Reassessment set aside for non-disposal of objections: Analysis of Vodafone Idea Limited vs DCIT (ITAT Delhi)

Background of the dispute

The Delhi Bench of the Income Tax Appellate Tribunal dealt with two connected matters filed by Vodafone Idea Limited for Assessment Year 2005-06, arising from proceedings initiated under Section 147 r.w.s 143(3) of the Income Tax Act 1961. Both appeals challenged an order passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre dated 28.09.2025.

The core legal controversy in the lead appeal related to the validity of reassessment framed on 28.03.2013, where the assessee contended that the reassessment was void because the Assessing Officer (AO) had not properly dealt with its objections to the reopening of assessment, as mandated by the Supreme Court in GKN Driveshafts (India) Ltd. v. ITO, 259 ITR 19 (SC).

Multiple appeals: one treated as duplicate

Treatment of twin appeals

  • The assessee had filed:
    • ITA No. 7730/Del/2025
    • ITA No. 7731/Del/2025

At the hearing, learned counsel for the assessee candidly clarified that ITA No. 7731/Del/2025 was only a duplicate appeal arising from the same impugned order and same cause of action.

The Tribunal therefore:

  • Dismissed ITA No. 7731/Del/2025 as a duplicate filing; and
  • Proceeded to adjudicate only the lead appeal, ITA No. 7730/Del/2025, on merits.

Central issue: Validity of reassessment under Section 147

In ITA No. 7730/Del/2025, the assessee’s primary ground was that the reassessment order completed on 28.03.2013 could not be sustained in law because:

  1. The assessee had filed objections to the reasons recorded for reopening under Section 147;
  2. The AO did not pass a separate, speaking order disposing of these objections before proceeding with and finalising the reassessment;
  3. This omission, as per the assessee, constituted a direct violation of the binding procedure laid down by the Supreme Court in GKN Driveshafts (India) Ltd. v. ITO, which requires:
    • Furnishing of reasons on request;
    • Opportunity to the assessee to file objections; and
    • Passing of a reasoned order on such objections before continuing with reassessment.

Accordingly, the assessee argued that the failure to follow this mandatory procedure vitiated the entire reassessment exercise.

Revenue’s defence of the reassessment

The Department, relying heavily on the discussion in the CIT(A) order (particularly page 10, para 2), urged that:

  • The AO had, in substance, addressed the assessee’s objections; and
  • The reassessment should therefore be treated as valid, with any lapse being at best a curable procedural irregularity and not going to the root of jurisdiction.

However, the Tribunal was not persuaded by this line of argument.

ITAT’s reliance on earlier decision in ITO vs Hardeep Singh

To resolve the controversy, the Tribunal placed substantial reliance on its own recent decision in:

ITO vs. Hardeep Singh, ITA No. 1152/Del/2020, order dated 27.12.2024

In that case, the Tribunal had examined, in considerable detail, whether the AO’s communication could be treated as a valid disposal of objections filed against reopening.

Brief factual outline of Hardeep Singh case

In ITO vs. Hardeep Singh, the chain of events included:

  1. Notice under Section 148 issued on 23.03.2018.
  2. The assessee filed a return declaring income of Rs. 1,34,955/- and agricultural income of Rs. 2,70,468/-.
  3. Objections to reopening were filed on 23.08.2018.
  4. The AO completed reassessment under Section 143(3) r.w.s 147 on 31.12.2018, adding Rs. 2,57,38,200/- on account of cash deposits, without passing a distinct order on objections.
  5. The assessee challenged both:
    • The reassessment jurisdiction; and
    • The addition on merits before the CIT(A).