Shraddha Prakash Mehta Vs ITO (ITAT Mumbai)
Summary: ITAT Mumbai allowed the assessee’s appeal and quashed reassessment proceedings for A.Y. 2019-20 after finding a foundational jurisdictional defect in the notice issued under Section 148 of the Income-tax Act. The reassessment arose from information received following a search conducted on 05/07/2022 in the case of Suumaya Group. The assessee’s proprietary concern, M/s Shraddha Cottworld, was alleged to have participated in circular trading, and purchases aggregating to Rs.1,27,57,013/- were treated as non-genuine and added as unexplained expenditure under Section 69C.
The Tribunal observed that the Revenue’s own material showed that the information triggering reassessment emanated from the search of another person. Considering clause (iv) of Explanation 2 to Section 148, as it then stood, read with clause (c) of the proviso to Section 148A, the Tribunal held that the statutory procedure applicable to such a category could not be substituted by resorting to the ordinary Section 148A procedure. It further found that the approval produced by the Revenue was specifically for passing an order under Section 148A(d), while no material demonstrated that independent prior approval required for issuance of the Section 148 notice under the applicable statutory route had been obtained.
Accordingly, the Tribunal held that approval obtained under an inapplicable procedure could not cure the jurisdictional defect. The Section 148 notice dated 29/03/2023 and consequential assessment dated 22/12/2023 under Section 147 read with Section 144B were quashed. Since reassessment itself was invalidated, grounds concerning the Rs.1,27,57,013/- addition under Section 69C and other merits were rendered academic.
