2024 (5) TMI 296 - AT - Income Tax

Reopening of assessment - Reasons to believe - ACIT jurisdiction to issue the notice u/s 148 - notice was issued by another officer (i.e. ACIT) while jurisdiction over the case was with ITO - HELD THAT - AO had recorded the reasons to believe based on the specific and credible information received from the Investigation Wing of the department which prima facie showed escapement of income. Reasons recorded were duly furnished to the appellant. Since the return of income u/s. 139(1) was filed at an income of Rs. 53, 77, 300/-. (well above the prescribed monetary limits) the ACIT had jurisdiction to issue the notice u/s. 148 of the I.T. Act. Necessary approval has also been taken from the Competent authority. Subsequently the case was transferred u/s. 127 from ACIT Circle 1(1) Mumbai to ITO Ward (1)(1) Mumbai. As such the grounds of appeal relating to reopening of assessment and the procedure followed are found to be without merit and hence rejected. Estimation of income - bogus purchases - HELD THAT - AO has rightly held that books of accounts are not reliable and after rejecting the same made as addition of 30% of the disputed purchase amount. The CIT(A) has sustained the addition to the extent of 12.5% of total disputed purchases. The same is considered reasonable and is therefore upheld. Assessee appeal dismissed.

Summary

Issues Involved:
The judgment involves challenges to the validity of the order based on jurisdiction, notice issuance, reasons for reopening, approval process, lack of inquiry, and procedural compliance.

Challenge to Jurisdiction:
The appellant contested the validity of the order due to the notice being issued by an officer not holding jurisdiction over the case. The reasons for reopening were hastily recorded without proper inquiry, and the approval process was criticized for lacking detailed consideration.

Reasons for Reopening and Approval Process:
The ACIT received information from the Investigation Wing regarding bogus purchases by the appellant, leading to the notice under section 148. Despite objections, the approval by the PCIT was deemed valid as the satisfaction was recorded within the prescribed time limit.

Procedural Compliance and Notice Issuance:
The appellant raised objections to the order being passed by the ITO beyond the monetary limits set by CBDT instructions. The timing of the notice issuance was also disputed, but the acknowledgment of receipt by postal authorities on time was considered valid.

Validity of Disputed Purchases and Assessment:
The appellant failed to produce evidence to prove the genuineness of a transaction, resulting in the treating of purchases as bogus. The AO's addition of 30% of disputed purchases was reduced to 12.5% by the CIT(A), which was upheld as reasonable.

Conclusion:
After careful consideration, the Tribunal rejected the grounds challenging the reopening of assessment and the procedure followed. The addition to the income based on disputed purchases was upheld as reasonable, leading to the dismissal of the appeal.