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2017 (11) TMI 1414 - AT - Income TaxRevision u/s 263 - different categories of jewellery manufactured and sold undisclosed - Held that:- Not only in the tax audit report but also in the course of assessment proceedings, the assessee had produced monthwise and carat–wise details of different categories of jewellery manufactured and sold by it. It is also a fact on record that the Assessing Officer has not only enquired into the issue but has also examined the details furnished by the assessee before completing the assessment. Therefore, observations of the learned PCIT that the Assessing Officer has not made proper enquiry and not called for necessary details is wholly unsubstantiated and baseless. Further, the learned PCIT has not stated in clear terms what prejudice was caused to the Revenue as a result of alleged inaction of the Assessing Officer in making proper enquiry. Therefore, without any specific conclusion / finding by the learned PCIT with regard to prejudice caused to the Revenue, the conditions of section 263 are not fulfilled . For the genuineness of advance received of ₹ 55 lakh from Prabodh B. Thakkar is concerned, it is noticed, the Assessing Officer in the notice issued under section 142(1) of the Act on 15th January 2014, has called upon the assessee to furnish the name and address and other details of the parties from whom advances were received along with the confirmations. In response to the notices issued by the Assessing Officer, the assessee vide letter dated 10th December 2014, has furnished the details of advances received from customers. A perusal of the party–wise details of unsecured loans / advances, received a copy of which is at Page–96 of the paper book reveals that the assessee has shown an aggregate amount of ₹ 1,30,49,675 towards advances to have been received from 80 customers. The revisional authority has not questioned the advances received from other 79 customers amounting to ₹ 75,49,675. He has picked up the advances received of ₹ 55 lakh from a single customer. Notably, as per the materials on record, it is evident that the Assessing Officer has not only made enquiry relating to the advances received from different parties but after analyzing the details furnished by the assessee has completed the assessment. Assessing Officer having made enquiry and found the assessee’s claim to be correct, the learned PCIT cannot question the decision of the Assessing Officer, merely because in his opinion the Assessing Officer should have made some more enquiry without specifying what more enquiry should have been conducted by the Assessing Officer. Reasonableness of payment to Anmol Jewellery qua section 40A(2)(b)in the course of assessment proceedings, the Assessing Officer has enquired into the issue of payment made to persons specified under section 40A(2)(b) and after applying his mind to materials brought on record has completed the assessment. Learned PCIT has held the assessment order to be erroneous and prejudicial to the interests of Revenue, since, according to him the Assessing Officer has not examined the reasonableness of such payment looking at the fair market value of the goods and services received from the concerned party. A perusal of the show cause notice under section 263 as well as the impugned order passed under section 263 does not reveal any conclusive observation / finding of the learned PCIT that the payment made by the assessee to Anmol Jewellery is not in conformity with the fair market value of the goods purchased. Nothing has been brought on record by the learned PCIT to even remotely suggest that the payment made by the assessee to Anmol Jewellery was either excessive or more than fair market value of the goods purchased. Thus, it indicates that the learned PCIT himself was not sure whether the payments made to Anmol Jewellery were not commensurate with the fair market value. That being the case, by merely observing that the Assessing Officer should have made some more enquiry to ascertain the reasonableness of payment he could not have held the assessment order to be erroneous and prejudicial to the interests of Revenue. - Assessee appeal allowed.
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