Reassessment order under section 147 quashed for non-compliance with mandatory section 148A notice requirements

The ITAT Amritsar quashed a reassessment order passed under section 147 r.w.s. 144 dated 29-03-2022, holding it without jurisdiction and void ab initio. The AO initiated reassessment proceedings on 25.06.2021 without following the amended provisions of section 148 effective from 01-04-2021, failing to issue mandatory notice under section 148A(b) and consequently not passing any order under section 148A(d). The tribunal found the reassessment proceedings were conducted in violation of statutory procedure, making the assessment order bad in law. The assessee's appeal was allowed.

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Issues Involved:
1. Legality of the proceedings initiated under Section 148 of the Income Tax Act, 1961.
2. Validity of the assessment order passed without issuing a notice under Section 148.
3. Confirmation of additions made under Section 69A and Section 115BBE of the Income Tax Act, 1961.

Issue-wise Detailed Analysis:

1. Legality of the Proceedings Initiated under Section 148:
The appellant contended that the proceedings initiated under Section 148 by the AO were "bad in law, illegal and without jurisdiction" as they violated the amended provisions of law and the Supreme Court's judgment in Union of India Vs. Ashish Aggarwal. The Tribunal noted that the assessment proceedings were initiated by issuing a notice under Section 148 on 25.06.2021, without following the amended procedure effective from 01-04-2021, which required issuing a notice under Section 148A(b) and passing an order under Section 148A(d). Consequently, the Tribunal found that the assessment order dated 29-03-2022 was "without jurisdiction and illegal and bad in law".

2. Validity of the Assessment Order Passed Without Issuing a Notice under Section 148:
The Tribunal observed that the AO issued a subsequent notice under Section 148A(b) on 29.05.2022 and a fresh notice under Section 148 on 18.07.2022, implying that the initial notice dated 25.06.2021 was treated as a notice under Section 148A(b). The Tribunal held that the assessment order dated 24.03.2022, passed without issuing any notice under Section 148, was "without assuming any jurisdiction" and thus "illegal and bad in law". The Tribunal referenced the Supreme Court's judgment in Union of India vs. Ashish Aggarwal, which mandated that notices issued under the unamended Section 148 should be treated as show-cause notices under Section 148A(b).

3. Confirmation of Additions Made under Section 69A and Section 115BBE:
The appellant argued that the CIT(A) erred in confirming the addition of Rs. 4,786,000 out of the total addition of Rs. 5,345,000 made by the AO on account of unexplained money under Section 69A read with Section 115BBE. The appellant contended that the CIT(A) ignored the sale account, purchase account, complete cash book, and bank statement filed during the appellate proceedings to substantiate the cash receipts/cash in hand deposited during the demonetization period. However, since the Tribunal quashed the assessment order as void ab initio due to the procedural lapses in issuing notices, the confirmation of these additions was rendered moot.

Conclusion:
The Tribunal allowed the appeal filed by the assessee, holding that the assessment order passed under Section 147 r.w.s. 144 was "without jurisdiction and as such, it is quashed as void ab initio". The Tribunal's decision was pronounced in the open court on 10.07.2024.

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