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2021 (7) TMI 220 - AT - Income TaxValidity of reopening of assessment u/s 147 - Non follow of procedure laid down - HELD THAT - Recording of reasons and furnishing of the same has to be strictly complied with as it is a jurisdictional issue and in the absence of reasons being furnished when sought for would make an order passed on reassessment bad in law. We also find that in the case of Jayanthi Natarajan 2017 (9) TMI 1042 - MADRAS HIGH COURT has held that when the procedure required to be followed has not been adhered to, the entire reassessment proceedings were vitiated. We, therefore, relying on the aforesaid decision in the case of Jayanthi Natarajan (supra) and Trend Electronics 2015 (9) TMI 1119 - BOMBAY HIGH COURT hold that since the procedure required to be followed has not been followed the entire assessment proceedings are vitiated and therefore we hold the assessment order passed by the AO to be bad in law and thus set it aside. Appeals of the assessee are allowed.
Issues involved:
1. Jurisdiction of the Assessing Officer in reassessment proceedings under sections 147 and 143(3) of the Income Tax Act, 1961. 2. Compliance with mandatory conditions as per sections 147 to 151 of the Income Tax Act, 1961. 3. Addition of interest received on enhanced compensation under section 28 of the Land Acquisition Act. 4. Charging of interest under sections 234A, 234B, 234C, and 234D of the Income Tax Act, 1961. Analysis: Issue 1: Jurisdiction of the Assessing Officer in reassessment proceedings under sections 147 and 143(3) of the Income Tax Act, 1961: The appellant challenged the reassessment proceedings for A.Y. 2010-11, arguing that the Assessing Officer (AO) did not follow the procedures as mandated by the Hon'ble Supreme Court in the case of GKN Driveshafts India Ltd. vs. ITO. The AO did not pass a speaking order on the objections raised by the assessee before completing the reassessment. The appellant cited various decisions to support their contention. The appellant's argument was supported by the fact that the AO failed to comply with the requirement of disposing of objections raised by the assessee before passing the reassessment order, as established by legal precedents. The Tribunal held that the failure to follow the mandatory procedure rendered the assessment order without jurisdiction, setting it aside. Issue 2: Compliance with mandatory conditions as per sections 147 to 151 of the Income Tax Act, 1961: The failure of the AO to pass a speaking order on the objections raised by the assessee regarding the reassessment proceedings was deemed a procedural irregularity by the Learned DR. However, the Tribunal emphasized the importance of complying with the legal requirements laid down by the Hon'ble Supreme Court and other High Courts. The Tribunal referred to the case law and held that the failure to furnish reasons and dispose of objections raised by the assessee before reassessment rendered the entire assessment proceedings vitiated. Issue 3: Addition of interest received on enhanced compensation under section 28 of the Land Acquisition Act: The appellant contested the addition of interest received on enhanced compensation under section 28 of the Land Acquisition Act. However, due to the jurisdictional issue and procedural irregularities discussed above, the Tribunal did not delve into the merits of this addition, as setting aside the reassessment order made further adjudication unnecessary. Issue 4: Charging of interest under sections 234A, 234B, 234C, and 234D of the Income Tax Act, 1961: Similar to the previous issue, the Tribunal did not address the charging of interest under sections 234A, 234B, 234C, and 234D due to the assessment order being set aside on jurisdictional grounds. The procedural lapses in the reassessment proceedings led to the Tribunal allowing the appeal of the assessee for both A.Y. 2010-11 and A.Y. 2011-12. In conclusion, the Tribunal found in favor of the assessee, setting aside the reassessment orders for both assessment years due to the failure of the Assessing Officer to comply with the mandatory procedures and legal requirements, thereby rendering the assessment orders without jurisdiction.
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