2018 (4) TMI 10 - AT - Income Tax

Validity of reopening of assessment - bogus purchases - Held that - In identical issue was examined by the AO during the scrutiny assessment for the A.Y. 2003-04 in reassessment proceeding and consequently the initiation of proceeding for the reassessment for the year under consideration was initiated by the AO and in view of the decision in case of Multiscreen Media P. Ltd. vs. Union of India (2010 (2) TMI 269 - BOMBAY HIGH COURT). No error or illegality in the reopening of the assessment under consideration. The decisions relied upon by the ld. AR are not applicable in the facts of the present case because at the time of issuing notice u/s 148 of the Act the AO had already conducted any enquiry about the genuineness of the purchases made from M/s Ambica Traders. Addition u/s 69C - Held that - Since, the assessee is seeking the directions to the AO for proper examination of additional evidence therefore, in the facts and circumstances of the case and in the interest of justice the matter on merits is remanded to the record of the Assessing Officer for denovo adjudication after consideration of evidence filed by the assessee.

Summary

Issues involved:
1. Validity of reopening assessment
2. Addition made under section 69C of the Act
3. Addition/disallowance made on estimated basis

Validity of reopening assessment:
The appeal raised concerns about the initiation of proceedings under section 147 without sufficient reasons recorded before issuing the notice. The assessee argued that the AO's actions were illegal and lacked jurisdiction. The Tribunal considered the previous assessment for the year 2003-04, where it was found that purchases from M/s Ambica Traders were bogus. The Tribunal concluded that the notice issued under section 148 for the current assessment year was based on tangible material from the previous assessment, thus holding the reopening valid. The Tribunal referenced a decision by the Hon'ble Bombay High Court to support its findings.

Addition made under section 69C of the Act:
The assessee contested the addition made by the AO under section 69C, claiming that additional evidence supporting their case was not considered by the authorities. The Tribunal remanded the matter back to the AO for a fresh examination of the evidence filed by the assessee, emphasizing the need for a proper adjudication on merits.

Addition/disallowance made on estimated basis:
Grounds 4 and 5 of the appeal challenged the additions/disallowances made on an estimated basis by the AO. As the matter was remanded back to the AO for reconsideration based on additional evidence, the Tribunal directed a fresh examination of the issue after providing the assessee with an opportunity to be heard. Consequently, the appeal was partly allowed for statistical purposes.

This comprehensive analysis of the judgment addresses the issues raised in the appeal, providing detailed insights into the Tribunal's decision-making process and legal reasoning.