Akbar Ali Vs JAO (ITAT Chandigarh)
No Evidence, No 147- Third party Statement Alone Cannot Justify Reopening – Reopening on Vague Search Information Quashed: ITAT Deletes Bogus Purchase Allegation
Assessee, proprietor of A.R. Steels (India), filed appeal against CIT(A)/NFAC order sustaining addition of Rs.43,17,081/- as alleged bogus purchases from M/s G.S. Industries. AO reopened assessment u/s 147 relying solely on information from DCIT, Central Circle, Patiala based on search u/s 132 in the Deepak Sharma Group, wherein proprietor Deepak Sharma allegedly admitted that his group issued bogus purchase bills without actual delivery of goods. Relying on this statement alone & without supplying any underlying material, AO treated purchases as bogus & disallowed entire amount.
Before CIT(A), Assessee furnished invoices, stock register, books, GST returns, bank statements & confirmed ledger copies showing corresponding sales and movement of goods. Assessee argued that reopening was based merely on vague third-party statement with no corroborative evidence. CIT(A) acknowledged that purchases were recorded in GST returns & payments were made through banking channels, but still upheld addition stating that Assessee failed to prove actual delivery of goods.
Tribunal observed that AO had no concrete evidence whatsoever except the statement of Deepak Sharma recorded during search. No copy of such statement, no seized documents, no delivery challans, no transport evidence, & no investigation linkage was ever provided to Assessee. Tribunal held that mere unverified information from Investigation Wing cannot constitute “reason to believe” for reopening u/s 147, relying on Gujarat HC decision in J.K. Bullions (P) Ltd. which held that cryptic, vague & uncorroborated reasons cannot confer jurisdiction. Tribunal found that both AO & CIT(A) proceeded purely on suspicion, despite full GST compliance & banking trail supporting genuineness.
