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Income Tax Appellate Tribunal, RAIPUR BENCH, RAIPUR
Before: SHRI RAVISH SOOD & SHRI JAMLAPPA D BATTULL
आदेश / ORDER PER RAVISH SOOD, JM: The present appeal filed by the assessee is directed against the order passed by the CIT (Appeals)-1, Raipur, dated 03.07.2017, which in turn arises from the order passed by the A.O under Sec. 147 r.w.s. 143(3) of the Income-tax Act, 1961 (in short ‘the Act’), dated 30.03.2016 for assessment year 2008-09. Before us the assessee has assailed the impugned order on the following grounds of appeal : “1. That the order u/s.147 read with section 143(3) passed by the learned DCIT is illegal, invalid and bad in law and deserves to be set aside. 2. On the facts and in the circumstances of the case the learned CIT(A) is not justified in sustaining addition f Rs.16,48,336/- made by the learned DCIT on the alleged ground of bogus purchase of Bitumen which is duly confirmed to have been purchased and used in the contract work by the subcontractor and contractee department. 3. On the facts and in the circumstances of the case, the learned DCIT is not justified in making addition of Rs.16,48,336/- which was not the basis for reopening the case u/s.148 as the alleged bogus purchase of Bitumen for Rs.486910/- mentioned in the reason for reopening the case u/s.148 was not found to have been claimed or debited. 4. On the facts and in the circumstances of the case, the learned DCIT is not justified in making addition of expense for purchase of Bitumen which has not been incurred by the appellant.
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The appellant reserves the right to take any other grounds at the time of hearing.” 2. Controversy involved in the present appeal hinges around the sustainability of the assessment order passed by the Assessing Officer u/s.147 r.w.s. 143(3) of the Act, dated 30.03.2016.
Original assessment was framed by the Assessing Officer vide his order passed u/s. 143(3) r.w.s 147 of the Act, dated 12.11.2010, determining the total income of the assessee firm at Rs. 60,38,220/-.
On the basis of information received by the A.O that the assessee had procured bogus purchase bills of bitumen emulsion of Rs.4,86,910/- from one M/s. Baba Basukinath Petrochemicals Ltd., Kolkata, its case was reopened u/s 147 of the Act. Assessment was thereafter framed by the Assessing Officer vide his order passed u/s.147 r.w.s 143(3), dated 30.03.2016, determining the income of the assessee firm at Rs. 76,86,560/-.
Aggrieved, the assessee carried the matter in appeal before the CIT(Appeals), but without any success.
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The assessee being aggrieved with the order of the CIT(Appeals) has carried the matter in appeal before us.
We have heard the Ld. Authorized Representatives of both the parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by the Ld. AR to drive home his contentions. Before us, the Ld. AR has assailed the validity of the additions made by the Assessing Officer vide the assessment framed by him under Section 147 r.w.s 143(3) of the Act, dated 30.03.2016. Elaborating on his aforesaid contention, it was submitted by the Ld. AR, that though the case of the assessee was re-opened for the reason that it had procured bogus purchases bills of Rs.4,86,910/- from M/s. Baba Basukinath Petrochemicals Ltd, Kolkata, however, no addition on the said count was made by the Assessing Officer while framing the assessment. It was submitted by the Ld. AR that though the Assessing Officer on the basis of the impugned information received from the ITO, Ward-1, Raigarh, had while framing the assessment alleged that
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the assessee had procured bogus purchases of Rs.16,48,336/- from CUBs International Petrochem Ltd. (formerly known as M/s. Baba Basukinath Petrochemicals Ltd, Kolkata) and made an addition on the said count, however, no addition as regards the alleged bogus purchases of Rs.4,86,910/- (supra) on the basis of which its case was re-opened was made by him. In order to buttress his aforesaid claim the Ld. AR had taken us through the assessment order wherein the bifurcated details of the alleged bogus purchases of Rs.16,48,336/- (supra) were mentioned. Backed by the aforesaid facts, it was the claim of the Ld. AR, that now when the Assessing Officer had not made any addition as regards the issue on the basis of which the case of the assessee was re-opened, therefore, he was divested of his jurisdiction for making any independent addition in the hands of the assessee.
