Addition already finalized u/s. 143(3) cannot be added again vide order u/s. 144: ITAT Mumbai

Suvida Drums Vs ITO (ITAT Mumbai)

ITAT Mumbai held that passing of assessment order u/s. 144/147 making addition of alleged bogus purchase which is already added vide assessment order passed u/s. 143(3)/147 and has attained finality is unsustainable and liable to be quashed.

Facts-

Vide the present appeal, the assessment order u/s.143(3)r.w.s.147 was passed on 19/03/2015 based on same information about bogus purchases made from M/s. Shree Ganesh Trading Co of Rs. 4,25,880/-. The entire purchases was added made from the said party. Now again the AO had issued u/s.148 and passed another order u/s. 144 r.w.s. 147, on 22/12/2016 making the same addition of Rs.4,25,880/- made from Shree Ganesh Trading Company. The addition made by the AO was accepted and no appeal was filed. Thus the assessment and the addition of Rs. 4,25,880/- had attained finality.

Conclusion-

Held that none of the lower authorites despite bringing this fact on record have been bothered to look into this matter that already assessment order u/s. 147/143(3) has been made on the addition of alleged bogus purchase of Rs. 4,25,880/-and this addition has attained finality. This shows casual approach and complete non application of mind and callousness. Reopening the case again and sending notice u/s 148 twice in a gap of a year and dragging the assessee to the litigation and creating another demand simply because both the AO and appellant authority have not bothered to examine the facts which has been brought on record and harassing the assessee for unwanted litigation for several years as first appeal has been decided after more than 7 years. Be that as may be, the impugned assessment order passed by the AO u/s. 144/147 dated 22/3/2016 is here by quashed, because already earlier assessment order was passed u/s. 143(3)/147 on 19/03/2015 making the same addition.

FULL TEXT OF THE ORDER OF ITAT MUMBAI

The Aforesaid appeal has been filed by the assessee against order dated 24/01/2024 passed by additional/ JCIT(A)-2 Delhi for the quantum of assessment passed u/s.144. The Ld. JCIT(A) has decided appeal ex-parte on the ground that despite issue of notices assessee has not responded accordingly appeal has been dismissed for want of prosecution.

2. In the grounds of appeal the assessee has raised following grounds :

I. Reopening of Assessment:

1. On the facts and in the circumstances of the case and as per the law, the Ld CIT(A) erred in confirming the order of AO in reopening the assessment by issuing the second notice u/s 148 dated 30/03/2016 and reopening order was passed u/s 144 r.w.s 147, dated 22.12.2016 on same ground on which previous reopening notice u/s 148 dated 10/05/2013 was issued and order was passed u/s 143(3) r.w.s 147. dated. 19.03.2015. Therefore, the reopening made on the second time on the same addition is bad in law.

2. On the facts and in the circumstances of the case and as per the law. the Ld CIT(A) erred in confirming the order of A.O in reopening the assessment vide notice u/s 148 dated 30/03/2016 which is be beyond the period of four year merely on information received from DGIT(INV) Mumbai and sales tax department without considering the fact that there was no tangible material on basis of which a assessment can be reopened, further the AO failed to apply his independent mind to such material before reopening the assessment, therefore the reopening is bad in law.

II. Addition as unexplained purchase of Rs. 4,25,880/-:

3. On the facts and in the circumstances of the case and as per the law, the ld CIT(A) erred in confirming the order of A.O in disallowing the purchases from one party of Rs. 4,25,880/- without considering the genuine of purchase duly supported by documents details like bank statement showing payments made to supplier, purchase bills, ledger accounts, quantitative details & MVAT return etc, therefore merely on the information received from the sales tax department and third party statement, purchases cannot be treated as non-genuine.

4. On the facts and in the circumstances of the case and as per the law, the Ld CIT(A) erred in deciding the appeal ex parte in violation of the principle of natural justice.

5. On the facts and in the circumstances of the case and as per the law, the order dated 24.01.2024 as passed by the ld CIT(A) is bad in law since it dismisses the appeal on the reason of non-prosecution and does not adjudicate on the grounds of appeal and the issues under consideration. The said order, being in violation of the provisions of Section 250 and 251 of the Act and may be quashed.

