Reopening quashed as AO did not disposed objection against reopening filed by the assessee.
Background:
• The assessee’s original assessment (AY 2013-14) was framed under section 143(3) r.w.s. 153C in 2016, with additions for alleged bogus LTCG.
• That assessment was quashed by ITAT in 2021.
• Subsequently, the AO issued a notice under section 148 (04.02.2021) to reopen the case under section 147, this time disallowing the purchase cost of shares (Turbo Tech & Gemstone Investment Ltd.).
Key Issue:
• The assessee filed detailed objections to the reopening (10.06.2021), invoking the Supreme Court ruling in GKN Driveshafts (India) Ltd. v. ITO (259 ITR 19).
• The AO did not dispose of these objections before completing reassessment on 23.06.2021.
• This procedural lapse was admitted by the AO in his remand report.
Arguments:
• Assessee: Non-disposal of objections is a jurisdictional defect; relied on Bombay HC in KSS Petron Pvt. Ltd. and Rajasthan HC in Foset (India) Pvt. Ltd..
• Revenue: Relied on Madras HC in Home Finders Housing Ltd., arguing defect could be cured by remand.
Tribunal’s Findings:
• Disposal of objections under GKN Driveshafts is a mandatory jurisdictional requirement, not a mere formality.
• Failure to comply vitiates the assumption of jurisdiction under section 147.
• Bombay HC (KSS Petron) is binding: once jurisdiction is flawed, reassessment cannot be remanded for curing defects.
• Rajasthan HC (Foset India) supports that non-disposal of objections renders reassessment void ab initio.
• Reliance on Home Finders Housing Ltd. rejected, as it is overridden by binding Bombay HC precedent.
Decision:
• The ITAT held the reassessment order dated 23.06.2021 under section 143(3) r.w.s. 147 to be without jurisdiction.
• Notice under section 148 and all subsequent proceedings were quashed.
• Since reassessment was annulled on jurisdictional grounds, merits of additions were not adjudicated.
• Appeal allowed in favour of the assessee.