Bogus machinery purchase and reopening objections: unrebutted evidence sustained depreciation, while reassessment challenge failed for no post-reasons objections.

Unrebutted documentary and banking evidence supported the machinery purchase, and the Assessing Officer's enquiries were limited to third-party addresses without verifying the asset at the assessee's premises; the addition for alleged bogus purchase and the related depreciation claim were therefore deleted and upheld against the Revenue. On reopening, the assessee filed no objections after receipt of the recorded reasons, so the requirement to dispose of objections by a speaking order was not triggered; the challenge to reassessment under section 148 accordingly failed against the assessee.

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Issues: (i) Whether the addition made on account of alleged bogus purchase of machinery and the related claim of depreciation were liable to be deleted. (ii) Whether the reopening of assessment under section 148 was invalid for want of disposal of objections by a speaking order.

Issue (i): Whether the addition made on account of alleged bogus purchase of machinery and the related claim of depreciation were liable to be deleted.

Analysis: The purchase was supported by invoice, bank sanction papers and a bank certificate showing payment directly to the supplier and installer. The Department did not rebut this material. The enquiries made by the Assessing Officer were confined to the alleged addresses of the vendor and installer and the Inspector did not verify the existence of the machine at the assessee's premises. The machinery was a fixed asset and its purchase was not claimed as an expenditure in the profit and loss account.

Conclusion: The deletion of the addition and the allowance of depreciation were upheld, and this issue was decided against the Revenue.

Issue (ii): Whether the reopening of assessment under section 148 was invalid for want of disposal of objections by a speaking order.

Analysis: The assessee had sought the reasons for reopening and objected before the reasons were furnished, but no objections were filed after receipt of the reasons. The requirement to file objections arises after the reasons are supplied, and the Assessing Officer's obligation to pass a speaking order is triggered by such objections. Since no post-reasons objections were filed, the challenge to reopening could not succeed.

Conclusion: The reopening challenge failed, and this issue was decided against the assessee.

Final Conclusion: The assessee's challenge to reopening and the Revenue's challenge to deletion of the additions both failed, leaving the assessment relief undisturbed and the proceedings concluded in dismissal.

Ratio Decidendi: Enquiries confined to third-party addresses, without verification of the asset at the assessee's premises and in the face of unrebutted documentary and banking evidence, are insufficient to sustain a bogus purchase disallowance; and objections to reopening must be filed after the reasons are furnished before the requirement of a speaking order arises.

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