2023 (1) TMI 1415 - AT - Income Tax

Validity of reopening of assessment - AO has not disposed off the objections filed by the assessee against the re-opening of assessment - HELD THAT- It is trite law that the assessment framed without disposing of objections filed by the assessee against the re-opening of assessment is not a valid assessment and cannot not be sustained. The case of the assessee finds support from the decision of the GKN Driveshafts (India) Ltd. 2002 (11) TMI 7 - SUPREME COURT wherein the Hon ble Apex Court has held that when a notice u/s 148 is issued and the assessee has filed its return of income and sought the reasons for issuance of notice u/s 148 of the Act, the AO is bound to furnish the copy of reasons within the reasonable time and assessee on receipt of the reasons is entitled to file objections to issuance of notice. The Hon ble Apex Court held that the AO is bound to dispose of the objections filed by the assessee by passing a speaking order. However in the instant case before us, the AO has not disposed off the objections filed by the assessee. Thus, we uphold the order of ld CIT(A) by dismissing the appeal of the revenue. The legal ground raised by the revenue is dismissed.

Summary

Issues:
1. Challenge to the order of Commissioner of Income Tax (Appeals) on legal issue and merits.
2. Validity of assessment due to non-disposal of objections against re-opening of assessment.
3. Compliance with legal requirements in assessment proceedings.

Analysis:
The judgment pertains to an appeal by the assessee against the order of the Commissioner of Income Tax (Appeals) for the assessment year 2014-15. The revenue challenged the order of the Commissioner on legal and merit grounds, specifically contesting the non-disposal of objections by the Assessing Officer (AO) against the re-opening of assessment. The AO had reopened the assessment under section 147 of the Act, but the objections raised by the assessee were not addressed before finalizing the assessment.

The facts revealed that the AO issued a notice for re-opening the assessment, to which the assessee submitted objections that were allegedly not disposed of by the AO. Subsequently, the assessment was completed, making significant additions to the income of the assessee. The Commissioner of Income Tax (Appeals) allowed the appeal of the assessee on the legal issue, emphasizing the mandatory requirement of disposing objections against the re-opening of assessment.

The Commissioner's decision was supported by legal precedents, including the Supreme Court's ruling in GKN Driveshafts (India) Ltd. vs. DCIT, highlighting the necessity for the AO to address objections filed by the assessee. Failure to dispose of such objections renders the assessment invalid. The Income Tax Appellate Tribunal, Kolkata, also upheld the importance of addressing objections before finalizing the assessment, leading to the quashing of the assessment in this case.

In conclusion, the Tribunal upheld the Commissioner's decision, dismissing the revenue's appeal on the legal issue. As the assessment itself was deemed invalid due to non-compliance with legal requirements regarding the disposal of objections, the grounds raised by the revenue on merits were not addressed in this appeal. The judgment highlights the significance of adhering to procedural requirements in assessment proceedings to ensure the validity of the assessment and protect the rights of the assessee.

This detailed analysis of the judgment emphasizes the critical legal issue of non-disposal of objections against the re-opening of assessment, which led to the invalidation of the assessment in this case. The judgment underscores the importance of procedural compliance and adherence to legal requirements in assessment proceedings to maintain the validity and integrity of the assessment process.