Facts of the Case

The petitioner challenged:

  • Notice dated 30.03.2021 issued under Section 148
  • Assessment order, demand notice, and penalty notice dated 31.03.2022 (AY 2017–18)

The petitioner had:

  • Filed objections dated 17.03.2022 against the “reasons to believe”
  • However, the Assessing Officer did not adjudicate these objections
  • Instead, proceeded directly with assessment and issued demand and penalty notices

Issues Involved

  1. Whether non-disposal of objections filed against Section 148 notice invalidates reassessment proceedings?
  2. Whether the Assessing Officer can proceed with assessment without passing a speaking order on objections?

Petitioner’s Arguments

  • Objections were duly filed on the portal
  • Respondents failed to dispose of objections before proceeding further
  • Such action violates the mandatory procedure laid down by the Supreme Court
  • Entire reassessment proceedings are therefore illegal

Respondent’s Arguments

  • Admitted that objections were not disposed of
  • Contended that sufficient opportunity had been granted to the petitioner
  • Argued that non-disposal of objections was inconsequential

Court Findings / Order

  • The issue is no longer res integra
  • Relied on GKN Driveshafts (India) Ltd. vs ITO

Held:

  • Assessing Officer is mandatorily required to:
    1. Provide reasons
    2. Allow objections
    3. Dispose of objections by a speaking order before proceeding
  • Failure to do so renders proceedings unsustainable

Final Order

  • Assessment order, demand notice, and penalty notice set aside
  • Matter remanded back to Assessing Officer
  • Direction to decide objections within 8 weeks

Important Clarification

  • Disposal of objections is not a procedural formality but a mandatory jurisdictional requirement
  • Even if opportunity is given, non-adjudication of objections vitiates the entire reassessment process
  • Reinforces binding nature of GKN Driveshafts principle

Sections Involved

  • Section 148 – Income Tax Act, 1961 (Reassessment Notice)
  • Principles laid down in GKN Driveshafts (India) Ltd. vs ITO (2003) 1 SCC 72

Link to download the order -https://delhihighcourt.nic.in/app/case_number_pdf/2022:DHC:1655-DB/MMH28042022CW61132022_100613.pdf

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