2021 (12) TMI 725 - AT - Income Tax

Revision u/s 263 by CIT - bogus purchases - assessee was reopened u/s 147 by issuing notice under section 148 after the AO received information from DGIT (Inv.) Mumbai that assessee is beneficiary of hawala purchase bills and accommodation entries - HELD THAT - Undisputedly the issue of bogus purchases has been examined in the reassessment proceedings by the AO and after following the decision of CIT vs. Bolanath Polyfab Pvt. Ltd. 2013 (10) TMI 933 - GUJARAT HIGH COURT and CIT vs. Simit P. Sheth 2013 (10) TMI 1028 - GUJARAT HIGH COURT the AO has taken a view of 12.5% of the bogus purchases to be added to income. Thus the issue has been examined in detail in the reassessment proceedings and a reasonable view has been taken. According to the Ld. PCIT the assessment order is contrary as on the one hand the AO is holding that purchases are bogus whereas on the other hand the AO is applying a rate of 12.5% to tax the bogus purchases and thus came to the conclusion that the assessment order is erroneous and prejudicial to the interest of the revenue and thus set aside the assessment. In our considered opinion the revisionary proceedings initiated by Ld. PCIT appears to be not correct as he has tried to unsettle a settled position by setting aside the assessment order which is otherwise not erroneous and is in accordance with law and also in consonance with the decisions of High Court and co-ordinate Benches of the Tribunal. The case of the assessee is squarely covered by the decision of the co-ordinate Bench of the Tribunal in the case of Rahul Cables Pvt. Ltd. 2018 (5) TMI 2102 - ITAT PUNE wherein similar issue has been decided in favour of the assessee by quashing the revisionary proceedings as well as the order under section 263 - Decided in favour of assessee.

Summary

Issues Involved:
1. Revisionary order under section 263 of the Income Tax Act regarding assessment of alleged bogus purchases.

Detailed Analysis:

Issue 1: Revisionary Order under Section 263
The appellate tribunal heard the appeal against the revisionary order passed by the Principal Commissioner of Income Tax (PCIT) under section 263 of the Income Tax Act. The PCIT set aside the assessment order by the Assessing Officer (AO) concerning alleged bogus purchases made by the assessee. The PCIT found the assessment order erroneous and prejudicial to revenue as the AO applied a 12.5% rate to tax the alleged bogus purchases of ?1,05,98,219. The PCIT directed the AO to examine the purchases again. The assessee argued that the AO took a reasonable view based on precedents and that the assessment was not erroneous. The tribunal noted that the AO had examined the issue in detail during reassessment proceedings and applied a 12.5% rate based on court decisions. The tribunal disagreed with the PCIT's view that the assessment order was contradictory and held that the revisionary proceedings were initiated incorrectly. Citing a similar case, the tribunal quashed the revisionary proceedings and restored the assessment order, ultimately allowing the appeal of the assessee.

Conclusion:
The appellate tribunal found that the revisionary order under section 263 was not justified as the AO had taken a reasonable view based on precedents and relevant court decisions. The tribunal quashed the revisionary proceedings and restored the assessment order, ultimately allowing the appeal of the assessee.