9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2018 (9) TMI 1248 - HC - Income TaxRevision u/s 263 - undisclosed hawala trading - Held that - We do not find that in this case there is any substitution of the views of the Assessing Officer, but there was a clear failure to abide by the statutory mandate and by making an estimate so also accepting a vague and general explanation of the assessee, the assessment has been made, then, it will undoubtedly be erroneous insofar it is prejudicial to the interest of the Revenue. It is erroneous insofar as the same is prejudicial to the interest of the Revenue because the Assessing Officer has failed to carry out his statutory obligation and duty and failed to discharge it by holding further probe and inquiry. More so, when the assessee virtually had no answer to his notice. Secondly, very reliable and genuine information was received from the VAT and Sales Tax authorities with regard to the operations with these dealers styled as hawala traders . This certainly brought the matter within the purview of section 263. No error of law or perversity is committed either by the Commissioner or the Tribunal.
Issues Involved:
1. Genuineness of purchases by the assessee. 2. Jurisdiction and exercise of revisional power by the Commissioner under Section 263 of the Income Tax Act, 1961. 3. Whether the Assessing Officer's order was erroneous and prejudicial to the interest of the Revenue. Issue-wise Detailed Analysis: 1. Genuineness of Purchases by the Assessee: The assessee, a company operating a Five Star Hotel, was required to maintain high standards and thus made substantial purchases from various suppliers. During the assessment, the Assessing Officer questioned the genuineness of purchases amounting to ?3,60,24,582. Despite the assessee providing voluminous documentary evidence, the Assessing Officer was not satisfied and proposed treating the entire amount as non-genuine. The assessee, seeking to avoid prolonged litigation, offered to have the gross profit rate on these purchases assessed as income. Consequently, the Assessing Officer assessed 15% of the purchases as income, amounting to ?54,03,687, and initiated penal action. 2. Jurisdiction and Exercise of Revisional Power by the Commissioner under Section 263: The Commissioner of Income Tax deemed the Assessing Officer’s assessment erroneous and prejudicial to the interest of the Revenue, arguing that the entire purchases should have been disallowed. The Commissioner issued a notice under Section 263, asserting that the assessment should be revised. The assessee contested this, arguing that the Commissioner had no jurisdiction as the Assessing Officer had already considered all relevant materials and explanations. The Tribunal upheld the Commissioner’s view, emphasizing that the Assessing Officer failed to make a proper inquiry into the genuineness of the purchases. 3. Whether the Assessing Officer's Order was Erroneous and Prejudicial to the Interest of the Revenue: The Tribunal and the Commissioner found that the Assessing Officer did not conduct a thorough inquiry, especially given the information from the Sales Tax Department about certain suppliers being 'hawala operators'. The Assessing Officer’s reliance on the assessee's vague explanations and the decision to assess only 15% of the purchases as income were deemed insufficient. The Tribunal noted that the Assessing Officer failed to verify whether the goods were actually supplied and installed, particularly for items like furniture, plumbing, and electrical supplies. This lack of due diligence rendered the assessment order erroneous and prejudicial to the Revenue’s interest. Conclusion: The High Court dismissed the appeal, agreeing with the Tribunal and the Commissioner that the Assessing Officer’s order was erroneous and prejudicial to the interest of the Revenue. The court emphasized that the Assessing Officer failed to fulfill his statutory duties by not conducting a thorough investigation into the genuineness of the purchases, especially in light of credible information from the VAT and Sales Tax authorities. The court found no substantial questions of law in the appeal, thereby upholding the revisional powers exercised under Section 263 of the Income Tax Act, 1961.
|
