AMISH ANANTRAI MODI,MUMBAI V. CENTRAL CIRCLE 2(1), MUMBAI

ITA 6282/MUM/2025

AI Insights

The case involves Amish Anantrai Modi, the appellant, who contested the reassessment proceedings initiated by the Deputy Commissioner of Income Tax, Central Circle 2(1), Mumbai, for the Assessment Year 2013-14. Initially, the assessment was completed under section 143(3) read with section 153C, which was later quashed by the Tribunal. Subsequently, a reassessment was attempted under section 147, altering the basis of addition from alleged bogus long-term capital gains to disallowing the cost of acquisition of shares. The Tribunal found that the objections raised by the assessee against the reopening of the assessment were not addressed before the reassessment was completed, leading to the quashing of the reassessment order.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 832231 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-01-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: misc
• Appeal Filed On: 02-10-2025
• Other Referred Cases: GKN Driveshafts (India) Ltd. vs. ITO [259 ITR 19 (SC)], Kesar Terminals & Infrastructure Ltd. vs. DCIT [171 taxmann.com 800], Home Finders Housing Ltd. vs. ITO [93 taxmann.com 371], KSS Petron Pvt. Ltd. vs. ACIT (ITA No.224 of 2014), Foset (India) Pvt. Ltd., Prashanth Sunil Kumar Bohra vs. ITO [174 taxmann.com 907]
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SURENDRA MOHAN
• Assessee Lawyers: RAVIKANT PATHAK
• Keywords: Reassessment proceedings; Cost of acquisition; Reopening of assessment; Capital Gains; Procedural lapse; Bogus
• Section: 147; 148; 143(3)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL, ‘A’ BENCH MUMBAI BEFORE: SHRI AMIT SHUKLA, JUDICIAL MEMBER & SHRI MAKARAND VASANT MAHADEOKAR, ACCOUNTANT MEMBER ITA No.6282/Mum/2025 (Assessment Year :2013-14) Amish Anantrai Modi B-1602, Panchsheel Heights, Mahavir Nagar Kandivali West Mumbai – 400 067 Vs. Dy.Commissioner of Income Tax Central Circle 2(1), Mumbai PAN/GIR No.AFXPM2914F (Appellant) .. (Respondent) Assessee by Shri Ravikant Pathak Revenue by Shri Surendra Mohan, Sr. DR Date of Hearing 20/01/2026 Date of Pronouncement 21/01/2026 आदेश / O R D E R PER AMIT SHUKLA (J.M): The aforesaid appeal has been filed by the assessee against the order dated 12.08.2025 passed by the learned Commissioner of Income Tax (Appeals)-48, Mumbai, arising out of the assessment framed under section 147 read with section 143(3) of the Income Tax Act, 1961 for Assessment Year 2013–14. 2. At the very outset, the assessee has assailed the validity of the reopening of assessment under section 147 on the primary Printed from counselvise.com ITA No.6282/Mum/2025 Amish Anantrai Modi 2 jurisdictional ground that the objections filed by the assessee against the reasons recorded for reopening were not disposed of by the Assessing Officer prior to completion of the reassessment proceedings, thereby rendering the assumption of jurisdiction itself vitiated in law. The challenge thus raised strikes at the root of the proceedings and goes to the very legality of the reassessment, warranting adjudication as a threshold issue. 3. The learned counsel for the assessee submitted that originally, the assessment for the impugned assessment year had been framed under section 143(3) read with section 153C of the Act by order dated 30.12.2016, wherein the Assessing Officer had made additions aggregating to Rs.1,71,66,150/- on account of alleged bogus long-term capital gains arising from sale of shares, including shares of Turbo Tech. It was pointed out that the said assessment order, forming the first round of proceedings, stood quashed by the Coordinate Bench of this Tribunal in ITA No.1312/Mum/2021, thereby effacing the very substratum of the original assessment proceedings and restoring the position of the assessee to that obtaining prior to the framing of the said assessment. 4. It was further submitted that subsequent to the quashing of the said assessment, the Assessing Officer initiated reassessment proceedings under section 147 of the Act, not on the same footing as the earlier addition on alleged bogus long- term capital gains, but this time by shifting the very axis of the addition, seeking to disallow the cost of acquisition of the shares, Printed from counselvise.com ITA No.6282/Mum/2025 Amish Anantrai Modi 3 i.e., the purchase cost, thereby attempting to indirectly revive what stood already annulled by the Tribunal in the earlier round. It was contended that this reopening itself was a colourable attempt to overcome the judicial annulment of the earlier assessment. 5. On facts, the assessee filed his original return of income on 29.07.2013 declaring a total income of Rs.11,56,030/-. After the quashing of the assessment framed under section 143(3) read with section 153C, the case was sought to be reopened by issuance of notice under section 148 dated 04.02.2021. In response thereto, the assessee filed his return of income on 14.02.2021 and simultaneously requested the Assessing Officer to furnish the reasons recorded for reopening the assessment, which were supplied on 23.02.2021. 