Per contra, the Ld. Departmental Representative (for short ‘DR’ ) relied on the orders of the lower authorities. It was submitted by the Ld. DR that as the purchases claimed by the assessee to have been made from M/s. Baba Basukinath Petrochemicals Ltd, Kolkata had been
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held by the Assessing Officer as bogus, therefore, no infirmity could be related to the validity of the reassessment order and the addition made by the Assessing Officer.
We have given a thoughtful consideration to the aforesaid issue in hand in the backdrop of the orders of the lower authorities and the contentions advanced by the ld. Authorized representatives for both the parties before us. Before adverting any further, we think it apt to cull out the ‘reasons to believe’ on the basis of which the case of the assessee was re-opened by the Assessing Officer, which read as under:
“The assessee filed return of income on 29.09.2008 declaring total income of Rs.59,78,220/-. The case was scrutinized and assessment order u/s.143(3) of the IT Act was passed on 12.11.2010 determining total income at Rs.60,38,220/-. Addition of Rs.60,000/- was made on account of lump sum disallowances. During the course of further verification it was found that M/s. Baba Basukinath Petrochemicals Ltd., Kolkata has provided bogus bills for sale of Bitumin Emulsion to the assessee. In view of the above facts, the assesee has claimed bogus expenses of Rs.4,86,910/- in the form of bogus purchases. Considering the facts and circumstances of the case, I have reason to believe that income of the assesee chargeable to tax to the extent of Rs.4,86,910/- has escaped assessment for failure on the part of the assessee to disclose fully and truly all the materials facts in the return of income necessary for assessment and therefore, notice u/s.148 of IT Act is issued for reopening the case for assessment u/s.147 of the IT Act. The notice has been issued with approval
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u/s.151(1) of the IT Act vide F. No.CIT-I/RPR/Tech/F-2/148/2014-15 dated 27.02.2015 of CIT-I, Raipur.”
On a perusal of the assessment order, we find that though the case of the assessee was reopened by the Assessing Officer, for the reason, that it had procured bogus purchase bills of bitumen emulsion of Rs. 4,86,910/- (supra) from M/s. Baba Basukinath Petrochemicals Ltd, Kolkata, but no addition on the said count was made by the A.O while reassessing the income of the assessee firm vide his order passed u/s. 143(3) r.w.s. 147 of the Act, dated 30.03.2016. On the contrary, the Assessing Officer had disallowed purchases of bitumen of Rs.16,48,336/- (supra) that were claimed by the assessee to have been made from aforementioned party, viz. M/s. Baba Basukinath Petrochemicals Ltd, Kolkata. On a perusal of the bifurcated details of the aforementioned purchases of bitumin emulsion of Rs.16,48,336/- (supra), we find that the same reads as under:
Sl. No. Name of concern/party Bill No. Date Amount (Rs.) from where bitumen emulsion has purchased during FY 2007-08 1. CUBs International 793/2007-08 10.03.2008 4,23,400 Petrochem Ltd
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792/2007-08 10.03.2008 4,23,400 3. 790/2007-08 09.03.2008 3,78,136 4. 762/2007-08 10.02.2008 4,23,400 Total 16,48,336/-
Beyond doubt, the Assessing Officer had not made any disallowance qua the alleged bogus purchases of bitumen emulsion of Rs. 4,86,910/- (supra) that were claimed by the assessee to have been made from M/s. Baba Basukinath Petrochemicals Ltd, Kolkata, which had in fact formed the very basis for reopening of the assessee’s case u/s.147 of the Act. In sum and substance, the Assessing Officer while framing the assessment u/s. 147 r.w.s.143(3) of the Act, dated 30.03.2016 had though failed to make any addition as regards the issue which had formed the very basis for reopening of the concluded assessment of the assessee firm i.e, bogus purchases of Rs. 4,86,910/- (supra), but had made independent additions in its hands i.e, addition of bogus purchases of Rs. 16,48,336/- (supra).
