BINOY PODDAR,KOLKATA vs. ITO, WARD - 33(1), KOLKATA, KOLKATA

The assessee is an individual and is in the business of jewellery. He filed return of income on 29.10.2007 declaring total income of Rs.2,19,580/-. The assessments were reopened u/s 147 of the Act. Later an order u/s 143(3) r.w.s.147 was passed determining the total income of Rs.5,25,407/-. Aggrieved the assesee carried the matter in appeal without success. Further aggrieved the assessee is before me.

After hearing the rival contentions, the issue of validity of reopening of assessments u/s 147 of the Act, as well as the grounds on merits are considered and I hold as follows :-

The reasons for reopening of the assessment read as follows :- "Return of income for the Assessment Year 2007-08 was filed by the assessee on 29-10-2007 declaring income of Rs.2,19,580/- which was processed u/s. 143(1)

I find that the reopening has been made on the ground that the assessee had made a bogus purchase during the year to the tune of Rs.62,35,925/-. No addition has been in the final re-assessment order on account of bogus purchases. The AO added 3% of the purchase on the ground that, the purchase bill in question might have been inflated. The assessee’s contention is that, when no addition is made on the ground of re-opening based on which the assessments are reopened, then re-assessment order has to be quashed. Reliance was placed on the decision of Kolkata ‘B “ Bench of this Tribunal in order dated 22.05.2015, wherein the judgement of Hon’ble Bombay High Court in the case of CIT vs Jet Airways (I) Ltd (2011) 331 ITR 236 (Bom) and the judgment of the Hon’ble Rajasthan High Court in the case of CIT vs Shr Ram Singh (2008) 306 ITR 343(Raj) were followed.

On merits it was submitted that when the purchases were accepted as genuine and no addition made, the conclusion that the bill would have been inflated, cannot be factually sustained. The ld. Departmental Representative relies on the order of the AO.

On a conspectus of the matter, I am of the view that inference drawn by the AO that there is a possibility of the assessee having procured inflated purchase bills, is based on surmises and conjectures. There is no evidence in support of the same. Hence the addition has to be deleted. Even otherwise, as no addition is made on the ground or issue recorded in the reasons for reopening based on which the AO reopened the assessment, the assessment has to be quashed in view of the decisions of the judgement of Hon’ble Bombay High Court in the case of CIT vs Jet Airways (I) Ltd (supra) and the judgment of the Hon’ble Rajasthan High Court in the case of CIT vs Shr Ram Singh (supra). In view of the above discussion, I allow this appeal of the assessee.

In the result the appeal of the assessee is allowed.