Reassessment based on reversed GST allegations was quashed for ignoring material appellate findings before reopening income tax proceedings.

Reassessment under the Income-tax Act was unsustainable where reopening rested on GST cancellation allegations that had already been set aside in appellate proceedings. The appellate GST finding restored registration and negated any fraudulent input tax credit claim, making it material to the question of income escapement. Because the reassessing authority issued notice under Section 148A and the consequential notice under Section 148 without considering that decisive exculpatory material, and no independent basis for reopening was shown, the impugned reassessment action was quashed.

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Issues: (i) Whether reassessment proceedings under the Income-tax Act could be sustained when the foundation for reopening, namely the GST cancellation, had already been set aside by the appellate authority and the appellate order was not considered by the assessing authority.

Analysis: The reopening was founded on allegations arising from GST proceedings concerning ineligible input tax credit and cancellation of registration. The GST appellate authority had subsequently restored the registration and specifically found that there was no fraudulent ITC claim or violation under the relevant GST provisions. That appellate order was a material circumstance directly bearing on the alleged escapement of income. The reassessing authority proceeded under Section 148A and issued notice under Section 148 without dealing with that decisive material, and no other independent material was shown to justify the reopening.

Conclusion: The reopening was unsustainable, and the impugned order under Section 148A(3) and the notice under Section 148 were quashed.

Final Conclusion: The writ petition succeeded because the reassessment proceedings were initiated on a basis that had already been negatived in GST appellate proceedings and the relevant appellate findings were ignored.

Ratio Decidendi: Reassessment cannot be founded solely on allegations that have been conclusively negated in prior appellate proceedings, and material exculpatory findings directly bearing on escapement of income must be considered before issuing notice for reopening.

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