9911796707
TMI Blog2020 (1) TMI 1669X X X X Extracts X X X X X X X X Extracts X X X X ..... ed of by this consolidated order. For the sake of convenience, the grounds as well as the facts narrated in ITA No.1134/Kol/2018 for A.Y. 2010-11, have been taken into consideration for deciding the above appeals en masse. 4. The grounds of appeal raised by the assessee in lead case in ITA No.1134/Kol/2018 for A.Y. 2010-11, are as follows: 1. For that the order passed by the Ld. Pr. CIT-10, Kolkata is bad in law as well as on facts. 2. For that the reassessment proceedings itself being bad in law, the consequential proceedings are also bad in law. 3. For that the Ld. Pr. CIT -10, Kolkata erred in setting aside the reassessment order passed by the Ld. AO whereas the said order is neither erroneous nor prejudicial to the interest of revenue. 4. For that the reassessment order having been passed by the Ld. AO after due application of mind whereby the Ld. AO accepted the sale and held that there cannot be any sales without corresponding purchase and ultimately made addition of 3% of the purchase amount as inflated purchases. Therefore, the order passed by the Ld. AO is neither erroneous nor prejudicial to the interests of the revenue. 5. For that in course of assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt. However, instead of disallowing the whole amount, the AO disallowed only 3% of such purchases and accordingly added back a sum of Rs 1,46,537 /- to the total income of the assessee. 7. Subsequently, the Assessing Officer detected error in the assessment order and submitted a proposal to the ld PCIT for review u/s 263 of the Act of the impugned order. The Ld. PCIT noticed that AO has failed to take a logical action on the information available with him therefore, ld PCIT was of the view that assessment order passed by the AO is erroneous and prejudicial to the interest of Revenue. The Ld. PCIT therefore issued show cause initiating proceedings u/s 263 of the Act which is reproduced below: 8. In response to the show cause notice, none appeared on behalf of the assessee therefore the ld. PCIT again issued a show cause notice which was served on the assessee on 22.02.2018. 9. The ld. PCIT noted that only issue under consideration in this case is as to whether the impugned purchases were bogus in nature and as to whether the entire amount of such purchases should have been disallowed. Therefore ld PCIT relied on the judicial pronouncement of the Apex Court in the case of N. K. Pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taken by the ld PCIT, which we have already noted in our earlier para and the same is not being repeated for the sake of brevity. 13. We heard both the parties and carefully gone through the submission put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the fact of the case including the findings of the ld PCIT and other materials brought on record.Learned Counsel for the assessee submitted before us the quantity details of Trading Goods (MS Plate) and manufactured goods along with quantity reconciliation for each assessee which are given below: For example in case of Pramod Kumar Tekriwal HUF, the assessee submitted before Assessing Officer purchase value, purchase quantity, cost of purchase, consumption of quantity because assessee is partly doing manufacturing activity. Total quantity sold and cost of goods sold were also mentioned. Taking into account total sales reflected in audited Profit and loss account, the assessee computed gross profit rate @ 5.84%. In this reconciliation, the assessee worked out alleged purchase quantity as per PCIT at 25,07,205 kg.; which is not possible against sale / quantity consumed at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ge 29 of Paper Book). The Ld AO did estimate and further added 3% as possible profit on the alleged purchases of Rs. 48,84,550/- over and above the GP rate 4.63% shown by the assessee in the audited books of account. The quantity details shown by assessee in the audit report reflects sales quantity 4,64,632 Kg and corresponding purchases 4,30,650 Kg (Page 29 of Paper Book). No discrepancy was found between purchase shown by assessee and the sales declared. Purchase cannot be rejected without disturbing the sales. Recognized principle of accountancy and tax jurisprudence hold that no sales can take place without purchase. The AO has passed order consciously after applying his mind after conducting the enquiry and added further 3% on bogus purchase over and above GP rate 4.63% declared by the assessee inclusive of the said purchase. We note that ld PCIT exercised his jurisdiction u/s 263 of the Act solely by relying on the judgment of Apex Court in the case of N. K. Proteins Ltd. vs. Deputy Commissioner of Income Tax, reported in [2017] 84 taxmann.com 195 (SC), which is distinguishable on facts, as narrated above. In the assessee`s case, the assessee submitted before the AO audited b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellate