ITAT Chandigarh: Reassessment set aside as void ab initio on account of limitation; breach of CBDT instructions held not to vitiate the notice issued under section 143(2)
The Income Tax Appellate Tribunal, Chandigarh quashed the reassessment and deleted the addition made against a manufacturing company where reopening was based solely on an unverified third-party excel sheet recovered during a search on another entity. The Tribunal held that reopening beyond four years was invalid as there was no allegation or finding of failure by the assessee to disclose fully and truly all material facts in the original scrutiny assessment, attracting the bar under the proviso to section 147. It further found that the Assessing Officer had acted on borrowed satisfaction without independent application of mind, merely reproducing Investigation Wing inputs. The notice under section 148 was also declared void as it was issued by the Jurisdictional AO instead of following the Faceless Assessment Scheme mandate. On merits, the Tribunal held that uncorroborated third-party digital records, unsupported by inquiry, cross-examination, cash trail, or section 65B certification, cannot sustain an addition under section 69A, especially when audited books, stock records, and VAT assessments were accepted. Consequently, the reassessment was annulled and the addition did not survive.
