Case Law Details
Vodafone Idea Limited Vs DCIT (ITAT Delhi)
The Delhi Income Tax Appellate Tribunal (ITAT) decided two appeals filed by the assessee for Assessment Year 2005-06. The Tribunal noted that one appeal (ITA No. 7731/Del/2025) was merely a duplicate filing and dismissed it accordingly. The remaining appeal (ITA No. 7730/Del/2025) primarily challenged the validity of the reassessment proceedings.
The assessee argued that the reassessment order dated 28.03.2013 was legally unsustainable because the Assessing Officer (AO) failed to dispose of its objections to the reopening of assessment before completing the reassessment. The assessee relied on the Supreme Court’s decision in GKN Driveshafts (India) Ltd. v. ITO, which requires the AO to pass a separate speaking order disposing of objections before proceeding with reassessment.
The Revenue supported the reassessment by referring to the findings of the Commissioner of Income Tax (Appeals), contending that the AO had adequately addressed the assessee’s objections. However, the Tribunal found no merit in this contention. It observed that the AO had not passed a separate order disposing of the objections before completing the reassessment.
The Tribunal relied extensively on its earlier decision in ITO vs. Hardeep Singh (ITA No. 1152/Del/2020, dated 27.12.2024), which dealt with the same legal issue. In that case, the Tribunal had examined whether a communication issued by the AO constituted disposal of objections. It held that merely informing the assessee about the basis of reopening and seeking explanations did not amount to a speaking order disposing of objections. Consequently, the reassessment was held to be vitiated.
The earlier decision also considered the Revenue’s argument that failure to dispose of objections was only a procedural irregularity, relying on the Madras High Court decision in Home Finders Housing Ltd. v. ITO. The Tribunal rejected this contention after considering several judicial precedents cited by the assessee, including decisions of the Delhi High Court, Bombay High Court, Madras High Court, ITAT Delhi, and the Supreme Court.
The Tribunal referred to the Delhi High Court’s decision in Ferrous Infrastructure Pvt. Ltd., which held that the Assessing Officer must pass a separate speaking order disposing of objections before proceeding with reassessment. It noted that dealing with objections only in the reassessment order does not satisfy the requirement laid down by the Supreme Court.
The Tribunal also relied on the Bombay High Court’s ruling in KSS Petron Pvt. Ltd., which held that failure to comply with the procedure prescribed in GKN Driveshafts renders the reassessment without jurisdiction. The Court observed that allowing such matters to be restored merely for procedural compliance would unnecessarily revive stale proceedings and cause harassment to taxpayers.
Further, the Tribunal referred to the Madras High Court’s decision in CIT v. Pentafour Software Employees’ Welfare Association, which held that the procedure prescribed in GKN Driveshafts is mandatory and binding on the Revenue. The High Court observed that filing objections is not an empty formality and the requirement to pass a speaking order ensures that the assessee has an opportunity to challenge the reopening before reassessment is completed. It held that violation of this requirement affects the jurisdiction of the Assessing Officer and cannot be treated as a mere procedural defect.
The Tribunal also rejected the Revenue’s reliance on the dismissal of the Special Leave Petition in Home Finders Housing Ltd., observing that dismissal of an SLP without detailed reasons does not amount to a declaration of law or constitute a binding precedent under Article 141 of the Constitution.
Applying the reasoning adopted in ITO vs. Hardeep Singh to the present case, the Tribunal concluded that the Assessing Officer had failed to dispose of the assessee’s objections by passing a separate speaking order before completing the reassessment. Consequently, the reassessment order was quashed. Since the reassessment itself was held invalid, the Tribunal held that all other issues raised on the merits became academic and required no adjudication.
Accordingly, the Tribunal allowed ITA No. 7730/Del/2025 by quashing the reassessment, while dismissing ITA No. 7731/Del/2025 as a duplicate appeal. The common order was pronounced in open court on 20.05.2026.
FULL TEXT OF THE ORDER OF ITAT DELHI
These assessee’s twin appeals ITA Nos. 7730 86 7731/De1/2025; both for Assessment Year 2005-06, arise against Commissioner of Income Tax, National Faceless Appeal Centre (for short, “CIT(A)/NFAC”)’s order dated 28.09.2025 having DINs No. ITBA/ NFAC/ S/ 250/ 2025-26/ 1081270639(1), involving proceedings u/s 147 r.w.s 143(3) of the Income Tax Act, 1961; hereinafter referred to as ‘the Act’; respectively.
