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Facts
The assessee's case for AY 2012-13 was reopened based on information regarding alleged bogus purchases. Initially, a reassessment was completed with a 12.5% disallowance, but the case was reopened again on similar grounds. The AO disallowed 100% of the purchases in the second reassessment.
Held
The Tribunal held that reopening the assessment on the same information that was the subject of the earlier reopening is not justified, especially when an addition was already made. The reassessment proceedings initiated were quashed as void ab initio.
Key Issues
Whether reassessment proceedings initiated on the same information as a prior reopening, where an addition was already made, is legally permissible.
Sections Cited
147, 148, 143(3), 250, 144
AI-generated summary — verify with the full judgment below
Order Under Section 254(1) of Income Tax Act PER PAWAN SINGH, JUDICIAL MEMBER; 1. This appeal by assesses is preferred against the order dated 22.01.2025 passed in Appeal no. CIT(A) 30, Mumbai/11175/2019-20 by the Ld. Commissioner of Income–tax(Appeals)/ National Faceless Appeal Centre (NFAC) [hereinafter referred to as the “CIT(A)”] under section 250 of the Income-Tax Act, 1961 [hereinafter referred to as "Act"] for the Assessment year [A.Y.] 2012-13. The assessee has raised the following grounds, apart from Form-36: “ 1) The Learned Income Tax Officer erred in re-opening a competed 143(3) r.ws 147 assessment without any new material evidence on record and enhanced the disallowance to the extent of 100% of the alleged bogus purchase from the initial 12.5% of the alleged bogus purchase. 2) The Learned CIT(A) also erred in confirming the irregular Order passed u/s 147 r.w.s 144 specially after the initial assessment was completed under 143(3) r.w.s 147. 3) Your Petitioner states that all the details were furnished during the initial assessment and the Leamed Income Tax Officer after a considered application of mind had completed the assessment u/s 143(3) r.w.s 147 4) Your Petitioner states that during the re-opened assessment the assessing officer was aware of the initial assessment being completed and without verifying the records passed an Order u/s 144 r.w.s 147 5) Your Petitioner prays that the re-opened assessment Order enhancing the Retumed income of the assesse from 12.5% of the alleged bogus purchase to 100% of the same be set aside. 6) Your Petitioner states that such re-opening of assessments if allowed will lead to chaos and multiple assessments being done on the basis of individual opinions without any regard to law. 7) Your Petitioner craves leave to add/alter/amend and/or withdraw any/or all the above grounds of Appeal
.”
2. Rival submissions of both the parties have been heard and record perused. The learned authorized representative (Ld. AR) of the assessee submits that assessee is small business man and engaged in business of trading of steel in Ferrous and non-Ferrous metal in the name of “Kanakgura Stell Centre”, filed his return of income for A.Y. 2012-13 on 20.08.2022 declaring income at Rs. 507240/-. Initially return was accepted. The case was reopened under section 147. Notice under section 148 dated 25.02.2015 was served upon the assessee. Case of assessee was reopened on the basis of information from the investigation wing that assessee is beneficiary of alleged bogus purchases as per the information of sale tax department. As per allegation, the assessee has shown purchases from Shree Sundha Steel Pvt. Ltd. of Rs. 19,91,010/-. No material on the basis of which the case was reopened was supplied to the assessee. The Assessing Officer (AO) completed reassessment proceeding on 22.01.2016 by making disallowance of 12.5% of purchases from Shree Sundha Steel Pvt. Ltd. The case of assessee was again reopened under section 147 by issuing notice under section 148 on 30.03.2019. The case of assessee was Popatlal Peerchand Shah reopened on same information that assessee’s beneficiary of purchases shown from accommodation entry provider and that assessee has shown purchases from Metalax Tube Industries of Rs. 19,91,010/-. In the second reassessment order dated 13.12.2019, the AO disallowed 100% of the purchases shown from alleged Hawala dealer. The case of assessee was again reopened on the same information on the basis of which earlier assessment was completed. The Ld. AR of the assessee submitted that no material was supplied by AO, on the basis of which case of assessee was reopened initially, though 12.5% of purchases were disallowed. The similar amount of purchases is the subject matter of second reopening. The impugned purchases in fact relates to Metalax Tube Industries. The Ld. AR of the assessee filed copy of part of audit report of Metalax Tube Industry, wherein the sale of impugned amount is shown to the assessee. The Ld. AR of the assessee submit that once the AO on considering the similar information already made disallowance of similar purchases and the second reopening on similar allegation is not permissible. The Ld. AR submits that assessee made all such submission before CIT(A). However, the Ld. CIT(A) without verification of fact upheld the order of AO by taking view that no details in respect of original assessment was provided and that mere pleading cannot be considered as evidence. No information against the contention of assessee was verified from assessment record or from AO. The Ld. AR of the assessee submits that since reopening on similar information, which was the subject matter of earlier reassessment, particularly when the addition in the assessment was made, is bad in law. Therefore, subsequent action initiated thereon is void ab initio. The Ld. AR of the assessee submits that reassessment proceeding may be Popatlal Peerchand Shah quashed by setting aside the assessment order on 19.12.2029. On merit, the ld AR of the assessee submits that the transaction of purchases has already been taxed in the assessment order dated 20.01.2016, the same cannot be added again, thus, even on merit, the assessee has good case.
On the other hand the learned departmental (Ld. DR) for the revenue supported the order of lower authorities. The Ld. DR for the revenue submits that no specific adjudication on the legal ground of appeal
raised by the assessee is passed by first appellate authority; therefore, matter may be restored to his file to consider all such fact and to consider the order afresh. The ld CIT(A) passed the order on merit only in confirming the addition of disallowances of purchases
4. We have considered the rival submission of both the parties and have considered the orders of lower authority carefully. There is no dispute initially the assessment was completed under section 143(3) r.w.s 147 on 22.01.2016, wherein the addition on account of bogus purchases @12.5% of impugned purchases shown from Shree Sundha Steel Pvt. Ltd. was made. We find that on similar allegation by merely changing the name of impugned Hawala dealer, the case of assessee was reopened. The impugned purchases are of the exact same amount except change of name of supplier. Before us the Ld. AR of the assessee filed copy of part of audit report of Metalax Tube Industry, wherein the sale of impugned amount is shown to the assessee. Thus, the AO has made reopening on the basis of same information, which was the subject matter of first reopening. It is settled law in the Income Tax proceeding that reopening on the same information which was subject matter of earlier reopening is not justified, particularly when the AO made ad-hock addition in the assessment orde, based Popatlal Peerchand Shah on such information. Therefore, the reassessment proceeding initiated pursuant to notice under section 148 dated 30.03.2019 is quashed/set aside. Considering the fact that we have quashed the notice under section 148. Therefore, subsequent action initiated and passing of assessment order is void ab initio. In the result, the grounds of appeal against the validity of reassessment raised by the assessee are allowed. Considering the facts that we have allowed appeal of the assessee on legal issue, therefore adjudication on merit has become academic.
5. In the result, the appeal of the assessee is allowed. Order pronounced in open court on 23.04.2025.