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Income Tax Appellate Tribunal, ‘SMC’ ‘B’ BENCH, CHENNAI
Before: Shri A. Mohan Alankamony
आदेश / O R D E R
These appeals by the assessee are directed against the orders passed by the Ld. Commissioner of Income Tax (Appeals)-2, Chennai dated 12.01.2017 and 30.01.2017 in and ITA No.183/CIT(A)-2/2015-16 for the assessment year 2010-11 & 2009-10 respectively passed u/s.250(6) r.w.s.143(3) r.w.s.147 of the Act.
The assessee has raised several similar grounds in his appeals; however the crux of the issue is as follows:
(i) The Ld.CIT(A) has erred in upholding the validity of reopening U/s.147 of the Act, for both the assessment years because the assessing officer has no materials to believe that income has escaped assessment. (ii) The Ld.CIT(A) has erred in upholding the addition made by the Ld.AO by estimating 25% of bogus / unverifiable purchases as undisclosed income.
The brief facts of the case are that the assessee is an individual engaged in the business of trading in iron bars used for construction purposes, filed his return of income on 29.09.2009 and 25.09.2010 for the assessment years 2009-10 and 2010-11 respectively. The assessment for both the years were reopened because the Revenue had information from the Sales Tax Department, Mumbai that the assessee had availed bogus bills from certain entities for purchase of steel. Therefore the Ld.AO reopened the assessment for both the assessment years.
Ground No.(i) : Reopening U/s.147 of the Act:- The Ld.AR submitted before us that the Ld.AO had erred in reopening the assessment which is beyond 4 years because there were no materials available before the Revenue to hold that the income has escaped to be taxed in the hands of the assessee. He further argued stating that the Ld.AO has not passed a speaking order as held in the case GKN Driveshaft. At the outset we do not find any merits in these arguments advanced by the Ld.AR. From the facts of the case, it is apparent that the Revenue had information from the Sales Tax Department, Mumbai that the assessee had availed bogus bills from certain entities. In order to verify the velocity of such information received by the Revenue, the Ld.AO did not have any other option but to reopen the case of the assessee. The reason for reopening was also furnished to the assessee. Therefore we do not find any infirmity in the action of the Ld.AO with respect to reopening of the assessment. Hence this issue is held against the assessee for both the assessment years.
Ground No.(ii) : Estimating of income at 25% of bogus bills:-
At the outset the Ld.AR submitted that the assessee had furnished all the bills and invoices before the Ld.AO, even with respect to the entities cited by the Sales Tax Department, Mumbai to be bogus. However, neither the Ld.AO nor the Ld.CIT(A) had verified the invoices before coming into a conclusion that the bills are bogus. Further it was submitted that the Revenue has not summoned the vendors or obtained any information from any department with respect to the invoices produced by the assessee evidencing her purchases. The Ld.AR therefore pleaded that the matter may be remitted back to the file of Ld.AO for examining the invoices produced by the assessee and also for verifying the facts therein. The Ld.DR did not express any serious objections for the same. Considering the prayer of the Ld.AR and the facts of the case, I am of the considered view that addition cannot be made in the hands of the assessee towards bogus purchases only based on information received from Sales Tax Department that the persons with whom the assessee has dealt with were issuing bogus bills. The invoices produced by the assessee have to be properly verified and there should be a clear cut finding with respect to the genuineness of such invoice. Therefore in the interest of justice, I remit back the matter to the file of Ld.AO for de-nova consideration.
In the result, the appeal of the assessee is partly allowed for statistical purposes.
Order pronounced in the court on the 05th July, 2017.