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TMI Blog2020 (9) TMI 730X X X X Extracts X X X X X X X X Extracts X X X X ..... was processed u/s 143(1) of the Act. Thereafter, the AO initiated reassessment proceedings on the basis of information that the assessee was beneficiary of the hawala purchases. The assessment was completed u/s.143(3) r.w.s. 147 determining total income at Rs. 2.51 crore, making addition of Rs. 6,93,574/-, being, 20% of bogus purchases amounting to Rs. 34,67,870/-. The ld. Pr.CIT, exercised his revisional power u/s.263 of the Act, held that the AO was not justified in adding only 20% of the bogus purchase price. He also held that the AO failed to examine sundry creditors shown by the assessee, details of other purchases, valuation of stock and various expenses as claimed by the assessee in the Profit and loss account in the reassessment pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring on the tax liability of the assessee, the Tribunal has jurisdiction to examine the same. Having gone through the subject matter of the additional ground taken by the assessee, it is discernible that the additional ground raises a pure question of law. We, therefore, admit the additional ground and espousing it for disposal on merits. 5. The contention of the assessee through the additional ground is that the ld. Pr.CIT ought not to have travelled beyond the reasons recorded at the time of initiation of reassessment proceedings. It was submitted that initiation of reassessment proceedings was only on the premise of Hawala purchases and hence a direction given by him to the AO for examining the sundry creditors, purchase and other expe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in the instant case is the one which has been the subject matter of revision before the Tribunal. As such, we do not find any merit in the additional ground, which is hereby dismissed. 7. Coming to the merits of the appeal, it is observed from the assessment order passed u/s.143(3) r.w.s.147 of the Act on 30-05-2014 that the assessee could not satisfy the AO as regards the genuineness of alleged hawala purchases recorded in the books of account, which were consumed in the manufacturing process. The AO observed that the gross profit ratio in this case came down to 34.69% for the year as against 42.68% for the preceding year, which reflected that the assessee reduced gross profit ratio by way of exaggerated bogus purchase bills. Consideri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and prejudicial to the interest of revenue, cannot be validated. 10. The ld. DR relied on the judgment in Shoreline Hotel (P.) Ltd. VS. CIT (2018) 98 taxmann.com 234 (Bom) to support the contention that the assessment order making addition at a particular rate of bogus purchase bills rightly called for interference at the level of the CIT u/s 263. The facts of that case are that the assessee was engaged in the business of running a hotel. It showed to have purchased certain goods in the nature of plumbing and furniture items, painting and building items from some of the parties, which were found to be bogus. The AO made addition at a particular profit rate of such bogus bills. The CIT held the order to be erroneous and prejudicial to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndard, be construed as a non-plausible view. The Pune benches of the Tribunal in its order dated 16.09.2020 in Vinod Bhagwan Patil vs. Pr. CIT in ITA No.750/PUN/2018 has quashed the order u/s 263 of the Act in similar circumstances. We, therefore, set-aside the impugned order on this score. 13. We now accentuate the other point of view taken by the ld. Pr. CIT that the AO failed to examine sundry creditors shown by the assessee, details of other purchases, valuation of stock and various expenses as claimed in the Profit and loss account in the reassessment proceedings. The ld. DR has categorically submitted that the direction of the ld. Pr.CIT for examining the creditors and purchase accounts etc. along with valuation of stock was connecte ..... X X X X Extracts X X X X X X X X Extracts X X X X
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