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2022 (4) TMI 959 - AT - Income TaxReopening of assessment u/s 147 - bogus purchase of Bitumen - HELD THAT - Beyond doubt, the Assessing Officer had not made any disallowance qua the alleged bogus purchases of bitumen emulsion that were claimed by the assessee to have been made from M/s. Baba Basukinath Petrochemicals Ltd, Kolkata, which had in fact formed the very basis for reopening of the assessee s case u/s.147 of the Act. In sum and substance, the Assessing Officer while framing the assessment u/s. 147 r.w.s.143(3) had though failed to make any addition as regards the issue which had formed the very basis for reopening of the concluded assessment of the assessee firm i.e, bogus purchases but had made independent additions in its hands i.e, addition of bogus purchases. We are of considered view, that as stated by the Ld. AR, and rightly so, now when no addition had been made by the Assessing Officer as regards the issue on the basis of which the case of the assessee was reopened i.e, bogus purchases therein, no independent addition could have made by him - See JET AIRWAYS (I) LTD. 2010 (4) TMI 431 - HIGH COURT OF BOMBAY as held that if after issuing the notice u/s.148 of the Act the Assessing Officer concludes that the income which had initially formed the reason to believe for reopening the case of the assessee, has as a matter of fact not escaped assessment, then it would not be open to the Assessing Officer to independently assess some other income. AO without making any addition as regards the issue on the basis of which the case of the assessee was re-opened u/s.147 of the Act i.e, bogus purchase had therein grossly eared in law in making an independent addition - Appeal of assessee allowed.
Issues:
Sustainability of assessment order passed under Sec.147 r.w.s. 143(3) of the Income-tax Act, 1961 for assessment year 2008-09. Analysis: 1. The appeal challenged the order passed by the CIT (Appeals)-1, Raipur, dated 03.07.2017, arising from the order passed by the A.O under Sec. 147 r.w.s. 143(3) of the Act, dated 30.03.2016. The grounds of appeal included the legality of the order, sustaining addition of &8377; 16,48,336/- for alleged bogus purchase of Bitumen, and the justification for making such additions. The controversy centered around the sustainability of the assessment order by the Assessing Officer. 2. The original assessment was conducted by the Assessing Officer on 12.11.2010, determining the total income of the assessee firm at &8377; 60,38,220/-. Subsequently, the case was reopened under Sec. 147 of the Act based on information about alleged bogus purchase bills of bitumen emulsion from a specific party. The reassessment was done on 30.03.2016, determining the income at &8377; 76,86,560/-, leading to the appeal by the assessee. 3. The key argument presented by the assessee was that no addition was made by the Assessing Officer concerning the issue that led to the reopening of the case, i.e., the alleged bogus purchases of &8377; 4,86,910/-. Instead, the A.O disallowed purchases of bitumen amounting to &8377; 16,48,336/- from a different party. The assessee contended that the A.O lacked jurisdiction to make independent additions unrelated to the basis of reopening the case. 4. The Departmental Representative argued that since the purchases from the specific party were deemed bogus, the reassessment order and the addition made by the A.O were valid. However, the Tribunal examined the issue in detail, considering the arguments of both parties and the reasons for reopening the case. 5. After thorough consideration, the Tribunal found that the A.O erred in making an independent addition of &8377; 16,48,336/- when no addition was made regarding the issue that formed the basis for reopening the case. Citing legal precedents, the Tribunal concluded that the A.O exceeded his jurisdiction by making unrelated additions. Consequently, the addition of &8377; 16,48,336/- was vacated, and the appeal of the assessee was allowed based on these observations. 6. As a result of vacating the addition, the Tribunal refrained from delving into the merits of the case and dismissed the other grounds raised by the assessee. The appeal was allowed, and the order was pronounced on 05th day of April, 2022.
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