Combine Diamonds Private Limited Vs ACIT (ITAT Mumbai)
Reopening Quashed – Non-Compliance with GKN Driveshafts Procedure Vitiates Entire Assessment
Assessee’s case was reopened u/s 147 based on hawala purchase information (₹6.19 Cr) received from Investigation Wing. AO completed reassessment making addition of ₹29.35 lakh, which was upheld by CIT(A).
Before ITAT, assessee challenged validity of reopening on ground that mandatory procedure laid down in GKN Driveshafts was violated.
ITAT observed :
- Assessee repeatedly requested reasons for reopening
- AO issued notices u/s 142(1) even before furnishing reasons
- On same day of supplying reasons, AO also issued 143(2) & 142(1) without giving time to file objections
- Thus, no proper opportunity given to object to reopening
ITAT held:
- Procedure in GKN Driveshafts is mandatory, not procedural formality
- AO must:
- Provide reasons
- Allow assessee to file objections
- Dispose objections by speaking order before proceeding further
-
Violation of this sequence renders reopening void ab initio
Rejecting Revenue’s argument that defect is curable, ITAT relied on jurisdictional & other HC rulings holding such violation fatal.
Accordingly:
- Notice u/s 148 quashed
- Entire reassessment order set aside
FULL TEXT OF THE ORDER OF ITAT CHENNAI
This appeal has been preferred by the Assessee against the order dated 13.02.2025 impugned herein passed by the National Faceless Appeal Centre (NFAC), Delhi/Ld. Commissioner of Income Tax (Appeals) [in short “Ld. Commissioner] u/s 250 of the Income Tax Act, 1961 [in short “the Act”] for the A.Y 2009-10.