6. Upon receipt of the reasons, the assessee, invoking the procedural safeguard laid down by the Hon’ble Supreme Court in GKN Driveshafts (India) Ltd. vs. ITO [259 ITR 19 (SC)], filed detailed objections vide letter dated 28.05.2021, formally lodged on 10.06.2021, assailing both the validity of the reopening as well as the sustainability of the proposed reassessment on merits. 7. However, it is an undisputed and admitted position on record, including as reflected in the remand report of the Assessing Officer himself, that the objections so filed by the assessee were never disposed of by passing a speaking order Printed from counselvise.com ITA No.6282/Mum/2025 Amish Anantrai Modi 4 before proceeding to complete the reassessment. In utter disregard of the mandatory procedure, the Assessing Officer proceeded to frame the reassessment order dated 23.06.2021 under section 143(3) read with section 147, making additions of Rs.10,000/- towards purchase cost of shares of Turbo Tech and Rs.5,11,500/- towards purchase cost of shares of Gemstone Investment Ltd. 8. The assessee carried the matter in appeal before the learned CIT(A), contending that the reassessment proceedings were rendered void ab initio for violation of the law laid down by the Hon’ble Supreme Court in GKN Driveshafts (supra), inasmuch as the objections to reopening were not disposed of prior to completion of assessment. Reliance was placed upon the judgment of the Hon’ble Bombay High Court in Kesar Terminals & Infrastructure Ltd. vs. DCIT [171 taxmann.com 800], wherein it was held that failure to dispose of objections before completing reassessment vitiates the entire proceedings. It was also highlighted that the Assessing Officer himself had admitted this lapse in his remand report, which was duly taken cognizance of by the learned CIT(A) in para 10.3.1 of his order. However, the learned CIT(A) declined to annul the reassessment. 9. During the course of hearing before us, the learned Departmental Representative sought to rely upon the judgment of the Hon’ble Madras High Court in Home Finders Housing Ltd. vs. ITO [93 taxmann.com 371], to contend that such a procedural defect could be cured by restoring the matter to the Printed from counselvise.com ITA No.6282/Mum/2025 Amish Anantrai Modi 5 file of the Assessing Officer. Per contra, the learned counsel for the assessee vehemently opposed this proposition, placing reliance upon the judgment of the Hon’ble Bombay High Court in KSS Petron Pvt. Ltd. vs. ACIT (ITA No.224 of 2014), wherein the Hon’ble jurisdictional High Court has categorically held that once the assessment is found to be without jurisdiction for non- compliance with the mandate of GKN Driveshafts, there is no question of restoring the matter to the Assessing Officer to pass a fresh order. 10. The assessee further fortified his submissions by placing reliance upon the judgment of the Hon’ble Rajasthan High Court in Foset (India) Pvt. Ltd., wherein it has been held that non- disposal of objections strikes at the root of jurisdiction and renders the reassessment proceedings null and void, not being a curable procedural defect, but a fatal infirmity going to the very legality of the assumption of jurisdiction. 11. We have carefully considered the rival submissions, perused the record and examined the legal position governing the field. At the very threshold, it must be reiterated that the procedure laid down by the Hon’ble Supreme Court in GKN Driveshafts (India) Ltd. vs. ITO (supra) is not a mere administrative formality but a jurisdictional discipline, intended to balance the power of the Revenue to reopen concluded assessments with the corresponding right of the assessee to challenge such reopening at the inception itself. The Supreme Printed from counselvise.com ITA No.6282/Mum/2025 Amish Anantrai Modi 6 Court has unequivocally held that upon supply of reasons, the assessee is entitled to file objections and the Assessing Officer is mandatorily required to dispose of the same by a speaking order before proceeding further with the assessment. This procedural safeguard is not ornamental, but foundational to the validity of the assumption of jurisdiction under section 147. 12. In the present case, the factual position is not merely borne out from the record but stands expressly admitted by the Assessing Officer himself in his remand report that the objections filed by the assessee were not disposed of prior to completion of the reassessment. This is not a case where objections were cursorily dealt with or inadequately reasoned; rather, it is a case where the statutorily mandated step was completely bypassed. Such a lapse, in our considered view, goes to the very root of the assumption of jurisdiction under section 147 of the Act and is not capable of being condoned as a mere procedural irregularity. 