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TMI Blog2022 (12) TMI 39X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal is set aside. - ITAT/28/2020 ITAT/29/2020 - - - Dated:- 22-11-2022 - THE HON BLE JUSTICE T. S. SIVAGNANAM AND THE HON BLE JUSTICE HIRANMAY BHATTACHARYYA Mr. Soumen Bhattacharyya, Adv. ...for the appellant ORDER The Court: The affidavit of service is kept with the records. These appeals have been filed by the revenue challenging a common order passed by the Income Tax Appellate Tribunal, B Bench, Kolkata (the Tribunal )in a batch of cases in ITA Nos.1129, 1130 1131/Kol/2018 for the assessment years 2009-10, 2010-11 and 2011-12 and 2010-11 2011-12. The revenue had preferred appeals against three of the assessment years before this Court in ITAT/27/2022, ITAT/32/2022 and ITAT/33/2022 and by judgment date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mentioned by the assessee was rejected. With a view to afford opportunity to the assessee to establish genuinity of the purchases, opportunity was given to the assessee. In response to such opportunity the assessee stated that they are not in a position to produce the mentioned records and requested to treat 2% of the purported bogus purchase of Rs.54,13,476/- to be added to the total income for the said years. The Assessing Officer rejected such submission. After doing so he had observed that the assessee got same benefit of such bogus purchase, there would be no denial of the fact that the assessee s estimated income will increase to a certain extent. After making such an observation, the Assessing Officer estimates the addition at 3% of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said assessment order it was established that expenditure worth Rs.54,14,476/-, claimed by you as purchase, was bogus. When expenditure is established as bogus, there is no provision in the act, whereby partial disallowance to the bogus expenditure can be made. However, in your case, the A.O. has disallowed a sum of Rs.1,62,405/-, being 3% of such bogus expenditure/purchases whereas the entire amount was required to be disallowed. 4. In view of the above, you are hereby allowed on opportunity of being heard, either personally or through an authorized representative, in my office at 5th floor, Aayakar Bhawan Dakshin, 2 Gariahat Road South, Kolkata 700068, on 14.02.2018 at 1.00 P.M., and show cause as to why an order u/s 263 of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g any inquiry made a disallowance only to the extent of 3% of the bogus purchase. With regard to the aspect of the assessing officer as to making inquiries, the PCIT referred to the decision of the Hon ble Supreme Court reported in Rampyari Devi Saraogi Vs. CIT (1968) 67 ITR 84, Smt. Tara Devi Aggarwal Vs. CIT (1973) 88 ITR 323 (SC) and the decision of the other High Courts. Further, the PCIT took note of the Explanation 2 to Section 263 of the Act inserted by the Finance Act, 2015 with effect from 1.6.2015 and pointed out if an order has been passed by the Assessing Officer without making any inquiry or verification then it would be a case where the order is deemed to be erroneous in so far as it is prejudicial to the interest of the reven ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssing officer gave an opportunity to the assessee to explain the transaction, the assessee did not produce any document, but stated that 2% of the purported bogus purchase may be added to the total income. Thus it would mean that the assessee had accepted the allegations against them and precisely for such reason they offered that 2% of the bogus purchase may be added to the total income. If such was the factual position in the case on hand then it is incumbent upon the Assessing Officer to inquire into the matter and take the proceedings to the logical end. Having not done so, the PCIT was fully justified in exercising jurisdiction under Section 263 of the Act. Thus, we are of the view that Tribunal erroneously interfered with the order pa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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