ORDER
N.D. Ragravan, Vice President
This is an appeal by the assessee challenging the order dated 5-8-1999 of the CIT(A) as erroneous. 2.1 The learned counsel for the assessee submitted that : The assessment in this case was originally completed on 31-7-1992 under section 143(3) of the Income Tax Act, 1961. It was reopened subsequently to bring to tax the profit on sale of land under the head business income earlier assessed as capital gains. This was challenged by the assessee before the CIT(A) who dismissed the appeal upholding the initiation of proceedings under section 148 of the Act. An appeal was filed before the Tribunal without taking a specific ground regarding invalidity of the initiation of proceedings under section 148 of the Act as probably the assessee thought that this was covered by the general ground. Since the assessee considered it necessary to take a specific ground on the validity of the proceedings under section 148, it is prayed for admission of the additional grounds which are purely legal in nature and do not require any fresh investigation into facts.
2.2 On merits he submitted that : The Commissioner (Appeals) erred in upholding the action of the assessing officer in initiation of proceedings under section 148 of the Act. He ought to have held that the reopening of the assessment under section 147 of the Act is on mere change of opinion and that, therefore, the reopening proceedings are invalid. He is not justified in upholding the assessment when the reasons for reopening of the assessment specifically requested for by the assessee were not given and such reasons alone would form the basis for validity of the reopening of the assessment and the assessee has been denied the opportunity to argue against validity of reopening the assessment.
2.3 He further submitted that : The Commissioner (Appeals) failed to appreciate the fact that the land which was sold in parts was agricultural land and was used by the assessee exclusively for agricultural operations before it was sold and, therefore, there is no justification in treating the income from the sale of agricultural lands as business income instead of capital gains having regard to the facts and circumstances of the case. He ought to have seen that it was not the business or activity of purchase and sale of lands/plots either before or after the sale of agricultural lands owned by the assessee. Therefore, having regard to the facts and circumstances of the case, there is no justification for treating the sale of agricultural lands in parts by the assessee as business income or venture. He failed to see that the facts and circumstances of this case are totally different from the facts of the case laws referred to in her order.
3. On the other hand, the learned representative for the revenue countered to say in brief, by defending the order impugned besides opposing the preliminary point of objection for reopening of the assessment.
4.1 Rival submissions heard and relevant orders read including the copies of the papers filed in the form of paper book by and on behalf of the assessee on record, i.e., computation of total income in the assessment order, letter dated 7-7-1992, of the assessing officer, reply dated 16-7-1992, of the assessee, original assessment order dated 31-7-1992, letter dated 1-5-1995 of the assessee in reply to notice under section 148, dated 27-3-1995, and details of acquisition of lands and plots sold at Bhirnavaram furnished in the course of reassessment proceedings and purchase deeds. After doing so, we consider that the stand of the assessee on the preliminary point itself seems to have substantial force, as a result of which no necessity would be there to go into the merits of the appeal for the reasons following.
4.2 In view of the fact that We ate convinced with the stand taken by the assessee that additional ground of appeal as stated above being convincing, we do admit the same and proceed to dispose of the additional ground of appeal, which is the preliminary issueln the instant case.
4.3 We may state that in the case of GKN Driveshafts (India) Ltd. v. ITO & Ors. (2003) 259 ITR 19 (SC), it has been held that when a notice under section 148 of the Act is issued, the proper course of action for the noticee is to file the return and if he desires to give (sic-see) the reasons for issuing the notices, that the assessing officer is bound to furnish reasons within a reasonable time, that on receipt of reasons, the noticee is entitled to file objections to issuance of notice and the assessee is bound to file objections and the assessing officer is bound to dispose of the same by passing a speaking order.
4.4 In the light of the ratio decidendi of the apex court cited supra, we consider that the additional grounds of appeal filed by the assessee having been admitted deserve to be allowed too. On this score itself, we declare, the facts and circumstances being in favour of the assessee, the initiation of proceedings under section 148 of the Act and reopening under section 147 of the Act are invalid, the reasons for reopening of the assessment specifically requested for by the assessee having been not given by the department. Such reasons alone would form the basis for validity of the assessment but the assessee has been denied the opportunity to argue against validity of such reopening of assessment.
4.5 Hence, the reopening having been declared as bad in law, there is no necessity for us to go into the merits of the case, which has become infructuous.
5. In the result, the appeal of the assessee is allowed in limine.