Validity of reassessment without disposing of the objections of the assessee

In MGM Exports v. Dy. CIT (2009)23 DTR (Guj) 356 the Assessing Officer issued notice under section 148 for reopening the completed assessment. The assessee asked for the reasons based on which the reopening was resorted to by the AO. The assessee also gave his objections for the reasons furnished by the AO for initiation of reassessment proceedings. The AO without passing a speaking order in response to the objections should not have proceeded with the reassessment. The court hence held that the AO must dispose of the objections raised by the assessee and thereafter undertake the reassessment proceedings, if necessary. Precedent for the decision could be found in GKN Driveshafts(India) Ltd., v. ITO (2003) 259 ITR 19 (SC).

Within four years the AO can resort to reassessment even where the assessee had disclosed all material facts:

In Lakshmi Machine Works Ltd V. Asstt.CIT (2009) 23 DTR (Chennai) (Trib) 443 the assessment was completed under section 143(3) of the Act. Later it was found that the provisions of clause (iii) of the Explanation to section 115JA was not correctly applied. The AO hence initiated proceedings under section 147 and issued notice under section 148. The tribunal held that the notice issued under section 148 within 4 years from the end of the relevant assessment year is valid notwithstanding full and complete disclosure of all material facts by the assessee at the time of assessment or in the return furnished. The decision hence was in favour of Revenue.