13. The Hon’ble Bombay High Court in KSS Petron Pvt. Ltd. vs. ACIT (supra), while dealing with an identical issue, has authoritatively laid down that once an assessment order is found to be without jurisdiction for failure to follow the mandate of GKN Driveshafts, there remains no question of restoring the matter to the file of the Assessing Officer for passing a fresh order. The Hon’ble Court has categorically ruled that an order passed without complying with the jurisdictional precondition Printed from counselvise.com ITA No.6282/Mum/2025 Amish Anantrai Modi 7 cannot be resuscitated by remand, for to do so would, in effect, legitimise an order which is void at inception. The ratio emanating from the said judgment is that violation of the procedure prescribed in GKN Driveshafts does not merely vitiate the assessment procedurally, but strikes at the very authority of the Assessing Officer to proceed further. 14. The binding principle flowing from KSS Petron Pvt. Ltd. is that where the assumption of jurisdiction itself is flawed due to non-compliance with the mandatory preconditions laid down by the Supreme Court, the only consequence in law is annulment of the proceedings, and not restoration. The Hon’ble High Court has expressly cautioned that permitting remand in such cases would confer an unwarranted licence upon the Assessing Officer to pass jurisdictionally infirm orders with impunity, secure in the knowledge that the only consequence would be a remand for curing defects, thereby leading to needless harassment of the assessee and revival of stale matters. 15. We further find that the Hon’ble Rajasthan High Court in Foset (India) Pvt. Ltd. has taken the same principle to its logical conclusion by holding that non-disposal of objections is not a curable procedural lapse, but a jurisdictional defect which vitiates the reassessment proceedings in their entirety. The Hon’ble High Court has clearly ruled that the failure to decide objections deprives the Assessing Officer of the authority to proceed further and renders the subsequent reassessment order Printed from counselvise.com ITA No.6282/Mum/2025 Amish Anantrai Modi 8 void ab initio. This principle, in our considered view, squarely governs the controversy before us. 16. The attempt of the Revenue to rely upon the decision in Home Finders Housing Ltd. (supra) does not advance its case, inasmuch as the said decision stands eclipsed by the subsequent authoritative pronouncement of the Hon’ble jurisdictional Bombay High Court in KSS Petron Pvt. Ltd. (supra), which is binding upon us. Moreover, the Mumbai Bench of the Tribunal in Prashanth Sunil Kumar Bohra vs. ITO [174 taxmann.com 907], following KSS Petron, has reiterated that where objections are not disposed of prior to completion of reassessment, the only legally sustainable course is to quash the proceedings, and not to remand them. 17. In the light of the above judicial position, we are unable to persuade ourselves to accept the contention that the matter can be restored to the file of the Assessing Officer for curing the defect. Once the assumption of jurisdiction itself is found to be vitiated for non-compliance with the mandatory procedure laid down by the Supreme Court and reinforced by the jurisdictional High Court, the superstructure erected thereon must necessarily fall. To hold otherwise would be to dilute the discipline of jurisdictional control and erode a valuable procedural safeguard conferred upon the assessee. Printed from counselvise.com ITA No.6282/Mum/2025 Amish Anantrai Modi 9 18. Viewed thus, and respectfully following the binding ratio of the Hon’ble Bombay High Court in KSS Petron Pvt. Ltd. and the persuasive reasoning of the Hon’ble Rajasthan High Court in Foset (India) Pvt. Ltd., we hold that the reassessment order dated 23.06.2021 passed under section 143(3) read with section 147 of the Act is without jurisdiction and deserves to be quashed, as the objections filed by the assessee against reopening were admittedly not disposed of prior to completion of assessment, in clear violation of the law laid down by the Hon’ble Supreme Court in GKN Driveshafts (India) Ltd. 19. Consequently, the notice issued under section 148 of the Act and all proceedings subsequent thereto are hereby quashed. In view of this jurisdictional annulment, we do not deem it necessary to adjudicate upon the merits of the additions made in the reassessment order. 20. In the result, the appeal filed by the assessee is allowed. Order pronounced on 21st January, 2026. Sd/- (MAKARAND VASANT MAHADEOKAR) Sd/- (AMIT SHUKLA) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai; Dated 21/01/2026 KARUNA, sr.ps Printed from counselvise.com ITA No.6282/Mum/2025 Amish Anantrai Modi 10 Copy of the Order forwarded to : BY ORDER, (Asstt. Registrar) ITAT, Mumbai 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. //True Copy// Printed from counselvise.com "