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TMI Blog2017 (12) TMI 467X X X X Extracts X X X X X X X X Extracts X X X X ..... y caused prejudice to the interest of the revenue. The component of investment which is claimed as business expenditure may be unexplained investment, which is claim under the garb of trading expenditure. Keeping this in view, we do not see any reason to interfere into the action of the Ld. CIT(A), same is hereby affirmed. This ground of assessee’s appeal is dismissed. Before parting we may also hold that even if the Ld. CIT(A) has decided the issue that the profit arising out of the bogus purchases would be eligible for deduction u/s 10B even then the revenue cannot be precluded to examine the issue from the stand point of genuineness of investment. - Decided against assesee - ITA No. 375/JP/2017 - - - Dated:- 1-12-2017 - Shri Bhagchand, AM And Shri Kul Bharat, JM Assessee by : Shri P.C. Parwal (CA) Revenue by: Shri Varinder Mehta (CIT) ORDER Per Shri Kul Bharat, J. M. This appeal by the Assessee is directed against the order of Ld. PCIT (A)-3, Jaipur dated 14.03.2017 pertaining to Assessment Year 2007-08. The assessee has raised the following grounds of appeal:- 1. The order passed by the Ld. PCIT u/s 263 is illegal and bad in law. 1.1 The Ld ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d is erroneous; and (ii) it is prejudicial to the interests of the Revenue. If one of them is absent i.e. if the order of the Income-tax Officer is erroneous but is not prejudicial to the Revenue or if it is not erroneous but is prejudicial to the Revenue, recourse cannot be had to section 263(1) of the Act. 2. In the present case, even if the purchases made from M/s Vitrag Jewels is held to be bogus and disallowed in computing the income from business, the same would increase the profit of the assessee to that extent and such increased profit is eligible for deduction u/s 10B. Thus, no prejudice is caused to the revenue even when the disallowance of this amount is not made by the AO in computing the business income. The Bombay High Court in case of CIT Vs. Gabrial India Ltd. 203 ITR 108 has held that unless there is loss of revenue, the order cannot be said to be prejudicial. The CBDT in Circular No.37 of 2016 dt. 2 d Nov., 2016 has clarified that where specific disallowances, related to the business activity against which Chapter VI-A deduction has been claimed, result in enhancement of the profits of the eligible business, then deduction under Chapter VI-A is admissible on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order. In view of above, order passed by Ld. CIT u/s 263 is illegal bad in law and the same be quashed. 4. Ld. D/R opposed the submissions and supported the order of the authorities below. He submitted that by not making enquiry, the impugned order is erroneous and prejudicial to the interest of the Revenue. In rejoinder the Ld. Counsel for the assessee submitted that no prejudice is caused to the Revenue as there would not be any loss of Revenue as the assessee being 100% export oriented undertaking and the entitled to deduction u/s 10B of the Act. Even in the purchases treated to be bogus no loss of revenue would be caused. He further contended that the Revenue cannot be given indefinite innings to disturbed the concluded assessment. 5. We have heard the rival contentions, perused the material available on record. There is no dispute with regard to the fact that twin conditions are to be satisfied for invoking the provisions of section 263 of the Act. For the sake of clarity Section 263 is reproduced as under:- 263. Revision of orders prejudicial to revenue (1) The [Principal Commissioner or] commissioner may call for and examine the record of any proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the claim, (c) The order has not been made in accordance with any order, direction or instruction issued by the Board under section 119; or (d) The order has not been passed in accordance with any decision which is prejudicial to the assessee, rendered by the jurisdictional High Court or Supreme Court in the case of the assessee or any other person.] [(2) No order shall be made under sub-section 91) after the expiry of two years from the end of the financial year in which the order sought to be revised was passed.] (2) Notwithstanding anything contained in sub-section (2), an order in revision under this section may be passed at any time in the case of any order which has been passed in consequence of, or to give effect to, any finding or direction contained in an order of the Appellate Tribunal, the High court or the Supreme Court. [Explanation.- In computing the period of limitation for the purposes of sub-section (2), the time taken in giving an opportunity to the assessee to be reheard under the proviso to section 129 and any period during which any proceeding under this section is stayed by an order or injunction of any court shall be excluded. F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 6. Now, coming to the other grounds of the assessee that the order sought to be revised is not prejudicial to the interest of the revenue. The main thrust of the assessee is the contention is that assessee being 100% export oriented undertaking is entitled for deduction u/s 10B. It is contended by the Ld. Counsel for the assessee that even if it is assumed that purchases are not genuine in that event also it would only inflate profit and such profit is eligible for deduction consequently there would be no loss of revenue. 6.1 Ld. D/R opposed the submission and vehemently argued that there is another facet to this transaction i.e. genuineness of the investment. 6.2 After considering the rival submissions, we are of the considered view that the assessee can not be allowed to take advantage of its own wrong. By claiming the bogus expenditure the assessee has certainly caused prejudice to the interest of the revenue. The component of investment which is claimed as business expenditure may be unexplained investment, which is claim under the garb of trading expenditure. Keeping this in view, we do not see any reason to interfere into the action of the Ld. CIT(A), same is hereb ..... X X X X Extracts X X X X X X X X Extracts X X X X
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