2018 (2) TMI 2086 - AT - Income Tax

Validity of assessment made u/s 143(3)/147 - Deemed dividend u/s 2(22)(e) - Non d isposing of the objections raised by the assessee - HELD THAT - It is observed that the facts involved in the case of Hardware Trading Corporation (supra) were materially similar to the facts of the present case, inasmuch as the specific object ions raised by the assessee challenging the validity of reopening of assessment after going through the reasons recorded were neither considered nor disposed of by the AO by passing a speaking order. By relying on the decision in the case of G.K.N. Driveshaft (India) Limited 2002 (11) TMI 7 - SUPREME COURT Tribunal held that the reassessment order passed by the Assessing Officer without disposing of the objections raised by the assessee in respect of the validity of reopening was bad- in-law. In the case of G.K.N. Driveshaft (India) Limited 2002 (11) TMI 7 - SUPREME COURT it was held by the Hon ble Supreme Court that the assessee on receipt of reasons recorded by the AO is entitled to file objection to the issue of notice under section 148 and the Assessing Officer is bound to dispose of the said object ion by passing a speaking order. Respect fully following the decision in the case of G.K.N. Driveshaft (India) Limited (supra) as well as the decision of the Division Bench of this Tribunal in the case of Hardware Trading Corporation 2017 (11) TMI 2005 - ITAT KOLKATA , hold that the assessment made by the AO under section 143(3)/147 without disposing of the objections raised by the assessee challenging the validity of reopening was bad-in- law and the same is liable to be cancelled. Aappeal of the assessee is allowed.

Summary

Issues: Validity of assessment made under section 143(3)/147, Addition made under section 2(22)(e)

Validity of assessment made under section 143(3)/147:
The appeal was against the order of the ld. Commissioner of Income Tax (Appeals) challenging the validity of the assessment made by the Assessing Officer under section 143(3)/147. The Assessing Officer had reopened the assessment and issued a notice under section 148. The assessee requested to treat the original return as a response to the notice. The assessment was completed, adding deemed dividend under section 2(22)(e) of the Act. The appeal was dismissed by the ld. CIT(Appeals), leading to the appeal before the Tribunal. The assessee raised preliminary issues regarding the validity of the assessment.
The Tribunal found that the objections raised by the assessee challenging the validity of reopening were not considered or disposed of by the Assessing Officer before completing the reassessment. Citing a previous Tribunal decision and a Supreme Court case, it held that passing an assessment order without addressing objections challenging the validity of reopening was bad in law. Following the Supreme Court decision, the Tribunal canceled the assessment due to the Assessing Officer's failure to address the objections raised by the assessee.

Addition made under section 2(22)(e):
Due to the decision on the preliminary issue, the Tribunal found the issues raised by the assessee challenging the addition made by the Assessing Officer in the assessment to be infructuous. The Tribunal did not find it necessary to decide on these issues due to the cancellation of the assessment. Consequently, the appeal of the assessee was allowed based on the decision on the preliminary issue, and the Tribunal pronounced the order in favor of the assessee on February 23, 2018.