Rehana Shaikh Ishaq Vs ITO (ITAT Pune)
Pune ITAT Quashes Reassessment Based on Factually Incorrect Section 148 Notice; Wrong Assertion of Search in Assessee’s Case Held Fatal
The Pune ITAT held that a reassessment initiated under sections 147/148 is void ab initio where the very notice under section 148 is founded on factually incorrect assumptions, demonstrating a lack of application of mind. The Tribunal noted that although the Assessing Officer reopened the assessment based on information arising from a search conducted in the Manjeet Pride Group and Gadiya Group, the notice erroneously stated that a search under section 132 had been conducted in the assessee’s own case, when no such search had ever taken place. Rejecting the Revenue’s contention that the error was merely typographical and curable under sections 292B/292BB, the Tribunal held that the “reason to believe” must be founded on correct facts, and reopening based on an erroneous factual premise is legally unsustainable. Relying on its earlier decision in Lombard Realty Pvt. Ltd., as well as the judgments of the Bombay High Court in Sea Glimpse Investments Pvt. Ltd. and Dhiren Anantrai Modi, the Gujarat High Court in Sagar Enterprises, and the Delhi High Court in Dr. Ajit Gupta, the Tribunal quashed the reassessment proceedings, holding that the defect went to the very root of jurisdiction. Having allowed the legal ground, it declined to adjudicate the remaining grounds on merits, including the challenge to the proposed penalty proceedings under sections 271D and 271E.
