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TMI Blog2019 (12) TMI 900X X X X Extracts X X X X X X X X Extracts X X X X ..... f 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 v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee, no addition was warranted and hence, there was no reason to revise the asst. order directing the learned A.O. to frame a fresh asst. and estimate reasonable percentage of net profit on bogus purchases. 5] The learned Pr. CIT erred in not appreciating that the learned A.O. had completed the asst. after due application of mind and verification of all the issues relating to URD purchases made by the assessee company and therefore, there was no reason to revise the asst. order on the ground that there was complete lack of application of mind and incorrect assumption of facts on the part of the learned A.O. 6] The appellant craves leave to add, alter, amend or delete any of the above grounds of appeal. 3. From the above extracted grounds, it is evident that the legal issue raised by the assessee in ground no.1 relates to the correctness of the jurisdiction of Pr.CIT u/s 263 of the Act and the other grounds relate to the merits of the addition made on account of URD purchases. 4. Facts: Briefly stated the relevant facts include that the assessee is a company. A search and seizure action u/s 132 of the Act was conducted on 26.11.2014 and the orders u/s 153A r.w.s. 14 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s no merit. As stated above during the course of search proceeding evidence of bogus purchase in the form of URD purchase was found. Accordingly during post search in-depth investigation of the URD purchases were made and found that the self generated purchase vouchers of URD purchase debited in the books of the company were not verifiable. Hence, the Self generated purchase vouchers were prima facie found to be bogus and incriminating material for the purpose of section 153A of the Income Tax Act. 13.1 The submission of the assessee that there was only few discrepancies in the URD purchase and in the majority of the cases it was verifiable is not supported by the evidence available on record. As stated above in para 3 to 5 of the show cause notice verification of the genuineness of the URD purchase, could not be made in absence of proper identification of the so called sellers from whom the assessee had purchased gold in cash. Neither any identity proof of such person nor the proper address was made available. Further in the cases where payment were stated to have been made by cheque, no cross verification was made by the A.O from the bank, to verify the genuineness of the paym ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the revenue..... The phrase 'prejudicial to the interests of the revenue' has to be read in conjunction with an erroneous order passed by the Assessing Officer. On the facts of that case, the matter was decided by Hon'ble Supreme Court in favour of the revenue observing as under:- The Commissioner noted that the ITO passed the order of nil assessment without application of mind. Indeed, the High Court recorded the finding that the ITO failed to apply his mind to the case in all perspective and the order passed by him was erroneous. It appears that the resolution passed by the board of the appellant-company was not placed before the Assessing Officer. Thus, there was no material to support the claim of the appellant that the said amount represented compensation for loss of agricultural income. He accepted the entry in the statement of the account filed by the appellant in the absence of any supporting material and without making any inquiry. On these facts, the conclusion that the order of the ITO was erroneous is irresistible. We are, therefore, of the opinion that the High Court has rightly held that the exercise of the jurisdiction by the Commissioner under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tum of such purchase which are non verifiable. (b) The genuineness of the corresponding sales shown by the assessee company against such purchases. (c) Reasonable estimation of net profit on bogus purchase taking into account the facts and circumstances of case and finding and also in view of the decisions of the various Courts and Tribunals on the issue. 7. From the above extract, it is evident that, in the opinion of the Pr.CIT(C), the order passed by the Assessing Officer u/s 153A r.w.s. 143(3) of the Act constitutes an order with complete lack of application of mind and incorrect assumption of facts by the Assessing Officer. However, the said incorrect facts so assumed were not enlisted in the revision order. Further, how it is a case of complete lack of application of mind of the Assessing Officer, the Pr.CIT was casual in holding that the order of the Assessing Officer is erroneous and prejudicial to the interest of the Revenue. Otherwise, the Assessing Officer actually made addition after due examination and after taking a view of applying flat rate 2% of the entire URD purchases made in cash. 8. Aggrieved with the above order of the Pr.CIT, the assessee i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5. 14.11.2016 681 to 939 PB The assessee submitted detailed reply clarifying its case stating that the notices sent to most of the customers had been returned, there was no reason to hold that the purchases were made are bogus. 6. 10.11.2016 941 to 958 = BP No.2 The Assessing Officer issued further notice asking the assessee to clarify on certain issues. 7. 03.12.2016 1435 to 1569 PB No.2 The assessee submitted confirmations of a view customers and also details of the URD purchases made. 8. 14.12.2016 1571 to 1731 PB No.3 The assessee submitted additional details to the Assessing Officer. 9. 16.12.2016 1733 to 1735 PB No.3 The Assessing Officer again issued notice asking the assessee to clarify certain issues regarding the URD purchases. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d (i) without making inquiries or verification which should have been made or (ii) the order is passed allowing any relief without inquiring into the claim etc. Applying the said law to the facts of the present case, ld. Counsel for the assessee submitted that there is no such violation by the Assessing Officer in the present case. The Assessing Officer verified this issue of URD purchases deeply and invoked all the available provisions of the Act before took a view in favour of making addition @ 2% of the URD Purchases made in cash. Further, ld. Counsel for the assessee filed a written submission in this regard to consolidate his stands on the issue. 13. Per contra, ld. DR for the Revenue relied heavily on the order of the Pr.CIT. Brining our attention to the provisions of Explanation 2 of section 263 of the Act, ld. DR submitted that it is the case of making order by the Assessing Officer allowing certain reliefs without enquiring into the claims of the assessee. He also submitted fairly that it is the case of inadequate enquiry. In a way, ld. DR appreciated the facts that it is not a case of complete lack of application of mind. Further, he also agreed to the facts that the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ain the list of enquiries which are left unattended to by the Assessing Officer before the assessment is made. From this point of view, we find that the 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 of the Act 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 of the Act in a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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