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2019 (12) TMI 979 - AT - Income TaxRevision u/s 263 - adequate enquiry on the core issue - AO disallowing only 2% of gold purchases from Unregistered Dealers in cash is erroneous and prejudicial to the interest of the Revenue - HELD THAT - Revisionary jurisdiction u/s 263 of the Act can be assumed by the Pr.CIT only in case where there is no enquiry conducted by the Assessing Officer, whereas in this present case it is already demonstrated before us that there has been adequate enquiry on the core issue of URD purchases by the Assessing Officer. This fact also accepted by the Ld. DR and moreover the Ld. DR could not bring on record any other decision or evidences contradicting these existing facts on record. That also, regarding the binding judgments referred to by the Ld. AR of the assessee, the Ld. DR could not bring on board any other contrary view of other High Court or the Apex Court. In view of the matter and on examination of facts on record and the binding principles enshrined from the judicial pronouncements referred hereinabove, we are of the considered view that the Ld. Pr.CIT was not correct in resorting to revisionary jurisdiction u/s 263 of the Act and therefore, we quash the order passed u/s 263 of the Act. - Decided in favour of assessee.
Issues Involved:
1. Assumption of revisionary jurisdiction under Section 263 of the Income-tax Act, 1961 by the Principal Commissioner of Income Tax (Pr.CIT). 2. Adequacy of the Assessing Officer’s (AO) enquiry into Unregistered Dealer (URD) purchases. 3. Application of Explanation 2 to Section 263 of the Income-tax Act, 1961. Issue-wise Detailed Analysis: 1. Assumption of Revisionary Jurisdiction under Section 263: The core grievance of the assessee is the Pr.CIT's assumption of revisionary jurisdiction under Section 263 of the Income-tax Act, 1961. The Pr.CIT issued a show-cause notice on 14.01.2019 and passed an order on 18.03.2019, stating that the AO’s decision to disallow only 2% of gold purchases from URD in cash was erroneous and prejudicial to the interest of the Revenue. The Pr.CIT argued that there was a complete lack of application of mind and incorrect assumption of facts by the AO. 2. Adequacy of the Assessing Officer’s Enquiry: The assessee contended that the AO had conducted detailed and specific enquiries regarding URD purchases. Summons were issued to 43 persons, of which 19 were served, and 4 attended and deposed. The AO issued several questionnaires and received continuous responses from the assessee. Despite these detailed enquiries, the AO disallowed 2% of the total URD purchases in cash. The Tribunal observed that the AO had conducted adequate and reasonable enquiries into the matter, and thus, it was not a case of in-application of mind or incorrect assumption of facts by the AO. 3. Application of Explanation 2 to Section 263: The Tribunal noted that Explanation 2 to Section 263, effective from 01.06.2015, applies to cases where no enquiries or verification were made by the AO. However, in this case, the AO had conducted detailed verification and disallowed 2% of URD purchases. The Tribunal referenced similar cases, such as Chandukaka Saraf and Sons Pvt. Ltd., where the AO's detailed enquiries were acknowledged, and the Pr.CIT's assumption of revisionary jurisdiction under Section 263 was deemed unwarranted. The Tribunal also cited binding decisions from the Hon’ble Bombay High Court, which established that revisionary jurisdiction under Section 263 can be assumed only in cases of no enquiry, not inadequate enquiry. Conclusion: The Tribunal concluded that the Pr.CIT was not correct in resorting to revisionary jurisdiction under Section 263, as the AO had conducted adequate enquiries into the URD purchases. The order passed under Section 263 was quashed, and the appeals of the assessee for all assessment years (2009-10 to 2015-16) were allowed.
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