Reopening assessment under Section 147 invalid without Joint Commissioner sanction under Section 151(2) and wrong jurisdictional officer

ITAT Surat held that reopening of assessment u/s 147 for bogus purchases after four years was invalid. The AO failed to obtain mandatory sanction from Joint Commissioner as required u/s 151(2) and lacked proper approval. Additionally, notice u/s 148 was issued by ITO Ward-33(2), New Delhi instead of the competent jurisdictional AO at Surat. Since all material was available during original assessment u/s 143(3), the reopening and subsequent notice were held bad-in-law, rendering all subsequent actions ab initio void. Assessee's appeal was allowed.

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Issues Involved:
1. Validity of reopening assessment under section 147 and issuance of notice under section 148 of the Income Tax Act, 1961.
2. Addition of Rs. 70,10,470/- as bogus purchases.

Summary:

Validity of Reopening Assessment and Issuance of Notice:
The assessee challenged the reopening of the assessment under section 147 and the issuance of notice under section 148 of the Income Tax Act, 1961. The Tribunal found that the case was reopened based on information from the DDIT (Investigation) Mumbai and New Delhi, which indicated that the assessee had engaged in bogus purchases from M/s Vitrag Jewels. However, the Tribunal noted that the reopening occurred after four years from the end of the relevant assessment year, and there was no assertion by the Assessing Officer that the assessee failed to disclose fully and truly all material facts necessary for the assessment. Additionally, the Tribunal observed that the notice under section 148 was issued by an officer who did not have jurisdiction over the assessee, and there was no evidence of the required sanction/approval from the Joint-Commissioner of Income-tax as mandated under section 151(2). Consequently, the Tribunal held that the reopening and the issuance of the notice were invalid, rendering subsequent actions ab initio.

Addition of Rs. 70,10,470/- as Bogus Purchases:
The Tribunal noted that the original assessment under section 143(3) had already examined the issue of unverifiable purchases, including those from M/s Vitrag Jewels, and made an addition of Rs. 90,40,927/-. This addition was deleted by the CIT(A) and upheld by the ITAT in a previous appeal. During the reassessment, the assessee provided evidence such as invoices, bank statements, and confirmations to substantiate the purchases from M/s Vitrag Jewels. The Tribunal found that the Assessing Officer did not effectively dispute this evidence. Given that the reopening and the issuance of the notice were deemed invalid, the Tribunal did not adjudicate the merits of the additions, treating the issue as academic.

Conclusion:
The Tribunal allowed the appeal of the assessee, holding that the reopening of the assessment and the issuance of the notice under section 148 were invalid, and thus, all subsequent actions were ab initio. The appeal was allowed on these primary grounds, rendering the adjudication on the merits of the additions unnecessary.

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