2021 (1) TMI 1295 - AT - Income Tax

Reopening of assessment u/s 147 - bogus purchases - AO had disallowed 12.5% of the alleged non-genuine purchases which has been sustained by Commissioner (Appeals) - HELD THAT - The fact that the assessee failed to prove the genuineness of purchases before the Departmental Authorities is very much evident. Even, before the Tribunal the assessee had not filed any evidence to prove that purchases, indeed, were made from the declared source. In such circumstances the disallowance made by the Assessing Officer @ 12.5% of the non genuine purchases is reasonable considering the view expressed by the Tribunal in similar nature of cases. Therefore, we not inclined to interfere with the decision of learned Commissioner (Appeals) on the issue. Validity of issuance of notice u/s 148 - As it is very much clear, initially the returns of income filed by the assessee were not subjected to scrutiny but were only processed u/s 143(1) - Subsequently, AO had received specific information indicating that certain purchases made by the assessee are non-genuine. Therefore, tangible material was available with the Assessing Officer to reopen the assessments u/s 147 of the Act. That being the case, there cannot be any question regarding assumption of jurisdiction u/s 147 of the Act. - Decided against assessee.

Summary

Issues:
1. Disallowance on account of non-genuine purchases for assessment years 2009-10 and 2010-11.
2. Validity of notice issued under section 148 of the Act.

Analysis:
1. The appeals by the assessee pertain to disallowance made on account of non-genuine purchases for the assessment years 2009-10 and 2010-11. The Assessing Officer reopened the assessments under section 147 of the Act based on information received from the Sales Tax department identifying the purchases as non-genuine. The assessee failed to provide sufficient evidence to prove the genuineness of the purchases, leading to a disallowance of 12.5% of the alleged non-genuine purchases. Despite contesting the disallowances before the Commissioner (Appeals), they were sustained. The Tribunal found that the assessee could not link the purchases with corresponding sales and did not produce books of accounts for verification. The Tribunal upheld the decision of the Commissioner (Appeals) on the issue of disallowance, stating that the assessee failed to prove the genuineness of the purchases.

2. Regarding the validity of the notice issued under section 148 of the Act, it was found that the Assessing Officer had tangible material available from the Sales Tax department indicating non-genuine purchases by the assessee. As the returns were not previously scrutinized but only processed under section 143(1) of the Act, the Tribunal concluded that there was sufficient basis for the Assessing Officer to reopen the assessments under section 147 of the Act. Therefore, the Tribunal dismissed the grounds challenging the validity of the notice issued under section 148 of the Act.

In conclusion, the appeals filed by the assessee were dismissed by the Tribunal, upholding the disallowance on account of non-genuine purchases and affirming the validity of the notice issued under section 148 of the Act. The decision was pronounced on 18th January 2021.