TMI Blog2011 (3) TMI 1372X X X X Extracts X X X X X X X X Extracts X X X X ..... the period of limitation provided for in sub- section (2) of section 263 would commence from the date of the order of assessment and not from the date on which the order reopening the reassessment had been passed. In respect of issues which did not form the subject-matter of the reassessment proceedings under section 143(3) read with section 147 limitation would commence with reference to the original order of assessment, was processed under section 143(1) and the notice under section 148 was issued for adding unaccounted bogus purchases and unsecured loans, therefore, in the light of the ratio of the decisions cited above, the learned CIT cannot initiate proceedings under section 263 on other issues other than the items covered in the order passed under section 143(3)/147, appeals filed by the assessee are allowed - ITA NOS. 2840 TO 2843(MUM.) OF 2009 - - - Dated:- 31-3-2011 - SHRI D.K. AGRAWAL, AND SHRI R.K. PANDA, JJ. Represented By: Shri Prakash Jothwali for the Appellant. Shri Pavan Ved for the Respondent. ORDER 1. The above four appeals, filed by the assessee are directed against the separate orders dt. 31st March, 2009 passed under section 263 of the I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shown as a sundry creditor has been converted into unsecured loan. When suppliers are found to be non-existing parties, purchase itself is a doubtful one. The AO ought to have verified the genuineness of the purchases. Accordingly, he held that the AO has failed to investigate the following issues : (a) Huge current liabilities and provisions (b) Detail examination of cost of goods shown (c) Decrease in sales during the year compared to the previous year (d) Other issues could have been investigated when the case was reopened under section 147 of the Act (e) Entire unsecured loan (f) Closing stock of goods out of various cash purchases (g) Foreign travel with business connection (h) Details of duty chargeable and paid for goods procured from outside the country. He further held that some of the issues have not been examined by the AO, which are as under : (a) Interest charged to customers are not accounted on mercantile basis and there is no scope to allow mixed system of account. (b) Non-confirmation of debt and credit balance by the debtors and creditors." 3.1 The CIT accordingly was of the opinion that prima facie the order passed by the AO is erroneous a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... He submitted that when the AO after due application of his mind has taken a particular view; therefore, merely because the CIT does not agree with the view taken by the AO, he cannot invoke provisions of section 263 of the IT Act. 7.1. Referring to the copy of the assessment order, he submitted that the AO in the body of the assessment order has mentioned about the intimation sent by the Director of IT (Inv.) on the basis of the raid conducted by DRI authorities. He has also mentioned in para 4 of the order that the assessee has confessed that certain imported goods sold by the assessee were by procuring purchase bills from three parties viz. Casio Pharma, Vishnu Pharmachem and Verma Pharmaceuticals. He submitted that after receiving the replies given by the assessee from time to time, the AO has noted that there were no purchases during the year from Casio Pharma and Vishnu Pharmachem and goods worth Rs. 1,25,72,430 had been purchased from Verma Pharmaceuticals on cash for which he had invoked provisions of section 40A(3) and made addition of Rs. 25,14,486 to the returned income of Rs. 30,98,050. Since the AO had made proper enquiries and after due application of mind has passe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mentioning that the intimation sent by the Director of IT (Inv.) on the basis of raid conducted by DRI authorities, had called for details of purchases made and also unsecured loans as on 31st March, 2002 in the case of three parties mentioned therein. We find from the paper book filed by the assessee that the assessee has complied with various statutory notices issued by the AO and furnished details from time to time. Therefore, the order passed by the AO, in our opinion cannot be called as erroneous. It is the settled proposition of law that when the AO has taken one of the possible views and the CIT does not agree with such view, no proceedings under section 263 can be initiated. In the instant case, it may be prejudicial to the interests of the Revenue because the AO has not made the addition which, in the opinion of the CIT should have been added to the total income of the assessee i.e. the entire purchases made from the three parties mentioned in the notice and also unsecured loans. However, the same per se cannot be the basis for invoking proceedings under section 263. As mentioned earlier, unless the twin conditions i.e. (a) the order must be erroneous, and (b) the order mu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ga Pillai [2002] 172 CTR (Mad.) 250 : [2001] 252 ITR 260 (Mad) approved. There may not be any doubt or dispute that once an order of assessment is reopened, the previous underassessment will be held to be set aside and the whole proceedings would start afresh, but that would not mean that even when the subject-matter or reassessment is distinct and different, the entire proceedings would be deemed to have been reopened. Explanation (c) appended to sub- section (1) of section 263 of the IT Act, 1961 which deals with the power of the CIT in revision, is clear and unambiguous, as in terms thereof the doctrine of merger applies only in respect of such items which were the subject-matter of appeal and not in respect of those were not. Decision of the Madras High Court affirmed." 8.5. We find, the Hon'ble jurisdictional High Court in the case of Ashoka Buildcon Ltd. (supra) following the decision of the Hon'lble Supreme Court in the case of Alagendran Finance Ltd. (supra) held that where an assessment has been reopened under section 147 of the IT Act, 1961 in relation to a particular ground or in relation to certain specified grounds and, subsequent to the passing of the order of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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