Facts of the Case

The petitioner, Kamdhenu Enterprises Ltd., filed the present writ petition challenging reassessment proceedings initiated by the Income Tax Department. The challenge included notice dated 15 May 2020 issued under Section 148, a subsequent notice dated 07 June 2021 for the same assessment year, and the assessment order dated 30 March 2022 along with consequential demand and penalty notices.

It was contended that two reassessment notices had been issued for the same assessment year and that the assessment order was passed without disposing of objections filed by the petitioner. Further, reliance was placed on a third-party statement which was not provided to the petitioner in a timely manner.

Issues Involved

  1. Whether multiple reassessment notices under Section 148 can be issued for the same assessment year during the pendency of earlier reassessment proceedings.
  2. Whether passing an assessment order without disposing of objections violates settled legal principles.
  3. Whether failure to provide adequate opportunity to respond to relied-upon material violates principles of natural justice.

Petitioner’s Arguments

  • Two reassessment notices were issued for the same assessment year, which is impermissible in law.
  • The first notice was issued by a non-jurisdictional Assessing Officer, and alternatively, simultaneous reassessment proceedings are not allowed.
  • The assessment order was passed without disposing of objections, contrary to the law laid down in GKN Driveshafts (India) Ltd. vs ITO.
  • The statement relied upon by the Assessing Officer was not furnished in a timely manner, depriving the petitioner of a fair opportunity to respond.

Respondent’s Arguments

  • The initial notice was issued by the Assessing Officer having jurisdiction at the relevant time.
  • The reassessment notices were based on the same information.
  • There was no violation of natural justice as an opportunity of hearing was provided through video conferencing.

Court Findings / Order

1. Multiple Reassessment Notices Not Permissible

The Court held that issuance of a second reassessment notice during the pendency of earlier reassessment proceedings for the same assessment year is impermissible in law.

2. Reliance on Precedents

The Court relied on:

  • CIT v. Sanjay Kumar Garg
  • S.B. Jain v. Mahendra (SC)
  • Nilofer Hameed v. ITO

These judgments affirm that fresh reassessment cannot be initiated when earlier proceedings are still pending.

3. Non-Disposal of Objections Invalidates Assessment

The Court reiterated that objections must be disposed of before passing an assessment order, as mandated in GKN Driveshafts (India) Ltd.

4. Violation of Natural Justice

Failure to provide adequate opportunity to respond to material relied upon (statement of third party) amounted to violation of natural justice.

Final Order

  • Second reassessment notice dated 07 June 2021 and consequential notices were quashed.
  • Assessment order dated 30 March 2022 along with demand and penalty notices were also quashed.
  • Matter remanded back to the Assessing Officer for fresh decision after disposing of objections in accordance with law.

Important Clarification by Court

  • Reassessment proceedings cannot be duplicated for the same assessment year.
  • Disposal of objections is a mandatory procedural requirement.
  • Adequate opportunity must be given to the assessee to rebut evidence relied upon by the department.

Sections Involved

  • Section 148 of the Income Tax Act, 1961
  • Section 271(1)(c) of the Income Tax Act, 1961

Link to download the order -https://delhihighcourt.nic.in/app/showFileJudgment/MMH27102022CW85892022_182410.pdf

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