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Facts
The Revenue preferred an appeal challenging the CIT(A)'s order deleting additions made by the Assessing Officer. The Assessee filed Cross-Objections challenging the validity of the Assessment Order. The Assessee contended that the Assessing Officer failed to dispose of objections to the reasons for reopening before passing the assessment order.
Held
The Tribunal noted that the Assessing Officer did not dispose of the Assessee's objections by way of a separate speaking order and proceeded to pass the assessment order. Following the judgment of the Hon'ble Bombay High Court in Kesar Terminals and Infrastructure Limited, the Tribunal quashed the Assessment Order.
Key Issues
Whether the assessment order passed under Section 143(3) read with Section 147 of the Income Tax Act is valid when the Assessing Officer failed to dispose of the Assessee's objections to the reasons for reopening by way of a separate speaking order.
Sections Cited
Section 143(3), Section 147, Section 148
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Income Tax Appellate Tribunal, “J (SMC
(Assessment Year:2012-2013) N. K. Family Trust 333-B, Adhyaru Industrial Estate, Sunmill Compound, Lower Parel, Mumbai – 400012. Maharashtra [PAN:AAATN2399F] …………. Appellant Vs Income Tax Officer 22(2)(1) Room No.312, 3rd Floor, Piramal Chambers, Lalbaug, Mumbai - 400012. Maharashtra …………. Respondent Appearance For the Appellant/Department : Shri Aditya Rai For the Respondent/Assessee : Shri Dharmesh Shah Date Conclusion of hearing : 19.02.2026 Pronouncement of order : 25.02.2026 O R D E R [ Per Rahul Chaudhary, Judicial Member: 1. The present appeal and Cross Objection pertain to Assessment Year 2012-2013. The Revenue has preferred appeal challenging the Order, dated 17/10/2025, passed by the Commissioner of Income Tax (Appeals), Mumbai, [hereinafter referred to as ‘CIT(A)’] whereby the Ld. CIT(A) had deleted the additions made by the Assessing Officer C.O. No.32/Mum/2026 Assessment Year 2012-2013 vide Assessment Order, dated 29/12/2017, passed under Section 143(3) read with Section 147 of the Income Tax Act, 1961 [hereinafter referred to as ‘the Act’] for the Assessment Year 2012-2013. The Assessee has filed Cross-Objections in the aforesaid appeal, challenging the validity of the Assessment Order passed under Section 143(3) read with 147 of the Act. Cross Objection No.32/Mum/2016 [Assessment Year 2012-2013] 2. The Ld. Learned Authorized Representative for the Assessee appearing before us, at the outset, invited our attention to the Cross Objection raised by the Assessee whereby the Assessee has challenged the assumption of jurisdiction by the Assessing Officer under Section 148 of the Act which reads as under: “1. The Ld. CIT(A) ought to have appreciated that the reopening of assessment u/s.147 of the Act and issue of notice u/s.148 of the Act was invalid and viod ab initio.”
The facts relevant for adjudication of the above Cross Objection which goes to the root of the matter, are as follows:
3.1. The Assessee, an association of persons, filed return of income for the Assessment Year 2011-2012 on 31/07/2012. Reassessment proceedings under Section 147 of the Act were initiated in the case of the Assessee on the basis of information received from Deputy Director of Income Tax (Investigation) Unit-74 to the effect that Assessee had benefited from the accommodation entries taken from Vipul Vidur Bhatt and his associate concerns engaged in providing bogus accommodation entries. The Assessee filed objections against the reasons recorded for re-opening assessment vide letter dated 12/09/2017. It is admitted position that the objections filed by the Assessee were not disposed of by the Assessing Officer by was of a separate order. However, in Paragraph 4 of the Assessment Order, dated 29/12/2017, passed under Section 143(3) read with Section 147 C.O. No.32/Mum/2026 Assessment Year 2012-2013 of the Act the Assessing Officer rejected the objections raised by the Assessee.
