AO Provided Only 6 Days to Reply to Notice Instead of Mandatory 7 u/s 148A(b): ITAT Quashes Reassessment [Read Order]

The Raipur Bench of the Income Tax Appellate Tribunal (ITAT) quashed the reassessment proceedings due to the Assessing Officer (AO) violating the mandatory statutory timeline prescribed under Section 148A(b) by allowing only six days instead of the minimum required seven for filing a reply.

Satish Kumar Agrawal, the assessee, filed his return of income for Assessment Year 2018–19, declaring a total income of Rs. 11,42,800. The case was reopened based on information gathered during survey operations conducted in the cases of Pratyush Steels and M/s Abhishek Enterprises.

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The AO alleged that the assessee had engaged in accommodation transactions involving bogus sales amounting to Rs. 1.86 crore and bogus purchases of Rs. 1.80 crore. The reassessment proceedings were initiated, and a notice under Section 148A(b) was issued on 21.03.2022, requiring the assessee to respond by 27.03.2022.

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The assessee challenged the reassessment on the ground that the time granted to respond to the show cause notice under Section 148A(b) was only six days, whereas the statute prescribes a minimum period of seven days. The assessee also contended that no opportunity for cross-examination was provided, and that the sales and purchases were genuine, supported by banking transactions and tax documentation.

The revenue counsel argued that the reassessment was valid and based on concrete information from survey findings. They claimed that the AO had sufficient reasons to believe income had escaped assessment and that technical deficiencies did not vitiate the proceedings.

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The bench comprising Ravish Sood (Judicial Member) and Arun Khodpia (Accountant Member) observed that the AO had violated the statutory minimum requirement of seven days to furnish a reply and that such breach rendered the reassessment process void ab initio. The tribunal explained that compliance with procedural safeguards under Section 148A is mandatory and not a mere formality.

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The tribunal held that the reassessment proceedings stood vitiated due to the violation of statutory procedure and accordingly quashed the notice issued under Section 148A(b) and the subsequent reassessment order passed under Section 147 of the Income Tax Act. The case was restored to the file of the AO with liberty to initiate fresh proceedings and appeal was allowed for statistical purposes.

To Read the full text of the Order CLICK HERE

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