P. C. — Rule. Respondents waive service. By consent of parties, Rule is made returnable forthwith and heard finally.
2. This Petition under Article 226 of the Constitution of India challenges a notice dated 14th March, 2014 issued under Section 148 of the Income Tax Act(the "Act") seeking to reopen the assessment for the AY 2010-11 and the order dated 3rd February, 2015 passed under Section 143(3) read with Section 147 of the Act for the AY 2010-11.
3. The undisputed facts in the present case are that consequent to the reopening notice dated 14th March, 2014, the Assessing Officer has passed an assessment order dated 3rd February 2015. However, the Assessing Officer has passed the order of reassessment on 3rd February, 2015 for AY 2010-11 without disposing of the Petitioner's objections dated 2nd May 2014 to the reopening notice dated 14th March 2014 in complete defiance of the decision of the Apex Court in the case of GKN Driveshafts (India)Ltd v/s Income Tax Officer and Others, reported in 259 ITR 19(SC). The Apex Court in the above case had laid down that before taking up the reassessment consequent to reopening notice under section 147 of the Act, the reasons recorded for reopening the assessment should be forwarded to the Assessee and if the Assessee objects to the same, he should first dispose of its objections to the reopening notice.
4. When the Petition reached effective hearing for the first time on 23rd July 2015 for admission, the Revenue accepted the position that the order dated 3rd February 2015 passed on reopening of assessment for AY 2010-11 is without jurisdiction and the same be set aside. However, we were disturbed as on quite a few occasions we had noticed the orders on reassessment were being passed without disposing of the objections. However, in Court the Revenue accepts the position that the order is not sustainable. We were of the view that if a mechanism could be put in place by the Revenue to recall an order such as this (where even the Revenue concedes that the order dated 3rd February 2015 is without jurisdiction). This for the reason that otherwise Assessees are being unnecessarily harassed and have to move the Court to remedy the injustice to have the order which is ex facie without jurisdiction, set aside.
5. In fact, on 7th December, 2015 the Principal Commissioner of Income Tax along with the Commissioner of Income Tax(Judicial) attended Court and conceded the position that the impugned order dated 5th February, 2015 is not sustainable in law and should not have been passed in defiance of the decision of the Supreme Court in GKN Driveshafts(India)Ltd (supra). We were also informed that appropriate directions would be issued to ensure that mistake such as these do not occur in the future. However, they sought time to consider the best possible manner this illegality could be remedied/cured and that some mechanism could be put in place to take care in the future, if and when such a situation arises i.e. where even the officers of the Revenue accept that the order is without jurisdiction. Thus, this Petition was adjourned to enable the Commissioner of Income Tax to consider the same and put in place an appropriate mechanism to ensure that the Assessees are not unnecessarily harassed.
6. Today, when the Petition reached hearing, the learned Additional Solicitor General informs us that the Commissioner of Income Tax has on 16th December, 2015 passed an order under Section 264 of the Act setting aside the order of the reassessment dated 3rd February, 2015 passed by the Assessing Officer. It further directed the Assessing Officer to commence the reassessment proceedings afresh after disposal of the Petitioner's objections. However, we are taken aback as we were given to understand that the Commissioner of Income Tax will consider and a mechanism would be put in place for future while curing this injustice. It is very pertinent to note that we could have set aside the order dated 3rd February 2015 passed on merit being an order without jurisdiction on the first effective hearing itself. This for the reason that it was accepted by the Revenue that the order dated 3rd February 2015 is without jurisdiction. We had adjourned this petition from time to time with the hope that a mechanism would be created by the Revenue to set right an injustice which is not disputed in this case and found also in other cases. We find that no attempt has been made on the part of the officers of the Revenue to try and place some procedure / mechanism in place to cure such admitted injustice.
7. At this stage, the Additional Solicitor General on instructions, states that the Revenue is withdrawing its order dated 16th December, 2015 passed in the case of the Petitioner. In the above view, we are not called upon to consider the validity of the order dated 16th December, 2015 passed under Section 264 of the Act, as the same is withdrawn.
8. It is accepted by the Revenue that passing of an assessment order without disposing of the objections to the reasons recorded in support of the reopening notice, is an order without jurisdiction being in defiance of the Apex Court's decision in GKN Driveshafts (India) Ltd (supra). Therefore, we set aside the order dated 3rd February, 2015 passed on reassessment for the A.Y. 2010-11.
9. Rule is made absolute in the above terms, with no order as to costs.