SC Dismisses Revenue SLP Against Vivo; Upholds HC Ruling Quashing Reassessment for Violation of Natural Justice

The case arose from reassessment proceedings initiated against Vivo Mobile India Pvt. Ltd. for AY 2018-19 based on information from the Insight Portal alleging bogus purchases from a purported accommodation entry provider. In response to the show cause notice under Section 148A(b), the assessee clarified that it had no dealings with the named entity and instead had transactions with a different contractor, supported by documents.

Thereafter, the Revenue conducted its own verification and concluded that the corrected entity was non-existent and merely a paper entity. However, without confronting the assessee with this new allegation or issuing a fresh notice, the Assessing Officer passed an order under Section 148A(d) and issued a reassessment notice under Section 148.

Main Issue: Whether reassessment proceedings are valid when the assessee is not given an opportunity to respond to new adverse material relied upon by the revenue.

HC and Supreme Court’s Decision: The Hon’ble High Court set aside the reassessment proceedings, holding that the Revenue violated principles of natural justice by relying on fresh material, i.e., the alleged non-existence of the contractor, without allowing the assessee opportunity to respond. Since this allegation was not part of the original show cause notice under Section 148A(b), the entire process stood vitiated.

The Court emphasized that once an assessment is concluded, reopening requires strict adherence to statutory safeguards, including proper disclosure of material and opportunity to reply. Failure to do so deprived the assessee of a fair hearing.

The Supreme Court dismissed the Revenue’s SLP, observing that no interference was warranted under Article 136, thereby affirming the High Court’s ruling.

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