ASL Capital Holdings Pvt. Ltd. Vs ACIT (ITAT Mumbai)
AO’s Own Penalty Order Sinks Reassessment: ITAT Holds First Section 147 Order ‘Infructuous’
The Mumbai ITAT quashed a reassessment by holding that there cannot be two reassessment orders for the same assessment year, same transaction and same addition. The case involved alleged bogus penny stock transactions in shares of Sunstar Realty Development Ltd., where the AO had first reopened the assessment under the old reassessment regime and passed an order under Section 147 making an addition of ₹2.34 crore.
Subsequently, after the Supreme Court ruling in Union of India vs. Ashish Agarwal, the AO again initiated reassessment proceedings under the new regime by issuing a fresh notice under Section 148A and passed a second reassessment order for the very same assessment year, same transaction and same amount.
The turning point came from the AO’s own penalty order under Section 271(1)(c), where he explicitly recorded that the first reassessment order had become “infructuous” because a fresh reassessment notice had been issued pursuant to the Ashish Agarwal judgment. The Tribunal treated this as the most clinching evidence against the Revenue.
The ITAT observed that once the AO himself accepted that the earlier reassessment had become infructuous, the Department could not continue to sustain two parallel reassessment orders for the same issue. Holding that such duplication is impermissible in law, the Tribunal allowed the assessee’s appeal and declared the first reassessment proceedings infructuous.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
