2021 (3) TMI 657 - AT - Income Tax

Estimation of income - Bogus purchases - receipt of certain information from Sales Tax Department that the assessee procured accommodation purchase bills - HELD THAT - Assessee had made certain purchases from concerns run by a tainted group. It was admitted by key persons of those concerns that they did not carry out any genuine business activities. During survey proceedings also, the assessee could not satisfactorily explain the purchases made during the year. The assessee could not produce any of the suppliers to prove the genuineness of the purchases. Hence the assessee was unable to discharge the primary onus of proving impugned purchases. On the facts of the case, it was a fit case for estimation of income earned on these tainted purchases. We find the estimation of 12.5% to be fair and reasonable. No new material is before us to deviate from the adjudication of Ld. CIT(A) in the impugned order. Validity of reassessment proceedings - HELD THAT - We find that original return was processed u/s. 143(1) and the case was reopened upon receipt of specific information from Sales Tax Authorities which indicated possible escapement of income in the hands of the assessee. Nothing more was required at this stage. Therefore, no infirmity could be found in the jurisdiction acquired by Ld. AO. Resultantly, the legal grounds as well as appeal stand dismissed. AY 2013-14 - We find that the discrepancies found during the course of survey proceedings remained to be explained by the assessee to the satisfaction of lower authorities. The unaccounted purchases/sales, shortage of stock and cash were noted during the course of survey. The onus to explain the discrepancies remained un-discharged. Therefore, the estimations as made by lower authorities, in our considered opinion, are quite fair and reasonable and no interference is called for. Resultantly, the appeal stand dismissed.

Summary

Issues:
Challenges to separate orders of the Commissioner of Income Tax (Appeals) for Assessment Years 2009-10, 2010-11, and 2013-14 on common grounds.

Analysis:

Issue 1: Reopening of Assessment for AY 2009-10
The appeal contested the reopening of assessment based on third-party satisfaction without the Assessing Officer (AO) applying independent judgment. The Commissioner of Income Tax (Appeals) confirmed the re-opening and additions on alleged bogus purchases. The AO estimated a 12.5% profit on these purchases, leading to an addition of ?90.90 Lacs. The appellate tribunal upheld the AO's actions, stating the assessee failed to prove the genuineness of purchases, and the estimation was fair and reasonable.

Issue 2: Legality of Reassessment Proceedings
The original return was processed under section 143(1), and the case was reopened due to specific information indicating income escapement. The tribunal found no infirmity in the jurisdiction acquired by the AO, dismissing the legal grounds and the appeal.

Issue 3: AY 2010-11
Similar to AY 2009-10, the assessee faced estimated additions of 12.5% against tainted purchases. The tribunal upheld the lower authorities' decisions, as the facts and issues were identical.

Issue 4: AY 2013-14
In this assessment, unaccounted transactions were discovered during a survey, leading to estimated income additions on unaccounted purchases, shortage of stock, and cash. The tribunal found the lower authorities' estimations fair and reasonable, dismissing the appeal.

In conclusion, all appeals challenging the Commissioner of Income Tax (Appeals) orders for AYs 2009-10, 2010-11, and 2013-14 were dismissed by the appellate tribunal. The tribunal upheld the estimations made by the Assessing Officer and found no grounds for interference in the decisions of the lower authorities.