Validity of reopening notice and Sec.69C bogus purchase additions: faceless notice requirement quashes reopening; Sec.69C additions rejected

Reopening of assessment was invalid because the statutory faceless assessment notification required a Faceless Assessing Officer to issue the section 148 notice, but the notice was issued by the Jurisdictional Assessing Officer; consequence: the reopening notice was quashed. Additions under the unexplained investments provision were unsustainable because the alleged purchases were recorded in regular books and payments were made through normal banking channels, so no unexplained expenditure outside books was shown; consequence: Sec.69C-style additions were rejected.

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Issues: (i) Whether the reassessment / notice under section 148 issued by the Jurisdictional Assessing Officer instead of under the faceless assessment scheme (s.151A/notification dated 29-03-2022) is valid; (ii) Whether additions of Rs.7,67,89,408 (alleged bogus purchases and commission) made by invoking section 69C can be sustained where transactions are recorded in regular books and payments were made through banking channels and GST authorities did not find discrepancies.

Issue (i): Validity of reassessment notice issued by Jurisdictional Assessing Officer instead of Faceless Assessing Officer under s.151A/notification dated 29-03-2022.

Analysis: The statutory scheme requires applicability of the faceless assessment procedure from issuance of show cause notice under section 148 where notification under section 151A applies. Relevant High Court precedents uphold that issuance of notice under section 148 by a Jurisdictional Assessing Officer contrary to the notification vitiates reassessment proceedings. The impugned notice was issued by the Jurisdictional Assessing Officer on 31-03-2022 contrary to the notification dated 29-03-2022.

Conclusion: The notice under section 148 issued by the Jurisdictional Assessing Officer is quashed and reassessment proceedings initiated thereunder are vitiated in favour of the assessee.

Issue (ii): Sustainability of additions under section 69C treating purchases as bogus where purchases are recorded in regular books, supported by documentary evidence, payments made through banking channels and GST authorities found no discrepancy.

Analysis: Section 69C requires existence of expenditures or payments not recorded in regular books to invoke its scope. The assessee produced purchase invoices, transport documents, bank statements, quantitative stock details and audited books; payments were routed through banking channels; GST adjudication accepted the assessee's transactions without adverse finding. Third-party investigative information alone, without cross-examination or corroborative evidence, is insufficient to overturn the documentary support. Therefore the statutory pre-condition for applying section 69C was not satisfied.

Conclusion: The additions under section 69C are unsustainable and are deleted in favour of the assessee.

Final Conclusion: The reassessment is quashed for procedural non-compliance with the faceless assessment scheme and, on merits, the additions under section 69C are not maintainable; overall the revenue appeal is dismissed and the assessee's cross-objection is allowed.

Ratio Decidendi: A notice under section 148 issued in breach of the faceless assessment procedure prescribed by section 151A/notification dated 29-03-2022 vitiates reassessment proceedings; further, section 69C cannot be invoked where the alleged transactions are recorded in regular books of account and supported by documentary evidence and banking channel payments, absent independent corroborative evidence to prove bogus nature.

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