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 the reassessment procedure conflicted with the show cause notice. The revenue relied on alleged bogus purchases and absence of delivery, transport and payment evidence to justify addition. The tribunal found the reasons in the show cause notice inconsistent with the subsequent reopening order, concluded jurisdictional defects in the primary proceedings, and quashed the impugned assessment and consequent reassessment proceedings, resulting in relief to the taxpayer.

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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.

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