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2016 (10) TMI 1189 - AT - Income TaxEstimation of income on account of bogus/unverifiable purchases - rectification of mistake - Held that - Only issue involved in the assessment proceedings related to rejection of books of accounts on account of unverified purchases and estimation of appropriate gross profit rate thereon. The AO had applied 25% gross profit rate on unverified purchases which has been confirmed by the ld. CIT(A) which was the subject matter of appeal before the Coordinate Bench wherein set aside the issue relating to estimation of profits and restored the matter back to the file of the AO to decide the same afresh after the judgement of Hon ble Rajasthan High Court in the case of Anuj Kumar Varshney & Others vs. ITO (2015 (4) TMI 533 - ITAT JAIPUR) is delivered. From the perusal of records, it is also noted that the provisions of Section 153(2A) of the Act were not brought to the notice of the Coordinate Bench. We accordingly recall the order passed by the Coordinate Bench and direct the Registry to fix the matter for fresh hearing in due course.
Issues:
1. Setting aside of assessment by ITAT for estimation of income on account of bogus/unverifiable purchases. 2. Justifiability of setting aside assessment for an uncertain future event. 3. Applicability of Section 153(2A) of the IT Act, 1961 in the given case. Analysis: Issue 1: Setting aside of assessment The Revenue filed a Miscellaneous Application against the ITAT's order setting aside the assessment to decide the issue of estimation of income on account of bogus/unverifiable purchases. The Revenue argued that setting aside the assessment for an uncertain future event, i.e., the judgment of the High Court, is not justifiable. They contended that assessments set aside must be completed within the time prescribed by Section 153(2A) of the IT Act, 1961. The Revenue highlighted that the Tribunal's observation regarding the Departmental Representative's acceptance was factually incorrect. They requested the ITAT to rectify the order under section 254(2) of the IT Act, 1961. Issue 2: Justifiability of setting aside assessment The Co-ordinate Bench set aside the assessment and restored it to the AO to decide afresh after the High Court's judgment in a specific case. The Revenue argued that such indefinite postponement of assessment is not permissible under the law. They emphasized that the AO must complete the assessment within the timeframe specified in Section 153(2A) of the IT Act, 1961. The Revenue pointed out that the provisions of Section 153(2A) were not brought to the notice of the Coordinate Bench during the proceedings. Issue 3: Applicability of Section 153(2A) of the IT Act, 1961 The ld DR referred to Section 153(2A) of the IT Act, which allows for a fresh assessment within a specified timeframe after an order setting aside or canceling an assessment. It was noted that the only issue in the assessment related to the rejection of books of accounts due to unverified purchases and the estimation of gross profit rate. The Coordinate Bench had set aside the estimation of profits and directed the matter to be decided afresh after a specific judgment is delivered. The ITAT recalled the order and directed the matter for fresh hearing. In conclusion, the ITAT's decision to set aside the assessment for estimation of income on account of bogus/unverifiable purchases and the subsequent arguments by the Revenue regarding the justifiability and applicability of Section 153(2A) of the IT Act, 1961 were thoroughly analyzed. The ITAT recalled the order and directed the matter for fresh hearing, considering the procedural and legal aspects involved in the case.
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