INCOME TAX ACT, 1961

Section 11

Reassessment - Under section 11 - Framing of reassessment order without first disposing assessee's objections to reasons recorded for reopening -

Assessee filed return under the provisions of Expenditure Tax Act, 1987 showing chargeable expenditure at rupees Nil on 12-8-1998. AO by notice under section 11 of the said Act reopened assessment for the reasons that in view of Himachal High Court decision in case of H.P. Tourism Development Corporation (1999) 238 ITR 38 (HP) : 1999 TaxPub(DT) 1110, the expenditure had escaped assessment. Assessee lodged objections to the assumption of jurisdiction under section 11. However, AO without making any order disposing of objections filed by assessee passed the assessment order bringing to charge taxable expenditure of Rs. 10 crores. Assessee sought relief before High Court.Held: Since, AO had purported to assume jurisdiction for reopening of assessment, without having first disposed of assessee's objections to reasons recorded for reopening, by passing a speaking order, assumption of jurisdiction by AO was ultra vires section 11 and, therefore, reassessment order was quashed as invalid.

Followed:GKN Driveshaft v. ITO (2003) 259 ITR 19 (SC) : 2003 TaxPub(DT) 734 (SC) and Bayer Material Science (P) Ltd. v. Dy. CIT & KSS Petron (P) Ltd. v. Asstt. CIT.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 1997-98

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