Reassessment Notices Set Aside Due to Lack of Evidence and Approval; Court Orders Lawful Recommencement for AY 2019-20.

The HC set aside the impugned notices and order related to reassessment proceedings for AY 2019-20, citing flaws in the AO's actions, including lack of material evidence and absence of disclosed approval for reassessment. The court directed a lawful recommencement of proceedings, ensuring compliance with statutory requirements. The writ petition was disposed of, with parties instructed to act based on the digitally signed order, closing the pending interlocutory application.

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Issues involved: Assessment proceedings for AY 2019-20 based on allegations of accommodation entry, validity of reassessment proceedings, approval for reassessment, discrepancies in cash transactions, and material evidence against the petitioners/assessees.

Validity of Reassessment Proceedings:
The petitioners/assessees were alleged to be beneficiaries of accommodation entry by Mr. Ankit Jain. Despite asserting the genuineness of transactions, the AO proceeded with reassessment, escalating the alleged amount. The counsel argued lack of material to trigger reassessment and absence of approval for commencing proceedings, highlighting discrepancies in the AO's order and Mr. Jain's statement. The court found the AO's actions flawed and set aside the impugned notices and order, directing a lawful recommencement of proceedings.

Material Evidence and Discrepancies:
The AO relied on Mr. Jain's statement regarding under-invoicing in cash transactions, but there was no mention of the petitioners/assessees in the statement. The translated statement revealed cash transactions outside the books of account, but the lack of reference to the petitioners/assessees weakened the case. The court noted the absence of evidence linking the petitioners/assessees to the alleged discrepancies, emphasizing the need for substantial material to support reassessment proceedings.

Approval for Reassessment and Legal Compliance:
The counsel contended that the approval for reassessment proceedings was not disclosed to the petitioners/assessees, questioning the validity of the entire process. The court agreed that the documents evidencing approval should have been provided, underscoring the importance of legal compliance and transparency in such proceedings. Consequently, the court directed the AO to restart the proceedings lawfully, ensuring adherence to due process and statutory requirements.

Conclusion:
In light of the above considerations, the court set aside the impugned notices and order, granting liberty to the AO to recommence the proceedings in accordance with the law. The writ petition was disposed of accordingly, and parties were instructed to act based on the digitally signed copy of the order, bringing closure to the pending interlocutory application.

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