Reassessment Quashed for Violating 4-Week Cooling-Off Period After Disposal of Objections – ITAT Pune Follows Asian Paints

Pinnacle Constro and Ecohomes Pvt. Ltd. Vs ACIT (ITAT Pune)

Reassessment Quashed for Violating 4-Week Cooling-Off Period After Disposal of Objections – ITAT Pune Follows Asian Paints

The Pune ITAT quashed a reassessment order holding that the Assessing Officer violated the binding principle laid down by the Bombay High Court that, after rejecting an assessee’s objections to reopening, the AO must wait at least four weeks before proceeding further with the reassessment.

The assessee’s case was reopened under section 147 based on information received from independent sources. After receiving the reasons for reopening, the assessee filed objections which were disposed of by the Assessing Officer on 29.11.2019. However, the reassessment order under sections 143(3) read with 147 was passed on 16.12.2019, i.e., before expiry of four weeks from the date of disposal of objections.

Before the Tribunal, the assessee relied on the Bombay High Court decisions in Asian Paints Ltd. v. DCIT and Bharat Jayantilal Patel v. Union of India, which mandate that where objections to reopening are rejected, the Assessing Officer cannot proceed further for a period of four weeks, thereby enabling the assessee to seek appropriate legal remedies.

The Tribunal noted that an identical issue had recently been decided by the Pune Bench in Pramod Manikchand Dugad, where reassessment proceedings were quashed for the same procedural violation. Applying the ratio of the Bombay High Court judgments, the ITAT held that the Assessing Officer failed to adhere to the mandatory waiting period after disposal of objections and therefore the reassessment proceedings were invalid in law.

Accordingly, the reassessment order was quashed in its entirety. Since the legal ground itself succeeded, the Tribunal did not consider the merits relating to the disallowance of interest, holding those grounds to be academic and infructuous

FULL TEXT OF THE ORDER OF ITAT PUNE

This appeal at the instance of the assessee is directed against the order of Ld. Commissioner of Income Tax (Appeals)/NFAC, Delhi [“CIT(A)”] dated 14/10/2025 passed under section 250 of the Income Tax Act, 1961 (“Act”) which is arising out of assessment order dated 16.12.2019 passed u/s. 143(3) r.w.s. 147 of the Act by the ACIT, Circle-2, Pune for the Assessment Year (AY) 2012-13.

2. The assessee has raised 07 grounds of appeal raising various legal issues and also on merits of the case challenging the disallowance of interest made by the Assessing Officer.

3. We, however, with the consent of the both the sides, first take up the legal issue raised by the assessee challenging the validity of re-assessment order on the ground that Ld.AO has passed the assessment order in a period less than 04 weeks from the date of disposing of assessee’s objections raised against the reasons recorded for issuing notice u/s. 148 of the Act.

4. At the outset, learned counsel for the assessee submitted that under the given facts the case of the assessee is squarely covered by the judgments of Hon’ble Jurisdictional High Court in the case of Bharat Jayantilal Patel v. Union of India (2015) 378 ITR 596 (Bom-HC) and Asian Paints Ltd. vs. DCIT (2008) 296 ITR 90 (Bom-HC) and also relied on the latest decision of this Tribunal in the case of Pramod Manikchand Dugad vs. ITO (ITA No. 27/PUN/2025, dt. 30.05.2025).

5. On the other hand, Ld. Departmental Representative (DR) vehemently argued supporting the order of Ld. CIT(A).

6. We have heard rival contentions and perused the records placed before us. We observe that assessee is a limited company and declared loss of ₹ 48,02,235/- in the return of income for A.Y. 2012-13 filed on 29.09.2012.  assessment u/s. 143(3) of the Act completed on 27.03.2015 determining total loss at ₹ 44,49,435/-. Based on certain information received by the Ld.AO from independent sources, a notice u/s. 148 of the Act issued on 12.10.2018 duly served upon the assessee. In response, assessee furnished return of income on 03.11.2018 declaring loss of ₹56,22,498/- The assessee raised objection to the notice issued u/s. 148 of the Act vide letter dated 11.07.2019 and the Ld.AO disposed of the objection by passing a speaking order dated 26.08.2019. Thereafter, notice u/s. 142(1) of the Act dated 09.09.2019 was issued. Subsequently, due to change of incumbent, a fresh notice u/s. 142(1) of the Act was issued on 13.11.2019. Assessee again raised objections against reopening vide letter dated 25.11.2019 and the same was disposed of on 29.11.2019. Thereafter, re-assessment order u/s. 143(3) r.w.s. 147 of the Act has been passed on 16.12.2019.

