Validity of reassessment under section 147 after notice under section 148A(b) invalidated for factual error and nondisclosure of material

Validity of reassessment is challenged where the jurisdictional notice under section 148A(b) proceeded on an incorrect factual premise that the assessee donated to a different entity; the AO later admitted the error. The notice also failed to disclose or furnish the material relied upon (statements under section 132(4) and investigation extracts) despite requests. Because formation of satisfaction under section 147 depends on correct and specific information and the mandatory procedure under section 148A was not followed, consequent reassessment proceedings under section 148 are invalid and liable to be quashed.

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Issues: (i) Whether the reassessment proceedings initiated under section 148, founded on the notice issued under section 148A(b), are valid where the annexure to the notice contained factual inaccuracies and the Assessing Officer did not furnish the material relied upon; (ii) Whether disallowance of deduction of Rs. 5,00,000/- claimed under section 80GGC can be sustained on merits in absence of tangible evidence that the donation was not genuine.

Issue (i): Whether the initiation of reassessment proceedings under section 148 is legally valid given alleged defects in the notice under section 148A(b) and non-furnishing of material relied upon.

Analysis: The notice under section 148A(b) repeatedly alleged donations to Aadhar Foundation though the assessee had not made any payment to that entity; the Assessing Officer admitted this error in the order under section 148A(d). The notice did not enclose or supply the statements or other material relied upon notwithstanding requests. The statutory scheme of section 148A contemplates a meaningful opportunity to reply which requires disclosure of material forming the basis of initiation. Reliance was placed on binding High Court precedent holding that failure to furnish material vitiates proceedings under section 148A. The Assessing Officers inconsistent findings and reliance on undisclosed third-party statements without affording cross-examination demonstrated non-application of mind and procedural infirmity.

Conclusion: The reassessment proceedings under section 148, being founded on a defective notice under section 148A(b) and issued without furnishing the material relied upon, are invalid and are quashed. This conclusion is in favour of the assessee.

Issue (ii): Whether the disallowance of Rs. 5,00,000/- under section 80GGC is sustainable on merits where the assessee produced donation receipt, bank evidence of payment, and proof of the donees registration.

Analysis: The assessee furnished a donation receipt bearing name and PAN, bank statement evidencing cheque payment, and the Election Commission registration certificate showing the donee was registered under section 29A. The Assessing Officer relied on generalized investigation inputs and third-party statements but did not produce tangible evidence that any part of the donation was returned to the assessee. Once the assessee discharged the primary onus with primary documentary evidence, the burden shifted to the Revenue to produce corroborative material to prove the donation was not genuine; mere suspicion or application of human probabilities without corroboration is insufficient to deny the statutory deduction.

Conclusion: The disallowance of Rs. 5,00,000/- under section 80GGC is unsustainable on merits and in favour of the assessee.

Final Conclusion: The appeal is allowed inasmuch as the reassessment proceedings under section 148 are quashed for violation of the mandatory procedure under section 148A and, alternatively, the disallowance under section 80GGC is set aside on merits, resulting in an overall decision favourable to the assessee.

Ratio Decidendi: Where a notice under section 148A(b) is issued without furnishing the material on which the information is based and contains substantive factual errors, the initiation of reassessment under section 148 is vitiated; additionally, once the assessee discharges primary onus with cogent documentary evidence, the Revenue must produce corroborative material to displace the claimed deduction under section 80GGC.

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