2021 (4) TMI 480 - AT - Income Tax

Validity of reassessment u/s 147 - non-compliance of statutory notices - Addition of bogus purchases - notice issued u/s. 142(1) And questionnaire were also returned back unserved - due to non-appearance before the AO to substantiate that the assessee was not involved in making bogus purchases and in absence of substantiating his case, the AO was constrained to pass the order u/s. 147/144 - HELD THAT - On a pointed query by the Bench as to whether the assessee has received the notice issued by the AO or not, the ld. Counsel for the assessee fairly conceded that the assessee, in fact, has received the notice, but, under the misconception that the notice does not belong to him did not appear before the AO. It is his alternate contention that given an opportunity, the assessee is in a position to substantiate his case that the assessee was not indulged in any bogus purchases, and, therefore, no addition is called for. Considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore the issue to the file of the AO with a direction to grant one final opportunity to the assessee to substantiate his case and decide the issue as per fact and law. The assessee is also hereby directed to appear before the AO and produce the relevant details to substantiate his case, failing which the AO is at liberty to pass appropriate order as per law. I hold and direct accordingly. The grounds raised by the assessee are accordingly allowed for statistical purposes.

Summary

Issues involved:
- Appeal against CIT(A) orders sustaining additions made by AO for assessment years 2007-08 and 2009-10.
- Validity of reassessment proceedings challenged by the assessee.
- Non-appearance of assessee before AO to substantiate involvement in bogus purchases.

Analysis:

Issue 1: Appeal against CIT(A) orders
The two appeals were filed by the assessee against separate orders of the CIT(A) for assessment years 2007-08 and 2009-10. The grounds raised by the assessee in both appeals related to the CIT(A) sustaining the additions made by the AO. The appeals were heard together and disposed of by a common order for convenience.

Issue 2: Validity of reassessment proceedings
The assessee challenged the validity of the reassessment proceedings before the CIT(A). However, the CIT(A) dismissed both the issues raised by the assessee regarding the addition on merit and the validity of the reassessment proceedings.

Issue 3: Non-appearance of assessee
The AO, due to non-appearance of the assessee to substantiate involvement in bogus purchases, passed orders under sections 147/144 of the Act, determining the total income of the assessee. The CIT(A) upheld the additions made by the AO. The counsel for the assessee admitted that the notice was received but the assessee did not appear before the AO due to a misconception. The Tribunal directed the AO to grant one final opportunity to the assessee to substantiate the case and decide the issue based on facts and law. The assessee was directed to produce relevant details before the AO, failing which appropriate orders could be passed. The grounds raised by the assessee were allowed for statistical purposes.

In conclusion, the appeals filed by the assessee were allowed for statistical purposes, and the decision was pronounced during the hearing. The Tribunal directed the AO to provide the assessee with an opportunity to substantiate the case regarding the bogus purchases and to decide the issue accordingly.