Case Law Details
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
This appeal filed by the assessee is against the order of Ld. CIT(A) 48, Mumbai, vide order no. ITBA/APL/S/250/2024-25/1073392403(1), dated 18.02.2025, passed against the assessment order by Deputy Commissioner of Income-tax, -Central Circle 2(1), Mumbai, u/s. 143(3) r.w.s. 147 of the Income-tax Act, 1961 (hereinafter referred to as the “Act”), dated 21.03.2022, for Assessment Year 201516.
2. Grounds taken by the assessee are reproduced as under:
“1. Invalid reassessment for non-compliance with section 144B On the facts and in law, the learned Commissioner of Income-tax (Appeals) [“CIT(A)”] has erred in upholding the action of the Assessing Officer (“AO”) in issuing notice u/s. 148 of the Income-tax Act, 1961 (“the Act”), conducting the reassessment proceedings and passing the assessment order u/s. 147 of the Act in complete contravention of the mandatory provisions of section 144B of the Act, rendering the reassessment proceedings void ab initio.
2. Assessment order treated as infructuous by the AO himself On the facts and in law, the learned AO has himself treated the impugned assessment order passed u/s. 147 of the Act as infructuous while dropping the penalty proceedings initiated u/s. 271(1)(c) of the Act vide order dated 30.09.2022, and therefore the learned CIT(A) erred in sustaining such an assessment.
3. Re-initiation of reassessment admits invalidity of earlier order On the facts and in law, the learned AO re-initiated reassessment proceedings by issuing a fresh notice u/s. 148 dated 29.07.2022 after completion of 1st reassessment proceedings vide order dated 21.03.2022, which clearly establishes that the AO himself was convinced that the impugned assessment order passed u/s. 147 was legally untenable, null and void, and suffered from inherent jurisdictional defects.
4. Reopening based on change of opinion – information already on record On the facts and in law, the learned CIT(A) erred in upholding the reopening of assessment despite the fact that the information forming the basis of such reopening was already in the possession of the AO during the pendency of proceedings u/s. 153C of the Act.
The AO had received the information from DDIT (Inv.), Unit-2(2), Mumbai vide letter dated 08.03.2021, and assessment u/s. 153C was completed on 04.05.2021. Hence, the reopening is merely based on a change of opinion and is unsustainable in law.”
5. At the outset, there is a delay noted by the registry of 285 days in filing the present appeal before the Tribunal. In this respect, assessee has furnished its explanation dated 23.03.2026 placed on record. Facts in this regard are noted that assessee had initially filed its appeal against the impugned order of ld. CIT(A) before the Coordinate Bench at Chennai. The said appeal was registered with ITA No. 1125/Chny/2025 which was heard on 17.11.2025 and the order was pronounced on 26.11.2025. The Coordinate Bench noted that impugned assessment order was framed by DCIT, Central Circle 2(1), Mumbai u/s. 147 of the Act, vide order dated 29.03.2023. By taking into consideration the decision of Hon’ble Supreme Court in the case of PCIT vs. ABC Papers Limited [2022] 9 SCC 1, the Coordinate Bench concluded that jurisdiction of this appeal lay with the Coordinate Bench at Mumbai since the assessment order was passed by the Assessing Officer having jurisdiction in Mumbai. Accordingly, the appeal was dismissed as withdrawn with the liberty to file a fresh appeal before the appropriate forum that is before ITAT Mumbai within 10 weeks from the receipt of the said order.
3.1. Assessee has filed this present appeal before the ITAT Mumbai Bench on 09.02.2026 which is within the period granted by the Coordinate Bench while dismissing the appeal filed at Chennai.
3.2. In view of the above stated facts and the liberty so granted to file a fresh appeal, the delay noted by the registry is condoned and the matter is taken up for adjudication.
4. Before us, ld. Counsel for the assessee has emphasized and strongly contested on the jurisdictional aspect of the assessment completed u/s. 147, vide order dated 21.03.2022. List of events in this regard are noted as under:
4.1. First notice u/s. 148 was issued on 30.06.2021. In this regard, assessee filed its return on 30.09.2015, reporting total income at Nil. Subsequently, information was received from DDIT (Inv), Unit-II(2), Mumbai through CRIU, whereby it was informed that assessee is one of the beneficiaries to generate bogus profit by dealing in penny stock scrips of Sunstar Realty Development Ltd. which was providing accommodation entries of long-term capital gain/long-term capital loss or business loss. In the year under consideration, assessee had sold shares of alleged penny stock of Sunstar Realty Development Ltd., amounting to Rs. 2,34,25,200/-. In view of these facts, ld. AO had reason to believe that income to this extent had escaped assessment for which reasons were recorded. The first reassessment so opened and taken up by issuing notice u/s. 148 dated 30.06.2021 was completed with total income assessed at Rs. 2,41,27,956/- by making an addition of Rs. 2,34,25,200/- vide order dated 21.03.2022.
