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2023 (5) TMI 950 - AT - Income TaxRevision u/s 263 by CIT - PCIT doubted the genuineness of purchases - Bogus parties - Matter restored back to AO for verification of purchase and suppliers (parties) - HELD THAT - Assessment was complicated u/s 143(3) r.w.s. 147 - assessment was reopened u/s 148 r.w.s.151. The approval was granted by the ld. PCIT during issuance of notice u/s 148. During the proceeding u/s 263 the assessee submitted relevant documents in relation to show cause notice issued by the ld. PCIT. PCIT after receiving the submission from assessee just subsided the entire documents to the lower authority for further verification. Without proper verification of documents of the assessee, only to remand the matter to the ld. AO for verification which is vitiated the order u/s 263. In the assessment order, the issue of purchase is dealt by the ld AO is reflected in order of assessment. We fully relied on the order in the case of R.K. Metal Works ( 1976 (12) TMI 28 - PUNJAB AND HARYANA HIGH COURT - In our considered view when the assessee filed a detailed written submission before him, the ld. PCIT did not deal with any of the points raised in the submission. Without verification of the documents only to remand the matter to the ld. AO for consideration of the points raised in the assessee's written statement. In our considered view the order U/s 263, passed by the ld. PCIT is setting aside and quashed. Assessee appeal allowed.
Issues Involved:
1. Validity of the PCIT's order under section 263 of the Income Tax Act, 1961. 2. Assumption of jurisdiction under sections 147/148. 3. Pending appeal's impact on jurisdiction under section 263. 4. Bogus purchases allegation and its examination. 5. Overall legality and factual correctness of the order under appeal. Summary: 1. Validity of the PCIT's order under section 263: The assessee argued that the impugned order was passed in a "most mechanical and summary manner" without allowing sufficient opportunity or considering the assessee's explanation. The Tribunal noted that the PCIT did not properly verify the documents submitted by the assessee and merely remanded the matter to the AO for further verification. This approach was deemed improper, and the Tribunal quashed the order under section 263. 2. Assumption of jurisdiction under sections 147/148: The assessee contended that the reassessment order dated 27.12.2018 was invalid due to wrongful assumption of jurisdiction under sections 147/148. The Tribunal observed that the issue of purchases was already dealt with by the AO in the reassessment order, and the PCIT's order did not provide a proper basis for invoking section 263. 3. Pending appeal's impact on jurisdiction under section 263: The assessee argued that since the first appeal disputing the reopening under section 147 was pending, the jurisdiction under section 263 could not be invoked. The Tribunal did not find merit in this argument, referring to case laws that allowed the PCIT to assume jurisdiction under section 263 even during the pendency of an appeal. 4. Bogus purchases allegation and its examination: The PCIT assumed the purchases from 18 parties as bogus without proper verification. The assessee provided detailed documents, including purchase bills, ledger accounts, and VAT returns, to support the genuineness of the purchases. The Tribunal found that the PCIT did not adequately address these submissions and incorrectly held the order as erroneous and prejudicial to the interest of the revenue. 5. Overall legality and factual correctness of the order under appeal: The Tribunal concluded that the PCIT's order was not justified as it failed to substantiate the reasons for considering the AO's order erroneous and prejudicial to the revenue. The Tribunal relied on the judgment of the Hon'ble Punjab and Haryana High Court in the case of R.K. Metal Works, which emphasized the need for the Commissioner to provide a clear basis for such conclusions. Conclusion: The Tribunal set aside and quashed the order under section 263 passed by the PCIT, allowing the appeal of the assessee. The order was pronounced in the open court on 27.04.2023.
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