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Facts
The assessee's appeal was dismissed for non-prosecution by the CIT(A). The assessee's grievance is that the reassessment proceedings, notice under Section 148, and reassessment order were illegal and invalid. The assessee also contested the addition made under Section 69C, arguing it was made without issuing notice under Section 143(2).
Held
The Tribunal held that the Assessing Officer should not have reopened the assessment for the same reasons when it had already been framed under Section 147 and previously restricted by the Tribunal. The reopening was deemed to be a change of opinion. Following the jurisdictional High Court's decision in Usha Exports vs. ACIT, the notice for reopening was set aside.
Key Issues
Whether the reopening of assessment under Section 147 after an earlier assessment and subsequent tribunal proceedings, based on the same facts and issue, amounts to a change of opinion.
Sections Cited
147, 148, 143(3), 143(2), 69C, 151(1)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “G” BENCH, MUMBAI
Before: SAKTIJIT DEY, HON’BLE & SHRI NARENDRA KUMAR BILLAIYA, HON’BLE
O R D E R
PER NARENDRA KUMAR BILLAIYA, AM:
This appeal by the assessee is preferred against the order dated 20/08/2024 by NFAC, Delhi [hereinafter ‘the ld. CIT(A)’] pertaining to AY 2013-14.
The grievance of the assessee reads as under:- “1. The National Faceless Appeal Centre ["the CIT(A)"] erred in dismissing the appeal of the Appellant for non-prosecution of the appeal. 2. The CIT(A) erred in upholding the validity of the re-assessment proceedings.The notice issued for re-opening of assessment under section 148, the re-opening of assessment under section 147, the reassessment proceedings and also the reassessment order are illegal, invalid and unjustified. 3. The CIT(A) erred in upholding the validity of re-assessment proceedings which was conducted without the issue of notice under section 143(2) of the Act. Hence, the re-assessment proceedings and also the re-assessment order are ab-inito void and bad in law. 4. The CIT(A) erred in confirming the addition of Rs. 2,86,09,257 made by the AO under section 69C of the Act. In doing so, the learned CIT(A) ignored the decision of the Hon'ble Income Tax Appellate Tribunal in the Appellant's own case.
5. The Appellant craves leave to add to, to alter or to amend the above grounds of appeal
.”
3. Representatives were heard at length. Case records carefully perused.
4. The reasons for reopening the assessment as extracted in the body of the assessment order, read as under:- “Return of Income for A.Y.2013-14 declaring total income of Rs.7,21,850/- was e- filed on 02.09.2013. Thereafter, assessment was completed u/s. 143(3) r.w.s. 147 on 16.10.2017 accepting the total income at Rs. 42,98,007/-.
2. The assesse company is a trader in textile. In this case assessment was reopened for examining the genuineness of assessee's claim of bogus purchases during the F.Y. 2012-13 aggregating to Rs. 2,86,09,257/- with respect to parties who appeared to be hawala dealers as per the verification from Maharashtra Sales Tax Department. The facts were also confirmed from the website of Sales Tax Department and as per the DGIT (Investigation), Mumbai report of 26.12.2013 that the parties were involved in issuing hawala sales bills without supplying goods and that assessee is one of the beneficiaries of such hawala transactions.
2.1. Further, on perusal of records, it is noticed that the reasons recorded in the order for reopening the assessee case were made on the aforesaid facts and since the case was not subject to scrutiny assessment for the said period necessary evidences were called for. It was seen that the assessment proceedings concluded with well- established facts that the assessee was neither able to substantiate the claim of bogus purchases of Rs. 2,86,09,257/- with relevant documentary evidences nor the concerned parties (hawala dealers) could be traceable. Thus the onus of proof for genuineness of the purchases failed to be discharged by the assessee. Further, reliance was also placed on decisions (1) to record that even payment by account payee cheque is not sacrosanct to prove the transaction as genuine and in this case there is uncontroverted evidence from an impeccable source (Maharashtra Sales Tax Department) which has the primary duty of taxing a purchase sale transaction in the form of admission of the so called seller about issuing bogus bills of purchase/sale.
2.2 Thereafter, the assessing officer while relying on several judgments had held that assesse failed to establish the genuineness of the purchases claimed by it. However, made a disallowance of only 12.5% of the bogus purchases and added back an amount of Rs. 35,76, 157/- since the entire purchases purported to have been claimed on bills issued by the hawala dealers as confirmed from the Sales Tax Authorities/investigation wing, could not be proved to be genuine by the assessee the disallowance was required to be done for the total amount of bogus transactions of Rs. 2,86,09,257/-. Omission to do so has resulted in under assessment of income to the extent of Rs. 2,50,33, 100/- (Rs. 2,86,09,257-Rs. 35,76, 157) in the wake of SC decision in N K Proteins Ltd. Vs. DCIT 2017 -TIOL - 23-SC-IT dated January 16,2017 for addition of entire income on account of bogus purchases subsequently 3 there has been an issuance of order of the 0/o Pr. CIT (Coordination), Mumbai dated 24/08/2017 to report and review identical issues for entire addition of bogus purchases.
On the basis of the aforesaid details stated above, I have reasons to believe that the assessee has failed to disclose fully and truly all material facts necessary for assessment. Therefore, I have reason to believe that income chargeable to tax exceeding Rs. 1 lakhs has under assessed and escaped assessment within the meaning of section 147 of the I. T. Act 1961.
5. In this case since RO/ was filed for relevant A. Y. and regular assessment u/s 143(3) was made, the provision of clause (c) of Explanation 2 to section 147 are applicable and the assessment year under consideration is deemed to be a case where income chargeable tax has escaped assessment is more than four years have elapsed from the end of assessment year under consideration. Hence, necessary sanction to issue notice u/s 148 is sought as per the provisions of section 151(1) of the Income Tax Act, 1961.”
It can be seen from the aforementioned reasons that, assessment u/s 143 r.w.s. 147 of the Act was already made in the case of the assessee in which addition of 12.5% of the bogus purchases were added back. The quarrel has travelled up to the Tribunal and the Tribunal restricted the addition to 1% of the bogus purchases.
Pursuant to the decision of the Hon’ble Supreme Court in the case of N K Protiens Ltd. vs. DCIT (supra), the O/o Pr. CIT (Coordination), issued an order for making addition of entire amount on account of bogus purchases. Therefore, the AO reopened the assessment once again.
We are of the considered view that once the assessment has been framed u/s 147 of the Act, for the very same reasons, the AO should not have reopened the assessment and that too for making the entire additions pursuant to the order issued by the O/o Pr. CIT. This is nothing but a change in the view earlier taken by the AO.
On identical set of facts, the Hon’ble Jurisdictional High Court in the case of Usha Exports vs. ACIT in W.P. No. 2506 of 2019 held as under:-