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2018 (10) TMI 2028 - AT - Income TaxRevision u/s 263 by CIT - Reopening of assessment u/s 147 - estimation of income on bogus purchases - assessee was saddled with estimated addition of 10% by AO - PCIT has held the assessment order to be erroneous and prejudicial to the interest of revenue primarily for two reasons. Firstly, due to non-consideration of the decision of hon’ble Supreme Court in case of N. K. Protein [2017 (1) TMI 1090 - SC ORDER] and secondly, due to lack of proper inquiry HELD THAT:- As regards the second allegation of the PCIT, we are unable to agree with the same. The assessment order clearly reveals that the AO made necessary inquiry to find out genuineness of purchases. As regards the allegation of non- consideration of the decision in case of N.K. Protein (supra), it is relevant to note, the said decision was rendered by the hon’ble apex court on 16.01.2017 which is much after the completion of assessment on 02.03.2016. Therefore, there is no occasion on the part of the Assessing Officer to consider the said decision. That being the case, the exercise of power under section 263 of the Act for non-consideration of the aforesaid decision of the hon’ble apex court is wholly misconceived. In any case of the matter, the addition to be made on the basis of bogus purchase is a purely factual issue and varies from case to case depending upon the facts of each case. In case of N.K. Protein (supra) the facts involved clearly reveal that there was a search and seizure action carried out in case of N.K. Protein during which various incriminating material including blank cheque books in the name of different entities were found which conclusively proved that the assessee had not made any purchases. Thus, in the context of those facts 100% addition on account of bogus purchases was upheld. Whereas, in the case of the present assessee no such facts are involved. In any case of the matter, when the assessee was able to link the purchases with corresponding sales, the logical conclusion which one can arrived at is, the assessee might not have purchased goods from the declared source but from some other parties. In that event, only the profit element embedded in the bogus purchases can be considered for addition. Therefore, the decision of the Assessing Officer to restrict the addition to 10% of the bogus purchases is in tune with the consistent view of the tribunal and different high courts in similar nature of cases. The exercise of power u/s 263 in the facts of the present case is invalid. Accordingly, the impugned order passed by the leaned PCIT u/s 263 of the Act deserves to be quashed and order passed by the Assessing Officer is restored. Decided in favour of assessee.
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