Heard both the parties at length. Case files perused.
2. Learned counsel states very fairly that the assessee’s latter appeal herein ITA No. 7731/De1/2025 is a “duplicate” file only. Rejected in very terms.
3. Next comes the assessee “lead” appeal ITA Nos. 7730/Del/2025. Its first and foremost legal argument/ ground raised herein is that the impugned reassessment framed in its case on 28.03.2013 itself is not sustainable in law once the learned Assessing Officer had not disposed off its objections to the reopening reasons before finalising the same so as to ensure compliance to the of the hon’ble apex court’s landmark decision in GKN Driveshafts (India) Ltd., v. ITO, 259 ITR 19 (SC).
4. The Revenue on the other hand strongly supports the impugned reopening in light of the CIT(A) detailed discussion at Page 10 Para 2 that the Assessing Officer had duly taken care of the assessee’s foregoing contentions. We find no merit in the Revenue’s stand once it is crystal clear that the Assessing Officer had not disposed off the assessee’s objections to the impugned reopening reasons in light of this tribunal’s recent order in ITA No. 1152/Del/2020, dated 27.12.2024 in ITO vs Hardeep Singh, having decided the very issue against the department, as under:
“2. The facts of the case as emanating from records are; Notice u/ s. 148 of Income Tax Act, 1961(hereinafter referred to as ‘the Act’) was issued to the assessee on 23.03.2018. In response to the said notice, the assessee filed return of income on 05.05,2018 declaring income of Rs.1,34,955/ – and agricultural income of Rs.2,70,468/ The assessee filed objections against reopening of assessment on 23.08.2018. The contention of the assessee is that the Assessing Officer (AO) in violation of the law laid down by the Hon’ble Supreme Court of India in the case of GKN Driveshafts (India) Ltd vs ITO, 259 ITR 19 completed the assessment without disposing of objections of the assessee by a separate order. The AO vide assessment order dated 31.12.2018 passed u/ s. .143(3) rw.s 147 of the Act made addition of Rs.2,57,38,200/ – on account of cash deposits. Against the said assessment order, the assessee filed appeal before the CIT(A) inter alia assailing validity of assessment proceedings u/ s. 147 r.w.s 148 of the Act, and the addition on merits. The CIT(A) vide impugned order allowed appeal of the assessee and quashed the assessment order on the ground that the AO before proceeding with the assessment was mandatorily required to dispose of objections of the assessee, as per dictum of the Hon’ble Apex Court in GKN Driveshafts (India) Ltd vs. ITO (supra). Hence, the present appeal by the Revenue.
3. Shri Vivek Kumar Upadhya, representing the department submitted that the objections of the assessee dated 23.08.2018 were considered by the AO and were disposed of on 05.09.2018. The assessee filed same objections on 26.12.2018 at the fag-end, that is just four days before time barring date for completion of assessment. He further submitted that merely for the reason that the AO failed to comply with the procedure indicated by the Hon’ble Supreme Court of India in the case of GKN Driveshafts (India) Ltd vs. ITO (supra) would not rendered the assessment proceedings null and avoid. At the most it can be held as procedural infirmity that can be rectified. To support his contention; he placed reliance on the decision in the case of Home Finders Housing Ltd. vs. ITO 404 ITR 611 (Madras). He submitted that against the decision of Hon’ble High Court, the SLP filed by the assessee was dismisSed.
4. Au contraire, Shri Ved Jain appearing on behalf of the assessee vehemently defended the impugned order and prayed for dismissing appeal of the Revenue. He submitted that the AO without disposing of objections filed against reopening of assessment has passed the assessment order. The Hon’ble Apex Court has mandated that the objections have to be decided by the AO by passing a speaking order before proceeding to complete the assessment. Deciding of objections against reopening is not merely a procedural formality but goes to the root of validity of reassessment proceedings. He further pointed that letter dated 05.09.2018 vide which the AO is stated to have disposed of the objections does not deal with objections of the assessee at all, it only says that proceedings u/ s. 148 of the Act have been initiated on the basis of cash deposits and copy of reasons u/ s. 148 of the Act have already been supplied to the assessee and the assessee is now required to explain the source of cash deposits along with documentary evidences. Thus, a perusal of letter would show that it does not deal with the detailed objections filed by the assessee against reopening of assessment. The ld. Counsel for the assessee submitted the various High Courts including jurisdictional High Court have held that the law laid down by Hon’ble Supreme Court of India has to be necessarily followed. If any order is passed in violation of the law laid down by Hon’ble Apex Court it is without jurisdiction. To buttress his arguments he placed reliance on following decisions:-
i. Ferrous Infrastructure P. Ltd. vs DCIT, 2015 (5) TMI 871 (Delhi HC);
ii. KSS Petron P Ltd. vs ACIT 2016 (10) TMI 1112 (Born)
iii. CIT vs. M/ s. Pentafour Software Employee’s Welfare Foundation, 418 ITR 427 (Madras);
iv. ITO (Exemption) vs ICFAI University Dehradun, 2019 (5) TMI 1389 (ITAT Del); and
v. Shri S Subash Chand Nahar vs DCIT, 2023 (11) TMI 7 (SC).
