ITAT Raipur Quashes Reassessment for AO’s Violation of Mandatory Timeline U/S 148A(b)

The ITAT’s Raipur Bench has quashed the reassessment proceedings because the assessing officer violated the deadline set under Section 148A(b). The officer allowed only 6 days for the response, whereas the minimum required time is 7 days.

The taxpayer Satish Kumar Agrawal submitted his income tax return for the AY 2018-19, showing a total income of Rs 11,42,800. Grounded on the collected data in the survey of the cases of Pratyush Steels and M/s Abhishek Enterprises, the case was reopened.

It was alleged that the taxpayer had the accommodation transactions engaging fake sales of Rs 1.86 crore and fake purchases of Rs 1.80 crore. On 21.03.2022, reassessment proceedings began, and a notice u/s 148a(b) was issued mandating the taxpayer to answer by 27.03.2022.

The reassessment has been contested by the taxpayer based on the reason that the allotted time to answer the show cause notice (SCN) u/s 148a(b) was just 6 days, in which the regulations specify a minimum 7-day period.

Also, the taxpayer argued that no chance for cross-examination was furnished and that the sales and purchases were genuine, conducted via transactions of the bank and tax documentation.

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The counsel of the revenue claimed that the reassessment was valid and was based on the effective data from the survey. They asserted that the AO secures enough cause to assume the income had escaped assessment and that the technical issues do not make the proceedings ineffective.

It was noted by the bench, including Ravish Sood (Judicial Member) and Arun Khodpia (Accountant Member), that the AO has breached the regulatory minimum pre-requisite of 7 days to file a response and that these breaches directed the reassessment procedure void ab initio. Under section 148a, compliance with procedural safeguards is obligatory, the tribunal cited.

The tribunal, because of the statutory process, the reassessment proceedings stood vitiated and thereafter quashed the notice issued u/s 148a(b), and the forthcoming reassessment order has been passed u/s 147 of the Income Tax Act. The case was restored to the file of the AO with freedom to start fresh proceedings, and an appeal was permitted for statistical objectives.