely to verify thereturn. Such general enquiry can only be made by issuing noticeunder Section 143(2) of the Act within the stipulated period.Admittedly, it was not the case of the Revenue that during thecourse of proceeding under Section 147 of the Act, it had comeacross any material relating to the items mentioned in the letterdated 30[th] July 1998, suggesting escapement of income under any ofthose heads. Hence the Court held that letter dated 30[th] July 1998, issued by the Assessing Officer in so far as it related to mattersunconnected with the issue of depreciation as also the directionsissued by the Deputy Commissioner under Section 144A of the Actdated 26[th] October 1998, could not be sustained. The issue in thisPunjab and Haryana High Court judgment is also entirely differentfrom the facts involved in the present case. Further, it is seenthat the Allahabad High Court judgment reported in 90 ITR 197, inthe case of Sant Baba Mohan Singh Vs. Commissioner of Income-taxand Rajasthan High Court judgment reported in 165 ITR 501, in thecase of Commissioner of Income-tax Vs. Gyan Prakash Gupta, reliedon by the learned Standing counsel for the Revenue, considered asimilar issue and have taken a view that any irregularity committedby the Assessing Officer will not make the assessment nullity inlaw. 9.The said Allahabad High Court judgment considered thescope of completing the assessment without issuing notice underSection 23(2) under the old Act corresponding to Section 143(2) ofthe present Act. Therefore, the Appellate Assistant Commissioner,in that case, set aside the assessment made by the Income-taxOfficer for the reason that the assessment order was completedunder Section 23(3) of the Act without the issue of notice underSection 23(2) and directed the Income-tax Officer to make a freshassessment after issuing notice under Section 23(2) of the Act,which was confirmed by the Appellate Tribunal. On a reference tothe High Court, it was contended by the assessee that the AppellateAssistant Commissioner's direction to make a fresh assessment waswithout jurisdiction, and further it was argued that once theassessment was completed without notice, it amounts to nullity inlaw and the assessment should be annulled. The Court rejected thecontention and held as follows: "That is a power to be exercised where theassessment proceeding is a nullity in the sensethat the Income-tax Officer had no jurisdictionab initio to take the proceeding. A proceedingis a nullity when the authority taking it has nojurisdiction either because of want of pecuniaryjurisdiction or of territorial jurisdiction orof jurisdiction over the subject-matter of theproceeding. A proceeding is a nullity when theauthority taking it has no power to have seisinover the case. The omission of the Income-taxOfficer to issue a notice under section 23(2)does not affect the ab initio jurisdictionenjoyed by the Income-tax Officer in respect ofthe proceeding. The Income-tax Officer hadseisin over the case, he had overalljurisdiction over the case and in that sense hadpower to initiate the proceeding. The omissionto issue a notice under section 23(2) merely prevents the Income-tax Officer from making anassessment order under section 23(3), and afterhe rectifies the omission by issuing that noticehe can proceed further to the next stage, thatis, to exercise the power of completing theassessment under section 23(3). All these aresteps within the overall jurisdiction vested inthe Income-tax Officer over the entireassessment proceeding. We are of definiteopinion that the failure of the Income-taxOfficer to issue a notice under section 23(2)does not call for an order by the AppellateAssistant Commissioner annulling the assessment.The Appellate Assistant Commissioner was rightin merely setting aside the assessment." The above Allahabad High Court judgment was followed by theRajasthan High Court in the case of Commissioner of Income-tax Vs.Gyan Prakash Gupta, cited supra. The said Rajasthan High Courtjudgment also considered the scope of Section 143(2) of the Act andheld as follows: The above Allahabad High Court judgment was followed by theRajasthan High Court in the case of Commissioner of Income-tax Vs.Gyan Prakash Gupta, cited supra. The said Rajasthan High Courtjudgment also considered the scope of Section 143(2) of the Act andheld as follows: "As stated above, the assessment order passedwithout notice under section 143(2) is invalidand it is vitiated, but the invalidity is not,however, of such a nature which goes to theroot of the proceedings and that being so, theAppellate Assistant Commissioner having foundit to be invalid, that invalidity did not go tothe root of the matter. It could be set asidefor being redone de novo. He should not haveannulled it. Failure to serve notice on theassessee under section 143(2) of the Act ismerely an irregularity and the Income-taxOfficer, until and unless he gets the noticesserved, cannot complete the assessment. Wefind it difficult