Tribunal upholds reassessment under Income Tax Act despite assessee's non-appearance

The Tribunal dismissed the assessee's appeal challenging the reassessment proceedings under section 147 of the Income Tax Act, 1961. Despite the assessee's non-appearance, the Tribunal proceeded to decide on the reopening issue. The Tribunal upheld the validity of the reassessment proceedings based on information from the Sales Tax Department regarding bogus sales/purchase bills, emphasizing the Assessing Officer's 'reason to believe' standard. The appeal was dismissed, confirming the legitimacy of the reassessment under section 147.

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Issues Involved:
1. Reopening of assessment under section 147 of the Income Tax Act, 1961.
2. Validity of reassessment proceedings based on information from the Sales Tax Department regarding bogus sales/purchase bills.

Summary:

Reopening of assessment under section 147 of the Income Tax Act, 1961:
The assessee challenged the order dated 05/02/2018, passed under section 250 of the Income Tax Act, 1961 by the learned Commissioner of Income Tax (Appeals)-30, Mumbai, for the assessment year 2009-10. The appeal was listed for hearing following a recall order limited to the issue of reopening raised in the assessee's appeal. Despite several notices, the assessee did not appear or file for adjournment. The Tribunal noted that the pendency of a writ petition before the Hon'ble Bombay High Court would not affect the adjudication of the reopening issue. The Tribunal proceeded to decide the issue of reopening as restored by the coordinate bench.

Validity of reassessment proceedings based on information from the Sales Tax Department regarding bogus sales/purchase bills:
The assessee filed its return of income on 25/08/2009. Information from the DGIT (Investigation) Wing, Mumbai, indicated that the assessee was a beneficiary of bogus sales/purchase bills. Consequently, proceedings under section 147 were initiated, and notice under section 148 was issued on 08/03/2014. The Assessing Officer determined the total income of the assessee at Rs. 34,12,080, after making an addition of Rs. 29,60,308, being 12.5% of the total non-genuine purchases of Rs. 2,36,82,482.

The learned CIT(A) dismissed the grounds challenging the reassessment proceedings, stating that the Assessing Officer had 'reason to believe' that income had escaped assessment based on specific and credible information. The Tribunal upheld this view, citing the Supreme Court's observation in ACIT v. Rajesh Jhaveri Stock Brokers (P.) Ltd, that at the initiation stage, what is required is "reason to believe," not the established fact of escapement of income. The Tribunal found no infirmity in the reassessment proceedings initiated by the AO under section 147 and upheld by the learned CIT(A).

Conclusion:
The appeal by the assessee was dismissed, and the Tribunal found no infirmity in the reassessment proceedings under section 147 of the Act. The order was pronounced in the open Court on 14/08/2023.

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