An incorrect assumption of facts makes the entire reopening process legally untenable: ITAT Deharaudun
ITAT Dehradun in the case of Regalia Jewels Pvt. Ltd. vs. DCIT/ACIT, Central Circle, Dehradun [ITA No. 23/DDN/2024 | Assessment Year: 2015–16 | Order dated: 09.04.2025 | ITAT Dehradun Bench (SMC)],was concerned with the issue of Bogus Purchase. In this case, the alleged bogus purchases were made in earlier years, and Only payments were made in AY 2015–16 (i.e., the relevant assessment year).
Let us have a Short Overview of the case:
Assessee’s Submission:
The assessee submitted that:
No purchases were made from M/s. Surya Diamond Pvt. Ltd. during AY 2015–16.
The payment of ₹1,43,83,620 was made through RTGS in the current year, toward purchases made in earlier years.
The assessee produced extensive documentary evidence, including:
Purchase bills
Ledger accounts
Confirmation of balances
Stock register
Bank statements evidencing RTGS payments
No debit was made to the profit and loss account for such purchases in AY 2015–16.
Thus, there was no escapement of income during the year under consideration.
Assessing Officer’s Action:
The AO disregarded the explanation and proceeded to treat the payment of ₹1,43,83,620 as bogus purchases.
This addition was upheld by the CIT(A) on appeal.
Tribunal’s Observations:
The Tribunal thoroughly reviewed:
The ledger of M/s. Surya Diamond Pvt. Ltd.
Payment trail and documentary submissions
It found no purchase transactions during the relevant AY—only payments for past year’s purchases.
Hence, the foundation of the AO’s belief that income had escaped assessment was based on incorrect facts.
The Tribunal emphasized that Jurisdiction under Section 147 requires a reasonable belief based on correct facts.
An incorrect assumption of facts makes the entire reopening process legally untenable.
The copy of the order is as under:
