ITAT Quashes Reassessment Proceedings Due to Procedural Lapses and Absence of New Tangible Material:

ITAT Quashes Reassessment Proceedings Due to Procedural Lapses and Absence of New Tangible Material

The appellant, Vilas Polymer Private Limited, challenged separate orders passed by the CIT(A), which sustained reassessment orders for multiple assessment years from 2014-15 to 2019-20. The original assessments were concluded under Section 143(3) of the Income Tax Act.

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Thereafter, the Assessing Officer (AO) initiated reassessment proceedings under Section 147 by issuing notices under Section 148. The primary basis for these notices was information obtained during a search and seizure operation in the case of M/s. Gouri Shankar & Others, which suggested that the assessee had engaged in obtaining accommodation entries and inflated expenses.

For the Assessment Year 2019-20, the AO had issued a first notice under Section 148 which was dropped, only to issue a second notice on the same grounds without following the newly introduced mandatory procedure under Section 148A.

ITAT Ruled: The Income Tax Appellate Tribunal (ITAT), allowed all six appeals filed by the assessee. The Tribunal observed that for most of the assessment years, the AO had already examined the relevant details during original assessment proceedings, and the reassessment was based on the same set of documents, amounting to a mere "change of opinion."

The ITAT noted that the AO issued a second notice under Section 148, after the first notice was effectively abandoned or found defective. The Bench held that the department cannot use a second notice to revive a bad assessment or bypass the mandatory conditions provided under Section 148A. Since the AO failed to fulfill the statutory requirements for the second notice, the proceedings were declared bad in law and quashed.

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