Parallel Proceedings U/S 143(3) and 147 Impermissible: ITAT Quashes Reassessment Against Lalit Kumar Modi

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) quashed the reassessment proceedings initiated against former IPL chairman Lalit Kumar Modi for the Assessment Year (AY) 2010–11, holding that reassessment under Section 147/148 of the Income Tax Act cannot be initiated while regular scrutiny assessment proceedings under Section 143(3) are still pending. The bench of Vikas Awasthy (Judicial Member) and Brajesh Kumar Singh (Accountant Member) has observed that initiating reassessment during the pendency of scrutiny assessment lacked jurisdiction. The reassessment order was also procedurally invalid for failure to decide objections. The assessee had filed his income tax return for AY 2010–11 on July 28, 2010, declaring an income of Rs. 54.81 lakh. The return was selected for scrutiny and a notice under Section 143(2) was issued on July 27, 2011. During the pendency of the scrutiny proceedings, the Assessing Officer (AO) issued a notice under Section 148 on March 29, 2012, seeking to reopen the assessment on the ground of alleged escaped income. The reasons for reopening were supplied to the assessee later, and objections against the reopening were filed on March 22, 2013. However, the AO completed the assessment on March 28, 2013 determining the total income at Rs. 20.12 crore, without disposing of the assessee’s objections to the reassessment notice. The reassessment order involved major additions including Rs. 4.24 crore as unexplained expenditure through credit card transactions, Rs. 9.65 crore relating to lease rental and fuel expenses of a private jet and Rs. 5.66 crore towards alleged liability linked to Golden Wings Pvt. Ltd. The assessee challenged both the validity of the reassessment proceedings and the merits of the additions before the Tribunal. Senior Advocate Sachit Jolly, appearing for the assessee, raised two key jurisdictional objections. Firstly, reassessment proceedings were initiated while scrutiny proceedings were still pending, which is impermissible in law. Secondly, the AO failed to dispose of the assessee’s objections to the reopening, contrary to the mandatory procedure laid down by the Supreme Court in GKN Driveshafts (India) Ltd. v. ITO. During appellate proceedings, the Assessing Officer admitted in a remand report that no record existed showing that the objections were disposed of before completing the reassessment. The Tribunal examined the assessment order and noted that although it was titled as an order under Section 143(3), the contents clearly indicated that it was passed pursuant to reassessment proceedings under Sections 147/148. The bench emphasized that the law does not permit two parallel assessment proceedings—one under Section 143(3) and another under Section 147—at the same time. Relying on the Delhi High Court ruling in KLM Royal Dutch Airlines v. ADIT, the Tribunal reiterated that once scrutiny proceedings have commenced, the Assessing Officer must first conclude those proceedings before invoking reassessment provisions. The Tribunal also referred to the Supreme Court decision in Trustees of H.E.H. the Nizam’s Supplemental Family Trust v. CIT, which held that reassessment cannot be initiated unless existing assessment proceedings are concluded. The bench further held that the reassessment order was also invalid because the AO failed to dispose of the objections filed by the assessee against reopening, which is a mandatory requirement under the Supreme Court’s ruling in GKN Driveshafts. The Tribunal observed that the department’s own remand report acknowledged that no document existed to prove that the objections were decided, confirming procedural violation. The Tribunal quashed the assessment order and allowed the appeal of the assessee. Since the case was decided on jurisdictional grounds, the Tribunal did not examine the merits of the additions, leaving them open. Case Details Case Title: Lalit Kumar Modi Versus DCIT Citation: JURISHOUR-249-ITA-2026(DEL) Case No.: ITA No.1636/DEL/2023 (A.Ys. 2010-11) Date: 06.03.2026 Counsel For Petitioner: Sachit Jolly, Sr. Advocate Counsel For Respondent: M.S Nethrapal, CIT-DR Click Here To Read Order Read More: Credit Support Framework for MSME E-commerce Exporters Notified: DGFT

Parallel Proceedings U/S 143(3) and 147 Impermissible: ITAT Quashes Reassessment Against Lalit Kumar Modi

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