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TMI Blog2021 (7) TMI 1191X X X X Extracts X X X X X X X X Extracts X X X X ..... e Income Tax Act, 1961 (the "Act") revising assessment order passed u/s.143(3) on the issue of addition of alleged bogus purchases without appreciating that assessment order u/s. 143(3) is neither erroneous nor prejudicial to the interest of revenue as during assessment proceedings Ld. AO had specifically raised queries pertaining to alleged bogus purchases and after considering the evidences produced by the appellant, made addition of 1.6% of alleged bogus purchases in accordance with law and thus revision under section. 263 is nothing but a change of opinion and hence order u/s. 263 is bad in law. 2. The directions given to AO in para 8 and 9 of order under section. 263 by the ld. Pr.CIT are already carried out by the Hon'ble AO at the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t proper enquiries during original assessment proceedings and therefore, jurisdiction was validly exercised. 3. We have carefully heard the rival submissions and perused relevant material on record including the cited case laws. Our adjudication to the subject-matter of appeal would be as given in succeeding paragraphs. 4. The material facts are that the assessee being resident firm stated to be engaged in manufacturing & trading of diamonds was assessed for the year under consideration u/s. 143(3) on 30/12/2016 wherein it was saddled with estimated addition of 1.6% against certain bogus purchases stated to be made by the assessee from 6 entities allegedly run by entry provider Shri Bhanwarlal Jain Group. During the course of original ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons being relied upon include the decision of Hon'ble Gujarat High Court in Simit P. Sheth Vs. CIT (356 ITR 451); CIT Vs. Bholanath Poly Fab Ltd. (355 ITR 290); M/s. Vijay Proteins Ltd. Vs. CIT (58 Taxmann.com 44). It has been submitted before us that the assessment order has attained finality since no further appeal has been preferred by the assessee against the same. 5.1 Subsequently, upon perusal of case records, Ld. Pr. CIT opined that the order was erroneous and prejudicial to the interest of revenue and consequently, invoked revisional jurisdiction u/s 263. Accordingly, the assessee was show caused on 26/11/2018 that Ld. AO wrongly added only 1.6% of the total bogus purchases without any justification and there was an escapement of i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of purchase transactions. After considering all these evidences, Ld. AO came to a conclusion that since sales were offered and adequate quantitative details were produced by the assessee, the conclusion which was to be drawn was that the goods were procured from grey market whereas the bills were obtained from accommodating suppliers. In such a case, the only option left was to estimate the suppressed profits on these transactions. Keeping in view the applicable VAT rate, Ld. AO estimated a further addition of 1.6% against these purchases. There facts would show that Ld. AO took one of the possible view with due application of mind which could not be termed as perverse, in any manner. There could be no sale without actual purchase of goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom 9 parties aggregating to Rs. 26,73,39,615/- and thus the income has escaped assessment. Thereafter, the assessment was framed under section 143(3) read with section 147 of the Act assessing the total income at Rs. 48,88,440/- wherein an addition of Rs. 40,10,094/- was made towards assessing the profit element in the bogus purchases of Rs. 26,73,39,615/- calculated at 1.5% of the total alleged bogus purchases. The Ld. PCIT has exercised the revisionary jurisdiction on the ground that AO has not correctly assessed the income from bogus purchases by relying on the decision of Hon'ble Supreme Court in the case of N.K. Proteins vs. DCIT (supra) and Vijay Proteins Ltd. vs. CIT (supra). The undisputed facts are that the issue has been examined ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld be erroneous and (ii) also prejudicial to the Revenue. The Hon'ble Court has held that where two views are possible and AO has taken one of the possible views there is no occasion to invoke the provision of section 263 even the Hon'ble Supreme Court has dismissed the SLP filed by the Revenue against this decision in CIT vs. Nirav Modi (2017) 77 taxmann.com 78 SC. Therefore, we are not in concurrence with the conclusion of the Ld. PCIT on this issue. We have also perused the decision relied upon by the ld DR but same are either distinguishable on facts or cannot be followed in view of the legal position discussed above. In our considered view, the revisionary jurisdiction has been invalidly exercised and accordingly we set aside the proce ..... X X X X Extracts X X X X X X X X Extracts X X X X
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