Tribunal upholds notice validity but deems reassessment order invalid for lack of notice, leading to appeal dismissal.

The tribunal upheld the validity of the notice issued under Section 148 of the Income Tax Act, as the Assessing Officer had obtained necessary sanction and credible information justified the reopening of assessment. However, the reassessment order was deemed invalid due to the non-issuance of notice under Section 143(2), following precedents that such omission is fatal and renders the order bad in law. Consequently, the reassessment order was quashed, leading to the dismissal of the Revenue's appeal.

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Issues Involved:
1. Validity of notice issued under Section 148 of the Income Tax Act.
2. Validity of reassessment order without issuance of notice under Section 143(2).
3. Partial confirmation of addition on account of bogus purchases.

Issue-wise Detailed Analysis:

1. Validity of Notice Issued Under Section 148 of the Income Tax Act:
The assessee argued that the Assessing Officer (AO) did not record a finding that there was a failure on the part of the assessee to disclose all material facts necessary for the assessment and did not obtain sanction from the Commissioner of Income Tax (CIT) before issuing the notice under Section 148, as required under Section 151 of the Act. The tribunal examined the records and found that the AO had indeed obtained the necessary sanction from the CIT before issuing the notice under Section 148. The tribunal also noted that the AO had received credible information from the Investigation Wing regarding the assessee's involvement in accommodation entries, which justified the reopening of the assessment. Therefore, the tribunal dismissed the assessee's ground and upheld the validity of the notice under Section 148.

2. Validity of Reassessment Order Without Issuance of Notice Under Section 143(2):
The assessee contended that the reassessment order was invalid as no notice under Section 143(2) was issued. The tribunal noted that the issuance of notice under Section 143(2) is mandatory for the AO to assume jurisdiction and complete the scrutiny assessment procedure. The tribunal referred to various judicial precedents, including the Supreme Court's decision in Hotel Blue Moon, which held that the omission to issue notice under Section 143(2) cannot be a procedural irregularity and is not curable. The tribunal also referred to the Delhi High Court's decision in Pr. CIT v/s Shri Jai Shiv Shankar Traders (P) Ltd., which clarified that failure to issue notice under Section 143(2) is fatal to the reassessment order. The tribunal concluded that the reassessment order was passed without jurisdiction and was bad in law due to the non-issuance of notice under Section 143(2). Consequently, the tribunal quashed the reassessment order.

3. Partial Confirmation of Addition on Account of Bogus Purchases:
The assessee challenged the partial confirmation of the addition of Rs. 80,17,790 (being 12.50% of total alleged bogus purchases of Rs. 6,41,42,308) made by the AO. The tribunal noted that since the reassessment order was quashed on the ground of non-issuance of notice under Section 143(2), the issue of addition on account of bogus purchases became infructuous. Therefore, the tribunal did not adjudicate this issue.

Conclusion:
The tribunal allowed the appeal of the assessee on the legal issue of non-issuance of notice under Section 143(2) and quashed the reassessment order. Consequently, the appeal filed by the Revenue became infructuous and was dismissed.

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