2026 (1) TMI 872 - AT - Income Tax

Reopening of assessment where show cause reasons differ from final reopening order leading to quashing of assessment

Reopening of assessment was challenged on grounds that material and approval for reopening were not confronted with the taxpayer and that the order under ... Revision u/s 263 against reopening of assessment - as alleged assessee had made bogus purchases - jurisdictional defects in the primary assessment - foremost contention of the ld. counsel is that the material relied for reopening and the approval taken for reopening were not confronted to the assessee and that order u/s 148A(d) of the Act is at variance with the show cause notice u/s 148A(b) - as per CIT assessee failed to provide evidence of taking delivery, lorry receipt, mode of payment for transportation, evidence of payment made for loading and unloading of goods, weighing receipt etc which are essential to prove the actual movement of goods and AO should have added the entire bogus purchase as unexplained expenditure u/s 69C. HELD THAT:- Very apparently, the reasons to show cause are at variance with the order passed u/s 148A(d). The show reasons mentioned fraudulent ITC claim to be foundation of show cause while order u/s 148A(d) of the Act mentions of bogus purchases of assessee. We are inclined to allow ground No.1.1 and allow the appeal of the assessee. The impugned assessment stands quashed. The consequential proceedings by way of the impugned order u/s 263 of the Act get vitiated and the same are also quashed. Decided in favour of assessee. Issues: Whether the reopening/reassessment (notice and proceedings under section 148/148A/147 of the Income-tax Act, 1961) was invalid for lack of valid assumption of jurisdiction and whether, as a consequence, the revisionary order passed under section 263 of the Income-tax Act, 1961 is vitiated. Analysis: The appellate tribunal examined whether the material and sanction forming the basis for reopening were confronted with the assessee and whether the reasons recorded under section 148A(d) were consistent with the show cause notice under section 148A(b). Applying the legal principle that an order passed without jurisdiction is a nullity and that jurisdictional defects can be raised in collateral or subsequent proceedings to test the validity of those proceedings, the tribunal analysed the assessment record and the AO's order. The tribunal found a material variance between the show cause (which relied on alleged fraudulent input tax credit) and the reasons recorded in the section 148A(d) order (which referred to bogus purchases), and concluded that the AO had not validly assumed jurisdiction to reopen the assessment. On that basis, the reassessment order was held to be non est and incapable of supporting valid revision proceedings under section 263. Conclusion: The reopening/reassessment under section 148/147 is invalid for lack of valid assumption of jurisdiction and the assessment order is quashed; consequently, the revisionary order under section 263 is vitiated and is quashed.