Assessment orders declared void, Commissioner's orders quashed due to procedural error under Income Tax Act

The Tribunal declared the assessment orders as void ab initio and quashed them, setting aside the Commissioner's orders as well. The non-disposal of objections challenging the reopening of assessment under section 147 of the Income Tax Act was deemed a crucial procedural error affecting the Assessing Officer's jurisdiction, leading to the invalidation of the assessment orders. The Tribunal allowed the grounds challenging the validity of the reassessment orders, partially allowing the appeals and leaving certain issues for potential future adjudication in subsequent assessment years.

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Issues:
Challenging validity of assessment order under section 143(3) r/w section 147 of the Income Tax Act, 1961 for assessment years 2009-10 and 2010-11.

Analysis:
The appeals were filed by the assessee challenging two separate orders passed by the Commissioner of Income Tax (Appeals) for the assessment years 2009-10 and 2010-11. The grounds raised in both appeals were found to be identical. The assessee challenged the validity of the assessment order passed under section 143(3) r/w section 147 of the Act, raising additional grounds related to lack of proper approval under section 151 of the Act and non-disposal of objections during assessment proceedings. The Tribunal found the additional grounds to be crucial as they were on legal and jurisdictional issues. The Tribunal admitted the additional grounds for adjudication on merit, considering them essential to the main ground challenging the validity of the reassessment order.

The assessee, engaged in the business of manufacturing and trading, filed returns for the mentioned assessment years. The Assessing Officer reopened the assessments under section 147 of the Act based on information indicating bogus expenses. The assessee objected to the reopening, but the objections were not disposed of before completing the assessment. The Commissioner (Appeals) ruled against the assessee, leading to the appeal. The Tribunal noted that the Assessing Officer's failure to dispose of objections challenging the reopening of assessment under section 147 of the Act was a crucial procedural error. Citing legal precedents, including decisions by the Supreme Court and High Courts, the Tribunal held that non-disposal of such objections affects the jurisdiction of the Assessing Officer. Consequently, the Tribunal declared the assessment orders as void ab initio and quashed them, setting aside the Commissioner's orders as well.

The Tribunal found the non-disposal of objections by the Assessing Officer to be a jurisdictional issue rather than a mere procedural lapse, rendering the assessment orders void. As a result, the Tribunal allowed the grounds challenging the validity of the reassessment orders and set aside the assessment orders and the Commissioner's orders. The other propositions raised by the assessee were deemed of academic importance and not required to be adjudicated upon. The Tribunal partly allowed the appeals, with certain issues left open for future adjudication if they arise in subsequent assessment years.

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