2018 (10) TMI 1496 - AT - Income Tax

Reopening of assessment - non disposing of objections of the assessee against the reassessment proceedings by passing a speaking order. Held that - As AR submitted that non-disposal of the objections by passing a speaking order by the Assessing Officer was a clear violation of the directions of the Hon ble Apex Court in the case of GKN Driveshafts (India) Ltd. vs ITO (2002 (11) TMI 7 - SUPREME COURT and it made the reassessment illegal and invalid and on an inquiry from the Bench, AR had no objection to the file being restored to the office of the Assessing Officer with a direction to dispose of the objections of the assessee against reassessment proceedings. DR also had no objection if the Assessing Officer was directed to dispose of the objections of the assessee against the reassessment proceedings by passing a speaking order. Restore the issue to the file of the Assessing Officer with the direction to dispose of the objections of the assessee by passing a speaking order. - Decided in favour of assessee for statistical purposes.

Summary

Issues involved:
1. Validity of reassessment proceedings under section 144/147 of the Income Tax Act, 1961 due to non-disposal of objections by the Assessing Officer.
2. Adjudication by the ld. CIT(A) on the objections raised by the assessee.

Analysis:

Issue 1: Validity of reassessment proceedings
The appeal was filed against the order upholding the reassessment proceedings under section 144/147 of the Income Tax Act, 1961. The assessee contended that the Assessing Officer did not dispose of the objections raised by them regarding the initiation of reassessment proceedings. The assessee argued that failure to pass a speaking order on the objections violated the directions of the Hon'ble Apex Court in the case of GKN Driveshafts (India) Ltd. vs ITO (2003) 259 ITR (SC), rendering the reassessment illegal and invalid. Both parties agreed that the file should be restored to the Assessing Officer with directions to dispose of the objections by passing a speaking order. Consequently, the issue was remanded to the Assessing Officer for proper disposal of the objections, leading to the allowance of the appeal for statistical purposes.

Issue 2: Adjudication by ld. CIT(A)
The ld. AR highlighted that the ld. CIT(A) did not adjudicate on the specific issue raised by the assessee regarding the non-disposal of objections by the Assessing Officer. The grounds of appeal clearly raised this issue before the ld. CIT(A), but it remained unaddressed in the impugned order. However, the agreement between both parties to restore the issue to the Assessing Officer for disposal of objections implied that the ld. CIT(A)'s failure to address the issue became inconsequential. Ultimately, the appeal was allowed for statistical purposes, indicating that the failure of the ld. CIT(A) to adjudicate on the issue did not impact the final outcome.

In conclusion, the judgment focused on the procedural irregularity of non-disposal of objections by the Assessing Officer, leading to the remand of the issue for proper adjudication. The agreement between the parties facilitated the restoration of the matter to the Assessing Officer, ensuring compliance with legal requirements and resulting in the allowance of the appeal for statistical purposes.