Vimal Alloys Private Limited Vs DCIT (ITAT Chandigarh)
Reassessment Quashed: ITAT Chandigarh Strikes Down Section 147 Proceedings Based on Uncorroborated Third-Party Excel Sheet and Jurisdictional Lapses
The Chandigarh Bench of the ITAT quashed the reassessment for AY 2016-17 in the case of Vimal Alloys Pvt. Ltd., holding the reopening under sections 147/148 to be invalid and the consequential addition under section 69A unsustainable. The original assessment had been completed under section 143(3), and the reassessment was initiated beyond four years without any allegation or finding of failure on the part of the assessee to disclose fully and truly all material facts—violating the proviso to section 147. The Tribunal found the reopening to be based on borrowed satisfaction, as it relied solely on an uncorroborated, unsigned Excel sheet recovered from a third party during search/survey, with no independent inquiry, no linkage established to the assessee, and no compliance with evidentiary requirements for electronic records.
The Bench also noted serious procedural infirmities: non-disposal of detailed objections filed under section 148A, denial of cross-examination of third parties whose alleged data was relied upon, and issuance of the section 148 notice by the Jurisdictional AO instead of the NFAC, contrary to the faceless assessment scheme under section 151A. On merits, the Tribunal observed that the assessee maintained audited books, quantitative stock records, made purchases through banking channels, and had accepted sales; the books were not rejected and no defects were found. Consequently, the reassessment proceedings were held void ab initio and the addition of ₹55.02 lakh under section 69A was deleted.
FULL TEXT OF THE ORDER OF ITAT CHANDIGARH
