Reassessment on same turnover held invalid where commission income had already been estimated on sales turnover and purchases were taxed again.

Reassessment under section 147 was treated as unsustainable where the assessee had already been assessed on the basis that its business involved accommodation entries and the same purchases were sought to be taxed again on the basis of later Sales Tax Department information. The record showed that the original assessment had already treated purchases and sales as bogus and had estimated commission income on sales turnover, while parallel reassessment proceedings had also disallowed the very same purchases. On those facts, the authority held that the assessee could not be taxed twice on the same turnover, no real income had escaped assessment, and commission income, if any, could be estimated only on sales turnover. The reopening and related addition were quashed.

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Issues: Whether reassessment under section 147 of the Income-tax Act, 1961 was valid where the assessee had already been assessed on the basis that the business consisted of accommodation entries and the same purchases were again sought to be taxed on the basis of subsequent information.

Analysis: The assessment record showed that, in the original proceedings, the assessee's purchases and sales were treated as bogus and commission income was estimated on the sales turnover. Later information from the Sales Tax Department led to another reopening on the same set of purchases, and parallel reassessment proceedings had already resulted in disallowance of those very purchases. On these facts, the assessment authority held that the assessee was being subjected to tax on the same turnover more than once and that no real income had escaped assessment. It was also accepted that commission income, in such circumstances, could be estimated only on the sales turnover and not again on the purchase turnover.

Conclusion: Reopening under section 147 was invalid, the impugned assessment was quashed, and the addition based on commission on purchase turnover did not survive.

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