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2022 (12) TMI 434 - AT - Income Tax


Issues:
1. Validity of reopening assessment u/s 147 of the Income Tax Act.
2. Jurisdiction of the Assessing Officer to reopen the assessment.
3. Admissibility of reasons to believe escapement of income.
4. Legal grounds challenging the impugned assessment order.
5. Disallowance of purchases made from alleged bogus parties.

Issue 1: Validity of reopening assessment u/s 147 of the Income Tax Act:

The appeal challenges the order of the Ld. Commissioner of Income Tax-41, Mumbai for assessment year 2009-10. The appellant contests the reopening of assessment by the Assessing Officer (AO) under section 147 of the Income Tax Act. The AO reopened the assessment based on information received regarding bogus claim of expenses by the appellant from various parties. The appellant argues that the AO did not satisfy the essential condition precedent for reopening, i.e., "reason to believe escapement of income." The AO's action was based solely on information without a valid reason to suspect income escapement. The appellant asserts that the notice issued under section 148 of the Act should be quashed due to the absence of a valid reason for reopening.

Issue 2: Jurisdiction of the Assessing Officer to reopen the assessment:

The legal issue raised questions the AO's jurisdiction to reopen the assessment without fulfilling the condition precedents. The AO received information from the DGIT(Inv.) regarding the appellant's alleged bogus expenses, leading to the reopening of the assessment. However, the appellant argues that the AO's decision was not based on valid reasons to believe escapement of income, as required by law. The AO's reliance on the information without proper reasoning is contested by the appellant, challenging the validity of the reassessment.

Issue 3: Admissibility of reasons to believe escapement of income:

The case highlights the importance of the AO having valid reasons to believe escapement of income before reopening an assessment under section 147 of the Act. The appellant contends that the AO's decision was solely based on information received, lacking a proper foundation for reopening. The absence of a valid reason to suspect income escapement renders the reassessment proceedings void in the eyes of the law, as per legal requirements under the Act.

Issue 4: Legal grounds challenging the impugned assessment order:

The appellant raised legal grounds challenging the impugned assessment order, arguing that the AO did not have lawful jurisdiction to reopen the assessment. The appellant asserts that the AO failed to consider objections raised before assuming jurisdiction under section 147. Additionally, the appellant contests the arbitrary findings of the AO and the Ld. CIT(A) upholding the assessment order without proper basis or evidence. The legal grounds challenge the validity and procedural fairness of the assessment process.

Issue 5: Disallowance of purchases made from alleged bogus parties:

The appeal also contests the disallowance of purchases made from alleged bogus parties, with the Ld. CIT(A) sustaining a 30% disallowance. The appellant argues that the AO made the disallowance without providing an opportunity to be heard or presenting adverse evidence. The appellant challenges the arbitrary nature of the disallowance and questions its legal basis. The issue involves a detailed examination of the disallowance decision and the procedural fairness of the assessment process.

The detailed analysis of the judgment reveals a comprehensive review of the legal issues surrounding the validity of reopening the assessment, the jurisdiction of the Assessing Officer, the admissibility of reasons to believe escapement of income, legal challenges to the assessment order, and the disallowance of purchases from alleged bogus parties. The judgment emphasizes the importance of adherence to legal requirements and procedural fairness in assessment proceedings under the Income Tax Act.

 

 

 

 

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