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Backed by the aforesaid facts, we are of considered view, that as stated by the Ld. AR, and rightly so, now when no addition had been made by the Assessing Officer as regards the issue on the basis of which the case of the assessee was reopened i.e, bogus purchases of Rs. 4,86,910/- (supra), therein, no independent addition could have made by him. Our aforesaid conviction is supported by the judgment of the Hon’ble High Court of Bombay in the case of CIT Vs. Jet Airways ( I) Ltd. (2011) 331 ITR 236 ( Bom). In the aforesaid judgment, it was held by the Hon’ble High Court that if after issuing the notice u/s.148 of the Act the Assessing Officer concludes that the income which had initially formed the ‘reason to believe’ for reopening the case of the assessee, has as a matter of fact not escaped assessment, then it would not be open to the Assessing Officer to independently assess some other income. Similar view has also been taken by the Hon’ble Jurisdictional High Court in the case of CIT ( Asst.) Vs. Major Deepak Mehta (2012) 344 ITR 641 ( Chhattisgarh).
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Considering the facts involved in the present case before us in light of the aforesaid settled position of law, we are of the considered view that the Assessing Officer without making any addition as regards the issue on the basis of which the case of the assessee was re-opened u/s.147 of the Act i.e, bogus purchases of Rs.4,86,910/- (supra), had therein grossly eared in law in making an independent addition of Rs.16,48,336/- (supra) in the hands of the assessee. We, thus, in terms of our aforesaid observations are of the considered view that as the A.O had wrongly assumed jurisdiction and made an addition of Rs. 16,48,336/- (supra) vide his order passed under Sec. 147 r.w.s 143(3), dated 30.03.2014, therefore, the said addition cannot be sustained and is liable to be vacated for want of jurisdiction on his part. Thus, the Ground of appeal No.1 raised by the assessee is allowed in terms of our aforesaid observations.
As we have vacated the addition made by the Assessing Officer for want of jurisdiction, therefore, we refrain from adverting to and therein adjudicating the contentions advanced by the Ld. AR qua the
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merits of the case, which are left open. Thus, the Grounds of appeal No.(s) 2 to 5 raised by the assessee are dismissed in terms of our aforesaid observations.
In the result, appeal of the assessee is allowed in terms of our aforesaid observations.
Order pronounced in open court on 05th day of April, 2022.
Sd/- Sd/- JAMLAPPA D BATTULL RAVISH SOOD (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) रायपुर/ RAIPUR ; �दनांक / Dated : 05th April, 2022 SB आदेश क� ��त�ल�प अ�े�षत / Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant. 2. ��यथ� / The Respondent. 3. The CIT(Appeals)-1, Raipur (C.G) 4. The Pr. CIT-1, Raipur (C.G) 5.�वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण,रायपुरब�च, रायपुर / DR, ITAT, Raipur Bench, Raipur. गाड� फ़ाइल / Guard File. 6. आदेशानुसार / BY ORDER, // True Copy // �नजी स�चव / Private Secretary आयकर अपील�य अ�धकरण, रायपुर / ITAT, Raipur.
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Date 1 Draft dictated on 15.03.2022 Sr.PS/PS 2 Draft placed before author 17.03.2022 Sr.PS/PS 3 Draft proposed and placed JM/AM before the second Member 4 Draft discussed/approved by AM/JM second Member 5 Approved draft comes to the Sr.PS/PS Sr. PS/PS 6 Kept for pronouncement on Sr.PS/PS 7 Date of uploading of order Sr.PS/PS 8 File sent to Bench Clerk Sr.PS/PS 9 Date on which the file goes to the Head Clerk 10 Date on which file goes to the A.R 11 Date of dispatch of order