TMI Blog2020 (1) TMI 1218X X X X Extracts X X X X X X X X Extracts X X X X ..... chase figures between the group concern have been accepted per se since the AO proceeded to disallow an estimated 5% inflated amount only. We conclude in this factual backdrop that the PCIT has erred in law and on facts in holding the AO s regular assessment to this effect as an instance of outright bogus than inflated purchases. We according go by following settled legal proposition to hold that PCIT has erred in law and on facts in assuming his sec. 263 revision jurisdiction - The same stands reversed. - Decided in favour of assessee. - ITA No. 1027/Kol/2018 - - - Dated:- 22-1-2020 - Shri J.Sudhakar Reddy, Accountant Member And Shri S.S.Godara, Judicial Member For the Appellant : Shri Soumita Choudhury, Advocate For the Resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de by the AO to find out about the genuineness of purchase shown by the assessee. If the AO had information about the inflation of purchase in case of the assessee, he should have investigated about the genuineness .of entire purchases shown by the assessee and then necessary decision should have been taken by him for disallowing an appropriate percentage of purchase depending on the extent of the purchases found to be inflated. Since the AO had not made any enquiry or verification in respect of purchases shown by the assessee, the above-mentioned assessment order dated 24.03.2016 passed in case of the assessee for A.Y. 2013-14 u/s 143(3) has been found to be deemed to be erroneous in so far as in prejudicial to the interest of revenue in v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arrived at conclusion primarily on imaginative basis and conjectures rather than on the basis of any record or books of account and hence deleted the addition. Reliance is also placed in the case of Omega Estates V s. ITO 106 .ITD 427 (Chennai) where the Chennai Bench of ITAT held that since the revenue could not prove that actual consideration was more than that recorded by the assessee and since books of account had not be rejected, there was no basis of making the estimated addition. Reliance is further placed in the case of K.P. Varghese Vs . ITO, Ernakulam and Another 131 ITR 597 (SC) wherein the Supreme Court held that assessee must be shown to have received more than what is declared or disclosed ~Y him as consideration and on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ithout any evidence but due to not making any enquiry or verification by the AO, even after making an observation in the assessment order that purchases are inflated. Due to not making requisite enquiry or verification of the genuineness of purchases shown by the assessee, the assessment order passed by the AO has become deemed to be erroneous in so far as prejudicial to the interest of revenue. Therefore, now the AO is required to make enquiry from the parties from whom purchases have been shown e quantity of clothes sold, rate of clothes sold b them to the assessee corn any and the genuineness of such sale made by them to the assessee company and if genuineness of sales made by them to the assessee company is not verified due to non-trace ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this settled legal proposition and proceed to deal with the facts of the case. We reiterate that the PCIT s revision directions quoted the catena of case law (supra) that bogus purchase have to be disallowed @ 25% that @ 5% as per regular assessment in question. We notice that the case records speak otherwise. This assessee is stated to be an individual / proprietor of M/s Jayashri Trading Co. and M/s Annette Enterprise. He traded in hosiery goods fabrics. He had also acted as director of other group concern M/s Network Industries Ltd. It transpires from the regular assessment dated 24.03.2016 that the Assessing Officer found the assessee to have shown very lower net profit against voluminous gross receipt in its profit and loss account. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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