The Mumbai bench of the Income Tax Appellate Tribunal ( ITAT ) quashed the reassessment proceedings because the Assessing Officer (AO) failed to address the assessee’s objections during the proceedings.
The Shipping Corporation of India Limited, (assessee) a leading government-owned shipping entity, filed its return of income for AY 2016-17, declaring total income under normal provisions and book profits under section 115JB of the Income Tax Act, 1961.
The Assessing Officer (AO) selected the return for scrutiny assessment framed an assessment order under section 143(3) and revised the taxable income amounting to Rs. 2,23,10,90,360 under normal provisions of the act
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The AO issued a notice under section 148, seeking to reassess the income, alleging that the return was not properly assessed during the original assessment. The assessee filed objections to the reassessment in response to the notice.
The assessee contended that the reopening was based on a mere change of opinion. The assessee further contended that there was no new material on record to establish that the income was not properly assessed.
Despite these objections filed by the assessee, the AO proceeded with the reassessment proceedings. The assessment order was passed by the AO without disposing the objections filed by the assessee.
Aggrieved by the order the assessee filed an appeal before the Commissioner of Income Tax (Appeals) [CIT(A)]. However, the CIT(A) dismissed the appeal of the assessee. Therefore, the assessee filed an appeal before ITAT.
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The two-member bench comprising Shri Narendra Kumar Billaiya ( Accountant Member ) and Shri Sunil Kumar Singh ( Judicial Member ) observed that there was a procedural lapse by the AO for not disposing of the objections filed by the assessee.
The tribunal observed that the judgment of the Supreme Court in the case of GKN Driveshafts (India) Ltd., when an assessee files objections to reassessment proceedings, the AO is duty-bound to dispose of these objections.
The tribunal observed that the assessment order framed by the AO was without jurisdiction and the order was liable to set aside. The tribunal highlighted the judgments of the jurisdictional courts’ mandates to dispose of objections filed by the assessee.
Therefore, the tribunal quashed the reassessment order framed by the AO. The tribunal also held that the AO had violated the procedural mandate by not addressing the objections before finalizing the reassessment. The appeal of the assessee was allowed.
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