TMI Blog2022 (6) TMI 188X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment order is erroneous insofar as it is prejudicial to the interest of revenue. Neither in revision proceedings under section 263 nor during the hearing before us, it has been pointed out as to what enquiry was not conducted by the Assessing Officer with regard to the issue of bogus purchase, which can lead to the conclusion that the assessment order is erroneous and prejudicial to the interest of revenue. Further, during the hearing before us it was submitted by the learned DR that mere filing of submissions by the assessee would not lead to the conclusion that same has been considered by the Assessing Officer while passing the assessment order. Thus, in view of the above once submission/reply filed by the assessee, pursuant to enquiry by the Assessing Officer, are accepted by the Assessing Officer then finding on that particular aspect is not necessary to be recorded by the Assessing Officer. Further, it has not been denied in the present case that though the proceedings under section 147 of the Act may have been abated, as a result of search action, all the information filed by the assessee in response to notice(s) under section 143 (2) of the Act, during reassess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ication on the facts of the present case and, hence, the PCIT erred in invoking the same to justify the exercise of jurisdiction under section 263 of the Act. 4. That the PCIT failed to appreciate the fact that documentary evidences relating to purchases were produced during the assessment proceedings and the Appellant had established the nexus of the purchase with the export sales and realisation of sale proceeds, and, therefore, the assessment order cannot be said to be erroneous. 5. That the PCIT failed to appreciate that the Appellant had furnished all the documents and evidence to prove the genuineness of the transaction. 4. The only grievance of the assessee in the present appeal is against the order passed by the learned PCIT under section 263 of the Act. 5. The brief facts of the case pertaining to the appeal, as emanating from the record are: The assessee is primarily engaged in the business of manufacturing and trading in diamond studded jewelry. During the year under consideration, assessee filed its return of income on 15/09/2010 declaring total income at Rs.73,320. The assessee claimed deduction under section 10AA of the Act in respect of its unit sit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that that there was only one Ledger account maintained for Minal Gems and thus accepted only one transaction of Rs. 1,25,82,073 with Minal Gems. 8. While the reassessment proceedings were pending, search and seizure action under section 132 and survey action under section 133A of the Act was conducted in the case of Shri Rashesh M Bhansali and Smt. Ami Rashesh Bhansali on 17/03/2016 by the DDIT (Investigation), Unit-3(3), Mumbai. As a result of search action, reassessment proceedings were abated as per proviso to section 153A of the Act. During the course of search, residential premises, business premises and bank lockers of Goldiam Group including the associated key persons were covered, and various incriminating materials, documents, unexplained cash and jewellery were seized. Subsequent to notice issued under section 153A of the Act, assessee filed its return of income on 29.05.2017 declaring total income of Rs. 73,320. Notice under section 143 (2) as well as notices under section 142 (1) alongwith questionnaire were issued to the assessee calling for various details, which were attended and duly responded on behalf of the assessee. The Assessing Officer vide order dated 22/1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essary for its assessment for the said assessment year. Thus the order passed by the A. 0. has rendered the assessment erroneous in so far as it is prejudicial to the interest of revenue, for the reasons mentioned above. Therefore, prima facie action under section 263 of the I. T Act, 1961 is considered necessary. 10. In response, assessee filed reply vide letter dated 25/07/2018. The learned PCIT after going through the submission of the assessee issued another notice dated 26/02/2020 for furnishing additional details / documents / evidences. The said notice was replied by the assessee vide letter dated 09/03/2020. The assessee also submitted additional details/submission vide letter dated 13/03/2020. Thereafter, further details were sought vide notice dated 13/01/2021, which was also replied by the assessee vide letter dated 21/01/2021. 11. The learned PCIT vide impugned order dated 09/03/2021 passed under section 263 of the Act held that Assessing Officer has not conducted any enquiry nor made any addition in respect of the information received from the Investigation Wing, while passing the order under section 143 (3) r.w.s. 153A of the Act. The learned PCIT by refe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of the assessee and make any disallowance/addition. 