Vaibhav Dwarkanath Warekar Vs ITO (ITAT Mumbai)
ITAT Mumbai: Second Reopening Based on Same Material Is Invalid-Change of Opinion Not Permissible
The ITAT Mumbai held that a second reassessment on the same issue, without fresh material, amounts to mere change of opinion and is invalid in law, thereby quashing the reassessment.
In this case, the assessee’s assessment was reopened twice based on alleged bogus purchase entries. In the first reassessment, income was estimated at 0.25% of turnover, which was upheld by appellate authorities. However, in the second reassessment, the AO again estimated income (0.5%) on the same turnover.
The Tribunal observed:
- All material was already available during first reassessment.
- No failure on part of assessee to disclose material facts was recorded.
- Second reopening was merely a review of earlier decision, which is not permissible.
It further noted:
- Once income is estimated in earlier reassessment, AO cannot re-open and re-estimate on same issue.
- Absence of fresh tangible material renders reopening invalid.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
1. This appeal by assessee is directed against the order of Ld. CIT(A) / NFAC dated 30.06.2025 for A.Y. 2009-10. The assessee has raised following grounds of appeal;
i. In the facts and in the circumstances of the case and in law, the learned assessing officer erred in reopening the assessment under section 148 read with section 147 of the Income Tax Act, 1961.
ii. The learned CIT(A) erred by not following the rule of consistency
iii. The learned CIT(A) erred in not following the binding precedent in appellant’s own case for earlier reassessment proceedings where the CIT(A) had restricted profit estimation to 0.25% of turnover.
iv. On the facts and in the circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) [CIT(A)] erred in upholding the reopening of the assessment u/s 147 r.w.s. 148 of the Act.
v. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in confirming the addition of Rs. 56,97,405/-made by the AO by estimating 0.5% profit on an alleged turnover of Rs. 126,55,34,376/-.
vi. The reliance placed by the CIT(A) on decisions such as ACIT vs. Rajesh Jhaveri Stock Brokers Pvt. Ltd. and Raymond Woollen Mills Ltd. v. ITO was misplaced, as the facts of the present case are distinguishable and do not justify reopening on mere suspicion or borrowed material.
vii. The Appellant craves leave to add, amend or alter any of the grounds herein.
viii. For these and other grounds that may be urged at or before the time of hearing, the Appellant prays for appropriate relief.
2. Rival submissions of both the parties have been heard and record perused. The Ld. Authorised Representative (in short ‘Ld.AR’) of the assessee submits that the assessee filed his return of income for AY 200910, on 29.09.2009 declaring income of Rs. 5,62,780/-. Initially return was processed under Section 143(3). Thereafter, case was reopened under section 147. Notice under Section 148 dated 17.03.2014 was issued. The case was reopened on the basis of information of Sales Tax Department about issuance of bogus bills. The name of assessee was in the list of beneficiary, who availed the bogus bills. The assessee was engaged in the business of trading of forged steel material. The assessing officer (AO) while passing the assessment order estimated income of assessee at the rate of 0.50% of sales/turnover of the assessee thereby made addition of Rs. 18,95,029/- On further appeal before Tribunal, the disallowances was directed to estimates @ 0.25% of total turnover, instead of sales turnover, there by the assessee was allowed partial relief vide order dated 25.03.2025 in CIT (A)-26/Mumbai/10072/2014-15. On further appeal before Tribunal by revenue, appeal of revenue was dismissed in ITA No. 7295/M/2019 dated 31.03.2022.
