The Supreme Court two-judge Bench of Justice M R Shah and Justice M M Sundresh recently held that a second reassessment notice issued to the assessee due to a change of Assessing Officer is not valid.
The petitioner-revenue, challenging the decision of the Delhi High Court in a writ petition filed by the assessee, AVAIDS Technovators Pvt. Ltd (formerly Mastech Technologies Pvt. Ltd.), approached the Apex Court in a Special Leave Petition(SLP).
The Bench observed that the ground taken by the High Court for quashing the reopening is not sustainable and quashed the High Court’s order.
A second Show Cause Notice (SCN) was issued on the same grounds to the assessee for reopening the assessment after the first notice was served. The assessee had declared a loss of approximately 6.10 Lakh Rupees. The second notice was issued by the Assessing Officer (AO) who came after the transfer of the existing AO.
The AO, after issuing notice to the assessee, heard the assessee and rejected the claims, subsequently adding Rs. One Crore Thirty-Five Lakhs and Two Lakh Forty-Three Thousand on account of accommodation entry and commission respectively.
Aggrieved by this, the assessee approached the Delhi High Court to set aside the reopening of the assessment by a writ petition which was allowed and the assessment itself was set aside on grounds that a second SCN was issued.
The Supreme Court observed that “the assessee did not challenge the Assessment Order on merits which it ought to have challenged before the CIT-A and the High Court has set aside the Assessment Order on the ground that initiation of the reassessment is bad in law”.
Further directing the assessee to challenge the order before the CIT(A), on the merits and facts of the reassessment without going into the issue of the validity of the reassessment proceedings, the Supreme Court set aside the High Court’s decision.
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