Invalid Reassessment Proceedings Quashed by Tribunal for Procedural Lapses

The Tribunal found the reassessment proceedings initiated by the Assessing Officer to be invalid due to lack of tangible material and procedural lapses in disposing of objections raised by the assessee. Consequently, the Tribunal quashed the initiation of reassessment proceedings and allowed the appeals filed by the assessee in ITA Nos. 1728, 1729, 1730, 1731, and 1732/Kol/2018. The order was pronounced in open court on 19/02/2020.

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Issues Involved:
1. Validity of notice under Section 148 and proceedings under Section 147 of the Income Tax Act.
2. Validity of reassessment proceedings and the reasons recorded by the Assessing Officer.
3. Procedural lapses in disposing of objections raised by the assessee.

Issue-wise Detailed Analysis:

1. Validity of Notice Under Section 148 and Proceedings Under Section 147 of the Income Tax Act:
The assessee challenged the validity of the notice issued under Section 148 and the reassessment proceedings under Section 147, claiming they were void ab initio, wrong, illegal, and time-barred. The assessee argued that the proceedings were initiated without the Assessing Officer having a reasonable belief of income escapement, and that the notice was issued for verification purposes, which is not permissible under the law. The Tribunal found that the reasons recorded by the Assessing Officer were vague and intended for verification, which is not a valid ground for reopening an assessment. The Tribunal also noted that the Assessing Officer failed to follow the set principles of law and did not dispose of the preliminary objections raised by the assessee.

2. Validity of Reassessment Proceedings and the Reasons Recorded by the Assessing Officer:
The Tribunal analyzed the reasons recorded by the Assessing Officer, which were based on information from the Enforcement Directorate regarding high-value transactions and foreign investments. The Tribunal observed that the reasons recorded were for verification purposes and lacked tangible material to support the belief that income had escaped assessment. The Tribunal cited the Supreme Court's decision in Kelvinator of India Ltd. v. CIT, which held that reassessment must be based on tangible material and not on mere change of opinion. The Tribunal concluded that the reasons recorded by the Assessing Officer were not valid, as they were based on suspicion and intended for verification, which is not permissible under Section 147.

3. Procedural Lapses in Disposing of Objections Raised by the Assessee:
The Tribunal noted that the Assessing Officer did not dispose of the objections raised by the assessee by passing a speaking order, as required by the Supreme Court's decision in GKN Driveshafts (India) Ltd. v. ITO. The Tribunal emphasized that the Assessing Officer must dispose of the objections by passing a speaking order before proceeding with the reassessment. The failure to do so rendered the reassessment proceedings null and void.

Conclusion:
The Tribunal concluded that the reassessment proceedings initiated by the Assessing Officer were invalid due to the lack of tangible material and the procedural lapses in disposing of the assessee's objections. The Tribunal quashed the initiation of reassessment proceedings and allowed the appeals filed by the assessee.

Order Pronouncement:
The appeals filed by the assessee in ITA Nos. 1728, 1729, 1730, 1731, and 1732/Kol/2018 were allowed, and the order was pronounced in the open court on 19/02/2020.

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