INCOME TAX ACT, 1961

Section 263

Revision under section 263 - Erroneous and prejudicial order - AO took plausible view -

AO initiated reassessment proceedings on the basis of information that assessee was beneficiary of hawala purchases. Assessment was completed under section 143(3) read with section 147 making addition at the rate 20% of bogus purchases amounting. CIT, exercised his revisional power under section 263 held that AO was not justified in adding only 20% of bogus purchase price. He also held that AO failed to examine sundry creditors shown by assessee, details of other purchases, valuation of stock and various expenses as claimed by assessee in Profit and loss account in the reassessment proceedings. CIT held assessment order to be erroneous and prejudicial to the interest of revenue. Held: Since the AO in the instant case has made addition for the additional profit at the rate of 20% of bogus purchases, we hold that the impugned order, treating such assessment order as erroneous and prejudicial to the interest of revenue, cannot be validated. View taken by the Pr. CIT that the AO failed to examine sundry creditors shown by the assessee, details of other purchases, valuation of stock and various expenses as claimed in the Profit and loss account in the reassessment proceedings. The DR has categorically submitted that the direction of the Pr. CIT for examining the creditors and purchase accounts etc. along with valuation of stock was connected with the bogus purchases only and not de hors the same. We find this position to be amply emerging from the immediately next line in Para 6.1 of the impugned order to the effect that: “Since assessee's computation of profit are dependent on all the above issues and when bogus purchases have come to his notice, it was imperative on the part of the AO to verify all these aspects while completing the assessment.” That apart, The Pr. CIT has not indicated anything amiss in these items independent of the issue of bogus purchases. Revision order was set aside.

Relied:National Thermal Power Co. Ltd. v. CIT (1998) 229 ITR 383 (SC) : 1998 TaxPub(DT) 342 (SC), Pr.CIT v. Mohommad Haji Adam & Co. [ITA No. 1004 of 2016 with 1013 of 2016 with 1059 of 2016 with 1064 OF 2016 with 1075 of 2016 with 1095 of 2016 with 1204 of 2016 with 1012 OF 2016, dt. 11-2-2019], Shoreline Hotel Private Ltd. v. CIT (2018) 98 Taxmann.com 234 (Bom) : 2018 TaxPub(DT) 6459 (Bom-HC), Ashoka Buildcon Ltd. v. Asstt. CIT (2010) 325 ITR 574 (Bom.) : 2010 TaxPub(DT) 1860 (Bom-HC) and Vinod Bhagwan Patil v. Pr. CIT ITA No.750/PUN/2018 : 2020 TaxPub(DT) 3974 (Pune-Trib).

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2010-11

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