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TMI Blog2022 (8) TMI 1431X X X X Extracts X X X X X X X X Extracts X X X X ..... erial must be real and it must also have nexus with the believe that income, escaped assessment. It is clear that an order cannot be termed as erroneous unless it is not in accordance with law. This section does not visualize a case of substitution of the judgment of the Commissioner for that of the AO. Therefore, it cannot be held that in the instant case the ld. AO's order was erroneous and prejudicial to the interest of the revenue within the terms of section 263. Once the impugned issue was considered and examined by the AO Commissioner cannot set aside the order without recording a contrary finding. This will be contrary to Section 263 - Therefore, we are of the considered opinion that the impugned action of the PCIT u/s 263 of the Act was patently illegal and is liable to be quashed. - Dr. M. L. Meena, Accountant Member And Sh. Anikesh Banerjee, Judicial Member For the Appellant : Sh. J. S. Bhasin, Adv For the Respondent : Sh. Chandrajit Singh, CIT DR. ORDER The instant appeal was filed by the assessee against the order passed by the Ld. Pr. Commissioner of Income Tax-2, Jalandhar [in brevity the PCIT], bearing Order No. Pr.CIT-2/Jal/Judl./20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ii. M/s Ganesh Rice General Mills Jalalabad/ Guru Harsahai. iii. M/s Agro, Jalalabad/ Guru Harsahai. iv. M/s Galhotra Industries, Jalalabad/ Guru Harsahai. v. M/s J.B Agro, Guru Harsahai. vi. M/s D.M/ Agro Mills, Jalalabad. vii. M/s Agro, Jalalabad/ Guru Harsahai. vii. M/s Malkiat Trading Co., Jalalabad/ Guru Harsahai. Accordingly, the assessment order was treated as erroneous and prejudicial to the interest of the revenue. The order of assessment was set aside by the ld. Pr. CIT u/s 263 of the Act. 4. Aggrieved assessee filed an appeal before us. 5. The observation of the ld. Pr.CIT as per order U/s 263 of the Act is as follows: 5. Meanwhile this office through a letter to Deputy Excise and Taxation Officer, Jalandhar vide No Pr.CIT-2/Jal./Tech./2018-19/4595 dated 06.03.2019 requested to furnish a copy of appellate order passed by appellate authorities in this case. The same has been received in this office from the office of Deputy Excise and taxation Officer, Jalandhar vide their letter No.7368 dated 07.03.2019. It is seen that assessee s appeal against the order dated 25.10.2012 of Excise and Taxation Officer-cum- Designat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . DR relying on the order of the ld. Pr. CIT. 7. We heard both the parties and relied on the documents available on the record. The ld. counsel of the assessee Mr. Bhasin had filed a paper book which is kept in record. He argued that reopening was made u/s 148 on dated 30.03.2016 as per the reasons recorded by the AO which was duly approved u/s 151 by Pr. CIT for the assessment year 2009-10. The copy of the reasons recorded is annexed in page no. 35 to 36 of the paper book. The reasons are recorded on the basis of the enquiry report of ADIT(Inv.) Jalandhar copy at page 28 to 34 of the paper book alleged claim of bogus purchase amount of Rs.4,05,57,307/-. The amount of bogus purchase was informed from the Sales Tax order. During the assessment proceedings, the assessee had confronted about the alleged bogus purchase related to 8 different parties as provided by the Sales Tax Department. However, the assessee as per his reply denied his purchase from the said 8 parties. The copy of the letter annexed in page no. 42. In this respect, the ld. counsel filed an office note which is annexed in page no. 49 of APB. The Office Note of revenue is reproduced as under: Office Note ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m these parties as referred above. In this regard the Asstt Excise Taxation Commissioner Aman Nagar, Kapurthala vide her office letter No.1695 dated 28.12.2016 has confirmed that as per our office record purchases made from under mentioned firms are as under : Sr. No. Name of firm address Purchase amount 1 M/ Sandeep Rice and General Mills Jalalabad/Guru Harsahai/Ferozepur. NIL 2 M/s. Ganesh Rice General Mills, Jalalabad/Guru Harsahai/Ferozepur. Nil 3. M/s Jagdish Arora, Jalalabad/Guru Harsahai/Ferozepur Nil 4 M/s Galhotra Industries, Jalalabad/Guru Harsahai/Ferozepur. Nil 5. M/s J B Agro Mills, Jalalabad/Guru Harsahai/Ferozepur. Nil 6. M/s D.M. Agro Mills, 1st chowk, Shop No.l New Grain Market, Jalandhar. Nil 7. M/s M. S Agro Mills, N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied his mind for verification of the bogus purchase. He further, mentioned that in the notice u/s 263, the assessee also confronted the issues by submitting its document and producing the books of account. The all short of verification was completed during assessment proceeding. In any case, the order should not be called erroneous. 8. In this respect, the ld. counsel of the assessee submitted the catena of judgment of the different court apex court which are annexed here. 1. Denial Merchants Pvt Ltd vs ITO, Appeal No. 2396/2017, Dated 29/11/2017 2. Malabar Industrial Co. Ltd. v. CIT [2000] 109 Taxman 66 (SC)/[2000] 243 ITR 83 (SC)/[2000] 159 CTR 1 (SC) 3. Rajmandir Estates (P.) Ltd. v. PCIT [70 taxmann.com 124 (Calcutta)/[2016] 240 Taxman 306 (Calcutta)/[2016] 386 ITR 162 (Calcutta)/[2016] 287 CTR 512] 4. Rajmandir Estates (P.) Ltd. v. PCIT [2017] 77 taxmann.com 285 (SC)/[2017] 245 Taxman 127 (SC) 5. Shree Manjunathesware Packing Products Comphor Works v. CIT [1998] 96 Taxman 1 (SC)/1998] 231 ITR 53 (SC)/[1997] 143 CTR 406 (SC) 6. Surya Jyoti Software Pvt. Ltd. v. PCIT I.T.A. No. 2158/DEL/2017) ITAT Delhi 7. Surya Financial Services L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned counsel produced office note of revenue department which is mentioned above. After a quick look on the office note of revenue dated 16/03/2016, it is observed that the verification of documents with books of accounts of assessee an application of mind related bogus purchase was made by the assessing authority during the assessment proceeding. The information was received by the revenue authorities from the State tax authority and all the purchasers are default for paying there state tax which are under sub judice under state tax act. It is admitted fact that assessee is no longer related with those bogus sellers. As per the office note it is confirmed that the books of accounts and relevant documents are verified by the assessing authority during the assessment proceeding and no such bogus purchase was found in the books of the assessee. Revenue authorities was unable to substantial any nexus with the sellers and assessee. The proper verification was made during assessment proceeding with the proper application of mind. So, the assessment order cannot be called as erroneous. The assessee had complied the notice U/s 263 by the letter dated 19/03/2018, APB page 54 to 60. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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