Appeal allowed due to Assessing Officer's error in not addressing preliminary objections separately.

The tribunal allowed the appeal, quashing the reassessment order due to the Assessing Officer's failure to dispose of preliminary objections separately, rendering the proceedings void. As a result, the tribunal did not address the other grounds on merits.

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Issues Involved:
1. Breach of principles of natural justice
2. Validity and legality of the reassessment order
3. Addition of Rs. 25,43,725/- as unexplained cash
4. Addition of Rs. 1,33,545/- as unexplained expenses

Issue-wise Detailed Analysis:

1. Breach of Principles of Natural Justice:
The assessee contended that the Learned Commissioner of Income Tax (Appeals) - 48, Mumbai (Ld. CIT(A)) erred by not granting proper, sufficient, and adequate opportunity of being heard. This was argued to be a breach of the principles of natural justice, rendering the assessment framed illegal and without application of mind to the factual and legal aspects involved in the appeal.

2. Validity and Legality of the Reassessment Order:
The reassessment order was challenged on the grounds of being bad in law and without jurisdiction. The assessee's counsel argued that the Assessing Officer (AO) ignored the mandatory requirement of disposing of objections raised by the assessee for reopening the assessment under Section 147 of the Act. The counsel referred to the re-assessment order where it was stated that the assessee never submitted any objections, which was contrary to the record. The assessee had made elaborate submissions and preliminary objections which were never disposed of by the AO, thus rendering the assessment order bad in law.

The tribunal noted that the AO issued a notice under Section 148 dated 25.02.2016 for reopening the assessment and also issued a notice under Section 143(2) calling for details and objections. The assessee submitted detailed preliminary objections for reopening of assessment, which were not disposed of by the AO before framing the assessment. This failure to dispose of preliminary objections by a separate order was held as non-compliance with the decision of the Hon'ble Supreme Court in GKN Driveshafts (India) Ltd. v. ITO and the Hon'ble Bombay High Court in KSS Petron Pvt. Ltd. v. ACIT.

The tribunal quashed the reassessment order, following the precedent that the AO must pass a separate order disposing of the preliminary objections before proceeding with the assessment.

3. Addition of Rs. 25,43,725/- as Unexplained Cash:
The Ld. CIT(A) confirmed the AO's action of making an addition of Rs. 25,43,725/- as unexplained cash, which was claimed by the appellant as a term capital gain. The assessee argued that this addition was based on surmises, suspicion, and conjecture, taking into account irrelevant considerations, and ignoring relevant material and considerations submitted by the appellant. The tribunal did not delve into the merits of this issue as the reassessment order itself was quashed.

4. Addition of Rs. 1,33,545/- as Unexplained Expenses:
Similarly, the Ld. CIT(A) confirmed the AO's action of making an addition of Rs. 1,33,545/- as alleged estimated unexplained expenses. The assessee contended that no such addition was called for and that the computation was arbitrary and excessive. Again, the tribunal refrained from addressing this issue on merits due to the quashing of the reassessment order.

Conclusion:
The tribunal allowed the appeal of the assessee, quashing the reassessment order due to the AO's failure to dispose of the preliminary objections by a separate order, rendering the reassessment proceedings void. Consequently, the tribunal did not address the other grounds and contentions on merits, as it became an academic exercise. The order was pronounced on 08.12.2020.

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