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TMI Blog2015 (7) TMI 1365X X X X Extracts X X X X X X X X Extracts X X X X ..... n passed after making inquiries in different manner then it cannot held that the order of the AO was erroneous or prejudicial to the interest of Revenue. It is possible that had the AO made the inquiries as desired by the CIT he would have collected higher revenue.But, that alone would not justify the invoking of the revisionary powers by the CIT.As the AO had applied his mind and passed the order after rejecting the book of accounts u/s. 145(3) of the Act, so, we are of the opinion that the order of the AO was not neither erroneous nor prejudicial to the interest of the Revenue. - Decided in favour of the assessee. - ITA No.1921/Mum/2015 - - - Dated:- 1-7-2015 - S/Sh. Joginder Singh, Judicial Member And Rajendra, Accountant Member ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent order passed by the AO, the CIT held that the AO had made an addition of ₹ 14.43 lakhs on the basis of average GP of last three years, that there was no corresponding sales against the purchases, that the AO should have disallowed the entire bogus purchases.The CIT issued a show cause notice to the assessee on 04.09.2014, which read as under Information received from the Office of the DGIT(Inv) revealed that assessee had obtained accommodation bills for purchases to the tune of ₹ 84, 91, 525/- for the relevant previous year. Perusal of records shows that while completing assessment u/s. 143(3), the Assessing Officer has made an addition of ₹ 14, 43 , 560/ - worked out on the basis of average GP of last 3 years. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eques, that the statement of the Director of the company were recorded u/s.131 of the Act, that the issue of non-genuine bills was put to him, that the Director has emphatically denied the allegation, that the AO rejected the books results of the assessee invoking the provisions of section 145(3) of the Act, that the AO made adjustment to the Gross profit of the assessee.It was further argued that merely because a different approach on a particular issue could enhance the taxable income could not be equated with passing an erroneous order that was prejudicial to the interest of Revenue, that there was no error in the order passed by the AO. After considering the submissions of the assessee and the assessment order passed by the AO, the CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on part of the AO as alleged by the CIT, that the AO had disallowed 17% of the purchases made by the assessee for the year under appeal, that the provisions of section 263 could not be exercised by the CIT for substituting his own opinion for that of the AO.He relied upon the cases of Gabriel India(203ITR108), Grasim India(321ITR92), Arvind Jewellers(259ITR502)and Nikunj Eximp Enterprises(216Taxman171).Departmental Representative(DR supported the order of the CIT and argued that the AO had not made proper inquiries. 4.We have heard the rival submissions and perused the material before us.We find that the AO had made inquiries about the purchases made by the assessee in pursuance of the information received form the Sales tax department, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot lack of enquiry, the CIT must record a finding that the order / inquiry made is erroneous. This can happen if an enquiry and verification is conducted by the CIT and he is able to establish and show the error or mistake made by the AO , making the order unsustainable in law. An order of remit cannot be passed by the CIT to ask the AO to decide whether the order was erroneous. It was further held: .that inquiries were certainly conducted by the AO . It was not a case of no inquiry. The order u/s. 263 itself recorded that the Director felt that the inquiries were not sufficient and further inquiries or details should have been called for. The inquiry should have been conducted by the Director himself to record the finding that the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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