Court invalidates reassessment order for procedural errors, allows petition despite alternative remedy, parties bear own costs.

The court set aside the reassessment order due to failure to dispose of objections as required by law and the use of a different ground than the one in the notice. The court entertained the writ petition despite an alternative remedy being available, citing lack of jurisdiction and breach of natural justice. The parties were left to bear their own costs.

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Issues Involved:
1. Whether the objections filed by the petitioner/assessee to the notice issued for reopening the assessment were disposed of as required by law.
2. Whether the reassessment order was valid given that it was based on a different ground than the one mentioned in the notice issued under Section 148 of the Income Tax Act.
3. Whether the petitioner/assessee should be relegated to an alternative remedy.

Issue-wise Detailed Analysis:

1. Disposal of Objections:
The petitioner/assessee contended that the objections to the notice issued under Section 148 of the Income Tax Act were not disposed of before passing the reassessment order. This contention was supported by the Supreme Court's judgment in GKN Driveshafts (India) Limited V. ITO - 259 ITR 19 (SC), which mandates that objections must be disposed of by passing a speaking order before proceeding with the assessment. The court found that the respondents/Revenue conceded that the objections had not been disposed of, thus violating the legal mandate. Consequently, the reassessment order could not be sustained on this ground alone.

2. Validity of Reassessment Order:
The petitioner/assessee argued that the reassessment order was invalid as it was based on a different ground than the one mentioned in the notice issued under Section 148. Initially, the notice was issued due to a reduction in investments in mutual funds, which was not offered to tax. However, the reassessment order taxed the forfeited share application money under Section 28(iv) of the Act. The court emphasized that Section 147 allows the Assessing Officer to reassess income that has escaped assessment and also any other income discovered during the reassessment proceedings. However, this can only be done if the original ground for reopening the assessment is also assessed. This view was supported by judgments from the Bombay High Court, Gujarat High Court, and Delhi High Court. The court concluded that the reassessment order was invalid as it did not assess the income related to the original ground for reopening the assessment.

3. Alternative Remedy:
The respondents/Revenue argued that the writ petition should not be entertained as an alternative remedy was available under Section 246A of the Act. However, the court noted that it is well-settled that the availability of an alternative remedy does not bar the court from entertaining a writ petition, especially when the challenge is based on the absence of jurisdiction or breach of natural justice principles. Since the impugned order was passed without jurisdiction and without disposing of the objections, the court decided to entertain the writ petition.

Conclusion:
The court set aside the impugned reassessment order on the grounds that the objections were not disposed of as required by law and the reassessment was based on a different ground than the one mentioned in the notice issued under Section 148. The writ petition was disposed of, leaving the parties to bear their own costs.

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