VIJAY BIHARI KANDHARI ,MUMBAI vs. ACIT, 23(3), MUMBAI

These appeals have been preferred by the Assessee against the orders even dated 02.09.2025, impugned herein, passed by the National Faceless Appeal Centre(NFAC)/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.Ys. 2012-13 and 2013-14.

As both the appeals involve identical facts and issues, therefore, for the sake of brevity, the same were heard together and are being disposed of by this composite order by taking ITA No. 940/Mum/2025 as the lead case. The result thereof shall apply mutatis mutandis to the connected appeal also.

Coming to ITA No. 6940/Mum/2025, it is observed that the Assessee has raised an additional ground of appeal, which reads as under:

Coming to the merits of legal ground, it is observed that the Ld. AO, on the basis of search/survey action carried out u/s 132/133A of the Act by the DDIT (Investigation Unit)-5(4), Mumbai on 25.06.2016 in the case of M/s Ahuja Group and its associate concerns, and on perusal of a pen drive, wherein it was allegedly found that the Assessee had entered into cash transactions with Ahuja Group amounting to 1,74,00,000/-, reopened the case of the Assessee u/s 147 of the Act by issuing notice dated 30.03.2019 u/s 148 of the Act.

In response to the said notice u/s 148 of the Act, the Assessee filed return of income on 07.06.2019 and asked for the reasons recorded.

Thereafter, the Ld. AO supplied the reasons recorded for reopening on 25.06.2019.

The Assessee, vide letter dated 23.12.2019, raised objections against the reopening of assessment proceedings by issuing a notice u/s 148 of the Act.

The Ld. AO, however, disposed of the said objections in the assessment order dated 29.12.2019 itself, instead of passing a separate and independent speaking order, as mandated by the Hon'ble Apex Court in the case of GKN Driveshafts (India) Ltd. vs. ITO, 259 ITR 19 (SC). The Assessee, therefore, contended that the reassessment proceedings stood vitiated, as no opportunity was made available to the Assessee to challenge the order disposing of the objections before completion of reassessment.

On the contrary, the Ld. DR refuted the claim of the Assessee and relied upon the orders of the authorities below.

Heard the parties and perused the material available on record. Admittedly, the objections raised by the Assessee vide letter dated 23.12.2019 against reopening of assessment proceedings were not disposed of by the Ld. AO by passing a separate speaking order. The same were purportedly disposed of only in the reassessment order dated 29.12.2019 itself.

The Hon'ble Apex Court in GKN Driveshafts (India) Ltd. Vs. ITO, 259 ITR 19 (SC), has clearly laid down that when a notice u/s 148 of the Act is issued and the Assessee files objections to the reasons recorded, the Ld. AO is bound to dispose of such objections by passing a speaking order before proceeding further with the reassessment. For brevity and ready reference, dictum laid by Hon'ble Apex Court is as under: "However, we clarify that when a notice under Section 148 of the Income Tax Act is issued, the proper course

We further observe that the Hon'ble Jurisdictional High Court in Fomento Resorts & Hotels Ltd. Vs. ACIT, Tax Appeal No. 63 of 2007, order dated 30.08.2019, also dealt with an identical issue, wherein the Assessing Officer disposed of the objections in the assessment order itself. Thus, the Hon'ble High Court, after considering GKN Driveshafts (India) Ltd. Vs. ITO, Bayer Material Science Pvt. Ltd. Vs. DCIT, 66 taxmann.com 335 (Bom.) and KSS Petron Pvt. Ltd. Vs. ACIT, ITA No. 224 of 2014, held that such assumption of jurisdiction without first disposing of the objections by a speaking order, was invalid. The relevant observations are as under: "24. According to us, the rulings in Bayer Material Science (P) Ltd. (supra) and KSS Petron Private Ltd. (supra) afford a complete answer to the contentions raised by Ms. Linhares in defence of the impugned order. 25. Since, in the present case, the Assessing Officer has purported to assume the jurisdiction for reopening of the assessment, without having first disposed of the Assessee's objections to the reasons by passing a speaking order, following the law laid down in GKN Driveshafts (India) 26. As noted earlier, in view of the aforesaid, there is no necessity to advert to the second substantial question of law, at least, in so far as this Appeal is concerned. The Appeal is, therefore, allowed and the impugned orders dated

Thus, in view of the mandate of the Hon'ble Apex Court and the binding judgments of the Hon'ble Jurisdictional High Court, we are of the considered view that the Ld. AO was required to dispose of the objections raised by the Assessee by passing a separate speaking order before proceeding further with the reassessment. Since the objections were disposed of only in the assessment order itself, the reassessment proceedings are vitiated for want of compliance with the jurisdictional requirement.

Accordingly, the notice dated 30.03.2019 issued u/s 148 of the Act, along with the assessment order dated 29.12.2019 passed u/s 143(3) r.w.s. 147 of the Act in pursuance thereto, is quashed.

Consequently, the appeal filed by the Assessee in ITA No. 6940/Mum/2025 stands allowed.

Since we have quashed the notice issued u/s 148 of the Act as well as the assessment order passed in pursuance thereof, thus adjudication of the other grounds raised by the Assessee, which are otherwise not presses, would be academic and, therefore, the same are left open.

Coming to ITA No. 6942/Mum/2025, in view of our decision in ITA No. 6940/Mum/2025, the said appeal is also allowed on the same terms.

In the result, both the appeals filed by the Assessee stand allowed. Order pronounced in the open court on 30.06.2026.