The Income Tax Appellate Tribunal, Mumbai, has clarified that a single assessment year cannot be subject to two distinct reassessment orders arising from the same transaction. This ruling reinforces the principle that reassessment proceedings must be final and conclusive, and that administrative re-initiation does not cure jurisdictional or procedural defects in prior orders.
Background & Facts
The Dispute
The appellant, ASL Capital Holdings Pvt. Ltd., was subjected to two separate reassessment proceedings for Assessment Year 2015-16 concerning the same transaction: the sale of shares in Sunstar Realty Development Ltd., a penny stock, amounting to Rs. 2,34,25,200. The Assessing Officer (AO) initially reopened the assessment under Section 148 of the Income-tax Act, 1961, and passed a reassessment order on 21.03.2022, adding the full amount as unexplained income under Section 68. Subsequently, the AO issued a second notice under Section 148 on 29.07.2022, following the Supreme Court’s decision in Union of India v. Ashish Agarwal (2022) SCC Online SC 543, which mandated compliance with the new procedural regime under Section 148A. A second reassessment order was passed on 29.03.2023, again adding Rs. 2,34,25,200 under Section 68.
Key Facts
The assessee filed its original return for AY 2015-16 on 30.09.2015, reporting nil income.
Information regarding alleged bogus transactions in penny stocks was received from DDIT (Inv.), Unit-II(2), Mumbai via CRIU on 08.03.2021.
Assessment under Section 153C was completed on 04.05.2021.
First reassessment notice under Section 148 was issued on 30.06.2021.
First reassessment order under Section 147 was passed on 21.03.2022, adding Rs. 2,34,25,200.
Penalty proceedings under Section 271(1)(c) were initiated in respect of the first reassessment.
On 30.09.2022, the AO dropped the penalty proceedings, recording that the first reassessment order had become infructuous due to the issuance of the second notice under Section 148 on 29.07.2022.
Second reassessment order under Section 147 was passed on 29.03.2023, with identical addition.
The income tax portal reflects demand only against the second reassessment order dated 29.03.2023; no demand is shown for the first.
The AO explicitly acknowledged in para 3 of the second reassessment order that the first order was superseded.
Procedural History
30.06.2021: First notice under Section 148 issued.
21.03.2022: First reassessment order passed under Section 147.
29.07.2022: Second notice under Section 148 issued, following Ashish Agarwal.
30.09.2022: AO dropped penalty proceedings under Section 271(1)(c), declaring first reassessment infructuous.
29.03.2023: Second reassessment order passed under Section 147.
18.02.2025: CIT(A) upheld the first reassessment order.
17.11.2025: Appeal initially filed before ITAT Chennai (ITA No. 1125/Chny/2025).
26.11.2025: Chennai Bench dismissed appeal with liberty to file before Mumbai Bench within 10 weeks, citing jurisdiction under PCIT v. ABC Papers Limited [2022] 9 SCC 1.
09.02.2026: Present appeal filed before ITAT Mumbai.
29.04.2026: Hearing held.
30.04.2026: Judgment pronounced.
The Parties' Positions
For the Assessee: The first reassessment order is void ab initio because it was issued under the old regime without compliance with Section 148A. The AO himself admitted its infructuous nature by dropping penalty proceedings and initiating a fresh reassessment. Two assessments on the same transaction are legally impermissible.
For the Revenue: Relied on the CIT(A)’s order upholding the first reassessment and argued that the second reassessment was merely procedural refinement, not an admission of invalidity.
Relief Sought
The assessee sought quashing of the first reassessment order dated 21.03.2022, deletion of the addition of Rs. 2,34,25,200, and consequential relief including refund of any tax paid on the basis of the first order.
The Legal Issue
Can a reassessment order under Section 147 be sustained when the same Assessing Officer has subsequently issued a fresh notice and passed a second reassessment order for the same transaction, and has himself declared the first order infructuous?
Arguments Presented
For the Appellant
The appellant relied on the AO’s own admission in the penalty order dated 30.09.2022, wherein he explicitly stated that the first reassessment had become infructuous due to the issuance of the second notice under Section 148. The appellant argued that the Supreme Court in Ashish Agarwal mandated strict compliance with Section 148A, and failure to follow it rendered the first reassessment jurisdictionally defective. The principle that there cannot be two assessments for the same income in the same year was invoked, supported by CIT v. Smt. S. R. Ramanathan and CIT v. S. S. Agarwal. The AO’s conduct constituted an admission against interest.
For the Respondent
The Revenue contended that the second reassessment was merely a procedural correction under the new regime and did not invalidate the first. It argued that the CIT(A) had correctly upheld the first order and that the AO’s dropping of penalty proceedings was administrative, not a legal admission of invalidity. The Revenue relied on the CIT(A)’s reasoning that the information was new and sufficient to justify reopening.
The Court's Analysis
The Tribunal emphasized that the law does not permit multiple reassessments for the same income in the same assessment year. The fact that two orders were passed for identical additions based on the same transaction was undisputed. The most decisive factor was the AO’s own conduct: the order dated 30.09.2022 dropping penalty proceedings explicitly recorded that the first reassessment had become infructuous due to the issuance of the second notice under Section 148. The Tribunal held that such an admission by the revenue authority is binding and cannot be disregarded.
"The most clinching evidence brought on record by the ld. Counsel for the assessee is the order passed u/s. 271(1)(c) by the ld. Assessing Officer... wherein ld. AO has dropped the penalty proceedings... holding that reassessment order has become infructuous..."
The Tribunal further noted that the income tax portal reflected demand only against the second order, confirming that the revenue itself was treating the first order as non-operative. The Tribunal rejected the Revenue’s argument that the second notice was merely procedural, observing that the issuance of a fresh notice under the new regime, coupled with the AO’s explicit declaration, amounted to a recognition that the first order was legally unsustainable. The Tribunal held that the doctrine of res judicata and the principle of finality in tax assessments preclude dual proceedings on the same subject matter.
The Verdict
The appeal of the assessee is allowed. The reassessment order dated 21.03.2022 is set aside as infructuous. The addition of Rs. 2,34,25,200 made under that order is deleted. The demand, if any, is to be adjusted against the second reassessment order dated 29.03.2023. The Revenue is directed to refund any tax paid on the basis of the first order within 6 weeks from the date of this order.
What This Means For Similar Cases
Double Reassessment Is Legally Impermissible
Practitioners must challenge any reassessment order if a second notice has been issued for the same transaction, even if the second order is pending.
The mere issuance of a second notice under Section 148A, followed by a fresh assessment, renders the first order legally void.
Revenue authorities cannot rely on the pendency of a second order to justify the validity of the first.
AO’s Admission Against Interest Is Binding
When an Assessing Officer records in writing that a reassessment order has become infructuous, such a statement constitutes a binding admission under Section 13 of the Indian Evidence Act.
Penalty orders, departmental notes, and portal records can be used as evidence of the revenue’s own position.
Tribunals and courts will not permit the Revenue to disown its own recorded admissions.
Procedural Compliance Overrides Administrative Convenience
The shift from old to new reassessment regime under Section 148A is not a mere formality; it is a jurisdictional requirement.
Failure to comply with Section 148A procedures invalidates the reassessment, regardless of the substance of the income escapement.
Practitioners must verify whether the notice was issued under the old or new regime and challenge non-compliance at the earliest stage.