5. We have heard the submissions made by rival sides and have examined the orders of authorities below. We have also considered the decisions on which rival sides have placed reliance. The solitary grievance of the Department in present appeal is against findings of the CIT(A) in quashing assessment order for non disposal of assessee’s objections filed against reopening of assessment. The contention of the Revenue is that the AO before proceeding with assessment has disposed of objections of the assessee dated 23.08.2018 vide letter dated 05.09.2018. Before, proceeding further it would be imperative to refer to said letter vide which the objections of the assessee are alleged to have been decided. For the sake of ready reference, the relevant extract of the same is reproduced herein below:
“Sub:- Income-Tax assessment proceedings u/s 148/ 143(3) for the A.Y. 201112- regarding-
Please refer to your letter dated 23.08.2018 on the above noted subject.
2. In this regard, it is stated that proceedings u/s 148 have been initiated on the basis of cash deposits amounting to Rs. 1,95,91,000/- in OBC bank, G.T. Road, Karnal and copy of reason u/s 148 have already been supplied to you by this office on 23.08.2018. Therefore you are requested to explain the source of cash deposits amounting to Rs. 1,95,91,000/ – to this office by 10.09.2018 alongwith documentary evidence. Your case is fixed for hearing on 10.09.2018.
Your faithfully,
Sd/-
Kavita Batra
Income-Tax Officer,
Ward-2, Karnal”
6. A bare reading of contents of aforesaid letter would show that it does not deal with the objections filed by the assessee against reopening of assessment. Hence, contentions of the Revenue that the objections were disposed of by the AO on 05.09.2018 are misplaced. I find no infirmities in the finding of First Appellate Authority. The objections of the assessee against reopening of assessment were not disposed off by the AO, hence, the assessment is vitiated.
7. The Revenue has placed reliance on the decision rendered in the case of Home Finders Housing Ltd. vs. ITO (supra), to contend that non disposal of objections are mere procedural formality and would not make reassessment order void ab initio.
7.1. The assessee has placed reliance on various decisions to contend that non disposal of assessee’s objections by the AO by passing a separate, speaking order is fatal to the assessment. The Hon’ble Delhi High Court in the case of Ferrous Infrastructure P. Ltd. (supra) on the issue of non compliance of directions of Hon’ble Supreme Court of India in the case of GKN Driveshafis (supra) held:-
“8. We may also point out that the second issue raised by the learned counsel for the petitioners also deserves some consideration. In GKN Driveshafts (supra), the Supreme Court had directed as under:-
“However, we clarify that when a notice under Section 148 of the Income Tax Act is issued, the proper course of action for the noticee is to file return and if he so desires, to seek reasons for issuing notices. The assessing officer is bound to furnish reasons within a reasonable time. On receipt of reasons, the noticee is entitled to file objections to issuance of notice and the assessing officer is bound to dispose of the same by passing a speaking order. In the instant case, as the reasons have been disclosed in these proceedings, the assessing officer has to dispose of the objections, if filed, by passing a speaking order, before proceeding with the assessment in respect of the abovesaid five assessment years.”
8. On going through the same, it is evident that the Assessing Officer has to pass a speaking order disposing of the objections “before proceeding with the assessment”. In the present case, a separate speaking order has not been passed and the objections have been dealt with, if at all, in the re-assessment order itself. On this ground also, the petitioner is liable to succeed.”
7.2. The Hon’ble Bombay High Court in the case of KSS Petron P. Ltd. (supra) taking a similar view held:
“8. We note that once the impugned order finds the Assessment Order is without jurisdiction as the law laid down by the Apex Court in GKN Driveshafts (supra) has not been followed, then there is no reason to restore the issue to the Assessing Officer to pass a further/ fresh order. If this is permitted, it would give a licence to the Assessing Officer to pass orders on reopening notice, without jurisdiction (without compliance of the law in accordance with the procedure), yet the only consequence, would be that in appeal, it would be restored to the Assessing Officer for fresh adjudication after following the due procedure. This would lead to unnecessary harassment of the assessee by reviving stale/ old matters.”
