Ashish Gems v. ACIT

Case snapshot

Sections / provisions: 147; 148

Questions before the Court / Tribunal

• Reassessment; disposal of objections by speaking order: The reported ruling concerns reassessment proceedings where objections to reopening were not disposed of through a proper speaking order. The procedural defect was treated as material to the validity of the reassessment.

Material facts and background

The brief facts of the case are that the assessee had filed the return by

declaring income Rs. 1,24,07,629/-. The case was re-opened u/s. 147 of the Act and issued the notice u/s. 148 dated 13.03.2019 after recording the reasons and taking prior approval from the authority. In response to the notice u/s. 148, the assessee filed the return on dated 20.03.2019 and declaring total income Rs. 1,24,07,629/-. The assessee filed the objection before the Ld. AO related to the recorded reason supplied by the Ld. AO to the assessee. But finally the assessment was completed with an addition u/s. 69C amount to Rs. 2,39,91,088/- without disposal of the objection filed by the assessee . The aggrieved assessee filed an appeal before the Ld. CIT(A) by challenging both the legal grounds as well as on merit. But the Ld. CIT(A) rejected the appeal of the assessee and upheld the order of the Ld. AO. Being aggrieved, assessee filed an appeal before us. 3.

The Ld. AR filed the paper book comprising pages 1 to 57, which have been

taken on record. The Ld. AR raised an additional ground challenging the assumption of jurisdiction under Section 148 of the Act on the ground that the Ld. AO completed the reassessment without first disposing of the objections filed by the assessee against the recorded reasons for reopening under Section 147 of the Act. It was contended that the action of the Ld. AO in framing the assessment under Section 148 without adjudicating and disposing of the assessee's objections is contrary to the law laid down by the Hon'ble Supreme Court in GKN Driveshafts (India) Ltd. v. ITO reported in (2002) 125 Taxman 963 (SC).The Ld.AR placed that the Ld.AO in the present case has failed to follow the 2

directions laid down by the Hon’ble Apex Court, which makes the entire reassessment proceedings void and, therefore, is liable to be quashed. 4.

Ld. AR submitted the list of dates & events which are as follows:-

Notice issued under section 148 of the 13.03.2019

Appellant / assessee submissions

The Ld. AR filed the paper book comprising pages 1 to 57, which have been

taken on record. The Ld. AR raised an additional ground challenging the assumption of jurisdiction under Section 148 of the Act on the ground that the Ld. AO completed the reassessment without first disposing of the objections filed by the assessee against the recorded reasons for reopening under Section 147 of the Act. It was contended that the action of the Ld. AO in framing the assessment under Section 148 without adjudicating and disposing of the assessee's objections is contrary to the law laid down by the Hon'ble Supreme Court in GKN Driveshafts (India) Ltd. v. ITO reported in (2002) 125 Taxman 963 (SC).The Ld.AR placed that the Ld.AO in the present case has failed to follow the 2

Ld. AR submitted the list of dates & events which are as follows:-

Ld. AR contended that without disposing objection of the assessee, assessment under section 148 of the Act is vitiated entire proceedings. Ld. AR respectfully relied on the order of Hon'ble Bombay High Court in the case of KSS Petron Private Limited (ITA No. 224 of 2014 order dated 3.10.2016). Relevant paragraph 7 to 9 is reproduced below :“7. On further Appeal, the Tribunal passed the impugned order. By the impugned order it held that the Assessing Officer was not justified in finalizing the Assessment, without having first disposed of the objections of the appellant. This impugned order holds the Assessing Officer is obliged to do in terms of the Apex Court's decision in GKN Driveshafts (India) Ltd., v/s. ITO 259 ITR 19. In the aforesaid circumstances, the order of the CIT(A) and the Assessing Officer werequashed and set aside. However, after having set aside the orders, it restored the Assessment to the Assessing Officer to pass fresh order after disposing of the objections to re-opening notice dated 28th March, 2008, in accordance with law. 8. We note that once the impugned order finds the Assessment Order is without jurisdiction as the law laid down by the Apex Court in GKN...

The Ld. AR contended that the identical fact is duly adjudicated by

Revenue / respondent submissions

The Ld. DR supported the orders of the revenue authorities. However,

the Ld. DR did not controvert the submissions advanced by the Ld. AR by placing any contrary facts or material on record.

record, and carefully considered the judicial precedents relied upon by the parties. The additional grounds raised by the assessee challenge the very assumption of jurisdiction by the Ld. AO and arise from the facts already available on record. Since no fresh investigation of facts is required, the additional grounds are admitted for adjudication. The short issue for our consideration is whether the reassessment framed under Section 147 read with Section 143(3) of the Act is legally sustainable when the objections filed by the assessee against the recorded reasons for reopening were not disposed of by way of a separate speaking order before completion of the reassessment. The chronology of events placed on record shows that the notice under Section 148 of the Act was issued on 13.03.2019, the assessee filed objections to the recorded reasons on 30.09.2019 by the letter dated 24/09/2019, and thereafter the Ld. AO proceeded to issue the final show-cause notice dated 23.09.2019 without first passing a separate speaking order disposing of such objections. Though the Ld. DR contended that the objections were duly considered during the reassessment proceedings and that the show-cause...