Tribunal does not call for any interference." We note that Hon`ble High Court of Gujarat in the case of Tejua Rohit kumar Kapadia,[2018] 94 taxmann.com 324 (Gujarat) held that where purchases made by assessee-trader were duly supported by bills and payments were made by account payee cheque, seller also confirmed transaction and there was no evidence to show that amount was recycled back to assessee, Assessing Officer was not justified in treating said purchases as bogus under section 69C. In the assessee`s case under consideration the AO has failed to prove that amount was recycled back to assessee, therefore order passed by Assessing Officer is not erroneous. We also note that Hon`ble Bombay High Court in the case of M/s Mohommad Haji Adman & Co. Income Tax Appeal No.1004 of 2016, held that if sales are accepted then purchases cannot be disallowed. The findings of the Hon`ble Court is given below: "8 In the present case, as noted above, the assessee was a trader of fabrics. The A.O. found three entities who were indulging in bogus billing activities. A.O. found that the purchases made by the assessee from these entities were bogus. This being a finding of fact, we hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tity as per ld PCIT is at 25,87,205 kg which is not possible against quantity sold/ consumed at 38,29,322/-. We note that these facts were not there in the case of N.K. Proteins Ltd (2017) 292 CTR 354 (SC), therefore assessee`s case is distinguishable on these facts narrated above. Thus, in assessee`s case the facts are different therefore, the judgment of the Hon`ble Supreme Court in the case of N.K.Proteins Ltd (supra) does not squarely applicable to the assessee. 16. It is a settled position in law that the proceedings u/s. 263 cannot be initiated by the Ld. Pr. C.I.T. merely in his supervisory capacity. Before invoking the powers u/s 263 of the Act, it is necessary for him to demonstrate that the A.O. had committed a patent error which resulted in prejudice to the revenue. On the contrary, where the Ld. A.O. has conducted enquiries and after due consideration of the facts and circumstances of the case backed by relevant details/documents he comes to a conclusion, then it is not open to the Ld. Pr. C.I.T. to invoke revisionary jurisdiction. The power envisaged u/s. 263 of the Act in setting aside an assessment is large and wide, but that cannot be exercised to allow the A.O. to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly on the decision of Hon'ble Delhi High Court in the case of CIT vs. Sunbeam Auto Ltd. [(2010) 189 Taxman 436 (Del)] Further, it was settled by Hon`ble Supreme Court in the case of Malabar Industrial Co. Ltd. vs. CIT [(2000) 243 ITR 83 (SC)] wherein it was held that if the A.O. adopts one of the possible courses available in the scheme of the I.T. Act which results in any loss of revenue or when two views are possible and the A.O. adopts one of them with which the C.I.T. does not agree, then it would not be an order prejudicial to the interest of revenue for invoking the jurisdiction u/s. 263 of the Act. In other words, the Ld. Pr. C.I.T. on the same set of facts and evidences on record was of the opinion that the A.O. should have rejected the regrouping of debit and credit entries as explained above and he should have taken the stand which the Ld. Pr. C.I.T. hinted in the impugned order u/s 263 of the Act. This is not permissible under law. For better appreciation, the relevant portion of the judgment in the case of Malabar Industrial Co. Ltd. vs. CIT (supra) is quoted below : "The phrase "prejudicial to the interests of the Revenue" has to be read in conjunction with an errone ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respondent is not vested with any power under section 263 to initiate proceedings for revision in every case and start reexamination and fresh enquiries in matters which have already been concluded under the law. " The assessee produced all necessary details of purchases, sales, audited books of account, quantity details as mentioned above. The assessee books of accounts were audited by Chartered Accountant. Quantity details were given in respect of opening stock, purchases, sales, closing stock (vide page 29 of Paper Book). The Ld AO did estimate and further added 3% as possible profit on the alleged purchases of Rs. 48,84,550/- over and above the GP rate 4.63% shown by the assessee in the audited books of account. The quantity details shown by assessee in the audit report reflects sales quantity 4,64,632 Kg and corresponding purchases 4,30,650 Kg (Page 29 of Paper Book). No discrepancy was found between purchase shown by assessee and the sales declared. Purchase cannot be rejected without disturbing the sales. Recognized principle of accountancy and tax jurisprudence hold that no sales can take place without purchase.The AO has passed order consciously after applying his mind ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