3. Before us the Ld. Counsel for the assessee submitted that in the case of the assessee, already assessment order u/s.143(3)r.w.s.147 was passed on 19/03/2015 based on same information about bogus purchases made from M/s. Shree Ganesh Trading Co of Rs. 4,25,880/-. The entire purchases was added made from the said party. Now again the Ld. AO had issued u/s.148 and passed another order u/s. 144 r.w.s. 147, on 22/12/2016 making the same addition of Rs.4,25,880/- made from Shree Ganesh Trading Company.

4. He further submitted that the addition made by the AO was accepted and no appeal was filed. Thus the assessment and the addition of Rs. 4,25,880/- had attained finality. This fact was also brought to the notice of the AO that already assessment has been passed on the same ground and addition has been made, vide later dated 25/04/2016 which for sake of ready reference is reproduced here under :

To,
The Income Tax Officer
Ward 2(4)
Kalyan

Respected Sir,

Sub: NOTICE UNDER SECTION 148 OF THE INCOME TAXACT 1961

Ref: M/S. SUVIDA DRUMS
PAN: AAMFS2922B

ASST.YEAR: 2009-2010.

With reference to the above and under instruction of our above referred client, we would like to submit you as under:

The Income chargeable to tax for the assessment year 2009-10 has been already assessed by the Assessing Office Mr. K. K. Sonawane, Income Tax officer, Ward – 2(4), Kalyan. Copy of Demand Notice issued under section 156 of the Income Tax Act by the Assessing officer is attached for your record.

Your good self are therefore requested to take the above documents on your records and cancel the Notice issued under section 148 of the Income Tax Act 1961.

5. Thus, he submitted that the present assessment order is in fractious.

6. Ld. DR admitted that on the same issue, already reassessment order u/s. 143(3) r.w.s. 147 for the same assessment year has been passed vide order dated 19/03/2015. Thus, there is inadvertent mistake done by the AO.

7.After considering the facts and materials placed on record, it is seems that earlier, based on information received from sales tax department that assessee has made purchase from one party which has been blacklisted by Sales Tax Department, assessee’s case was reopened vide notice u/s 148 dated 10/05/2013 on the ground that assessee has taken purchase bill from the following party:

8. The AO added the entire sum of Rs.4,25,880/- and as against the return income of Rs.1,83,060/-. Assessment was completed at Rs.6,22,940/-. It has been informed that assessee accepted the said assessment and no appeal was filed. Further, the Ld. AO based on same information about the alleged bogus purchases made from Shree Ganesh Trading Company for Rs. 4,25,880/- issued another notice u/s 148 on 13/03/2016. Though it is an ex-parte order but AO has not even verified records or the aforesaid letter filed by the assessee that already assessment was completed by adding same alleged bogus purchases. Now, the assessment has been completed at an income of Rs. 6,08,940/-.

9. This fact was brought to the notice of Ld.CIT(A) in the statement of facts and grounds of appeal which is evident from Form 35. Despite this, Ld. CIT(A) has dismissed the assessee’s part on the ground that there is no compliance on notice.

Simply because assessee could not respond to the notices sent on E-mail.

10. However, none of the lower authorites despite bringing this fact on record have been bothered to look into this matter that already assessment order u/s. 147/143(3) has been made on the addition of alleged bogus purchase of Rs. 4,25,880/-and this addition has attained finality. This shows casual approach and complete non application of mind and callousness. Reopening the case again and sending notice u/s 148 twice in a gap of a year and dragging the assessee to the litigation and creating another demand simply because both the AO and appellant authority have not bothered to examine the facts which has been brought on record and harassing the assessee for unwanted litigation for several years as first appeal has been decided after more than 7 years. Be that as may be, the impugned assessment order passed by the AO u/s. 144/147 dated 22/3/2016 is here by quashed, because already earlier assessment order was passed u/s. 143(3)/147 on 19/03/2015 making the same addition.

11. In the result, appeal of the assessee is allowed.

Order pronounced on 27^th Jun, 2024.