Tribunal upholds proceedings validity & book rejection under tax law sections, dismissing appeal.

The Tribunal upheld the validity of the proceedings u/s 147/148 and the rejection of books of account u/s 145(3) of the Act, along with the addition of Rs. 2,15,936. The appeal challenging the initiation of proceedings and the rejection of books of account was dismissed, with the Tribunal finding in favor of the Department.

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Issues:
1. Validity of initiation of proceedings u/s 147/148 of the Act.
2. Rejection of books of account u/s 145(3) of the Act and addition of Rs. 2,15,936.

Issue 1: Validity of initiation of proceedings u/s 147/148 of the Act:
The appeal challenged the initiation of proceedings u/s 147/148 based on doubt and suspicion without sufficient reason to believe. The assessee argued that reopening the assessment based on a statement from Shri Rajendra Jain was invalid as it lacked evidence of income escaping assessment. However, the Department justified the reopening citing information from the Investigation Wing and the absence of stock with parties from whom purchases were claimed. The Tribunal upheld the reopening, citing precedents and emphasizing that sufficiency of material is not to be considered at this stage. The Tribunal concluded that the AO had a valid reason to believe income had escaped assessment, rejecting the appeal on this ground.

Issue 2: Rejection of books of account u/s 145(3) of the Act and addition of Rs. 2,15,936:
The appeal contested the rejection of books of account and the addition based on alleged bogus purchases. The assessee argued purchases from M/s. AVI Exports were genuine, supported by proper invoices and payments. The Department maintained that once purchases were deemed bogus, the books of account could not be accepted. The Tribunal noted the AO's addition of 25% of alleged bogus purchases but found the CIT(A) considered the matter under Section 145(3) r.w.s. 144, estimating income based on average g.p. declared in prior years. The Tribunal upheld the CIT(A)'s decision, stating that the estimated income based on past g.p. would exceed the AO's addition, finding no error in the CIT(A)'s order. Consequently, the Tribunal dismissed the appeal on these grounds.

In conclusion, the Tribunal upheld the validity of the proceedings u/s 147/148 and the rejection of books of account u/s 145(3) of the Act, along with the addition of Rs. 2,15,936. The appeal by the assessee was dismissed, and the order was pronounced on 04/03/2020.

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