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2022 (3) TMI 169 - AT - Income TaxValidity of Reopening u/s 147 - non-issuance of notice under section 143(2) - HELD THAT - In view of the decision of the hon'ble Supreme Court in the case of CIT v. Laxman Das Khandelwal 2019 (8) TMI 660 - SUPREME COURT wherein it has been categorically held that non-issuance of notice under section 143(2) of the Act is a jurisdictional defect and cannot get cured by section 292BB of the Act, the reassessment framed in the hands of the assessee for the assessment year 2009-10 is herewith quashed. Estimation of income - bogus purchases - profit percentage was restricted to 12.5 per cent. - HELD THAT - The assessee from its side had discharged its onus by filing all the relevant documents together with the confirmation from the said supplier including the PAN card, Aadhaar card, Income-tax return details of the supplier, among other relevant details. Hence, it could be conclusively proved that the assessee had discharged its onus to prove the genuineness of the purchases and merely because notice under section 133(6) of the Act, which had been duly served but not responded by the supplier, no adverse inference could be drawn on the assessee. We also find that absolutely no adverse inference has been drawn on the lower authorities on the documents furnished by the assessee. Hence, no addition could be made in the peculiar facts and circumstances of the instant case in the light of decision of the hon'ble jurisdictional High Court in the case of Pr. CIT v. Vaman International P. Ltd. 2020 (2) TMI 464 - BOMBAY HIGH COURT Thus we hold that no addition could be made on account of alleged ingenuine purchases in the peculiar facts and circumstances of the instant case. Accordingly, the grounds raised by the assessee on the merits are allowed for both the years. - Decided in favour of assessee.
Issues Involved:
1. Assumption of jurisdiction under section 147 of the Income-tax Act, 1961. 2. Non-service of notice under section 143(2) within the prescribed time. 3. Disallowance on account of bogus purchases. Detailed Analysis: 1. Assumption of Jurisdiction under Section 147 of the Income-tax Act, 1961: The assessee challenged the assumption of jurisdiction under section 147 of the Act. The case was reopened based on information from the Sales Tax Department of Maharashtra, which was passed on to the Assessing Officer (AO). The AO issued a notice under section 148, and the assessee responded by stating that the original return should be treated as a response to the notice under section 148. 2. Non-service of Notice under Section 143(2) within the Prescribed Time: The assessee raised a crucial ground that the notice under section 143(2) was not served before the completion of assessment proceedings within the prescribed time. The tribunal found that the AO did not have proof of service of notice under section 143(2) for the assessment year 2009-10. This was confirmed by a letter from the AO dated November 20, 2019. The tribunal cited the Supreme Court decision in CIT v. Laxman Das Khandelwal, which held that non-issuance of notice under section 143(2) is a jurisdictional defect and cannot be cured by section 292BB of the Act. Consequently, the reassessment for the assessment year 2009-10 was quashed, and other grounds were not addressed as they became academic in nature. 3. Disallowance on Account of Bogus Purchases: For the assessment years 2010-11 and 2011-12, the assessee challenged the disallowance made on account of bogus purchases. The purchases were made from M/s. Dimple Enterprises, a party listed as a tainted dealer by the Sales Tax Department. The AO issued a notice under section 133(6) to the supplier, which was served but not responded to. The assessee provided all relevant documents, including purchase bills, delivery challans, and bank statements showing payments by account payee cheques. Despite this, the AO disallowed the purchases, estimating the gross profit at higher percentages. The tribunal noted that the assessee had discharged its onus by providing all necessary documents and that the non-response to the notice under section 133(6) by the supplier should have led the AO to issue a summons under section 131. The tribunal found no adverse inference on the documents provided by the assessee and cited the Bombay High Court decision in Pr. CIT v. Vaman International P. Ltd., which held that without corresponding purchases, sales could not have been made. The tribunal concluded that no addition could be made on account of alleged ingenuine purchases and allowed the appeals for both years on merits. The grounds challenging the assumption of jurisdiction under section 147 were left open. Conclusion: The tribunal allowed the appeals for the assessment years 2009-10, 2010-11, and 2011-12, quashing the reassessment for 2009-10 due to non-service of notice under section 143(2) and allowing the appeals for 2010-11 and 2011-12 on merits regarding the disallowance of bogus purchases. Summary Table: | ITA No. | AY | Appeal By | Result | |----------------|----------|-----------|---------| | 5204/Mum/2018 | 2009-10 | Assessee | Allowed | | 5205/Mum/2018 | 2010-11 | Assessee | Allowed | | 5206/Mum/2018 | 2011-12 | Assessee | Allowed | Order pronounced on November 25, 2021, by way of proper mentioning in the notice board.
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