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TMI Blog2021 (6) TMI 70X X X X Extracts X X X X X X X X Extracts X X X X ..... facts that the issue has not been considered by the AO, while passing order dated 07/12/2016. Therefore, there is no justification invoking the provision u/s 263 of the Act in accordance with law - Decided in favour of assessee. - I.T.A. No.03/Mum/2020 - - - Dated:- 31-5-2021 - Shri Rajesh Kumar, Accountant Member And Shri Amarjit Singh, Judicial Member For the Assessee : Shri Subodh Ratnaparkhi, AR For the Revenue : Shri Rajiv Harit, CIT(DR) ORDER PER AMARJIT SINGH, JM: The assessee has filed the present appeal against the order dated 29/03/2019 passed by the Principal Commissioner of Income Tax (Appeals) -33, Mumbai in view of section 263 of the I.T.Act, 1961 relevant to the A.Y.2011-12. 2. The assessee has raised the following grounds: - 1. The Hon.Pr..CIT erred in holding the order framed by the Ld.AO u/s 143(3) r.w.s. 147 of the I.T.Act, 1961 on 07.12.2016, to be erroneous and prejudicial to the interest of revenue and accordingly the assumption of jurisdiction by the Hon.Pr.CIT u/s 263 of the I.T.Act, 1961 was not valid and justified by law. 2. The learned Pr.CIT erred in setting aside to the file of the assessing officer, the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osed income could not be restricted to a certain percentage when the entire transaction was found as bogus. Further, the Assessing Officer has also relied upon the judgement of Gujarat High Court in the case on CIT-1 vs Simit P. Sheth wherein the High Court has held the addition @ 12.5% of the bogus transactions. Thus, on the basis of examination of records it is found that the Assessing Officer without making proper inquiry or verification has erroneous/y passed the assessment order after making the addition @ 2.28% instead of 12.5%. The order passed by the AO is thus prejudicial to the interest of revenue. 4. Thereafter, the assessee filed the reply and after considering the reply of the assessee, the case of the assesee was reopened to pass the order afresh in view of provisions u/s 263 of the Act on the above mentioned grounds. The assessee was not satisfied .Therefore, filed the present appeal before us. ISSUES NO.1 AND 2:- 5. Under these issues, the assessee has challenged the validity of reopening of the assessment of the assesee in view of the provision 263 of the Act. The contention of the Ld. AR of the assessee is that the AO has already examined ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es has been made from M/s. Supreme Enterprises during the year. Further, during the course of assessment proceedings, it was seen that purchases of ₹ 16,42,462/- had been made from M/s. Krupa Trading., The assessee had submitted details of purchase including invoices along with copies of VAT return filed by M/s. Krupa Trading. Hence the purchases of ₹ 16.42.462/- was reduced from the total alleged purchases of ₹ 1,84,45,173/-,determining the total bogus purchases at ₹ 1,68,02,711/-. The Assessing Officer has added back 2.28% of the tote' bogus purchases i.e.₹ 3,83,102/-for A.Y. 2011-12. Further by relying upon judgement of the Hon'ble Supreme Court in the case of N. K. Proteins vs. DCIT-2017-T/OL-23SC-IT dated 16.01.2017 wherein it was held that addition on basis of undisclosed income could not be restricted to a certain percentage when the entire transaction was found as bogus. Further, the Assessing Officer has also relied upon the judgement of Gujarat High Court in the case on CIT-1 vs Simit P. Sheth wherein the High Court has held the addition @ 12.5% of the bogus transactions. Thus, on the basis of examination of records it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e purchases were not genuine. As stated above, the Hon'ble Supreme Court vide it's judgment in SLP in CC No. 769/2017 has dismissed the SLP filed by the assessee thereby confirming the judgment of the Hon'ble Gujarat High Court in the case of N.K. Proteins Ltd Vs. DCIT (2016) 72 Taxman.com 289 (Gujarat) which has held that addition on percentage basis on bogus or Hawala purchases is against the spirit of I.T. Act. Considering all these facts and legal position, the assessment order is required to be set aside. 10. However, on this issue, it may be noted that the ITAT Mumbai Bench 'F' Mumbai, vide its order under ITA No. 4557 and 4558/Mum/2015 dated 28-7-2017 in the case of dy. CIT 14(1)(2) Mumbai Vs. Fagiol India Pvt. Ltd., has distinguished the judgment of Supreme Court in the case of N.K. Proteins. The ITAT has held that considering factual matrix, what needs to be taxed is profit element embedded in Mah. Engg. Kolhapur A.Y. 2010-11 such purchases but not the entire purchases. Therefore, in the light of the above judgment, the A.O is required to re-examine the factual matrix and then to decide whether addition of entire purchases or only profit eleme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the same reasons, the case of the assessee is not required to be reopened in view of the provisions u/s 263 of the Act CIT vs Amitabh Bachchan, 384 ITR 200 (SC) has also speaks that where a specific view has been taken by the AO then interference u/s 263 is not permissible. Maharashtra High Court in the case of CIT vs Gabriel India Ltd. 203 ITR 108 (Bom) has also speaks the same thing in same sense. The facts of the case relied by the Ld. DR i.e. Sphinx Precision Ltd. Vs. CIT, Shimla (2007) 11 SOT 498 (Chd) is quiet distinguishable from the facts of the present case being in this case, there was an error in calculation of deduction u/s 80HHC and an error in calculation of income u/s 115JA and the order of the AO was silent on these issues. Taking into account all these facts and circumstances and considering these facts that the issue has not been considered by the AO, while passing order dated 07/12/2016. Therefore, there is no justification invoking the provision u/s 263 of the Act in accordance with law. Therefore, we are set aside the order in question and allowed the appeal of the assessee. 8. In the result, appeal of the assessee is allowed. Order pronounced in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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