Lorgan Lifestyle Limited Vs DCIT (ITAT Pune)
Reopening After 4 Years on Same “Hawala Purchase” Material = Mere Change of Opinion: Pune ITAT Quashes Reassessment
The Pune ITAT quashed reassessment proceedings initiated after four years where the AO attempted to reopen completed scrutiny assessment merely on the basis of the very same “hawala purchase” information already examined during original proceedings under section 143(3).
In the case of Lorgan Lifestyle Limited (erstwhile Sri Sidhivinayak Marketing), the AO reopened assessment alleging bogus purchases of over ₹6.86 crore from parties identified by the Sales Tax Department as accommodation entry providers. The reassessment ultimately resulted in addition of ₹85.77 lakh being 12.5% of alleged bogus purchases.
However, the Tribunal found that during the original scrutiny itself, the AO had specifically examined the alleged hawala purchases, called for purchase bills, export documents, bank statements, VAT details, H Forms and quantitative records, and thereafter consciously accepted the purchases as genuine while completing assessment under section 143(3).
The ITAT strongly noted that the reopening reasons themselves began with the words “on perusal of assessment records”, clearly showing that the AO relied only on existing material already available in original assessment records and not on any fresh tangible material or independent investigation.
The Tribunal held that once the issue had already been examined in original scrutiny proceedings, reopening on the very same facts amounted to a mere change of opinion, which is impermissible – particularly when reassessment was initiated beyond four years.
Relying on Bombay High Court rulings including Lupin Limited v. DCIT, Titanor Components Ltd. v. ACIT and Crompton Greaves Ltd. v. ACIT, the ITAT reiterated that reassessment after four years is invalid unless there is failure by the assessee to fully and truly disclose material facts. Since all purchase details, export records and supporting documents were already disclosed during original scrutiny, the reassessment was quashed in entirety.
FULL TEXT OF THE ORDER OF ITAT PUNE
