ITAT quashes Reassessment Order based on invalid Re-Assessment Notice issued without Jurisdiction

The Income Tax Appellate Tribunal (ITAT), Delhi bench consisting of Pradip Kumar Kedia, Accountant Member and Yogesh Kumar US, Judicial Member quashed reassessment order framed as result of invalid re-assessment notice.

The assessee-company,Garg Acrylics Ltd. filed its original return of income declaring total income of Rs.3,20,64,950/-. The return of income filed was subjected to scrutiny assessment under Section 143(3). Thereafter, a notice under Section 148 of the Act was issued seeking to reopen the completed assessment. The re-assessment order was consequently finalized after making additions/disallowances on account of bogus purchases amounting to Rs.9,17,83,845/-. The impugned re-assessment order was thus framed determining the re-assessed income at Rs.12,38,48,800/- as against regular assessment under Section 143(3) at Rs.320,64,950/-.The assessee challenged the re-assessment order before the Commissioner of Income Tax (CIT) on two counts, namely, (i) validity of jurisdiction assumed under Section 148 of the Act and (ii) merits of the additions so made in the re-assessment proceedings. The CIT affirmed the action of the Assessing Officer on both counts, i.e., jurisdiction under Section 147/148 as well as merits of the addition towards bogus purchases. Aggrieved by the order of the CIT , the assessee preferred appeal before the Tribunal. The assessee challenged (i) the jurisdiction to issue notice under Section 148 and frame reassessment (ii) the correctness of addition/disallowance towards bogus purchases on merits.

The Tribunal observed “Assessing Officer was obviously not competent to invoke the provision of Section 147 of the Act which are drastic in nature. The assumption of jurisdiction under Section 147 is thus clearly without sanction of law and void ab initio. The consequent reassessment order is thus clearly bad in law. In this view of the matter, the reassessment order framed in consequence of invalid notice issued under Section 148 is requires to be quashed. Having held the impugned re-assessment order framed without fulfilling prerequisites of Section 147 of the Act to be bad in law, we do not consider it expedient to deal with the challenges raised by the assessee on merits of additions, being an infructuous exercise.”