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2022 (12) TMI 39 - HC - Income TaxRevision u/s 263 - Estimation of bogus purchases - HELD THAT - Since a common order passed by the learned Tribunal had been reversed by this Court 2022 (7) TMI 1352 - CALCUTTA HIGH COURT wherein as held that it was the factual position in the case on hand then it is incumbent upon the AO to inquire into the matter and take the proceedings to the logical end. Having not done so, PCIT was fully justified in exercising jurisdiction u/s 263 of the Act - the said decision will apply to the cases on hand as well. For the above reasons, the appeals filed by the revenue are allowed and the order passed by the learned Tribunal is set aside.
Issues involved:
Challenging a common order passed by the Income Tax Appellate Tribunal regarding assessment years 2009-10, 2010-11, and 2011-12. Reopening of assessment based on information received from the Director General of Income Tax (Investigation) regarding fictitious purchases. Disallowance of a portion of the alleged bogus purchases by the Assessing Officer. Exercise of power under Section 263 of the Income Tax Act by the Principal Commissioner of Income Tax. Appeal to the Tribunal against the PCIT's order. Interpretation of relevant legal provisions and precedents. Analysis: 1. Challenging Tribunal's Order: The revenue filed appeals challenging a common order by the Income Tax Appellate Tribunal concerning assessment years 2009-10, 2010-11, and 2011-12. The Tribunal allowed the assessee's appeal, prompting the revenue to approach the High Court. The Court reviewed the facts and found that the Tribunal's decision was erroneous, leading to the setting aside of the Tribunal's order. 2. Reopening of Assessment: The assessment was reopened based on incriminating information received from the Director General of Income Tax (Investigation) regarding fictitious purchases. The Assessing Officer disallowed a portion of the alleged bogus purchases, leading to a dispute over the correctness of the assessment. The Principal Commissioner of Income Tax exercised power under Section 263 of the Income Tax Act to rectify the alleged error in the assessment order. 3. Disallowance of Bogus Purchases: The Principal Commissioner of Income Tax found that the entire amount of bogus expenditure should have been disallowed, rather than the partial disallowance made by the Assessing Officer. Citing legal provisions and precedents, the PCIT directed the reassessment of the assessee's income for the relevant assessment years, emphasizing the need for a thorough examination of each transaction. 4. Appeal to Tribunal: The assessee appealed to the Tribunal, which ruled in favor of the assessee based on certain precedents. However, the High Court differentiated the facts of those cases from the present case, highlighting that the assessing officer did not conduct a thorough inquiry despite the opportunity given to the assessee to explain the transactions. As a result, the Court held that the PCIT was justified in exercising jurisdiction under Section 263 of the Act. 5. Legal Interpretation and Decision: The High Court concluded that the Tribunal had erroneously interfered with the order passed by the PCIT. Consequently, the Court allowed the revenue's appeals, setting aside the Tribunal's order and restoring the PCIT's decision. The substantial questions of law were answered in favor of the revenue, emphasizing the importance of a comprehensive inquiry into transactions to ensure accurate assessment. This detailed analysis covers the issues involved in the legal judgment, providing a comprehensive understanding of the case and the Court's decision.
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