7. The grievance of the assessee is that after disposal of the assessee’s last objection dated 29.11.2019, Ld.AO should have given at least 04 weeks time before passing the assessment order in the light of the ratio laid down by the Hon’ble Jurisdictional High Court in the case of Asian Paints Ltd. (supra). Admittedly, the Ld.AO has passed the assessment order before expiry of four weeks from the date of disposing of the last objection raised by the assessee. Under these given facts, the validity of the assessment proceedings has been challenged. We note that similar issue came up before this Tribunal in the case of Pramod Manikchand Dugad (supra) wherein this Tribunal placing reliance on the judgment of Hon’ble Jurisdictional High Court in the case of Asian Paints Ltd. (supra) quashed the re-assessment proceedings observing as follows:-

“4. We have heard rival contentions and perused the records placed before us. We observe that the assessee filed return of income u/s 139(1) on 24.10.2017 declaring income of Rs.24,29,600/-. Subsequently, the case of the assessee was reopened on the basis of information about the alleged deposit of cash during the demonetization period. Notice u/s 148 of the Act was issued on 30.03.2021 and in reply the assessee furnished the return on 30.06.2021 declaring same income of Rs.24,29,600/-. Thereafter, the case assigned to the Faceless Unit on 11.11.2021 for disposal of assessment followed by validly serving notices u/s 143(2) and 142(1) of the Act. During the course of assessment proceedings, the assessee asked for reasons recorded and objected to the reopening of the case vide letter dated 01.03.2022 to which the objections were disposed of on 08.03.2022. Again on 10.03.2022 some other documents were asked by the assessee and objected for reopening. However, since the Ld. FAO has already disposed of one objection, he did not found the second objection as untenable and dispose off vide notice dated 16.03.2022. Before us, Ld. Counsel for the assessee referred to the judgment of Hon’ble Jurisdictional High Court in the case of Asian Paint Ltd. (supra) wherein Hon’ble Court has held that “if the Assessing Officer does not accept the objections so filed, he shall not proceed further in the matter within a period of four weeks from the date of receipt of service of the said order on objections, on the assessee. Accordingly rule is made absolute”. Examining the facts of the instant case in the light of above judgement of the Hon’ble Jurisdictional High Court in the case of Asian Paint Ld. (supra), we notice that the Ld. FAO disposed of the objection vide notice dated 16.03.2022 but he has concluded assessment proceedings on 24.03.2022 i.e. within a period less than four weeks. Therefore, since the assessment order has been framed in less than four weeks from the date of disposing of both the objections on 08.03.2022 & 16.03.2022, case of the assessee stands squarely covered by the judgment of Hon’ble Jurisdictional High Court in the case of Asian Paint Ltd. (supra) and, therefore, respectfully following the same, we are inclined to hold that the assessment proceedings carried out in the case of the assessee deserves to be quashed as the same has not been carried out in accordance with the settled judicial precedents. Since we have quashed the assessment order and allowed the legal ground, dealing with the merits of the case would be merely academic in nature. Accordingly, legal ground raised by the assessee is allowed.”

8. The ratio laid down in Asian Paints Ltd. (supra) has been subsequently followed by the Jurisdictional High Court in the case of Bharat Jayantilal Patel (supra) observing that if the AO does not accepting objections to the reopening of the assessment or the reasons recorded, he shall not proceed further in the matter within a period of four weeks from the date of receipt or service of the said order on the assessee.

9. Respectfully following the said judicial precedents referred herein above, we are inclined to hold that since Ld.AO has not adhered to the mandate laid down by the Hon’ble Jurisdictional High Court and has passed the re-assessment proceedings before expiry of four weeks from the date of disposing of the objections raised by the assessee, impugned re-assessment proceedings are held to be invalid and bad in law and the same are hereby quashed.

10. So far as remaining grounds of appeal are concerned, since we have already quashed the re-assessment order, dealing with the remaining grounds of appeal would be merely academic in nature and therefore held to be infructuous.

11. In the result, appeal of the Assessee is allowed as per terms indicated above.

Order pronounced in the open Court on 19.02.2026