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TMI Blog2020 (1) TMI 851X X X X Extracts X X X X X X X X Extracts X X X X ..... d that in the given facts and circumstances of the case, the assessment orders passed cannot be held as erroneous and prejudicial to the interests of Revenue. That being the case, exercise of power under section 263 of the Act to revise the assessment orders is neither justified nor valid - Decided in favour of assessee. - ITA No.2580 & 2581/Mum./2018 (Assessment Year : 2010–11 & 2011–12) - - - Dated:- 25-10-2019 - SHRI SAKTIJIT DEY, JUDICIAL MEMBER AND SHRI MANOJ KUMAR AGGARWAL, ACCOUNTANT MEMBER Assessee by: Shri Raj Kumar Singh Revenue by: Shri K. Madhusudhan ORDER PER SAKTIJIT DEY, J.M. Aforesaid appeals by the assessee arise out of two separate orders, both dated 26th March 2018, passed under section 263 of the Income tax Act, 1961 (for short the Act ) by the learned Principal Commissioner of Income Tax 5, Mumbai, pertaining to the assessment years 2010 11 and 2011 12. 2. Brief facts leading to filing of the present appeals are, the assessee company is engaged in the business of trading in ferrous and non ferrous metals. For the assessment year 2010 11, the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent records for examination. After examining the assessment records, he was of the view that the assessment orders passed estimating the income on non genuine purchases @ 12.5% is erroneous and prejudicial to the interests of Revenue, because, once the Assessing Officer has concluded that the purchases are bogus, he could not have estimated the income on such purchases by applying the rate of 12.5%. Further, he observed, the Assessing Officer has not examined the applicability of section 40A(3) of the Act to the cash purchases made in the grey market. Accordingly, he issued notices under section 263 of the Act directing the assessee to explain why the assessment orders should not be revised. In response to the show cause notices, though, the assessee furnished its reply objecting to the initiation of proceedings under section 263 of the Act, however, learned Principal CIT was not convinced with the submissions of the assessee. Learned Principal CIT observed, the Assessing Officer having received specific information in respect of the non genuine purchases made by the assessee did not carry out the necessary enquiry which was required to be done. While coming to such conclusion, he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yment of VAT and suppression of profit due to possibility of purchases having been made from grey market. He submitted, this view has not only been held by different High Courts but also has been consistently expressed by the Tribunal. He submitted, only because the decision of the Assessing Officer in estimating the profit element at 12.5% of the non genuine purchases is not acceptable to learned Principal CIT, the assessment orders cannot be held to be erroneous and prejudicial to the interest of Revenue. Further, he submitted, reliance placed by learned Principal CIT on the decision of N.K. Proteins Ltd. (supra) is totally misplaced as the facts are completely distinguishable. Thus, he submitted, the assessment orders cannot be held to be erroneous and prejudicial to the interest of Revenue. Consequently, the orders passed under section 263 of the Act have to be declared as invalid. In support of such contention, the learned Authorised Representative relied upon the following decisions: i) Malabar Industrial Co. Ltd. v/s CIT, [2000] 243 ITR 083 (SC); ii) CIT v/s Greenworld Corporation, [2009] 314 ITR 081 (SC); iii) CIT v/s Gabri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n record. Therefore, allegation of learned Principal Commissioner that while completing the assessment the Assessing Officer overlooked the materials on record or has not made enquiry is without any basis. A reading of the impugned order of learned Principal Commissioner certainly gives an impression that certain judicial precedents including the decision of the Hon'ble Supreme Court in N.K. Proteins Ltd. (supra) have triggered the exercise of power under section 263 of the Act. In our view, the decisions referred to by learned Principal Commissioner have been rendered in the context of specific facts involved therein, hence, cannot apply uniformly to all the cases. Pertinently, in the decision of N.K. Proteins Ltd. (supra), in course of search conducted in the premises of the assessee incriminating material such as various cheque books in the name of different parties were recovered. Thus, on the basis of such facts the Hon'ble Supreme Court upheld the addition of the entire purchases. However, the facts involved in the present appeal are different as the basis of addition is the information received from outside source i.e., the Sales Tax Department. Even otherwise also, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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