2022 (3) TMI 665 - AT - Income Tax

Reopening of assessment u/s 147 - eligibility of reasons to believe - Bogus purchases - HELD THAT - We have gone through the reasons recorded by the assessing officer and observe that the issue of notice u/s148 and assumption of jurisdiction for assessment by the AO was perfectly in accordance with law and his formation of belief for concealment of income was correctly based on material available with him at the time of issue of notice u/s148 of the Act. Consequently the reassessment proceedings initiated by the AO is in accordance with law. Hence this ground of appeal of the assessee is dismissed. Estimation of income on bogus purchases - As the issue is squarely covered by the decision of the Coordinate Bench in the case of Pankaj Choudhary 2021 (10) TMI 653 - ITAT SURAT and there is no change in facts and law and the ld Counsel is unable to produce any material to controvert the aforesaid findings we find no reason to interfere in the said order of the Coordinate Bench therefore respectfully following the binding judgment of the Coordinate Bench we sustain the addition @ 6% of impugned purchases.

Issues Involved:
1. Validity of reopening under section 147 of the Income Tax Act, 1961.
2. Legitimacy of reassessment proceedings without issuing notice in the name of the assessee.
3. Legitimacy of reassessment proceedings initiated after four years when full disclosure was made by the assessee.
4. Validity of reassessment proceedings initiated based on directions from another officer.
5. Necessity of personal belief of the Assessing Officer (AO) for reopening.
6. Requirement for a speaking order on objections raised by the assessee.
7. Legitimacy of additions made on grounds not mentioned in the reopening reasons.
8. Confirmation and enhancement of disallowance of purchases amounting to Rs. 12,26,43,063.
9. Non-provision of material/statements relied upon by the AO.
10. Non-provision of opportunity for cross-examination.
11. Acceptance of books of account and quantity details by the AO and CIT(A).
12. Transactions through banking channels not disputed.
13. Reliance on third-party retracted statements without supporting evidence.
14. Applicability of Section 69C when the source is explained.
15. Distinction from the case of N K Proteins Ltd.
16. Initiation of penalty proceedings under section 271(1)(c) of the Income Tax Act, 1961.

Detailed Analysis:

1. Validity of Reopening under Section 147:
The Tribunal upheld the reopening under section 147, noting that the AO had valid reasons to believe that income had escaped assessment based on material available at the time of issuing the notice. The reassessment proceedings were deemed to be in accordance with the law.

2. Legitimacy of Reassessment Proceedings Without Issuing Notice in the Name of the Assessee:
The Tribunal did not find any procedural infirmity in the issuance of the notice under section 148, as the notice was issued correctly and the assessee was duly informed.

3. Legitimacy of Reassessment Proceedings Initiated After Four Years:
The Tribunal found that the reopening was justified even after four years, given the new information received from the Director General of Income Tax (Investigation), Mumbai, which indicated that the assessee was a beneficiary of accommodation entries.

4. Validity of Reassessment Proceedings Initiated Based on Directions from Another Officer:
The Tribunal did not find any issue with the reassessment being initiated based on information from another officer, as the AO had independently formed a belief based on the material available.

5. Necessity of Personal Belief of the AO for Reopening:
The Tribunal held that the AO had a personal belief based on the information received, which was sufficient for reopening the assessment.

6. Requirement for a Speaking Order on Objections Raised by the Assessee:
The Tribunal noted that the AO had overruled the objections raised by the assessee through an order dated 04.01.2016, and the assessee did not appeal against this order.

7. Legitimacy of Additions Made on Grounds Not Mentioned in the Reopening Reasons:
The Tribunal did not specifically address this issue, but the overall judgment indicates that the additions were based on the material and investigation findings related to the reopening reasons.

8. Confirmation and Enhancement of Disallowance of Purchases Amounting to Rs. 12,26,43,063:
The Tribunal referred to the decision of the Coordinate Bench in the case of Pankaj Choudhary and sustained the addition at 6% of the impugned purchases, rather than the 100% disallowance made by the CIT(A). This was based on the principle that only the income component of the disputed transactions should be taxed.

9. Non-Provision of Material/Statements Relied Upon by the AO:
The Tribunal did not specifically address this issue, but the overall judgment indicates that the material and statements were part of the investigation findings that justified the additions.

10. Non-Provision of Opportunity for Cross-Examination:
The Tribunal did not specifically address this issue, but the overall judgment indicates that the investigation findings were sufficient to justify the additions.

11. Acceptance of Books of Account and Quantity Details by the AO and CIT(A):
The Tribunal noted that the AO and CIT(A) had accepted the books of account and quantity details, but still found that the purchases were bogus based on the investigation findings.

12. Transactions Through Banking Channels Not Disputed:
The Tribunal acknowledged that the transactions were through banking channels but still found that the purchases were bogus based on the investigation findings.

13. Reliance on Third-Party Retracted Statements Without Supporting Evidence:
The Tribunal did not specifically address this issue, but the overall judgment indicates that the investigation findings were sufficient to justify the additions.

14. Applicability of Section 69C When the Source is Explained:
The Tribunal did not specifically address this issue, but the overall judgment indicates that the additions were justified based on the investigation findings.

15. Distinction from the Case of N K Proteins Ltd.:
The Tribunal referred to the decision of the Coordinate Bench in the case of Pankaj Choudhary and found that the facts and law were similar, justifying the addition at 6% of the impugned purchases.

16. Initiation of Penalty Proceedings Under Section 271(1)(c):
The Tribunal did not specifically address this issue in the judgment provided.

Conclusion:
The Tribunal upheld the reopening of the assessment under section 147 and sustained the addition at 6% of the impugned purchases based on the principles laid down in the case of Pankaj Choudhary. The appeal filed by the assessee was allowed to the extent indicated, and the grounds of appeal raised by the revenue were dismissed.

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