to hold that the Income-taxOfficer has no jurisdiction in respect of theproceedings. As soon as the return is filed, hegets seisin over the case. He has jurisdictionover it, but on failure to comply with section143(2) of the Act, the only limited restrictionis that he cannot complete the assessment. Inthese circumstances, the assessment orderscompleted without service of notice undersection 143(2) cannot be said to be ab initiovoid and when it is not so, the assessmentorder cannot be annulled." We feel that the above two High Court judgments are similar to thefacts of the present case and hence, we are agreeing with these judgments and we are of the view that there are only proceduralirregularities committed by the Assessing Officer and hence thereassessment cannot be annulled. 10.Learned counsel for the assessee also relied on theSupreme Court judgment in the case of GKN Driveshafts (India) Ltd.Vs. Income-tax Officer and others reported in 259 ITR 19 tosupport his contention that objections were not considered by theAssessing Officer while completing the reassessment and hence theorder of the reassessment is bad in law. The Supreme Courtconsidered the scope of reopening of the assessment and held asfollows: "We see no justifiable reason to interfere withthe order under challenge. However, we clarifythat when a notice under section 148 of theIncome-tax Act is issued, the proper course ofaction for the noticee is to file a return andif he so desires, to seek reasons for issuingnotices. The Assessing Officer is bound tofurnish reasons within a reasonable time. Onreceipt of reasons, the noticee is entitled tofile objections to issuance of notice and theAssessing Officer is bound to dispose of thesame by passing a speaking order. In theinstant case, as the reasons have beendisclosed in these proceedings, the AssessingOfficer has to dispose of the objections, if filed, by passing a speaking order, beforeproceeding with the assessment in respect ofthe abovesaid five assessment years." From a reading of the above, it is clear that the Assessing Officerhas to furnish reasons, within a reasonable time and on receipt ofthe same, the assessee can file objection to issue of notice andthe Assessing Officer is bound to dispose of the same by a speakingorder, before proceeding with the reassessment. In the presentcase, the objections have not been considered at all by theAssessing Officer before proceeding with the reassessment.Reassessment order was completed without considering the objectionsto the reopening of the assessment. It is nothing but a proceduraldefect and therefore it could not be held that the reassessment isa nullity in law. From a reading of the above, it is clear that the Assessing Officerhas to furnish reasons, within a reasonable time and on receipt ofthe same, the assessee can file objection to issue of notice andthe Assessing Officer is bound to dispose of the same by a speakingorder, before proceeding with the reassessment. In the presentcase, the objections have not been considered at all by theAssessing Officer before proceeding with the reassessment.Reassessment order was completed without considering the objectionsto the reopening of the assessment. It is nothing but a proceduraldefect and therefore it could not be held that the reassessment isa nullity in law. 11.Since we are of the view that these are onlyirregularities committed by the Assessing Officer (i.e.) notconsidering the objections as well as not issuing notice underSection 143(2) of the Act, before completing the reassessment, weset aside the order of the Tribunal as well as the lowerauthorities with a direction to the Assessing Officer to considerthe matter afresh, particularly the objections given by theassessee for reopening and issue notice under Section 143(2) of the Act, after giving opportunity to the assessee to raise allcontentions relating to the reopening of the assessment as well asthe merits of the case and permit the assessee to produce materialsand evidence, if any, and pass orders in accordance with law, asexpeditiously as possible. As the matter is remanded, it is notnecessary to answer the above questions of law, as the same islikely to adversely affect the rights of either parties. 12.With the above observation, the tax case is disposd of.No costs. Consequently, M.P.Nos.1 and 2 of 2006 are closed. Sd/-Asst. Registrar. /true copy/Sub Asst. Registrar.kmTo1. The Assistant Commissioner of Income Tax,Company Circle I (1),121, Nungambakkam High Road,Chennai-600 034.2. The Assistant Registrar,The Income Tax Appellate Tribunal,III Floor,Rajaji Bhavan, Besant Nagar, Chennai-90.3. The secretary Central Board of Direct TaxesNew Delhi. 4. The Commissioner of Income Taxes (Appeals) IIIChennai. 5. The Commissioner of Income Tax, Chennai I, Chennai.1 cc to Mr. Pushya Sitaraman, Advocate, Sr. 539991 cc to Mr.T.R. Senthil Kumar, Advocate, sr. 53365 T.C. (A) No.2278 of 2006 VC (CO)kk 27/11 https://hcservices.ecourts.gov.in/hcservices/