K G HOTEL PVT LTD Vs. A C I T
INCOME TAX APPELLATE TRIBUNAL
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N.V. Vasudevan, Judicial Member -
(1.) THE above appeal by the assessee was heard by the Division Bench. THE first ground of appeal of the assessee reads thus:
(1) THE initiation of proceedings Under Section 148 in the present case has been done at the behest and under the directions of C.I.T.(A). As such, the action Under Section 147/148 is bad in law rendering thereby the entire assessment as void ab initio, and hence non-est in law. It may kindly be quashed.
(2.) In respect of the aforesaid ground of appeal, there was a difference of opinion between the Learned Accountant Member and the Learned Judicial Member and, therefore, the following question was referred for consideration by the Hon'ble Third Member:
In the facts and circumstances of the case, is the action of the Ld. Accountant Member correct in quashing the assessment or is the action of the Judicial Member correct in upholding the assessment?
The Hon'ble Third Member has concurred with the view of the Learned Accountant Member and has held that there was no existence of reason to believe for issue of notice under Section 148 of the Act. The assessment was, therefore, held to be invalid and illegal. In accordance with the majority view, it is held that the notice under Section 148 is not valid and legal and, therefore, the assessment under Section 148 is quashed.
In the result, appeal of the assessee is allowed.
(3.) ORDER, pronounced in the open Court on 14.03.08
ORDER UNDER SECTION 255 (4) OF THE INCOME TAX ACT
1. Since there is difference of opinion between the Members while adjudicating the captioned appeal, the following questions is referred to the Hon'ble President of the ITAT for deciding the same as contemplated in Section 255(4) of the Act
In the facts ad circumstances of the case is the action of the Ld. Accountant Member correct in quashing the assessment or is the action of the Judicial Member correct in upholding the assessment?
Diva Singh, Judicial Member
1. On receiving the draft order from my learned brother I have discussed the same with him and since I am unable to agree with the view expressed by him I am constrained to write my separate dissenting order.
2. As far as the facts are concerned there is no dispute in as much as there was a return filed by the assessee in response to notice Under Section 142(1) of the Act wherein certain additions were made, by the A.O. The assessee challenged these additions in appeal before the CIT(A) who, taking note of the fact that the return filed was beyond the period as prescribed Under Section 139 restored to the Assessing Officer with the direction to regularize the same.
3. There is also no dispute over the issue that notice under Section 148 within the prescribed time was issued to the assessee in order to regularize the same. It is also an admitted fact that in response to this, the assessee stated that the return of income filed originally on 31.12.93 may be treated as return of income filed in compliance to the notice Under Section 148 of the Act. In the fresh round also additions were made which were challenged by the assessee before the CIT(A) on merit. However, before the CIT(A) there was no representation and the action of the AO was confirmed in an ex parte order. Aggrieved by this, the assessee is in appeal. Before the Tribunal the assessee has challenged the addition on merits and also the invocation of Section 147/148 of the Act.
4. In the draft order sent by the ld. A.M. vide para 14 to 16 the Assessment has been quashed for the reason that the assessment has been reopened on the basis of the direction given in the CIT(A)'s order and the AO has not formed his own opinion. The issue which requires consideration is that can the direction given in appeal by the CIT(A) to the AO to regularize the assessment be considered to be "information" within the terminology as applied by judicial pronouncements.;
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