TMI Blog2020 (9) TMI 615X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 - Decided in favour of assessee. - ITA No. 1028/Kol/2018 - - - Dated:- 10-9-2020 - Shri J. Sudhakar Reddy, Accountant Member And Shri S. S. Godara, Judicial Member By Appellant : Shri Saumitra Choudhury, Advocate By Respondent : Shri Imokaba Jamair, CIT-DR ORDER Per S. S. Godara, Judicial Member : - This assessee s appeal for assessment year 2013-14 arises against the Principal Commissioner of Income Tax (Central)-1, Kolkata s order dated 26.03.2018 passed in case No.PCIT(C)-1/sec.263/2017-18/10057-60, involving proceedings u/s 263 of the Income Tax Act, 1961; in sho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e decision of ITAT, Ahmedabad disallowing 25% of purchase that was found to be inflated by showing higher purchase price through fictitious invoices. In the assessment record, only purchase and sale ledger are available. No further details or documents are available relating to enquiry made 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 an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Pvt. Ltd. (PAN- AAADCG 9317N). To substantiate our plea relating to Your 263 notice, we have relied on the following case laws for Your Honour's kind perusal. Reliance is placed in the case of CIT v. Lalit Bahsin 290 ITR 245 (Del) where the Delhi High Court deleted the addition on the ground that A.O. 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 no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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-traceability of such parties or rate or quantity o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hases and closing stock and passing of fresh assessment order with additions made in original assessment order remaining intact as per my direction in previous para. 3. It is in this backdrop of facts that the assessee has challenged correctness of PCIT s foregoing revision action. The Revenue s case on the other hand is that the PCIT has rightly invoked sec. 263 proceedings by pin-pointing the above narrated lack of proper enquiry verification qua the assessee s purchase / sales. 4. We find no merit in the PCIT s revision action under challenge stand before us. Case file suggests that the PCIT had invoked his similar revision action in one Sh Kartick Bose s case, for the very assessment year on the same lines who is also part of M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 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. He observed that the assessee s proprietor concern were actually dummy concerns for inflated purchases and sales of M/s Network Industries Ltd. And that the assessee s entire sale-purchase transactions were with the said group concern only. He therefore proceed to disallow 5% of the expenditure of ₹ 84,90,060/- coming to ₹ 4,23,503/- in the course of assessment. 4. Learned CIT-DR vehemently supported the PCIT s action that the impugned disallowance has to be made @ 25% than @ 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
