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of <h1>Tribunal rules against improper assessment reopening, stresses evidence requirement & dismisses bogus purchase claim</h1> <h3>M/s R.K. Machine Tools Ltd. Versus The Income Tax Officer, Ward-20 (3), New Delhi</h3> M/s R.K. Machine Tools Ltd. Versus The Income Tax Officer, Ward-20 (3), New Delhi - [2023] 105 ITR (Trib) 73 (ITAT [Del]) Issues:The issues involved in the judgment are the validity of the reopening of assessment under section 147 of the Income Tax Act, 1961 and the addition made on account of alleged bogus purchase.Validity of Reopening of Assessment:The appeal challenged the initiation of proceedings under section 147 based on information received from another Assessing Officer. The Tribunal held that the AO initiated proceedings without independent inquiry, solely relying on information from another officer, which was not made available to the assessee. The Tribunal found the initiation of proceedings to be erroneous, illegal, and impermissible under the law. Citing relevant case laws, the Tribunal quashed the reopening, emphasizing the necessity of tangible material and a valid reason to believe income had escaped assessment.Addition on Account of Alleged Bogus Purchase:The AO made an addition of Rs. 1,27,23,330 on account of alleged bogus purchases from M/s Mahavir Hosiery Works. The assessee provided detailed submissions and evidence during original and reassessment proceedings, including purchase details, bills, bank statements, and ledger accounts. The Tribunal noted that the AO did not comment on the contents of the assessee's reply and solely relied on a report from another officer to make the addition. The Tribunal found the addition not sustainable, as all purchases were vouched, payments were made through account payee cheques, and no defects were pointed out in the books of accounts. Consequently, the Tribunal directed the AO to delete the addition on merit.Conclusion:The Tribunal allowed the appeal of the assessee, quashing the reopening of assessment and directing the deletion of the addition made on account of alleged bogus purchase. The judgment was pronounced on 26th April 2023.
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