LATA HOLDING PRIVATE LIMITED,GOREGAON V. I.T.O., WARD-12(3)(1), MUMBAI

ITA 1959/MUM/2025

AI Insights

Lata Holdings Private Limited, a Non-Banking Finance Corporation, appealed against the reassessment order for the assessment year 2014-15, which included additions under sections 68 and 69C of the Income Tax Act, 1961. The primary legal contention was the procedural impropriety in the issuance of notices and the subsequent reassessment order, which the appellant argued was in violation of established judicial precedents requiring a specific timeline for the AO to act after disposing of objections. The Tribunal examined the timeline and procedural steps taken by the AO and found them to be in breach of the mandated process, leading to the allowance of the appeal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 652650 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-06-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Other Referred Cases: GKN Driveshafts (India) Ltd. v. ITO [2003] 259 ITR 19 (SC), Asian Paints Limited vs. DCIT (2008) 296 ITR 90, Shree Raj Foundation vs. DDIT (E)-1(2) in ITA No. 18/Mum/2023, Fomento Resorts Hotels Ltd Vs. ACIT (238 ITR 38) (Bom)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ADITYA RAI
• Assessee Lawyers: K. GOPAL; OM KANDALKAR
• Keywords: Reopening of assessment
• Section: 147; 148; 142(1); 68; 69C