Court / Tribunal analysis and reasoning

Ld. AR contended that without disposing objection of the assessee, assessment under section 148 of the Act is vitiated entire proceedings. Ld. AR respectfully relied on the order of Hon'ble Bombay High Court in the case of KSS Petron Private Limited (ITA No. 224 of 2014 order dated 3.10.2016). Relevant paragraph 7 to 9 is reproduced below :“7. On further Appeal, the Tribunal passed the impugned order. By the impugned order it held that the Assessing Officer was not justified in finalizing the Assessment, without having first disposed of the objections of the appellant. This impugned order holds the Assessing Officer is obliged to do in terms of the Apex Court's decision in GKN Driveshafts (India) Ltd., v/s. ITO 259 ITR 19. In the aforesaid circumstances, the order of the CIT(A) and the Assessing Officer werequashed and set aside. However, after having set aside the orders, it restored the Assessment to the Assessing Officer to pass fresh order after disposing of the objections to re-opening notice dated 28th March, 2008, in accordance with law. 8. We note that once the impugned order finds the Assessment Order is without jurisdiction as the law laid down by the Apex Court in GKN...

14. Admittedly, in the instant case, this has not been done by the respondent, but the respondent seeks to sustain the impugned assessment order stating that in the first few paragraphs of the order, he has dealt with objections and disposed of accordingly. Unfortunately, the manner in which the respondent has decided the issue is wholly unsustainable in law. The purpose for passing a separate speaking order on the objections is with a view to afford an opportunity to the assessee to question such an order, if he is aggrieved. The respondent by passing the impugned order has taken away such valuable right from the petitioner inasmuch as the impugned proceedings is an order of assessment under Section 143(3) of the Act. Therefore, if an order of assessment has to be challenged, necessarily an appeal has to be preferred and only in rarest of rare case, Courts would entertain challenge to assessment orders in writ proceedings. Thus, the procedure adopted by the respondent is completely flawed, which goes to the root of the matter, thereby, vitiates the entire proceedings. 15. In somewhat similar circumstances, the Division Bench of the Bombay High Court in KSS Petron (P.) Lid...

in GKN Driveshafts (India) Ltd. (supra), as followed by the Hon'ble Bombay High Court in KSS Petron Pvt. Ltd. (supra) and the Hon'ble Madras High Court in Jayanthi Natarajan (supra), we hold that the reassessment order passed by the Ld. AO is vitiated in law for non-compliance with the mandatory procedure governing reassessment proceedings.

Operative decision and relief

Ld. AR contended that without disposing objection of the assessee, assessment under section 148 of the Act is vitiated entire proceedings. Ld. AR respectfully relied on the order of Hon'ble Bombay High Court in the case of KSS Petron Private Limited (ITA No. 224 of 2014 order dated 3.10.2016). Relevant paragraph 7 to 9 is reproduced below :“7. On further Appeal, the Tribunal passed the impugned order. By the impugned order it held that the Assessing Officer was not justified in finalizing the Assessment, without having first disposed of the objections of the appellant. This impugned order holds the Assessing Officer is obliged to do in terms of the Apex Court's decision in GKN Driveshafts (India) Ltd., v/s. ITO 259 ITR 19. In the aforesaid circumstances, the order of the CIT(A) and the Assessing Officer werequashed and set aside. However, after having set aside the orders, it restored the Assessment to the Assessing Officer to pass fresh order after disposing of the objections to re-opening notice dated 28th March, 2008, in accordance with law. 8. We note that once the impugned order finds the Assessment Order is without jurisdiction as the law laid down by the Apex Court in GKN...

Authorities and precedents appearing in the judgment

• Court in GKN Driveshafts (India) Ltd. v. ITO reported in (2002) 125 Taxman 963
• Madras High Court in the case of Jayanthi Natarajan vs. ACIT reported

This list is machine-assisted from the judgment text and is not a substitute for checking the full citation chain in the PDF.

Ratio and legal principle

The decision turns on Reassessment; disposal of objections by speaking order. The operative result is classified as Quashed Or Set Aside. Read the rule only with the statutory version, factual findings and precedent chain recorded in the full judgment.

Why this judgment matters

The case is relevant to taxpayers, advisers and litigators dealing with Reassessment; disposal of objections by speaking order. Its practical value lies in the interaction between the statutory text, the evidentiary record and the procedural route followed in this case.

Practitioner action points

• Reconstruct the reassessment timeline: original assessment, section 148A notice/reply, approval authority, notice date and the applicable section 149 limitation window.
• Preserve the complete response to section 148A(b), objections and proof of disposal; jurisdictional defects are often decided from the documentary chronology.
• For litigation, attach the full judgment/order to the working paper and cite the paragraph/page supporting the proposition rather than relying on a headnote alone.

Full judgment and source trail

Read / download the clean local judgment copy

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