Snehalatha Singhi Vs DCIT (ITAT Bangalore)
In this case, the Bangalore ITAT held that reassessment proceedings initiated under Sections 147/148 are invalid in law where the Assessing Officer fails to dispose of the assessee’s objections by a speaking order, as mandated by the Supreme Court in GKN Driveshafts (India) Ltd.
The assessee had raised detailed objections to the reopening on 26.12.2019, but the AO considered only one part of the objections and completely ignored the second set filed later the same day. The Tribunal noted that there was no evidence of disposal of these objections, which is a mandatory procedural requirement.
Relying on the Karnataka High Court ruling in Hewlett Packard Financial Services (India) Ltd., the Tribunal held that non-disposal of objections vitiates the entire reassessment, irrespective of merits.
Accordingly, the notice issued under Section 148 and the assessment order passed under Section 143(3) r.w.s. 147 were set aside solely on this legal ground, without examining the merits of additions relating to penny stock, Section 68, or Section 69C.
Key takeaway: Procedural lapse in not disposing objections is fatal-entire reassessment collapses even if additions may otherwise be arguable.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
This is an appeal filed by the assessee challenging the order of the NFAC, Delhi dated 07/05/2025 in respect of the A.Y. 2012-13 and raised the following grounds:
“1. That the order of the Authorities below in so far as it is against the assessee is opposed to law, facts, circumstances, natural justice, equity and all other known principles of law.
2. That the total income and total tax computed is hereby disputed.
3. That the Authorities below erred in not providing sufficient and adequate opportunity to the appellant as required under law, thereby violating the principles of natural justice, hence the order requires to be cancelled.
4. That the notice, initiation and all subsequent proceedings u/s 148 is bad in law, is without jurisdiction, barred by law and requires to be cancelled.
5. The notice u/s 148 and service thereof is bad in law and the reassessment requires to be cancelled.
6. The conditions precedent to justify the reopening of the assessment u/s 147 of the Act being absent, the reopening of the assessment is bad in law and the reassessment requires to be cancelled.
7. That the order u/s 143(3) r.w.s 147 of the Act is bad in law, as the appellant had disclosed the material facts fully and truly necessary for assessment and there is no new or fresh information or evidence warranting reopening of the assessment.
8. That the entire reassessment proceedings violates the procedure prescribed by the Supreme Court in 259 ITR 19 for 148 proceedings.
9. The reassessment proceedings is on a change of opinion on the same set of facts without there being any new evidence or information which is not permitted under law.
10. The reasons / findings of the Authorities below are unsustainable and untenable in law as there is no relationship to the facts emerging from the record.
11. That the Authorities below erred in relying on material/information without furnishing the same to the assessee before passing the assessment order.
12. That the Authorities below erred in relying on uncorroborated statement of persons namely Shri Dhruv Narayan Jha, Shri Jagdish Prasad Purohit, Shri Devesh Upadhyaya and Shri Anuj Agarwal without furnishing the same to the assessee before passing the assessment order.
13. That the Authorities below erred in relying on the following material without furnishing the same to the assessee before passing the assessment order.
a).Findings of Kolkata Investigation Directorate and Mumbai Investigation Directorate
b) SEBI order in the matter of First Financial Services Ltd dt.19.12.2014
c) SIT Report on Black money
14. That the Authorities below erred in not providing complete details relied on before calling for objections from the assessee.
15. That the Authorities below erred in relying on statements without providing opportunity to cross examine.
16. That the Authorities below erred in relying on irrelevant material while ignoring the relevant material.
17. That the Authorities below erred in making addition of Rs.16,51,45,586/- as unaccounted cash credits u/s 68 of the Act.
18. That the Authorities below erred in treating the capital gains declared by the assessee from transfer of shares of M/s. Blue Circle Services Ltd u/s 68 of the IT Act.
19. That the Authorities below erred in resorting to section 68 of the Act.
20. That the Authorities below erred in refusing to apply the beneficial treatment provided under the Act of the Capital gains earned by the assessee from the transfer of shares in M/s. Blue Circle Services Ltd.
21. That the Authorities below erred in making addition of Rs.49,54,368/- as Unexplained Expenditure u/s 69C of the Act without adducing any evidence in support of the same.
22. That the Authorities below erred in estimating 3% of sale consideration of shares as the commission paid u/s 69C of the Act merely on surmise.
23. The appellant denies the liabilities for interest u/s 234A, 234B and 234C of the Act. Further prays that the interest if any should be levied only on returned income.
24. No opportunity has been given before levy of interest u/s 234A, 234B and 234C of the Act.
25. Without prejudice to the appellant’s right of seeking waiver before appropriate authority, the appellant begs for consequential relief in the levy of interest u/s 234A, 234B and 234C of the Act.
26. For the above and other grounds and reasons which may be submitted during the course of hearing of the appeal, the assessee requests that the appeal be allowed as prayed and justice be rendered. The assessee craves leave to add, alter, vary, omit, substitute or amend the above grounds, at any time before or at the time of hearing.”
2. The brief facts of the case are as follows:
