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TMI Blog2019 (1) TMI 341X X X X Extracts X X X X X X X X Extracts X X X X ..... cessary documents and evidences were furnished before the Assessing Officer. AO had also issued notice u/s 133(6) of the Act, to the sellers at the addresses given by the DGIT-(Inv.), Kolkata. He had received replies from these persons confirming the transactions. He only doubted the mode of delivery of these diamonds. The assessee furnished sufficient evidence to prove the mode of delivery. On these facts, the Assessing Officer chose not to bring to tax 97% of the value of the purchases to tax as bogus purchases. The issue is covered in favour of the assessee by the decision of the Hon'ble Gujarat High Court in the case Tejua Rohitkumar Kapadia [2017 (10) TMI 729 - GUJARAT HIGH COURT]. Even otherwise, when the issue is pending before the ld. CIT(A)-3, Kolkata, the ld. Pr. CIT, does not have the jurisdiction to exercise his powers u/s 263 of the Act, in view of explanation 1 (c) of Section 263 - revisionary powers cannot be exercise under these facts and circumstances of this case. The Assessing Officer in this case considered all the evidences and had taken a possible view under the law. - Decided in favour of assessee - ITA No. 666/Kol/2018, ITA No. 667/Kol/2018, ITA No. 668/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the assessee, the Assessing Officer disallowed 3% of the purchases. He submitted that the assessee had not accepted this decision of the Assessing Officer and has carried the matter in appeal. He filed documents to show that the matters are pending before the ld. CIT(A)-3, Kolkata. He submitted that when the matter is before the ld. CIT(A), the ld. Pr. CIT, does not have jurisdiction u/s 263 of the Act. He relied on the judgment of the Hon'ble Gujarat High Court in the case of Pr. Commissioner of Income Tax vs. Tejua Rohitkumar Kapadia in Tax Appeal No. 691 of 2017, wherein the Hon'ble High Court has upheld the order of the Tribunal on similar facts and circumstances, that the purchases cannot be considered as bogus purchases as there was no evidence to show that the amount was recycled back to the assessee. The Hon ble Supreme Court in SLP (Civil) Diary No(s). 12670/2018, dt. 04/05/2018, dismissed the SLP filed by the revenue on this judgment. He relied on certain decisions for the proposition that the exercise of revisionary powers u/s 263 of the Act, under the fact and circumstances of the case, is bad in law. 3.1. The ld. D/R, Shri Sanjay Raj, on the other hand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he method of maintaining accounts over the years and that the books of accounts of the assessee were never rejected and have always been accepted by the revenue. He pointed out that in this case all the sellers had confirmed the transactions directly to the Assessing Officer. 4. We have heard rival contentions. On careful consideration of the facts and circumstances of the case, perusal of the papers on record, orders of the authorities below as well as case law cited, we hold as follows:- 5. In response to the showcause notice issued by the ld. Pr. CIT to the assessee u/s 263 of the Act, the assessee filed detailed reply. The reply is extracted at page 2 to 4 of the order passed by the ld. Pr. CIT u/s 263 of the Act. This is extracted for ready reference:- The assessee company is in the business of manufacturing and sale of jewellery ornaments. Purchases of diamonds and precious stones are mostly from outstation parties at Mumbai and Surat. All the payments are made through banking channels. As is required under the provisions of Companies Act as well as under Income Tax Act the assessee is maintaining complete set of books of accounts supported by Bills, vouchers, Ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Invoice No. Invoice Date Date of deposit at Shop Invoice Value Goods Carried by Travel Details (including Flight No. Date) To conclude, it is to bring to your Honour s kind notice that all the purchases and sales are duly supported by documentary evidences. For each and every purchase there is supporting Bill and payments are made by cheques passing through the banking channel. Sales are supported by Bills/cash memos and these are duly finding place in the accounts by way of entries recorded therein. Proceedings for assessment were drawn by the A.O. u/s 142(1) and u/s 143(2) and as requisitioned by the A.O. all relevant details were submitted The assessee had with reference to the audited accounts explained to the A.o. about the maintenance of stock register with quantitative analysis. Details about the purchases which were having doubts in the mind of the A.O. with reference to which proceedings were initiated by the A.O. were submitted and it was-explained to the A.o. with reference to chart prepared about the name of the seller, PAN, date of Bill, amount, weight of diamonds purchased, and since these purchases were made by the Director w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the sellers in reply to notices u/s 133(6). It is thus submitted that order of assessment is neither erroneous nor prejudicial to the interest of revenue. All the submissions which have been made above and the evidences adduced are part and parcel of the assessment record with the A.O. It is only a case of doubt in the mind of the A.O. with regard to the process of bringing the diamonds after obtaining delivery at Surat from the diamond dealers. That these diamond dealers have already confirmed their transactions with the assessee is duly established by independent enquiry made by the AO. u/s 133(6) of the Act. His only doubt concerns as to how the diamonds could be brought to Kolkata. This issue was very elaborately cleared explained by the assessee by production of documentary evidences relating to travelling by Directors in support thereof air tickets/boarding Passes were submitted. The A. O. duly verified all the details which pertained to the purchases from the aforesaid two parties' delivery thereof and evidences regarding bringing the same to Kolkata and did not find any fault though he expressed his views about the delivery of the diamonds which was d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 263 of the Act. We also find that the ld. Pr. CIT has exercised his jurisdiction on the ground that there was no proper enquiry/verification. 5.2.1. The Hon'ble Delhi High Court in the case of Income-tax Officer v. D.G. Housing Projects Ltd. [2012] 343 ITR 329 (Delhi)held as follows:- Section 263 has been enacted to empower the Commissioner to exercise power of revision and revise any order passed by the Assessing Officer, if two cumulative conditions are satisfied. Firstly, the order sought to be revised should be erroneous and secondly, it should be prejudicial to the interest of the revenue. The expression 'prejudicial to the interest of the revenue' is of wide import and is not confined to merely loss of tax. The term 'erroneous' means a wrong/incorrect decision deviating from law. This expression postulates an error which makes an order unsustainable in law. [Para 10] The Assessing Officer is both an investigator and an adjudicator. If the Assessing Officer as an adjudicator decides a question or aspect and makes a wrong assessment which is unsustainable in law, it can be corrected by the Commissioner in exercise of revisionary power ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he absence of the finding that the order is erroneous and prejudicial to the interest of revenue, exercise of jurisdiction under section 263 is not sustainable. In most cases of alleged 'inadequate investigation', it will be difficult to hold that the order of the Assessing Officer, who had conducted enquiries and had acted as an investigator, is erroneous, without Commissioner conducting verification/inquiry. The order of the Assessing Officer may be or may not be wrong. Commissioner cannot direct reconsideration on this ground but only when the order is erroneous. An order of remit cannot be passed by the Commissioner to ask the Assessing Officer to decide whether the order was erroneous. This is not permissible. An order is not erroneous, unless the Commissioner hold and records reasons why it is erroneous. An order will not become erroneous because on remit, the Assessing Officer may decide that the order is erroneous. Therefore, the Commissioner must after recording reasons hold that the order is erroneous. The jurisdictional precondition stipulated is that the Commissioner must come to the conclusion that the order is erroneous and is unsustainable in law. It may be n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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