2023 (1) TMI 1082 - AT - Income Tax

Validity of reopening of assessment - three reasons so recorded, the subject matter of income escaped assessment, and quantum of income escaped - Accommodation entry pertaining to bogus purchases - HELD THAT:- Assessing Officer may reassess the income in respect of any issue, which has escaped assessment, and such issue comes to his notice subsequently in the course of the proceedings under this section, notwithstanding that the reasons for such issue have not been included in the reasons recorded under sub-section (2) of section 148 of the Act. Therefore, there is no restriction on the number of reasons to be recorded, that is, reasons may be recorded twice, thrice etc. as per the circumstances, hence we do not agree with the ld Counsel to the effect that reasons cannot be recorded three times.

Assessment was reopened after a period of four years and there is no failure on the part of the assessee to disclose fully and truly all material facts necessary for making original assessment - We do not agree with the ld Counsel, as in assessee`s case the original assessment was framed under section 143(3) of the Act, wherein the assessing officer had never discussed the issue of bogus purchases. The issue pertaining to bogus purchases was fresh issue before the Assessing Officer and it is a fresh and new information therefore assessing officer has rightly reopened the assessment.

We note that reasons were recorded by the Assessing Officer within the legal framework of provisions of section 147 of the Act therefore, second objection/question raised by the ld Counsel is hereby rejected.

As observed earlier not only there existed new information with the Assessing Officer from the credible sources, but also he had applied his mind and recorded the conclusion that the purchases claimed were non-genuine and therefore bogus, (clearly meaning that what was disclosed was false and untruthful). The requirements of section 147 r.w.s. 148 have clearly been met; and the reopening is held justified and legal. Therefore, we dismiss the additional ground raised by the assessee.

Estimation of income - bogus purchases - Since, the issue under consideration is squarely covered by the judgment of the Co-ordinate Bench of ITAT, Surat in the case of Pankaj K. Chaudhary [2021 (10) TMI 653 - ITAT SURAT] - There is no change in facts and law and the Revenue, as well as Assessee are unable to produce any material to controvert the aforesaid findings of the Coordinate Bench (supra), wherein the Tribunal considering overall facts and circumstances held that disallowances @ 6% of impugned purchases / disputed purchases would be sufficient to meet the possibility of revenue leakage. Therefore, respectfully following the binding judgment of Co-ordinate Bench, the appeal of the Revenue is partly allowed and cross objection filed by the assessee are dismissed.