AO's parallel reassessment proceedings under section 147/143(3) quashed for violating legal principles and lacking proper verification

The ITAT Kolkata quashed a reassessment order passed under section 147/143(3) after finding that the AO conducted two parallel proceedings for the same assessment year, which violated established legal principles. The court held that issuing notice under section 148 during pendency of a set-aside assessment proceeding was bad in law. The AO failed to provide specific details about alleged accommodation entries, conducted no proper verification, and made additions based on wrong beliefs without examining documentary evidence or persons involved. The tribunal also noted that share capital and premium had already been examined and accepted in an earlier assessment order, making the subsequent addition unjustified on merits.

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Issues Involved:
1. Jurisdiction of the Assessing Officer (AO) in initiating proceedings under Section 148.
2. Validity of the notice issued under Section 148.
3. Legitimacy of the reassessment proceedings initiated based on information from the Investigation Wing.
4. Simultaneous conduct of proceedings under Sections 144/263/143(3) and 147/263/144.
5. Absence of Document Identification Number (DIN) in the order.
6. Addition of Rs. 2,48,50,000/- on account of alleged transactions.
7. Interest charged under Sections 234A and 234B of the Income Tax Act.
8. Right to amend grounds at the time of hearing.

Summary:

1. Jurisdiction of the AO in Initiating Proceedings under Section 148:
The Tribunal noted that the AO initiated reassessment proceedings under Section 147 based on information received from the Investigation Wing. However, the second revision order under Section 263, which led to the reassessment proceedings, was quashed, making the reassessment order non-est. The AO's reference to the second effect giving assessment order dated 06.12.2019 was deemed unjustified.

2. Validity of the Notice Issued under Section 148:
The Tribunal found that the AO issued the notice under Section 148 during the pendency of set-aside assessment proceedings, which is contrary to the Supreme Court's decisions in S. M. Overseas Pvt. Ltd. and Trustees of HEH Nizam Supplemental Family Trust. Therefore, the reassessment proceedings were held to be bad in law.

3. Legitimacy of the Reassessment Proceedings Based on Information from the Investigation Wing:
The Tribunal observed that the AO did not provide details of the layers through which the alleged money was routed into the assessee's bank account. The AO's observations were vague, and no examination of the alleged layering of transactions was conducted. The Tribunal agreed with the assessee that the AO failed to establish a live link between the information received and the alleged escapement of income.

4. Simultaneous Conduct of Proceedings under Sections 144/263/143(3) and 147/263/144:
The Tribunal noted that the AO conducted two parallel proceedings for the same assessment year, which is contrary to legal principles. The reassessment order dated 16.12.2019 was passed within ten days of the second effect giving assessment order dated 06.12.2019, indicating an improper simultaneous conduct of proceedings.

5. Absence of Document Identification Number (DIN) in the Order:
The Tribunal did not specifically address the issue of the absence of DIN in the order.

6. Addition of Rs. 2,48,50,000/- on Account of Alleged Transactions:
The Tribunal found that the AO's addition of Rs. 2,48,50,000/- was based on unverified information and a wrong belief. The assessee demonstrated that there was no such transaction or amount routed into its bank account. The Tribunal concluded that the addition was made without conducting any verification or examination of the persons involved and thus, was liable to be deleted.

7. Interest Charged under Sections 234A and 234B:
The Tribunal did not specifically address the issue of interest charged under Sections 234A and 234B.

8. Right to Amend Grounds at the Time of Hearing:
The Tribunal allowed the assessee's appeal, implicitly recognizing the right to amend grounds at the time of hearing.

Conclusion:
The Tribunal quashed the reassessment proceedings and the consequent order under Section 147 read with Section 143(3), holding them to be bad in law. The addition of Rs. 2,48,50,000/- was also deleted. The appeal of the assessee was allowed.

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