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, MUMBAI BEFORE SHRI SANDEEP GOSAIN, (JUDICIAL MEMBER) & SHRI PRABHASH SHANKAR, (ACCOUNTANT MEMBER) I.T.A. No. 1959/Mum/2025 Assessment Year: 2014-15 Lata Holdings Private Limited 603A, Gardenia Tower, Vasant Valley Complex, Film City Road, Goregaon - 400063 PAN: AAACL2526K Vs. Income Tax Officer, Ward 12(3)(1), Mumbai (Appellant) (Respondent) Appellant by Shri K. Gopal & Shri Om Kandalkar Respondent by Shri Aditya Rai, (SR. D.R.) Date of Hearing 12.06.2025 Date of Pronouncement 17.06.2025 ORDER Per: SHRI. SANDEEP GOSAIN, J.M.: The present appeal has been filed by the assessee challenging the impugned order dated 24/01/2025, passed u/s. 250 of the Income Tax Act, 1961 ('the Act'), by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi ('Ld. 2 ITA No.1959/Mum/2025; A.Y. 2014-15 Lata Holdings Pvt. Ltd. CIT(A)'), for the assessment year 2014-15. The assessee has raised the following grounds of appeal: “1. Legal issues: 1. The actions of the Ld. Income Tax Officer Ward 12(3)(1), Mumbai (hereinafter referred to as 'Ld. A.O.) in issuing the reasons recorded along with the notice dated 28.06.2021 issued under section 143(2) of the Act is in violation of the ratio laid down by the Apex Court in GKN Driveshafts (India) Ltd. v. ITO [2003] 259 ITR 19 (SC). Hence, the notice dated 31.03.2021 issued u/s 148 of the Act is unlawful and therefore, void ab initio, II. On merits: 2. The National Faceless Appeal Centre, Delhi (hereinafter referred to as 'NFAC\") is not justified in setting aside the matter to the Assessing Officer for de novo consideration without appreciating that the provisions of section 68 of the Act are not applicable. Hence, the addition amounting to Rs.60,00,000/- made by invoking the provisions of section 68 of the Act, without appreciating the facts and circumstances of the present case, is unsustainable, unlawful, and therefore, bad in law. 3. The NFAC is not justified in setting aside the matter to the Assessing Officer for de novo consideration without appreciating that the provisions of section 69C of the Act are not applicable. Hence, the addition amounting to Rs.1,20,000/- made by invoking the provisions of section 69C of the Act, without appreciating the facts and circumstances of the present case, is unsustainable, unlawful, and therefore, bad in law.” 2. The brief facts of the case are that the assessee is a Non- Banking Finance Corporation (NBFC) company. The assessee had filed its return of income on 29/04/2014, declaring total income at Rs. 1,26,060/-. Notice u/s. 148 of the Act was issued to the assessee on 29/04/2021, and in compliance to notice u/s. 148, the assessee filed his return of income for the year under consideration. We noticed that the assessment order in this case 3 ITA No.1959/Mum/2025; A.Y. 2014-15 Lata Holdings Pvt. Ltd. was passed on 28/03/2022, u/s. 147 r.w.s. 144B of the Act, determining total income at Rs. 62,40,060/-after making addition various additions. 3. Aggrieved by the said additions, assessee preferred appeal, but the same was dismissed by Ld. CIT(A). 4. Aggrieved by the order of Ld. CIT(A) assessee has preferred the present appeal before us, on the grounds mentioned above. 5. At the outset, Ld. AR has raised legal issue with regard to challenging the order of AO passed u/s. 147 r.w.s. 144 of the Act. Since, the legal issue has been recked up firstly and the same goes to the roots of the case, therefore, we are adjudicating the same as ground no. 1. 6. We have heard the Counsels for both the parties, perused the materials placed on record, judgements cited before us and also the orders passed by revenue authorities. 7. From the record, we noticed that as per Ld. AR, the entire proceedings are liable to be quashed/annulled because the time gap between the date of order in disposing off the objections raised by the assessee and initiation of proceedings u/s. 147 of the Act and the date of order of assessment is less than a month, therefore, the entire proceedings are in direct violation of the decision of the 4 ITA No.1959/Mum/2025; A.Y. 2014-15 Lata Holdings Pvt. Ltd. Hon'ble Bombay High Court in the case of Asian Paints Limited vs. DCIT (2008) 296 ITR 90, wherein it has specifically been mentioned that if the Assessing Officer does not accept the objections so filed, then in that eventuality, the AO shall not proceed further in the matter within a period of four weeks from the date of receipt of service of the said order on objections of the assessee. 8. In order to adjudicate this ground, it is necessary to evaluate the facts of the present case. In order to substantiate the said claim, the assessee has also filed all the required documents along with indexation. The indexation/note filed by the assessee is reproduced hereinbelow: Sr. No. Particulars Page No. 1. Copy of the acknowledgement of returns dated 29.04.2014 filed for the Α.Υ. 2014-15. 1 2. Copy of the notice dated 31.03.2021 issued under section 148 of the Act. 2 3. Copy of the acknowledgement of returns dated 29.04.2021 filed in response to the abovementioned notice. 3 4. Copy of the notice dated 28.06.2021 issued under section 143(2) r.w.s. 147 of the Act. 4-8 5. Copy of the objections dated 01.10.2021 filed in response to the above notice. 9-11 6. Copy of notice dated 03.12.2021 issued under section 142(1) of the Act. 12-13 5 ITA No.1959/Mum/2025; A.Y. 2014-15 Lata Holdings Pvt. Ltd. 7. Copy of the letter dated 15.01.2022 seeking adjournment. 14 8. Copy of the letter dated 21.03.2022 filed in response to the above notice. 15-17 9. Copy of the objections dated 15.03.2022 disposing off the above objections 18-19 9. From the perusal of the documents placed on record and also the note submitted by the assessee, we found that the objections were filed by the assessee and uploaded the same on the portal on 08/10/2021 and the AO has passed the order dated 15/03/2022 while disposing off the said objections filed by he assessee and consequently, AO also passed order of assessment on 28/03/2022 itself, therefore, in this way, the order of assessment is in clear violation of the directions of the jurisdictional Bombay High Court in the case of Asian Paints vs. DCIT (supra). As in the present case, the order of assessment has been passed by the AO after 12 days of passing of order of disposing off the objections filed by the assessee. The said proposition has also been upheld by Hon'ble Supreme Court in the case of GKN Driveshaft Ltd. vs. ITO (2003) 259 ITR 19 (SC). Even the coordinate bench of ITAT in the case of Shree Raj Foundation vs. DDIT (E)-1(2) in ITA No. 18/Mum/2023, order dated 18/07/2023, have already dealt with 6 ITA No.1959/Mum/2025; A.Y. 2014-15 Lata Holdings Pvt. Ltd. the similar situation and the operative portion is contained at para no. 10 of the said order which is reproduced hereinbelow: “10. In the light of the aforesaid decisions which are binding on this Tribunal, we note in the instant case that even though the assessee had objected to the action of AO reopening the assessment for AY. 2009- 10, by filing its objection vide letter dated 23.01.2014, the AO without disposing of the objection (by passing a separate order) has passed the re-assessment order (by disposing of the objection in the re-assessment order dated 07.03.2014). This action of the AO is against the binding decision of the Hon’ble Jurisdictional High Court in the case of M/s. Asian Paints (supra) wherein the Hon’ble High Court has directed the AO to give at least four weeks time [after service of order not accepting the objection] and thereafter only to take further action i.e, to frame re-assessment. And the Hon’ble High Court had directed the AO of the department to follow the afore-said procedure strictly in all cases of re-opening of assessment [and this order of High Court was dated 29.01.2007], so AO was bound to follow it. By rejecting the objection raised by assessee along with re-assessment order, the AO was defeating the purpose and binding decision of Hon’ble High Court which itself makes the omission on the part of AO to be classified as arbitrary, whimsical and against Rule of Law. Therefore, the action of AO being against the binding direction of Hon’ble Supreme Court in the case of GKN Driveshafts (India) Ltd. (supra) and Hon’ble Bombay High Court Fomento Resorts Hotels Ltd (supra) and Asian Paints (supra), the action of the AO to reopen the assessment is not legally sustainable and is held to be bad in law. And therefore, the assessee succeeds on the legal ground. And therefore, the re- assessment order passed pursuant to the reopening is consequently held to be null in the eyes of law.” 10. Therefore, after having gone through the entire facts of the case as narrated above, we are of the considered view that the action of the AO is against the binding direction of Hon'ble Supreme Court in the case of GKN Driveshaft Ltd. (supra) and Bombay High Court decision in the case of Asian Paints Ltd. 7 ITA No.1959/Mum/2025; A.Y. 2014-15 Lata Holdings Pvt. Ltd. (supra) and Fomento Resorts Hotels Ltd Vs. ACIT (238 ITR 38) (Bom). 11. Since the action of the AO to reopen the assessment is not legally sustainable and is thus held to be bad in law. Therefore, we allow this ground of appeal raised by the assessee. 12. Since, assessee has succeeded on the legal ground, therefore, the reassessment order passed pursuant to the reopening is consequently held to be null and void in the eyes of law. 13. The other grounds raised by the assessee are not being adjudicated as the same are academic. 14. In the result, the appeal filed by the assessee is allowed. Order pronounced in the open court on 17/06/2025 Sd/- Sd/- (PRABHASH SHANKAR) (SANDEEP GOSAIN) Accountant Member Judicial Member Mumbai: Dated: 17/06/2025 Karishma J. Pawar, Stenographer Copy of the order forwarded to: (1)The Appellant (2) The Respondent (3) The CIT (4) The CIT (Appeals) (5) The DR, I.T.A.T. True Copy 8 ITA No.1959/Mum/2025; A.Y. 2014-15 Lata Holdings Pvt. Ltd. By order (Asstt. Registrar) ITAT, Mumbai "