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2020 (12) TMI 1242 - AT - Income TaxReopening of assessment u/s 147 - non disposing off the objections as put by assessee - HELD THAT - As could be seen from the decision of FOMENTO RESORTS AND HOTELS LTD., 2006 (11) TMI 645 - BOMBAY HIGH COURT even if Assessing Officer disposed off the objections raised by the assessee in the Assessment Order while completing the re-assessment that is not in compliance with the decision of GKN Driveshafts (India) Ltd. 2002 (11) TMI 7 - SUPREME COURT in other words the Assessing Officer shall pass a separate speaking order disposing off the preliminary objections raised by the assessee in reopening the assessment. In the case on hand before us since Assessing Officer failed to dispose off the preliminary objections of the assessee by way of a separate order, respectfully following the decision in the case of Fomento Resorts Hotels Ltd. v. ACIT 2006 (11) TMI 645 - BOMBAY HIGH COURT we quash the re-assessment order passed u/s. 143(3) r.w.s. 147 of the Act for the A.Y. 2011-12. The preliminary ground raised by the assessee is allowed.
Issues Involved:
1. Breach of principles of natural justice. 2. Validity and legality of the reassessment order. 3. Merits of the addition of ?18,86,490/- as unexplained cash. 4. Merits of the addition of ?99,040/- as unexplained expenses. Detailed Analysis: 1. Breach of Principles of Natural Justice: The assessee contended that the Learned Commissioner of Income Tax (Appeals) erred by not granting a proper, sufficient, and adequate opportunity of being heard while framing the assessment. The assessment was framed in breach of the principles of natural justice and without application of mind to the factual and legal aspects involved in the appeal. The Tribunal noted that the Assessing Officer (AO) issued a notice under section 148 for reopening the assessment but did not dispose of the preliminary objections raised by the assessee before completing the assessment. This failure to dispose of objections separately before the assessment rendered the reassessment order invalid as per the precedents set by the Hon’ble Supreme Court in GKN Driveshafts (India) Ltd. v. ITO. 2. Validity and Legality of the Reassessment Order: The Tribunal examined the validity of the reassessment order, which was challenged on the grounds that it was bad in law and without jurisdiction. The assessee argued that the AO ignored the mandatory requirement of disposing of objections raised against the reopening of the assessment. The Tribunal referred to several precedents, including DCIT v. M/s. Firstsource Solutions Ltd., Maharashtra State Power Generation Co. Ltd. v. Addl. CIT, and Fomento Resorts & Hotels Ltd. v. ACIT, which emphasized the necessity for the AO to pass a separate order disposing of preliminary objections before proceeding with the assessment. The Tribunal concluded that the AO's failure to do so in this case rendered the reassessment order invalid. 3. Merits of the Addition of ?18,86,490/- as Unexplained Cash: The assessee challenged the addition of ?18,86,490/- made by the AO on the grounds of unexplained cash, arguing that the addition was based on surmises, suspicion, and conjecture, and the AO took into account irrelevant and extraneous considerations while ignoring relevant material. However, since the Tribunal quashed the reassessment order on procedural grounds, it did not delve into the merits of this addition. 4. Merits of the Addition of ?99,040/- as Unexplained Expenses: Similarly, the assessee contested the addition of ?99,040/- as unexplained expenses, arguing that no such addition was warranted based on the facts and circumstances of the case. Again, due to the quashing of the reassessment order on procedural grounds, the Tribunal did not address the merits of this addition. Conclusion: The Tribunal quashed the reassessment order for the A.Y. 2011-12 due to the AO's failure to dispose of the preliminary objections raised by the assessee before completing the assessment. This procedural lapse rendered the reassessment order invalid. Consequently, the Tribunal did not examine the other grounds and contentions raised by the assessee on merits, as addressing them would be merely academic. The appeal of the assessee was allowed.
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