Tribunal quashes reassessment for procedural lapses in tax notice, assessee's appeals partly allowed.

The Tribunal quashed the reassessment proceedings for A.Y. 2012-13 and A.Y. 2013-14 due to procedural lapses in issuing the notice under Section 148 and failure to supply reasons to the assessee. Consequently, other grounds became academic and were not adjudicated. The assessee's appeals were partly allowed.

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Issues Involved:
1. Validity of proceedings under Section 147/148 due to non-supply of reasons for issuing notice.
2. Validity of proceedings under Section 147/148 due to lack of mandatory sanction/approval from the Commissioner of Income Tax.
3. Legality of additions made by the Assessing Officer (AO) after rejecting the books of accounts.
4. Specific additions challenged by the assessee:
- Anonymous donations.
- Difference in cost of construction.
- Payment for purchase of land.
- Bogus creditors.
- Difference in advertisement expenses.
- Disallowance of exemption under Section 10(23C)(iiiad).

Detailed Analysis:

1. Validity of proceedings under Section 147/148 due to non-supply of reasons for issuing notice:
The assessee argued that the reasons for issuing the notice under Section 148 were not supplied despite multiple requests. The Tribunal referenced the Supreme Court's ruling in *GKN Driveshafts (India) Ltd. v/s Income Tax Officer* (125 Taxman 963 (SC)), which mandates that the AO must furnish reasons within a reasonable time. The Tribunal found that the AO failed to supply these reasons, rendering the reassessment proceedings invalid.

2. Validity of proceedings under Section 147/148 due to lack of mandatory sanction/approval from the Commissioner of Income Tax:
The assessee contended that the notice under Section 148 was issued without the mandatory sanction of the Commissioner of Income Tax (Exemption). The Tribunal examined the timeline and found discrepancies in the approval process. The approval was granted on 26.03.2019, but the notice was issued on 25.03.2019. This procedural lapse led the Tribunal to conclude that the notice was issued without proper jurisdiction and sanction, thus invalidating the reassessment proceedings.

3. Legality of additions made by the Assessing Officer (AO) after rejecting the books of accounts:
The AO had rejected the books of accounts under Section 145(3) and made several additions. The Tribunal noted that the AO's actions were inconsistent, as the same set of books was used to make additions after being rejected. This inconsistency was deemed illegal and against the law.

4. Specific additions challenged by the assessee:

- Anonymous donations: The Tribunal upheld the addition of Rs. 6,17,900 on account of anonymous donations, as the assessee failed to provide satisfactory explanations during the assessment.

- Difference in cost of construction: The Tribunal sustained the addition of Rs. 4,24,205 due to the difference in the cost of construction, as the valuation report was not provided to the assessee for verification.

- Payment for purchase of land: The addition of Rs. 4,45,000 was sustained as the payment for the purchase of land was not satisfactorily explained.

- Bogus creditors: The Tribunal upheld the addition of Rs. 16,53,383 on account of bogus creditors.

- Difference in advertisement expenses: The addition of Rs. 26,87,000 was sustained due to unexplained differences in advertisement expenses.

- Disallowance of exemption under Section 10(23C)(iiiad): The Tribunal did not specifically address this issue in detail, as the reassessment proceedings were already quashed.

Conclusion:
The Tribunal quashed the reassessment proceedings for both A.Y. 2012-13 and A.Y. 2013-14 due to procedural lapses in issuing the notice under Section 148 and failure to supply reasons to the assessee. Consequently, other grounds became academic and were not adjudicated. The assessee's appeals were partly allowed.

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