Reassessment jurisdiction fails on wrong PAN and ignored pre-notice reply; unexplained cash and FDR additions also deleted.

Reassessment under the pre-notice procedure was held jurisdictionally invalid where the section 148 notice was issued on an incorrect PAN and the assessee's section 148A(b) reply, including disclosure of the correct PAN, was not meaningfully considered. The statutory requirements of prior inquiry, consideration of reply, and reasoned satisfaction before notice under section 148 were treated as mandatory, so the defect went to jurisdiction. On merits, additions for cash deposits and FDRs were deleted because the assessee explained the source as business receipts and renewal of earlier deposits, the Revenue did not rebut that explanation, and double taxation of the same funds as separate unexplained items was impermissible.

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Issues: (i) Whether reassessment proceedings initiated under section 147 were valid when the notice under section 148 was issued on an incorrect PAN and the assessee's reply under section 148A(b) was not duly considered; (ii) whether the additions sustained towards cash deposits and FDRs could survive on merits.

Issue (i): Whether reassessment proceedings initiated under section 147 were valid when the notice under section 148 was issued on an incorrect PAN and the assessee's reply under section 148A(b) was not duly considered.

Analysis: The notice was issued against an obsolete and incorrect PAN despite the assessee having already obtained and used the correct PAN for filing its return and disclosing the relevant transactions. The assessee had specifically informed the Assessing Officer of the correct PAN during the proceedings under section 148A(b), yet the matter was proceeded with on the wrong PAN without meaningful consideration of the reply. The statutory scheme under section 148A requires prior inquiry, consideration of the reply, and formation of a reasoned satisfaction before issuance of notice under section 148; failure to do so constitutes more than a procedural irregularity and goes to jurisdiction.

Conclusion: The reassessment proceedings were invalid and liable to be quashed on the ground of incorrect PAN and non-compliance with the mandatory procedure under section 148A.

Issue (ii): Whether the additions sustained towards cash deposits and FDRs could survive on merits.

Analysis: The assessee explained that the cash deposits represented business receipts and related transactions reflected in its accounts, and the Revenue did not rebut the explanation with contrary material. Rejection of the accounts merely for want of audit under section 44AB was not justified on the facts. As regards the FDRs, the source was explained as renewal of earlier deposits and business receipts, and once the source stood explained, addition under section 69A could not be sustained. The same funds could not be taxed twice by separately treating cash deposits and corresponding investments as unexplained.

Conclusion: The additions sustained by the lower authority were unsustainable and were deleted.

Final Conclusion: The reassessment was vitiated in law and the substantive additions also failed on merits, resulting in complete relief to the assessee.

Ratio Decidendi: A reassessment notice issued against the wrong PAN, without due consideration of the assessee's reply in the mandatory pre-notice procedure, is jurisdictionally invalid; unexplained-money additions cannot survive where the source of deposits and investments is satisfactorily explained and double addition is impermissible.

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