15. We have considered the rival submissions, decisions referred and perused the material available on record. In the present case, it is evident from the record that the initial proceedings under section 147 and subsequent proceedings under section 263 of the Act are based upon the information received from Investigation Wing, Mumbai, which, as per record, has emanated as a result of search action under section 132 of the Act in the case of Bhawarlal Jain group of cases of Mumbai. It is also evident that in both the notices i.e. issued under section 147 as well as 263 of the Act, it was alleged that the assessee was a beneficiary in respect of bogus purchases made by the assessee through entities, namely, Jewel Diam and Minal Jems. As is also evident that during the reassessment proceedings, Assessing Officer sought details from the assessee in respect of transactions undertaken by the assessee with aforesaid two entities. The assessee vide letter dated 18/12/2015, forming part of the paper book, provided following details: a) confirmation of account from Minal Jems; b) affidavit received from Minal Jems; c) c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax Authorities about foreign bank accounts cannot be shared, since the same is received under Exchange of Information Article of India-Singapore Double Taxation Avoidance Agreement (DTAA) and its use and disclosure is strictly governed by It and as per the terms prescribed in Manual on Exchange of Information issued by CBDT in May, 2015. 2. Further, there are certain points in connection with the block assessment proceedings u/s 153A r.w.s. 143(3) oil' the Income-tax Act 1961, for AY 2010 11 to 2016-17 on which I would like to some further information. Attached is Annexure, which contains the questionnaire on issues identified in your case. Kindly provide your submissions and arguments on these issues. 18. In response to aforesaid notice, the assessee vide letter filed on 04/12/2017 submitted, inter-alia, following details to the Assessing Officer: a) Details of sale made along with sample invoices for the year under consideration; b) Details of purchases made along with sample invoices for the year under consideration; c) Details of expenses along with sample TDS payment challans for the year under consideration. 19. In addition to submissions file ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by referring to clause (a) and (b) of Explanation 2 to section 263 of the Act, the learned PCIT alleged that the assessment order is erroneous insofar as it is prejudicial to the interest of revenue. 21. Neither in revision proceedings under section 263 nor during the hearing before us, it has been pointed out as to what enquiry was not conducted by the Assessing Officer with regard to the issue of bogus purchase, which can lead to the conclusion that the assessment order is erroneous and prejudicial to the interest of revenue. Further, during the hearing before us it was submitted by the learned DR that mere filing of submissions by the assessee would not lead to the conclusion that same has been considered by the Assessing Officer while passing the assessment order. In this regard, it is relevant to note following observations of Co-ordinate Bench of Tribunal in JRD Tata v. DCIT, Exemption, [2020] 122 taxmann.com 275 (Mumbai - Trib.): 21. That brings us to our next question, and that is what a prudent, judicious, and responsible Assessing Officer is to do in the course of his assessment proceedings. Is he to doubt or test every proposition put forward by the assessee an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , an Assessing Officer cannot remain passive on the facts which, in his fair opinion, need to be probed further, but then an Assessing Officer, unless he has specific reasons to do so after a look at the details, is not required to prove to the hilt everything coming to his notice in the course of the assessment proceedings. When the facts as emerging out of the scrutiny are apparently in order, and no further inquiry is warranted in his bonafide opinion, he need not conduct further inquiries just because it is lawful to make further inquiries in the matter. A degree of reasonable faith in the assessee and not doubting everything coming to the Assessing Officer's notice in the assessment proceedings cannot be said to be lacking bonafide, and as long as the path adopted by the Assessing Officer is taken bonafide and he has adopted a course permissible in law, he cannot be faulted- which is a sine qua non for invoking the powers under section 263. In the case strial Co Ltd v. CIT [(2000) 243 ITR 83 (SC)], Hon'ble Supreme Court has held that Every loss of revenue as a consequence of an order of the Assessing Officer cannot be treated as prejudicial to the interests of the rev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing enquiries or verification which should have been made. 22. Thus, in view of the above once submission/reply filed by the assessee, pursuant to enquiry by the Assessing Officer, are accepted by the Assessing Officer then finding on that particular aspect is not necessary to be recorded by the Assessing Officer. Further, it has not been denied in the present case that though the proceedings under section 147 of the Act may have been abated, as a result of search action, all the information filed by the assessee in response to notice(s) under section 143 (2) of the Act, during reassessment proceedings, were available with the Assessing Officer. 23. Therefore, in view of the above, we are of the considered opinion that clauses (a) and (b) of Explanation 2 to section 263 of the Act are not applicable to the facts of the present case and thus the revision order passed by the learned PCIT under section 263 of the Act is set aside. 24. As stated earlier, the facts for assessment year 2010 11 are exactly identical with the assessment year 2011 12 except with variance in figures. Hence, the decision rendered hereinabove for assessment year 2010 11 shall apply mutatis mutandis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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