AO must issue Speaking Orders Against Assessee’s Written Objections: Calcutta HC Upholds ITAT Order [Read Order]

The Calcutta High Court recently affirmed an ITAT ruling that removed an assessee’s income addition of more than ₹4 crore made in a reassessment proceeding under the Income Tax Act, 1961. The Assessing Officer (AO) must give oral directions in response to the assessee’s written objections, the court said.

Revenue’s appeal against the ITAT’s decision to grant the assessee’s appeal and revoke the assessment order under Section 147 for failing to address the assessee’s objections was before the Court. The ITAT had referenced the ruling in M/s. Home Finders Housing Limited vs. The Income Tax Officer (2017) by the Madras High Court, which reversed the reassessment judgment and returned the case to the AO for failing to issue a speaking order on the assessee’s objections.

A division bench of Chief Justice TS Sivagnanam and Justice Bivas Pattanayak held that the Assessing Officer had erred in not disposing of the written objection submitted by the assessee against the reopening of the assessment.

Become PF & ESIC Pro: Basic to Advance Course – Enroll Today

Read More: Income Tax Act, 1961 v/s Income Tax Bill 2025: Key Provision Changes

It was viewed  that the assessing officer is in charge of issuing a spoken order and resolving the assessee’s written objections to the planned reopening. Since the Income Tax Act of 1961 offers no other option, the assessee may challenge the order by filing a writ petition if it is unfavorable to them.

The Supreme Court established the process for handling objections made against a reassessment notice in GKN Driveshafts [India] Ltd. vs. ITO (2003), which the High Court cited. According to the ruling, the assessee should file his return and, if he so chooses, inquire as to why he was sent the notice under Section 148 of the Income Tax Act.

The assessing officer is then required to provide justifications in a fair amount of time. The Apex  Court ruled that the assessee has the right to object to the notice being issued after receiving reasons, and the assessing officer must address the objections by issuing a spoken order.

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates