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

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

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.

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.

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