4.2. Subsequently, ld. AO noticed that case of the assessee was reopened by issuing notice u/s. 148 under the old provisions of the Act. Accordingly, in pursuance of the decision of Hon’ble Supreme Court in the case of Union of India vs. Ashish Agarwal dated 04.05.2022 [2022] SCC online SC 543 and by following CBDT’s instruction, a fresh notice u/s. 148 was issued on the assessee, dated 29.07.2022 after following the procedure laid down in the new regime of reassessment proceedings as contemplated u/s. 148A. The second reassessment was completed by passing the order u/s. 147 dated 29.03.2023 wherein also same addition has been made of Rs. 2,34,25,200/- by holding the transaction of sale of shares in the script of Sunstar Realty Development Ltd treated as non-genuine by applying the provisions of section 68.
4.3. It was submitted by the ld. Counsel of the assessee that the present appeal before the Tribunal is against the first reassessment order dated 21.03.2022.
5. For the first reassessment order passed u/s. 147 dated 21.03.2022, ld. AO observed that it was initiated under the old procedure of reopening under the Act. The second reassessment completed for the same assessment year in respect of the same transaction of sale of shares of alleged penny stock of Sunstar Realty Development Ltd with the same amount has been completed by passing order dated 29.03.2023 against which assessee is an appeal before the ld. CIT(A) and is pending for disposal. Thus, it is evidently placed before us that there are two reassessment orders both, u/s. 147 for the same assessment year, for the same transaction of alleged bogus non-genuine sale of penny stock of Sunstar Realty Development Ltd, for the same amount involved in the alleged transaction.
5.1. The most clinching evidence brought on record by the ld. Counsel for the assessee is the order passed u/s. 271(1)(c) by the ld. Assessing Officer in respect of penalty proceedings initiated pursuant to the first reassessment order against which assessee is in appeal before the Tribunal. The order passed u/s. 271(1)(c) is dated 30.09.2022, placed in the paper book, wherein ld. AO has dropped the penalty proceedings so initiated. The reasoning given by him for dropping the penalty proceedings is that reassessment order has become infructuous as second reassessment notice has been issued on 29.07.2022, in view of the decision of Hon’ble Supreme Court in the case of Ashish Agarwal (Supra). The said penalty order passed u/s. 271(1)(c) is reproduced below for ready reference:
5.3. Ld. AO has recorded these facts in the second reassessment order dated 29.03.2023, in para 3 of the said order. Ld. Counsel also referred to the details of outstanding demand as appearing on the income-tax portal for the relevant year that is AY 2015-16, wherein the reference is made to the reassessment order dated 29.03.2023. There is no mention about any demand in respect of the reassessment completed vide the first reassessment order dated 21.03.2022.
5.4. On confrontation of the stated facts, ld. Sr. DR placed reliance on the orders of the authority below.
6. We have heard both the parties and perused the material on record. We have given our thoughtful consideration to the submissions made before us in respect of two reassessment proceedings conducted by the Assessing Officer in respect of the same transaction alleged to be non-genuine on account of sale of alleged penny stock of Sunstar Reality Development Ltd. It is a trite law that there cannot be two assessments for the same assessment year in respect of the same transaction. The fact of two assessment having been conducted by the Assessing Officer for the same assessment year, under the same provisions of the Act, relating to the same transaction, with same amount of addition made, is undisputed. Most clinching fact in this regard is that ld. AO himself has recorded, dropping the penalty proceedings by holding that the first reassessment order has become infructuous, since the second reassessment order has been taken up subsequently.
6.1. In view of these facts on record and the provisions of the law, we are in agreement with the contentions made by the ld. Counsel of the assessee and hold that the present appeal is rendered infructuous in view of the fact that impugned reassessment order is held infructuous by the ld. AO while dropping the penalty proceedings u/s. 271(1)(c) which were initiated in the said reassessment proceedings. Accordingly, ground no. 2 and 3 raised by the assessee in the present appeal are allowed.
7. In the result, appeal of the assessee is allowed.
Order is pronounced in the open court on 30 April, 2026
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