3.2. In appeal preferred by the Assessee, the Learned CIT(A) deleted the additions on merit and allowed the appeal preferred by the Assessee vide Order, dated 17/10/2025. The ground raised by the Assessee challenging the validity of the re-assessment proceedings under Section 147 of the Act was not adjudicated upon by the Learned CIT(A) in view of the fact that relief was granted to the Assessee on merits.
Being aggrieved by the relief granted by the Learned CIT(A), the Revenue has preferred the present appeal before the Tribunal while the Assessee has filed Cross-Objections challenging the validity of the re-assessment proceedings. The Assessee has challenged the jurisdiction of the Assessing Officer to pass Assessment Order, dated 29/12/2017, under Section 143(3)(ii) read with Section 147 of the Act.
The Ld. Authorised Representative appearing on behalf of the Assessee, advancing arguments on Cross-Objection above, submitted that the Assessing Officer had failed to dispose off the objections to reasons recorded for reopening the assessment filed by the Assessee before passing the assessment order under Section 143(3) read with Section 147 of the Act, and therefore, the assumption of jurisdiction by the Assessing Officer under Section 147/148 of the Act was bad in law. In this regard, the Learned Authorized Representative appeared before us placing reliance on the following judgments:
1. 1. GKN Driveshafts (India) Ltd. Vs. ITO (2003) 259 ITR 19 (SC) 2. Kesar Terminals and Infrastructure Limited Vs. DCIT [2025] 171 taxmann.com 800 (Bombay).
3. Fomento Resorts & Hotels Ltd. Vs. Assistant Commissioner of Income, Central Circle, Panjim, Goa : Tax Appeal No. 63 of 2007, dated 30/08/2019 C.O. No.32/Mum/2026 Assessment Year 2012-2013
Soham Estates Vs. DCIT [ITA No.690/Mum/2023, dated 20/09/2023] 4. Per contra, the Ld. Departmental Representative submitted that in the present case it cannot be said that the Assessing Officer had failed to dispose of the objections to reopening of assessment. Referring to paragraph 4 of the Assessment Order, dated 29/12/2017, the Ld. Departmental Representative submitted that the Assessing Officer had disposed off the objections before passing the assessment order. He submitted that there was no requirement that the Assessing Officer should pass an order, separate from the assessment order, for disposing of the objections to the reopening of assessment raised by the Assessee.
We have considered the rival submissions, perused the material on record and examined the position in law.
During the course of hearing the Learned Authorized Representative for the Assessee had placed reliance upon the judgment of the Hon’ble Bombay High Court in the case of Kesar Terminals and Infrastructure Limited Vs. DCIT [2025] 171 taxmann.com 800 (Bombay). On perusal of the aforesaid judgment, we find that in identical facts and circumstances the Hon’ble Bombay High Court had quashed the assessment order on the ground that the objections to reopening of assessment filed by the assessee were not disposed by the assessing officer by way of a separate order before proceeding to pass assessment order under Section 147 read with Section 143(3) of the Act. The relevant extract of the aforesaid judgment of the Hon’ble Bombay High Court reads as under: “6. The rival contentions now fall for our determination.
