Partap Singh Vs ACIT (ITAT Delhi)
The Income Tax Appellate Tribunal (ITAT), Delhi, heard a batch of appeals filed by the assessee, Partap Singh, against separate orders of the Commissioner of Income-tax (Appeals) for the assessment years (A.Y.) 2008-09, 2009-10, and 2010-11. As the grounds and facts were identical, the appeals were disposed of through a common order.
I. Challenge to Reopening Proceedings (Section 147) The assessee challenged the initiation of reassessment proceedings under Section 147 of the Income-tax Act, arguing that the Assessing Officer (AO) lacked specific, reliable, and tangible material to form a “reason to believe” that income had escaped assessment. The assessee also claimed the proceedings were invalid due to mechanical recording of reasons and a lack of a valid approval under Section 151.
The ITAT found that the reopening was based on detailed information received from the Investigation Wing of the Income Tax Department, which had previously received a detailed investigation report from the Directorate of Revenue Intelligence (DRI). The DRI report concerned the assessee’s proprietorship concern, M/s Gouri International, regarding fraudulent availment of Duty Drawback and DEPB Credits via the over-invoicing of readymade garment exports to Russia. The investigation found evidence that the prices in the customs invoices were up to ten times higher than those in seized internal invoices, and Russian authorities confirmed no goods reached Moscow. The modus operandi suggested the differential inflated amount was received back as export remittances, making it undisclosed income. Given the detailed information and investigation report, the Tribunal concluded that the AO had sufficient material on record for a valid reopening under Section 147. The appeal on this ground was dismissed.
