ITO, 19(2)(2), MUMBAI vs. SHRI KETAN MAHESHBHAI VASANI, MUMBAI

PDF · subscribers
ITA 5234/MUM/2019Status: DisposedITAT Mumbai16 March 2021AY 2009-104 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the reassessment proceedings are bad in law because the name of the supplier mentioned in the reasons for reopening and in the assessment order do not match. This discrepancy vitiates the entire reassessment process.

What were the facts?

The Revenue reopened the assessment of an assessee engaged in import/export based on information about bogus purchases. The reasons recorded for reopening mentioned purchases from 'M/s.Starwood Mercantile Co. Pvt. Ltd.', but the assessment order made additions for purchases from 'M/s. Woodland Mercantile Co. Pvt. Ltd.'.

What were the issues?

Whether the reassessment proceedings are valid when there is a discrepancy in the name of the supplier mentioned in the reasons for reopening and the assessment order.

Which sections of the Income-tax Act were involved?

Section 147,Section 143(3)

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(1)Show list

Detected automatically from the text. Citations are also linked where they appear in the judgment. The count shows how many other judgments on BharatTax rely on the same authority.

Income Tax Appellate Tribunal, MUMBAI BENCH “SMC”, MUMBAI

Before: VIKAS AWASTHY & SHRI N.K.PRADHANShri Ketan Maheshbhai Vasani,

Hearing: 08/03/2021

This appeal by the Revenue is directed against the order of Commissioner of Income Tax (Appeals)- 4, Mumbai (in short ‘the CIT(A)’) dated 15/05/2019 for the assessment year 2009-10.

2.

The Revenue in appeal has assailed the findings of CIT(A) in holding reopening of assessment as bad in law.

2 आअसं. 5234/मुं/2019 (�न.व. 2009-10) (A.Y.2009-10)

3.

The brief facts of the case as emanating from the records are: The assessee is engaged in the business of import/export and resale of paper board and allied products. On the basis of information received by DGIT(Invn) from the Sales Tax Department, Government of Maharashtra, the assessment in the case of assessee for assessment year 2009-10 was reopened. As per the information received, the assessee had obtained bogus purchase bills aggregating to Rs.1,30,36,171/- from M/s. Woodland Mercantile Co. Pvt. Ltd. The assessee asked for the reason for reopening. As per the reasons provided to the assessee, the reopening was initiated as the assessee had made purchases from one ‘Starwood Mercantile Co. Pvt. Ltd.’ The contention of the assessee is that in the reasons recorded for reopening, the name of alleged bogus suppliers is different from the one mentioned in assessment order for making the addition. Therefore, the reopening is bad in law.

The Assessing Officer made addition on account of bogus purchases from M/s. Woodland Mercantile Co. Pvt. Ltd. by estimating G.P @12.5%. Aggrieved by the assessment order dated 20/03/2015 passed under section 143(3) r.w.s. 147 of the Income Tax Act, 1961 ( in short ‘the Act’), the assessee filed appeal before the CIT(A), inter-alia challenging the validity of reopening proceedings. The CIT(A) relying on the decision of Hon'ble Bombay High Court in the case of Akshar Builders and Developers vs. ACIT , 411 ITR 602 concluded that reopening is bad in law as the name of supplier mentioned in the reasons for reopening and in the assessment order do not coincide. Against the findings of CIT(A), the Revenue is in appeal before the Tribunal.

3. Ms.Smita Verma representing the Department submitted that the reasons for reopening clearly indicate that it is on account of assessee’s involvement in bogus purchases the assessment is being reopened and in the reassessment proceedings the addition has been made for same reasons. In so far as the name of the supplier is concerned both parties i.e. ‘M/s. Woodland Mercantile Co. Pvt. Ltd.’

3 आअसं. 5234/मुं/2019 (�न.व. 2009-10) (A.Y.2009-10) and ‘M/s.Starwood Mercantile Co. Pvt. Ltd.’ their names appear in the list of suspicious dealers declared by the Sales Tax Department, Government of Maharashtra. The wrong mentioning of the name does not cause prejudice to the assessee as the addition has been made in reassessment proceedings in line with the reasons recorded for reopening. The case law on which CIT(A) has placed reliance is distinguishable on facts.

4.

We have heard the submissions made by ld. Departmental Representative and have examined the orders of authorities below. The Revenue in appeal has assailed the findings of CIT(A) in holding reopening of assessment as bad in law. A perusal of documents on record reveal that while recording reasons for reopening the Assessing Officer has recorded that the assessee had made bogus purchases from ‘M/s.Starwood Mercantile Co. Pvt. Ltd.’, whereas while passing assessment under 143(3) r.w.s. 147 of the Act, the Assessing Officer has made addition on account of bogus purchases by assessee from ‘‘M/s. Woodland Mercantile Co. Pvt. Ltd.’ . The reason for making addition may coincide with reasons for reopening, but the party qua which satisfaction was recorded for reopening the assessments is distinct and different. ‘M/s.Starwood Mercantile Co. Pvt. Ltd.’ and ‘M/s. Woodland Mercantile Co. Pvt. Ltd.’ are two distinct, separate entities having separate PAN. Erroneous recording of name of the entity in the reasons for reopening vitiates the entire reassessment proceedings. The reasons for reopening are recorded by the Assessing Officer after having satisfaction that the assessee has entered into a transaction with a particular/definite entity. The Assessing Officer cannot record a satisfaction on the basis of a roving enquiry, naming entity ‘A’ in the reasons for reopening and making addition in the reassessment proceedings on the basis of transactions with entity ‘B’. The reasons for reopening are soul of reassessment proceedings. If any error is committed in recording of such reasons, it leads to an inescapable conclusion that Assessing Officer‘s satisfaction was flawed.

4 आअसं. 5234/मुं/2019 (�न.व. 2009-10) (A.Y.2009-10)

Recording of reasons for reopening based on impaired satisfaction would fail the test and judicial scrutiny. Thus, in view of the fact that the name of the entity in reasons for reopening and in reassessment proceedings do not coincide, we hold that the reassessment proceedings are bad in law and are liable to be quashed. We concur with the order passed by CIT(A) and uphold the same.

5.

In the result, appeal by the Revenue is dismissed being devoid of any merit.

Order pronounced in the open court on Tuesday the 16th day of March, 2021.

More judgments on Section 147

All 49,210 judgments and leading authorities on Section 147 →

Recent GST High Court judgments

Search GST case law →