Reassessment initiated during pending scrutiny breaches jurisdiction; reassessment quashed where objections to reopening were not decided.

Reopening and reassessment under section 147/148 issued while the original scrutiny assessment under section 143(3) remained pending, and where the assessee's statutory objections to reopening were not decided, are procedurally invalid. The Tribunal treated concurrent pursuit of original and reassessment proceedings as a jurisdictional defect, applied the principle that objections to reopening must be disposed of before completing reassessment, and concluded that the reassessment order was without jurisdiction and therefore quashed, resulting in relief to the assessee.

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Issues: Whether reassessment proceedings under section 147/148 of the Income-tax Act, 1961 initiated and completed during the pendency of regular scrutiny assessment under section 143(3) (and without deciding the assessee's objections to reopening) are valid.

Analysis: The Tribunal examined the assessment order and record and found that notice under section 148 was issued during pendency of proceedings under section 143(3). The reasons recorded for reopening formed the basis of the final assessment order and the assessing officer admitted in the remand report that objections filed by the assessee against reopening were not disposed of. The Tribunal reviewed binding authority holding that two concurrent assessment proceedings cannot lawfully be pursued and that reassessment under section 147/148 cannot be initiated while the original scrutiny assessment remains pending. The Tribunal considered the departmental plea of "merging streams" and noted that the existence of a notice under section 148 together with the AO's admission that objections were not decided establishes that reassessment was in fact proceeded with; this gave rise to a jurisdictional defect. The Tribunal also applied the principle that assessment completed without deciding statutory objections to reopening violates the requirement in GKN Driveshafts (India) Ltd. and renders the reassessment invalid. Having found both initiation of reassessment during pending scrutiny assessment and failure to decide objections, the Tribunal held the reassessment order to be without jurisdiction and procedurally flawed.

Conclusion: The reassessment proceedings and the assessment order dated 28.03.2013 under section 147/148 read with section 143(3) are quashed; decision is in favour of the assessee.

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