2019 (7) TMI 1728 - AT - Income Tax

Reopening of assessment u/s 147 - Non disposing off appellant s objections - HELD THAT - The fact that the assessee had raised objections against the reopening of the assessment and the same was not disposed-off by Ld. AO, remain uncontroverted. Nothing on record would establish that the assessee s objections against reopening of assessment were ever considered and rejected by Ld. AO at any point of time, during reassessment proceedings. Thus the action of Ld. first appellate authority in upholding the reassessment proceedings, could not be said to be in accordance with law. Therefore, we quash the reassessment order - Decided in favour of assessee.

Summary

Issues Involved:
1. Validity of reassessment proceedings under Section 148 of the Income Tax Act, 1961.

Issue-wise Detailed Analysis:

1. Validity of reassessment proceedings:
The primary issue contested by the assessee was the validity of the reassessment proceedings initiated under Section 148 of the Income Tax Act, 1961. The assessee argued that the reassessment was in excess of jurisdiction and not in accordance with the law, thus rendering it invalid.

1.1 Non-disposal of objections:
The assessee's Authorized Representative (AR) submitted that the objections raised against the reopening of the assessment were not disposed of by the Assessing Officer (AO) as mandated by the Supreme Court in GKN Driveshafts (India) Ltd. V/s ITO [259 ITR 19]. This procedural lapse, according to the assessee, vitiated the reassessment proceedings.

1.2 CIT(A)'s stance:
The CIT(A) acknowledged that the AO did not dispose of the objections raised by the assessee, which was a procedural irregularity. However, it was argued that this irregularity did not affect the legality of the assessment order. The CIT(A) cited various case laws to support the stance that the assessment order could not be held invalid solely due to this procedural lapse.

1.3 Judicial precedents:
The Tribunal considered the binding judicial precedent set by the Bombay High Court in KSS Petron Private Limited V/s ACIT [ITA No. 224 of 2014], which clearly stated that if the reassessment order is passed without disposing of the objections, it should be quashed, and no second opportunity should be given to the AO to pass fresh assessment orders after disposing of the objections.

1.4 Tribunal's conclusion:
The Tribunal found that the AO's failure to dispose of the objections raised by the assessee was a significant procedural lapse. Citing the Bombay High Court's decision, the Tribunal concluded that the reassessment order was without jurisdiction and legally unsustainable. The Tribunal quashed the reassessment order dated 29/12/2009, thereby rendering the other grounds of appeal infructuous.

Final Order:
The appeal was allowed, and the reassessment order was quashed. The Tribunal refrained from dealing with the merits of the case as the primary issue of the validity of the reassessment proceedings was resolved in favor of the assessee. The order was pronounced in the open court on 31st July 2019.