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Income Tax Appellate Tribunal, Hyderabad ‘ B ‘ Bench, Hyderabad
Before: Shri S.S. Godara & Shri Laxmi Prasad Sahu
This is assessee’s appeal for the A.Y 2006-07 against the order of the CIT (A)-5, Hyderabad, dated 29.11.2016.
Heard both the parties and the case files perused.
Coming to the first and foremost legal issue of correctness of both the learned lower authorities action taking recourse to section 148/147 mechanism, we find that the Assessing Officer had recorded his following reason(s) while forming the opinion that this taxpayer’s taxable income had escaped assessment: “Reasons for reopening of the assessment: The assessee company is engaged in the business of manufacturing of speciality chemicals. In this case, assessment was completed u/s 143(3) on 31.12.2008, determining the total income at Rs.6,26,78,380/- as against the returned income of Rs.6,10,66,421/-.
As per the information received from the Dy.CIT, Central Circle-3 Mumbai, vide his letter dated 08.01.2013 (received on 23.01.2013), search operations u/s 132 of the I.T. Act were carried out in the case of Sri Parag Mehta and others (Shri Sangita Mehta, Shri Sanjay Sonawani and M/s.Wachington Software Ltd) on 22.03.2011. In the course of search operations, it was revealed that the aforesaid group cases engaged in fraudulent billing activities and in the business of providing bogus bills for software and had been continuing this business for many years. The assessee company M/s. Vivimed Labs Ltd., is one of the clients found to be involved in such transactions and the details of bogus purchase provided are as under: S.No Invoice No. Invoice Date Amount in (Rs.) 1 WSL/INV/31/2005- 24.10.2005 15,00,000 06 2 -do- -do- 15,00,000 3 -do- -7.12.2005 15,00,000
Thus, bogus purchases amounting to Rs.45,00,000/- needs to be disallowed. Hence, I have reason to believe that income chargeable to tax for the A.Y 2006-07 has escaped assessment within the meaning of section 147 of the Act and it is therefore, this case is being reopened u/s 147”.
The clinching fact that emerges during the course of hearing is that we are in A.Y 2006-07 wherein the Assessing Officer interalia framed his section 143(3) regular assessment on 31.3.2008 followed by issuance of his section 148 notice to the assessee on 12.2.2013 i.e, well beyond the prescribed period of 4 years from the end of the relevant assessment year in light of section 147 1st proviso in the Act.
Learned CIT (DR) fails to dispute that the Assessing Officer’s reopening reasons had nowhere recorded that assessee’s taxable income had escaped assessment on account of its failure in disclosing the corresponding particulars “fully” and “truly”. Hon'ble Bombay high court’s decision in Hindustan Liver Ltd vs. R.B Wadkar, 268 ITR 332 holds that an Assessing Officers reopening reason have to be read on standalone basis without having any scope of addition, deletion or substitution at a later stage; as the case may be. And that such reopening reasons should not be allowed to be improved by discovery of new facts later on. We therefore invoke section 147 first proviso to held that both the lower authorities have erred in law and in facts in initiating the impugned reopening against the assessee. The same stands quashed. All other pleading on merits are rendered academic.
In the result, assessee’s appeal is allowed in above terms.
Order pronounced in the Open Court on 8th September,2021.