Invalid Reassessment Order Quashed due to Pending Proceedings

The Tribunal found that initiating reassessment proceedings under Section 147 of the Income Tax Act while proceedings under Section 143(2) were pending was irregular and invalid. The reassessment order was quashed, leading to the appeal being allowed in favor of the assessee. The Tribunal did not address the original ground of confirming the addition of Rs. 1,25,00,000 to the assessee's income due to the jurisdictional error. The appeal was allowed, and the original addition was not adjudicated.

---

---

Issues Involved:
1. Legality of the reassessment proceedings initiated under Section 147 of the Income Tax Act during the pendency of proceedings under Section 143(2).
2. Confirmation of the addition of Rs. 1,25,00,000 to the assessee’s income.

Detailed Analysis:

Issue 1: Legality of the reassessment proceedings initiated under Section 147 during the pendency of proceedings under Section 143(2)
- The primary contention raised by the assessee was that the initiation of reassessment proceedings under Section 147 of the Income Tax Act was without jurisdiction since the proceedings under Section 143(2) were already pending.
- The Tribunal noted that the notice under Section 143(2) was issued on 29.09.2010, and the assessee had replied to the notice on 15.10.2010. Despite this, the Assessing Officer issued a notice under Section 148 on 02.11.2010 without disposing of the notices or passing any order under Section 143(3).
- The Tribunal referenced the decision of the Hon’ble Delhi High Court in KLM Royal Dutch Airlines Vs. ADIT 292 ITR 49 (Del), which held that initiation of proceedings under Section 147 while proceedings under Section 143(2) are pending is irregular and illegal.
- The Tribunal further cited the Supreme Court's decision in Trustees of HEH the Nizam Family Trust Vs. CIT 242 ITR 381, which established that reassessment proceedings cannot be initiated as long as the assessment proceedings on the basis of the return already filed are not terminated.
- Based on these precedents, the Tribunal concluded that the Assessing Officer's action of invoking jurisdiction under Section 147 without completing the original enquiry under Section 143(2) was irregular and invalid. Consequently, the reassessment order was quashed.

Issue 2: Confirmation of the addition of Rs. 1,25,00,000 to the assessee’s income
- Since the Tribunal quashed the reassessment order on the additional ground of jurisdictional error, it did not adjudicate the original ground concerning the confirmation of the addition of Rs. 1,25,00,000 to the assessee’s income.
- The Tribunal's decision to quash the reassessment proceedings rendered the original ground moot, leading to the appeal being allowed in favor of the assessee.

Conclusion:
- The Tribunal admitted the additional ground raised by the assessee regarding the jurisdictional error in initiating reassessment proceedings under Section 147.
- The Tribunal quashed the reassessment order passed by the Assessing Officer as it was deemed irregular and invalid due to the pending proceedings under Section 143(2).
- As a result, the appeal filed by the assessee was allowed, and the original ground concerning the addition of Rs. 1,25,00,000 was not adjudicated.

Order Pronounced:
- The appeal filed by the assessee was allowed, and the order was pronounced in the open court on 08/08/2017.

---