2016 (2) TMI 469 - HC - Income Tax

Court sets aside reassessment order for AY 2010-11, emphasizing need to address objections before passing assessment orders.

M/s MSPL Gases Ltd. Versus The Deputy Commissioner Of Income Tax-1 (2) (2) And Others

The court set aside the reassessment order for AY 2010-11 due to the failure to address objections raised by the petitioner to the reopening notice. The ... Reopening of assessment - non disposing of the objections to the reasons recorded for reopening - Held that:- It is accepted by the Revenue that passing of an assessment order without disposing of the objections to the reasons recorded in support of the reopening notice, is an order without jurisdiction being in defiance of the Apex Court's decision in GKN Driveshafts (India) Ltd (2002 (11) TMI 7 - SUPREME Court ). Therefore, we set aside the order dated 3rd February, 2015 passed on reassessment for the A.Y. 2010-11. - Decided in favour of assessee. Issues:Challenge to notice seeking to reopen assessment for AY 2010-11 under Section 148 of the Income Tax Act.Order passed under Section 143(3) read with Section 147 of the Act for AY 2010-11 without disposing of objections to reopening notice.Analysis:The judgment concerns a petition under Article 226 challenging a notice seeking to reopen assessment for AY 2010-11 under Section 148 of the Income Tax Act. The Assessing Officer had passed an assessment order without addressing the objections raised by the petitioner to the reopening notice, contravening the Supreme Court's directive in GKN Driveshafts (India) Ltd v/s Income Tax Officer and Others. The court noted the Revenue's acceptance that the order passed was without jurisdiction and should be set aside. This raised concerns about the recurring issue of orders being passed without addressing objections, leading to unnecessary harassment for taxpayers.Upon effective hearing, the Revenue acknowledged the order's lack of jurisdiction and agreed to set it aside. The Principal Commissioner of Income Tax and Commissioner of Income Tax(Judicial) conceded the order's illegality and pledged to prevent such errors in the future. The court adjourned the case to allow the authorities to devise a mechanism to avoid similar injustices. Subsequently, the Commissioner of Income Tax set aside the order and directed reassessment proceedings after disposing of the objections, as per Section 264 of the Act.Despite expectations of a mechanism to prevent such errors, no concrete steps were taken by the Revenue. The court expressed disappointment at the lack of effort to address the recurring issue. Eventually, the Revenue withdrew the order passed under Section 264, leading to the court setting aside the reassessment order for AY 2010-11. The judgment emphasized the importance of addressing objections before passing assessment orders, as mandated by the Apex Court's decision in GKN Driveshafts (India) Ltd.In conclusion, the court made the rule absolute, setting aside the reassessment order for AY 2010-11 due to the failure to address objections, without imposing any costs.