In this matter, vide assessment order dated 25 March 2016 made under Section 143(3) of the Income Tax Act, the returns filed by the Petitioner were assessed and accepted, and the claim under C.O. No.32/Mum/2026 Assessment Year 2012-2013 Section 80-IA was revised. 8. The petitioner was issued the impugned notice under Section 148 of the Income Tax Act on 30 March 2021, seeking to reopen the assessment. In compliance with the notice, the petitioner filed a return on 7 April 2021. On 12 May 2021, the Petitioner requested the reasons for reopening, which were furnished to the Petitioner on 6 July 2021. 9. On 4 August 2021, the Petitioner filed objections to the reopening of the assessment by raising several contentions. Without disposing of such objections, on 22 November 2021, the Petitioner was issued a notice under Section 142(1) directing it to justify its claim under Section 80-1A with supporting documents. 10. On 26 November 2021, the Petitioner requested the Respondents to dispose of the objections filed by the Petitioner before proceeding any further. The Petitioner made a specific reference to the Hon'ble Supreme Court's decision in the case of GKN Driveshafts (India) Ltd. v. 170 [2002] 125 Taxman 963/[2003] 259 ITR 19 (SC). The Petitioner also referred to this Court's decision in the case of Asian Paints Ltd. v. Dy. CIT [2008] 296 ITR 90 (Bombay), which had provided that an assessee must be given a reasonable period of about four weeks to take any remedial course of action should the assessee's objections to the reopening be rejected by the revenue. 11. The Petitioner's objections were never disposed of, but the impugned consolidated reassessment order dated 31 March 2022 was made, in which the Petitioner's objections were also purported to be disposed of. 12. Apart from the fact that the making of such consolidated or combined orders was not approved in some decided cases, which we propose to refer to, we think that such a procedure also involves breaching the principles of natural justice and fair play. 13. The assessing officer in Fomento Resorts & Hotels Ltd. (supra) C.O. No.32/Mum/2026 Assessment Year 2012-2013 made a similar combined order. Neither were the assessee's objections disposed of by a separate order, nor was the assessee granted any reasonable opportunity of questioning the order disposing of the objections. In such circumstances, the Court, after analyzing the decision of the Hon’ble Supreme Court in GKN Driveshafts (India) Ltd. (supra) and following its earlier precedents in KSS Petron Private Ltd. v. Asstt. CIT [IT Appeal No.224 of 2014, dated 3-10-2016] and Bayer Material Science (P.) Ltd. v. Dy. CIT [2016] 66 taxmann.com 335/237 Taxman 723/382 ITR 333 (Bombay) quashed the combined order on the ground of want of compliance with jurisdictional parameters. 14. Accordingly, we cannot accept Mr …. contention about there being no infirmity in the impugned consolidated order dated 31 March 2022, given the above decisions referred to by us rendered in substantially similar facts. xx xx 17. For all the above reasons, we allow this Petition and make the Rule absolute in terms of prayer clause (a), which reads as follows- "(a) that this Hon'ble Court be pleased to issue a Writ of Certiorari or any other writ order or direction under Article 226 of the Constitution of India calling for the records of the case leading to the issue of the impugned notice and passing of the impugned order and after going through the same and examining the question of legality thereof quash, cancel and set aside the impugned notice (Exhibit O) dated March 30, 2021 and impugned order (Exhibit W) dated March 31, 2022;" (Emphasis Supplied) 7. We note that in the present case the Assessing Officer did not dispose off the objections by way of a separate speaking order and passed the Assessment order under Section 143(3) read with Section 147 of the Act on 29/12/2017 and in paragraph 4 therein rejected the objections to reasons recorded for reopening the assessment filed by the C.O. No.32/Mum/2026 Assessment Year 2012-2013 Assessee. Therefore, respectfully following the above judgment of the Hon’ble Bombay High Court in the case of Kesar Terminals and Infrastructure Limited Vs. DCIT [2025] 171 taxmann.com 800 (Bombay), we quash the Assessment order, dated 29/12/2017, passed under Section 143(3) read with Section 147 of the Act. Cross Objection No.1 raised by the Assessee is, therefore, allowed while all other cross-objections are dismissed as having been rendered infructuous.
Year 2012-2013] 8. As regards the appeal preferred by the Revenue ( Cross- objections filed by the Assessee and have quashed the Assessment Order, dated 29/12/2017, passed under Section 147 read with Section 143(3) of the Act, the grounds raised by the Revenue challenging the relief granted by Learned CIT(A) on merits have been rendered infructuous. Accordingly, all the grounds raised by the Revenue are dismissed. In result, the appeal preferred by the Revenue is dismissed
In result, the Cross objection preferred by the Assessee is allowed while the appeal preferred by the Revenue is dismissed
Order pronounced on 25.02.2026. (Bijayananda Pruseth) Judicial Member मुंबई Mumbai; िदनांक Dated : 25.02.2026 Milan, LDC C.O. No.32/Mum/2026 Assessment Year 2012-2013