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2018 (10) TMI 1341 - AT - Income TaxRevision u/s 263 - Addition being 12.5% of bogus purchase by A0 and not 100% - Held that - De hors any examination or adverse inference on the sales, 100% disallowance of bogus purchase is not sustainable as per the explanation in the case of Nikunj Eximp Enterprises 2014 (7) TMI 559 - BOMBAY HIGH COURT . Further for the defect in the purchase documentation, this tribunal in catena of decision has taken into account the various decisions including that from the Hon ble jurisdictional High Court and has held that 12.50% of the bogus purchase if disallowed would serve the interest of the justice. We further note that the dismissal of the SLP by the Hon ble Apex Court does not merge the dismissal of the SLP into the order of the Hon ble Apex Court. Accordingly, in our considered opinion, the order passed by the ld. CIT is liable to be quashed As held in the case of Malabar Industrial Co. Ltd. vs. CIT 2000 (2) TMI 10 - SUPREME COURT if there are two views possible and the A.O. has adopted one view, with which the ld. CIT is not in agreement, the order cannot be said to be liable to be visited with the revisionary order by the ld. CIT. Accordingly, the order under 263 passed by the ld. CIT is hereby quashed. - Decided in favour of assessee.
Issues involved:
Challenge to order passed by Principal Commissioner of Income Tax-29, Mumbai for assessment year 2010-11 regarding disallowance of alleged bogus purchases. Analysis: 1. The appellant contested the order passed by the Principal Commissioner of Income Tax-29, Mumbai, challenging the disallowance of 12.5% of alleged bogus purchases amounting to ?14,97,817. The appellant argued that the Assessing Officer had made the disallowance after thorough inquiries and consideration of all materials produced during the assessment proceedings. The appellant contended that the purchases were supported by bills from suppliers, payment was made through account payee cheques, and suppliers were Income Tax-assessed entities. The appellant sought cancellation of the order. 2. The Principal Commissioner of Income Tax-29, Mumbai, set aside the assessment order citing errors prejudicial to the revenue's interest. The Commissioner referred to defects in purchase documentation and previous judicial decisions mandating 100% disallowance of bogus purchases. The Commissioner directed the Assessing Officer to reconsider the issue after providing the appellant with a hearing opportunity. 3. The Appellate Tribunal noted that the Assessing Officer had disallowed 12.5% of the alleged bogus purchases without questioning the genuineness of the sales. The Tribunal highlighted that the Commissioner did not address the genuineness of sales either. The Tribunal referenced relevant judicial decisions, including the Hon'ble jurisdictional High Court's stance on disallowances. It emphasized that a 100% disallowance without examining sales was unsustainable and contrary to legal precedents. The Tribunal ruled in favor of the appellant, quashing the Commissioner's order under Section 263 of the Income Tax Act, 1961. 4. The Tribunal emphasized that the Commissioner's order contradicted the jurisdictional High Court's decision on disallowances and the Supreme Court's stance on differing views between Assessing Officer and Commissioner. Citing the principle of allowing different views, the Tribunal held that the Commissioner's revisionary order was unwarranted. Consequently, the Tribunal allowed the appellant's appeal, overturning the Commissioner's order and deciding the issue in favor of the assessee. In conclusion, the Appellate Tribunal ruled in favor of the appellant, canceling the Principal Commissioner's order and allowing the appeal regarding the disallowance of alleged bogus purchases for the assessment year 2010-11.
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