9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2022 (8) TMI 31 - AT - Income TaxRevision u/s 263 - Bogus purchases - HELD THAT - AO has done a thorough examination of the facts and has given an elaborate finding on bogus purchases declared. AO has confronted each of the submissions of the assessee and has listed out his conclusions as can be seen from the order. With regard to the PCIT s contention that the details of previous assessment was not brought to the notice of the AO, we find that in the assessment order the AO has tabulated the list of names against whose names bogus purchases were recorded from assessment years 2016-17 to 2018-19. Further the AO in assessment order has given a specific finding that the purchases booked in the name Syed Ibrahim has been offered to tax as bogus purchase in assessment year 2018-19. In view of these facts which is clearly coming out of the AO s order, we see no merit in the conclusion of the PCIT that the AO has not examined the facts and not done proper verification. Issue that Explanation (2) to Section 263 of the Act could be invoked only in a very gross case of inadequacy in enquiring or where the mandatory enquiries are not conducted has reached finality. AO in the given case has conducted enquiry and perused the details submitted and has taken decision to make addition of bogus purchases recorded in the books accounts with proper application of mind. Therefore in our considered view, that the PCIT is not justified in revising the order of the AO. Accordingly, the impugned order of the PCIT is quashed. Appeal of assessee allowed.
Issues Involved:
1. Legality of the revision order passed under Section 263 of the Income Tax Act. 2. Justification of the Principal Commissioner of Income Tax (PCIT) in setting aside the assessment order. 3. Adequacy of the Assessing Officer's (AO) enquiry and verification during the assessment proceedings. 4. Applicability of Explanation (2) to Section 263 of the Income Tax Act. 5. Binding nature of the statement recorded under Section 132(4) of the Act. Issue-Wise Detailed Analysis: 1. Legality of the Revision Order Passed under Section 263 of the Income Tax Act: The assessee challenged the revision order passed by the PCIT under Section 263 of the Income Tax Act, claiming it was opposed to law and facts. The Tribunal noted that for invoking Section 263, the order passed by the AO should be both erroneous and prejudicial to the interests of the revenue. The Tribunal relied on the decision of the Hon'ble Apex Court in Malabar Industrial Co., Ltd. Vs. CIT, which clarified that not every loss of revenue due to an AO's order can be treated as prejudicial to the interests of revenue unless the order is unsustainable in law. 2. Justification of the Principal Commissioner of Income Tax (PCIT) in Setting Aside the Assessment Order: The PCIT set aside the assessment order on the grounds that the AO failed to make necessary enquiries and verification regarding the bogus purchases, leading to an under-assessment of Rs.1,39,10,034. The PCIT argued that the AO's order was erroneous and prejudicial to the revenue's interests. However, the Tribunal found that the AO had conducted a thorough examination and provided an elaborate finding on the bogus purchases declared, thus rejecting the PCIT's contention. 3. Adequacy of the Assessing Officer's (AO) Enquiry and Verification during the Assessment Proceedings: The AO had called for various details during the assessment proceedings, and the assessee had submitted the required information. The AO's order included a detailed analysis and conclusions regarding the bogus purchases. The Tribunal observed that the AO had verified the facts, including the previous assessment years, and had made an addition of Rs.77,82,870 based on the evidence. The Tribunal concluded that the AO had conducted a proper enquiry and verification, contrary to the PCIT's claim. 4. Applicability of Explanation (2) to Section 263 of the Income Tax Act: The PCIT invoked Clause (a) of Explanation (2) to Section 263, which deems an order erroneous if it is passed without making necessary enquiries or verification. The Tribunal referred to the Hon'ble Gujarat High Court's decision in Shreeji Prints (P) Ltd., which held that the Explanation (2) could only be invoked in cases of gross inadequacy in enquiry or where mandatory enquiries were not conducted. The Tribunal found that the AO had conducted due enquiries and verification, making the invocation of Explanation (2) inappropriate in this case. 5. Binding Nature of the Statement Recorded under Section 132(4) of the Act: The PCIT argued that the statement recorded under Section 132(4) during the search, where the partner admitted to inflated purchases, was conclusive evidence. The Tribunal acknowledged that such statements have great evidentiary value but noted that the AO had considered the statement and other evidence during the assessment. The AO's decision to add Rs.77,82,870 was based on a detailed examination, and the Tribunal found no reason to question the AO's judgement. Conclusion: The Tribunal concluded that the AO had conducted a thorough enquiry and verification, and the assessment order was neither erroneous nor prejudicial to the interests of the revenue. The PCIT's invocation of Section 263 was found to be unjustified, and the revision order was quashed. The appeal by the assessee was allowed.
|
