Reassessment on undisclosed transactions fails where the return already disclosed the relevant entries, making penalty proceedings unsustainable.

Reassessment proceedings under the Income-tax Act could not stand where the notice under section 148A(b) and the order under section 148A(d) proceeded on the premise that the relevant transactions were not disclosed, although they were already reflected in the return for AY 2019-20. The HC held that this factual error destroyed the jurisdictional basis for reassessment, and the consequential notices, orders, and penalty proceedings were unsustainable. The reassessment and penalty actions were quashed, and the petition was allowed.

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Issues: Whether reassessment and penalty proceedings under the Income-tax Act were liable to be quashed on the ground that the transactions referred to in the notice had already been disclosed in the income tax return.

Analysis: The transactions cited in the notice under section 148A(b) and in the subsequent order under section 148A(d) were found to be already reflected in the return filed for the assessment year 2019-20. On that factual basis, the premise that the transactions were not disclosed was held to be erroneous and the initiation of reassessment proceedings was treated as lacking legal foundation. The consequential notices, orders, and penalty proceedings were also found unsustainable.

Conclusion: The reassessment proceedings and the consequential penalty actions were quashed, and the petition was allowed.

Ratio Decidendi: Reassessment proceedings cannot be sustained when their jurisdictional basis rests on a factually incorrect assumption that the relevant transactions were not disclosed in the return.

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