Failure to Dispose Objections Before Assessment: ITAT Rules Reassessment Proceedings Void [Read Order]

Anita Jha (assessee) faced reassessment proceedings initiated by the AO. The AO recorded reasons for reopening the assessment and provided them to the assessee upon request. The assessee raised several objections to the reopening, filed through the e-portal with an acknowledgment.

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The AO passed the assessment order without disposing of the assessee’s objections. Aggrieved by the AO’s order, the assessee approached the Commissioner of Income Tax (Appeals) [CIT(A)]. The objections were only addressed, during the appellate proceedings the CIT(A). The CIT(A) upheld the AO’s order.

Aggrieved by the CIT(A)’s order, the assessee filed an appeal before the ITAT. The Counsel argued that the AO’s failure to dispose of objections before passing the assessment order violated the mandatory procedure outlined in Section 148 and the Supreme Court’s ruling in CIT v. Kelvinator of India Ltd.

The Counsel for the Revenue contended that no evidence was provided by the assessee to prove objections were raised before the AO. The counsel of the Revenue also relied on the CIT(A)’s findings.

The two-member bench, comprising Vikas Awasthy (Judicial Member) and S. Rifaur Rahman (Accountant Member), observed that the assessee had filed objections via the e-portal. It also observed that no record showed the AO disposing of these before the assessment order.

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The bench noted the AO’s disposal of objections, as reproduced in the CIT(A)’s order, which occurred after the assessment. It also observed that it was an attempt to rectify the procedural lapse during appellate proceedings.

The Tribunal held that the AO’s failure to dispose of objections before initiating reassessment proceedings contravened the Supreme Court’s directive in Kelvinator of India Ltd., which mandates addressing objections prior to assessment.

The bench held that this procedural violation rendered the reassessment proceedings bad in law and void ab initio. It set aside the reassessment order. The appeal of the assessee was allowed.

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