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| The Tax Publishers2021 TaxPub(DT) 4297 (Ahd-Trib) INCOME TAX ACT, 1961
Section 147
AO upon receiving information from VAT Department, Maharashtra, verified from the financial statements of assessee and thereafter found that assessee had shown creditors in its books in the name of concerned entities on account of purchases of consumables. Thus, AO after applying his mind on information received from VAT Department arrived at the conclusion, based on the reasons to believe that income of assessee had escaped assessment. Further, AO at the time of issuing notice under section 148 has to form prima facie opinion for escapement of income, rather than to reach to the conclusion that income had escaped assessment. Therefore, reassessment was sustained as valid.
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Reassessment - Validity - Assessee alleged no application of mind by AO and no addition made by him on other issues being subject-matter of reopening -
AO received information from VAT Department about assessee stating that it had claimed bogus purchases. Accordingly, AO reopened assessment and made addition. Assessee challenged this on the ground that proceedings under section 147 were initiated by AO merely on the basis of information received from the VAT Department, without application of mind and further, there was no disallowance made by AO in the assessment framed under section 147 on account of freight expenses, despite AO had recorded the same in the reasons for escapement of income on account of such expenses. Held: AO upon receiving information from VAT Department, verified from the financial statements of assessee and thereafter found that assessee had shown creditors in its books in the name of concerned entities on account of purchases of consumables. The amount of consumables purchased from those entities as shown in the books of account was exactly matching with the information received from VAT Department. Thus, AO after applying his mind on information received from VAT Department, arrived at the conclusion based on the reasons to believe that income of assessee had escaped assessment. Further, AO at the time of issuing notice under section 148 has to form prima facie opinion for escapement of income rather than to reach to the conclusion that income had escaped assessment. Furthermore, initiation of proceedings could not be held invalid merely on the reasoning that there was no addition made by AO on account of freight expenses though there was mention of such expenses in the reasons recorded because addition on account of bogus purchases had been made by AO and it was sufficient enough for initiating proceedings under section 147. Therefore, reassessment was sustained as valid.
Supported by:Pannala Mahesh Chandra Jewelers v. Dy. CIT (2010) 188 Taxman 95 (All) : 2010 TaxPub(DT) 998 (All-HC).
REFERRED :
FAVOUR : Against the assessee.
A.Y. : 2010-11
INCOME TAX ACT, 1961
Section 69C
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