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2022 (9) TMI 822 - AT - Income TaxRevision u/s 263 by CIT - cash payment made for purchase of old gold jewellery - violation of section 40A(3) - whether the AO has conducted necessary enquiry regarding the issue raised in the Show Cause Notice and secondly, that whether the order of the AO is erroneous as well as prejudicial to the interest of the revenue? - HELD THAT:- As we find that the assessee is in the course of its business of selling of old gold jewellery and occasionally receives old gold jewellery in exchange from the customers. The value of such old gold jewellery is calculated by the assessee as per rates of the gold/silver/diamond or other precious stones as on the date of the transaction and the same is reduced from the sale value of new jewellery purchased by such customers. We can understand such transaction with the help of an example. The value of new gold jewellery is Rs. 1 lakh and customer gives old gold jewellery worth at Rs. 20,000/- to the assessee in exchange. After agreeing to the value of old jewellery the customer pays Rs. 80,000/-, which can be received in cash/cheque. In this transaction no cash is paid by the seller to purchase of old gold jewellery. Now in the books of account in order to make clarity and also to make proper quantitative details the assessee categorises the Rs. 1 lakh as sales and books purchase of old jewellery at Rs. 20,000/-. Actually the assessee has not made any purchases in cash in alleged transactions and only net consideration i.e total sale value less value of old jewellery exchange is received by the assessee in cash/cheque. There is no violation of provisions of section 40A(3) of the Act in the case of assessee as alleged by Ld. PCIT in the impugned order, as there is no actual transaction of payment of cash for making purchases exceeding the limit as prescribed u/s. 40A(3) of the Act. Since there is no violation of the said provisions of section 40A(3) of the Act, no such disallowance was called for in the hands of the assessee for alleged amount mentioned in the impugned order and Ld. AO has rightly carried out the assessment proceedings. PCIT erred in not considering the facts in correct perceptive and erred in holding that the assessment order is erroneous and prejudicial to the interest of the revenue. Since the impugned order is bad in law we quash the revisionary proceedings made u/s. 263 - We also hold that the order passed u/s. 143(3) dt. is neither erroneous nor prejudicial to the interest of the revenue and the same is accordingly restored. Appeal of assessee allowed.
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