7.3 The Hon’ble Madras High Court in the case of CIT vs. Pentafour Software Employees’ Welfare Association (supra), subsequent to the decision rendered in the case of Home Finder Housing Ltd. (supra) held that, the procedure carved out in GKN Driveshafts (India) P Ltd. (supra) is binding, if any order violates the law laid down by Hon’ble Supreme Court of India, then it is without jurisdiction. For the sake of completeness the relevant extract of the observations by Hon’ble High Court are reproduced herein under:-
“36.In our considered view, the decision arrived at in the case of Jayanthi Narayanan (supra) reflexes the correct position of law because, the procedure carved out by the Hon’ble Supreme Court in GKN Driveshafts (India) Ltd. (supra) not only binds the assessee, but also the Revenue. Filing of objections to the reasons for reopening is not an empty formality. If this is so, passing a speaking order on the objections cannot be treated as an empty formality and to be brushed aside as a procedural error. The purpose for passing a speaking order on the objections is to afford an opportunity to the assessee to question the same, in the event the assessee is aggrieved by such an order. Therefore, to state that it would be sufficient for the Assessing Officer to deal with the objections in the assessment order and thereafter, if the assessee is aggrieved, he can file a statutory appeal, is a proposition which would be against the principles of natural justice. Therefore, Tan order violates the law laid down by the Hon’ble Supreme Court, then it has to be necessarily held to be an order without jurisdiction. The law declared bu the Hon’ble Apex Court is a binding character and is a source of law and to itself which will bind all authorities.
37. xxxxxxx
38. xxxxxxx
39. The Hon’ble Supreme Court in GKN Driveshafts (India) Ltd. (supra) had clarified that when a notice under Section 148 of the Act is issued, the proper course of action for the noticee is to file a return and if he so desires, to seek for reasons for issuing such notice. Further, it was held that the Assessing Officer is bound to furnish reasons within a reasonable time, on receipt of the reasons, the noticee is entitled to file objections and the Assessing Officer is bound to dispose of the same by passing a speaking order.
40. We do not agree with the interpretation canvassed before us that assuming objections were not disposed of by a speaking order, it would be only a procedural error.
41. We have referred to Kelvinator of India Ltd. (supra), which has pointed out as to how serious is reopening of a concluded assessment, that too, after four years. The Hon’ble Supreme Court has laid down the law and it has been made mandatory for the Assessing Officer to pass a speaking order. The use of the word “bound” cannot be rendered meaningless. Therefore, we are of the clear view that if there has been a procedural error, it goes to the root of the matter thereby affecting the jurisdiction of the Assessing Officer to proceed further to give a fresh innings to the Assessing Officer on the ground that it is a procedural error, will not only dilute the decision of the Hon’ble Supreme Court in GKN Driveshafts (India) Ltd. (supra), but would lead to abuse of power conferred under Section 147 of the Act, which had been pointed out in Kelvinator of India Ltd. Therefore, this would be the one more reason to hold that the reopening of assessments are bad.”
[Emphasized by us]
8. In so far as dismissal of assessee’s SLP in the case of Home Finders Housing P. Ltd. (supra) is concerned, we observe that the SLP has been dismissed at threshold without any observations by the Hon’ble Apex Court. Dismissal of SLP in limine without any detailed reasons, does not constitute any declaration of law or a binding precedent under Article 141 of the Constitution [Re. State of Orissa vs Dhirendra Sundar Das (2019) AIR SC 2331].
9. Thus, in light of our above findings, we find no merit in appeal by the Revenue. We concur with the findings of the CIT(A), hence, appeal of Revenue is dismissed.”
5. We adopt the above extraction detailed discussion mutatis mutandis to quash the impugned assessment herein framed in the assessee’s case in very terms.
All other remaining pleadings between the parties on merits stand rendered academic. The assessee succeeds in the instant “lead” appeal ITA No. 7730/Del/2025 therefore.
6. These assessee’s twin appeals ITA Nos. 7730/Del/2025 86 7731/De1/2025 are allowed and dismissed; respectively, in preceding terms. A copy of this common order be placed in the respective case files.
Order pronounced in the open court on 20.05.2026.
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