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2019 (12) TMI 900 - AT - Income TaxRevision u/s 263 - Assessment u/s 153A - bogus purchases calculating at the rate of 2% of URD purchases made in cash by AO - HELD THAT - Assumption of inaccurate particulars/facts In this regard, we examined the revision order of the Pr.CIT and search for the details of entire facts, which were correctly assumed by the Assessing Officer while making the reassessment u/s 153A r.w.s. 143(3) of the Act. We find that the allegation of the Pr.CIT is unspecific and vague. Therefore, such allegations are now stand rejected. Accordingly, the same is decided in favour of the assessee. Complete lack of application of mind - The catch words of the new inserted provisions of the said Explanation 2 of section 263 of the Act is (i) without making enquiries or (ii) verification which should have been made and (iii) allowing any relief without enquiring into the claim. On examination of each of these expressions, we find the core issue of URD purchases were repeatedly examined over a period of months/years and issued number of letters/notices after carefully examining three sets of Paper Books containing 1000 and above pages. Further, we find that it is not a case of granting of relief at all but it is a case of making a disallowance out of the URD purchases. Therefore, the provisions of clause (b) of Explanation 2 to section 263 of the Act do not apply to the facts of the present case. Inadequate enquiry or verification which should have been made - Allegations in the order of the Pr.CIT are general in nature and unspecific to the indirect assumption of facts and uncertain of the left over enquiries has to be conducted. The Pr.CIT has not made out a case to allege that the Assessing Officer is of complete lack of application of mind. Further, contrary to the same, we find the Assessing Officer and his team invoked the provisions of section 131 regarding the statement of the URD purchases and examining the Paper Books filed by the assessee on this issue etc before a view is taken about the requirement of making disallowance at the rate of 2% of such URD purchases in cash. Para 11 of this order contains the chronology of events and the Assessing Officer s effects in scrutinizing the same issue relating to URD purchases. Thus, it is a case of taking a view on the matter by the Assessing Officer. Pr.CIT decision to take another possible view, which is not permitted in law. Therefore, from the above, it is not a case for assumption of jurisdiction u/s 263 - Decided in favour of assessee.
Issues Involved:
1. Correctness of the jurisdiction of Pr.CIT under Section 263 of the Income Tax Act. 2. Merits of the addition made on account of Unregistered Dealer (URD) purchases. Detailed Analysis: 1. Correctness of the Jurisdiction of Pr.CIT under Section 263 of the Income Tax Act: The primary issue raised by the assessee pertains to the jurisdiction of the Pr.CIT under Section 263 of the Income Tax Act. The Pr.CIT had set aside the assessment orders for the years 2009-10 to 2015-16 on the grounds of "complete lack of application of mind" and "incorrect assumption of facts" by the Assessing Officer (AO). The Tribunal examined the revision order and found that the Pr.CIT's allegations of incorrect assumption of facts were unspecific and vague. The Tribunal noted that the Pr.CIT did not specify which facts were incorrectly assumed by the AO. Consequently, this allegation was rejected in favor of the assessee. Regarding the allegation of "complete lack of application of mind," the Tribunal referred to the provisions of Section 263 and the newly inserted Explanation 2. The Tribunal found that the AO had conducted a thorough examination of the URD purchases over several months, issuing multiple notices and examining extensive documentation. The Tribunal concluded that the AO had made a disallowance after due deliberation and application of mind. Therefore, the Pr.CIT's assumption of jurisdiction under Section 263 was deemed invalid. 2. Merits of the Addition Made on Account of URD Purchases: The Pr.CIT had set aside the AO's order for verification of the genuineness of URD purchases, corresponding sales, and reasonable estimation of net profit on bogus purchases. The AO had made ad-hoc additions at the rate of 2% of URD purchases made in cash, which was challenged by the Pr.CIT. The Tribunal noted that the AO had issued multiple notices and conducted a detailed examination of the URD purchases. The AO had invoked the provisions of Section 131 and scrutinized extensive documentation before making the disallowance at the rate of 2%. The Tribunal found that the AO had applied his mind and taken a considered view on the matter. The Tribunal also observed that the Pr.CIT's order did not specify the list of enquiries that were left unattended by the AO. The Pr.CIT's allegations were found to be general and unspecific. The Tribunal concluded that the Pr.CIT's decision to take another possible view was not permitted in law. Conclusion: The Tribunal held that the Pr.CIT's assumption of jurisdiction under Section 263 was invalid, and the AO had conducted a thorough examination and applied his mind in making the disallowance. Consequently, the appeals were partly allowed in favor of the assessee, and the other grounds raised by the assessee became academic and were dismissed. Order Pronounced: The order was pronounced on the 21st day of November, 2019, and all seven appeals of the assessee were partly allowed.
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