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2020 (11) TMI 820 - AT - Income TaxRevision u/s 263 - addition on account of suppression of GP on accommodation entries - AO T axing only profit by estimating GP on alleged bogus purchase - Reopening of assessment on the basis of information received by Investigation Wing after search on Bhanwarlal Jain group - HELD THAT:- The Hon'ble Jurisdictional High court in the case of Mohommad Haji Adam & Co. [2019 (2) TMI 1632 - BOMBAY HIGH COURT] and Paramshakti Distributors Pvt. Ltd. [2019 (7) TMI 838 - BOMBAY HIGH COURT] has held that in case of bogus purchases, purchases cannot be rejected without distrusting the sales in case of a trader. The addition can be restricted to the extent of GP rate on such purchases to bring it at par with genuine purchases. In other words, it is only the profit element embedded in the bogus purchase bills that is to be brought to tax and the entire bogus purchases cannot be added. AO was right in taxing only profit by estimating GP on alleged bogus purchases. As regards invoking of jurisdiction under section 263 by PCIT, we are of considered view that the PCIT has over stepped while exercising his revisional powers - AO has passed the order by estimating GP after examining the documents on record and considering various judicial pronouncements - AO has taken one of the possible views by making reasonable assumption that the assessee might have procured the goods from grey market. This assumption has been accepted by the Tribunal in various decisions where the revenue has accepted the sales/ turnover corresponding to alleged bogus purchases. The Hon’ble Supreme Court of India in the case of Malabar Industrial Co. Ltd. v. Commissioner of Income-tax [2000 (2) TMI 10 - SUPREME COURT] in an unambiguous manner has held that where two views are possible and the Assessing Officer has taken one of the possible views to which CIT does not agree, this would not make the assessment order erroneous. In the instant case the assessment order may be prejudicial to the interest of revenue but it cannot be said to be erroneous. Since, both the conditions to trigger Sec 263 are not satisfied, the PCIT has erred in invoking his revisional power. - Decided in favour of assessee.
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