2025 (3) TMI 355 - HC - Income Tax

Validity of reopening of assessment - non-compliance of procedure - assessee liberty to challenge the order by filing a writ petition - whether the AO was right in not disposing of the written objection submitted by the assessee for reopening of the assessment? - HELD THAT - This ground was canvassed by the assessee before the CIT(A) which call for a remand report but unfortunately the AO did not submit the remand report and the CIT(A) proceeded to take a decision on merits and particularly allowed the appeal of the assessee but with regard to the percentage of the gross profit rate on the entire turnover and made a restriction thereof. Tribunal in our view rightly took note of the decision of GKN Driveshafts India Ltd. 2002 (11) TMI 7 - SUPREME COURT The duty cast upon the assessing officer is to decide the written objections given by the assessee to the proposed reopening and passing a speaking order and if the order goes against the assessee the assessee has a liberty to challenge the order by filing a writ petition as no other alternative remedy is provided under the provisions of the Income Tax Act 1961. In the instant case it is not in dispute that the assessing officer did not follow the procedure laid down in GKN Driveshafts India Ltd. supra . Therefore the learned Tribunal was justified in allowing the assessee s appeal on the said ground.

Summary

The High Court of Calcutta heard an appeal filed by the revenue under Section 260A of the Income Tax Act, 1961 challenging an order passed by the Income Tax Appellate Tribunal. The appeal raised three substantial questions of law for consideration:1. Whether the Tribunal erred in allowing the appeal based on a finding of the Madras High Court in a previous case regarding non-compliance with procedural requirements.2. Whether the Tribunal erred in quashing the assessment order by deleting an addition made by the Assessing Officer due to failure to dispose of objections raised by the assessee before completing the assessment.3. Whether the Tribunal erred in not examining the merits of the case in light of a judgment by the Calcutta High Court in a different case where the assessee failed to prove the identity, genuineness, and creditworthiness of a transaction.The Court noted a delay in filing the appeal but accepted the explanation provided and condoned the delay. The appeal concerned a common order by the Tribunal in appeals filed by both the assessee and the department against an assessment order affirmed by the Commissioner of Income Tax. The main issue considered by the Tribunal was whether the Assessing Officer was correct in not addressing the written objections submitted by the assessee for reopening the assessment.The Court referenced the decision in GKN Driveshafts [India] Ltd. vs. ITO [2003] 259 ITR 19 [SC], emphasizing the duty of the Assessing Officer to consider written objections and pass a speaking order. In this case, the Assessing Officer did not follow the procedure outlined in the GKN Driveshafts case. Therefore, the Tribunal was justified in allowing the assessee's appeal on this ground. The Court found no reason to interfere with the Tribunal's decision and dismissed the appeal filed by the revenue, deciding substantial question of law No. 1 against the revenue and in favor of the assessee.In conclusion, the Court dismissed the appeal, upheld the Tribunal's decision, and left the other substantial questions of law open for future consideration.