Amish Anantrai Modi Vs DCIT (ITAT Mumbai)
Reassessment Quashed for Non-Disposal of Objections: GKN Driveshafts Violation Is Jurisdictional, Not Curable — ITAT Mumbai
The Mumbai ITAT (“A” Bench) allowed the appeal of the assessee for AY 2013-14 and quashed the reassessment proceedings in entirety, holding that failure to dispose of objections to reopening before completing reassessment is a fatal jurisdictional defect.
The assessee’s original assessment, earlier framed under section 143(3) r.w.s. 153C and involving alleged bogus LTCG, had already been quashed by the Tribunal in the first round. Thereafter, the Assessing Officer initiated reassessment proceedings under section 147, this time shifting the basis of addition to disallowance of purchase cost of shares—an approach the assessee characterised as an indirect attempt to revive an annulled assessment.
Upon receipt of reasons recorded, the assessee duly filed detailed objections in accordance with the procedure laid down by the Supreme Court in GKN Driveshafts (India) Ltd. v. ITO. However, it was an admitted position, even as per the AO’s remand report, that these objections were never disposed of by a speaking order before completion of reassessment. Despite this, the AO proceeded to pass the reassessment order making additions towards alleged unexplained purchase cost of shares.
The Tribunal held that compliance with GKN Driveshafts is not a procedural formality but a mandatory jurisdictional discipline, non-observance of which strikes at the very authority of the AO to proceed under section 147. Relying on the binding judgment of the Bombay High Court in KSS Petron Pvt. Ltd. v. ACIT and the Rajasthan High Court decision in Foset (India) Pvt. Ltd., the ITAT held that such a defect is not curable by remand and that once jurisdiction is found to be lacking, the only permissible course is annulment of proceedings.
The Tribunal expressly rejected the Revenue’s plea for restoration to the AO and held that permitting remand would dilute jurisdictional safeguards and legitimise void proceedings. Consequently, the notice under section 148, the reassessment order, and all consequential proceedings were quashed, without examining the merits of additions. The appeal was allowed in full.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
