ITAT Jodhpur Quashes Reassessment as Notice under Section 148 Issued by Jurisdictional AO Instead of Following Faceless Assessment Scheme

Vinayak Traders, a partnership firm engaged in the wholesale business of Micromax mobiles, filed its return of income for AY 2018–19 declaring ₹4.80 lakhs. The case was reopened based on information that M/s. Sonu Monu Telecom Pvt. Ltd. was issuing bogus invoices, and the assessee was alleged to have made bogus purchases of ₹76.47 lakhs from it. However, the assessee clarified that it had not made purchases but had sold goods worth ₹85.69 lakhs to Sonu Monu, and supported this with invoices, stock records, and bank entries. The AO rejected the submissions without inquiry and added the entire sales amount under Section 68. The reassessment was initiated by the Jurisdictional AO instead of the Faceless AO, contrary to the CBDT Scheme under Section 151A.

Tribunal’s Observations:

The Tribunal held that the reassessment proceedings were invalid as the notice under Section 148 was issued by the Jurisdictional AO instead of the designated Faceless Assessment Unit, violating the binding scheme under Section 151A, as upheld by the Bombay and Telangana High Courts. It further observed that the reopening was based on incorrect and unverified facts, as the assessee had made sales, not purchases, to Sonu Monu. On merits, the Tribunal found that the assessee had discharged its burden by furnishing sale bills, GST returns, stock records, and bank proofs of payments received through cheques. Since the sales were genuine and already offered to tax, invoking Section 68 was unwarranted. Accordingly, both the reassessment and addition of ₹85.69 lakhs were quashed.

The copy of the order is as under:

1727415029-611 Vinayak Traders