Assam Valley Finance and Investment Pvt. Ltd. Vs DCIT (ITAT Gauhati)
NFAC Had No Jurisdiction, Borrowed Satisfaction Exposed: Guwahati ITAT Quashes 147 Reopening & 68 Addition on Alleged F&O Loss
Guwahati ITAT, Guwahati Bench, in Assam Valley Finance and Investment Pvt. Ltd. Vs DCIT (ITA No.75/GTY/2025; AY 2016-17; order dated 18-12-2025), allowed the assessee’s appeal and quashed the reassessment framed u/s 147 r.w.s. 143(3) on multiple jurisdictional grounds.
The Tribunal held that the assessment framed by NFAC on 29-03-2022 was without jurisdiction, since the faceless scheme for income escaping assessment u/s 151A, though inserted w.e.f. 01-11-2020, was not notified and made operational until 29-03-2022. Consequently, notices issued and the reassessment order passed by NFAC on the very same date were held to be invalid, following coordinate-bench decisions including MD Mahimud SK and Nabiul Industrial Metal Pvt. Ltd..
Independently, the Tribunal also quashed the reopening u/s 147 on merits, holding that the reasons recorded suffered from total non-application of mind and borrowed satisfaction. The AO relied on statements of certain brokers allegedly involved in generating artificial losses, whereas the assessee had never transacted through those brokers at all, as evident from the assessment records themselves. This absence of a live nexus between information and belief of escapement rendered the reopening invalid, squarely attracting Meenakshi Overseas, SFIL Stock Broking and Sarthak Securities.
Further, the Tribunal observed that even on merits, trading loss debited to P&L cannot be treated as unexplained cash credit u/s 68, as section 68 applies to unexplained credits, not to business losses.
Accordingly, the ITAT quashed both the reopening and the consequent reassessment in toto, allowed the appeal in full, and reiterated that jurisdictional defects, non-notified faceless powers and borrowed satisfaction strike at the very root of reassessment proceedings
FULL TEXT OF THE ORDER OF ITAT GAUHATI
