ITO Vs Hardeep Singh (ITAT Delhi)
The Revenue filed an appeal before the Income Tax Appellate Tribunal (ITAT) Delhi challenging the order dated 24 January 2020 passed by the Commissioner of Income Tax (Appeals), Karnal, for Assessment Year 2011–12. The assessee also filed cross objections. The case originated from issuance of a notice under Section 148 of the Income Tax Act on 23 March 2018, pursuant to which the assessee filed a return declaring income of ₹1,34,955 and agricultural income of ₹2,70,468. The assessee raised objections to the reopening on 23 August 2018, contending that the Assessing Officer completed the reassessment without disposing of the objections by a separate, reasoned order, which the Supreme Court in GKN Driveshafts (India) Ltd. v. ITO had mandated. The Assessing Officer completed the assessment under Sections 143(3) read with 147 on 31 December 2018, making an addition of ₹2,57,38,200 towards cash deposits. The assessee appealed before the CIT(A), challenging both the validity of the reassessment proceedings and the addition on merits. The CIT(A) allowed the appeal and quashed the reassessment on the ground that the objections were not disposed of as required by law.
Before the Tribunal, the Revenue argued that the objections were, in fact, disposed of by a letter dated 5 September 2018 and asserted that the assessee repeated the same objections on 26 December 2018, only a few days before the time limit for completing the assessment. The Revenue contended that even if the procedure under GKN Driveshafts was not fully followed, the defect was a procedural irregularity rather than a jurisdictional one, relying on a judgment in Home Finders Housing Ltd. v. ITO. The assessee countered that the letter dated 5 September 2018 did not deal with the objections at all but merely referred to the cash deposits forming the basis of the reopening and directed the assessee to explain their source. According to the assessee, the requirement to dispose of objections through a separate speaking order was not a mere formality but a mandatory procedural safeguard forming part of the validity of the reassessment. The assessee relied on several decisions of High Courts and the Supreme Court to support the contention that failure to follow the GKN Driveshafts procedure rendered the reassessment order void.
