ITO Vs Geeta Kirit Muchhala (ITAT Mumbai)
ITAT Mumbai: Reassessment Void for Faceless Violation – ₹1.64 Cr Addition Collapses
In this case, the ITAT Mumbai upheld the CIT(A)’s order quashing reassessment proceedings involving ₹1.64 crore addition u/s 68 arising from alleged accommodation entries in illiquid stock transactions.
The Tribunal noted that the entire reassessment was fundamentally flawed, as the notice u/s 148 and subsequent proceedings were not issued through the faceless mechanism mandated under Section 151A. The Hon’ble Bombay High Court, in the assessee’s own case, had already held such action to be without jurisdiction, rendering the entire proceedings invalid.
The ITAT held that:
- Once jurisdictional defect is established, the entire assessment collapses
- Non-compliance with faceless scheme is not a procedural lapse but a fatal illegality
- CIT(A) rightly followed binding High Court judgment and quashed the assessment
Additionally, the Tribunal observed that even on limitation:
- Notice u/s 148 (dated 25.07.2022) was beyond permissible time as per Supreme Court ruling in Rajeev Bansal
- TOLA cannot revive expired limitation
Since the foundation itself failed, the ITAT did not examine merits relating to Section 68 addition, Section 115BBE, or loss set-off.
Final Outcome:
- Reassessment proceedings – Quashed
- ₹1.64 crore addition – Does not survive
- Revenue appeal – Dismissed
This ruling delivers a strong message:
Faceless procedure is mandatory, not optional
Jurisdictional defect = complete collapse of assessment
FULL TEXT OF THE ORDER OF ITAT MUMBAI
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