TMI Blog2022 (11) TMI 1241X X X X Extracts X X X X X X X X Extracts X X X X ..... cation as alleged by the CIT u/s 263 of the Act. Whether the purchase shown by the assessee represents the bogus transaction in the absence of supporting documents ? - We note that whatever purchases are made by the assessee, become part of stock in trade and subsequently sold to the parties. Thus the impugned amount of purchases were either shown by the assessee in the stock in trade in the year under consideration or sales were made against such purchases. The learned CIT has not disturbed either the stock in trade of the purchases The entire exercise becomes tax neutral, in the sense that if the purchases are disbelieved and corresponding closing stock and the sale of the subsequent year should also be disbelieved on the same parameter. As such the revenue cannot take different stand with respect to the common transactions having impact on purchases, closing stock and the sales. All these transactions are interconnected and linked with each other. If any of the transaction is doubted then corresponding transaction should also be carrying same shadow of doubt - part of the transactions cannot be accepted as genuine and part of the transaction cannot accepted as bogus. E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce submitted by the assessee or culled out by the AO that the 10% of URD expenses were made from commission agent. The AO merely on the basis of assumption made addition of commission expenses instead of making the addition of entire unverified or non-genuine URD purchases of Rs. 23,38,31,152/- only. Accordingly, the PCIT initiated the proceedings under section 263 of the Act vide show cause notice dated 23 March 2022. 5. The assessee in response to such show cause notice submitted that during the assessment proceeding, the detailed submission with regard to purchases were made. The AO has not doubted the quantitative detail of purchases and sale and stock. It was only doubt of the AO that the parties from whom such purchases were made, the supporting documents such as bills/invoices were not available with regard to 10% of URD purchases. Therefore the AO reached to the conclusion that purchases were made from commission agent and made addition of commission expenses. Thus, the AO after considering the submission and application of mind has taken this view. Therefore, there is no error in the order of the AO in this regard as the AO has taken one of the possible view. 5.1 Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... horities below. 10. We have heard the rival contentions of both the parties and perused the materials available on record. The issue in the present case relates whether the assessment order has been passed by Ld. AO is proper and after due application of correct mind with respect to unverified URD purchases as discussed above and hence the assessment is erroneous insofar prejudicial to the interest of the Revenue and thus requiring revision by Pr. CIT u/s 263 of the Act. 10.1 Admittedly the assessment in the case of the assessee was framed under section 143(3) read with section 147 of the Act. The reassessment proceeding was started based on the extensive survey proceeding carried out in case of the assessee dated 10th August 2016. In the post survey proceedings, the ADIT Investigation-II Rajkot carried marathon inquiries and verification was carried out with regard to URD purchases which can be seen from the chronology of the event reproduced as under: 15. 15.11.2016 Summons u/s.131(1A) of the Act was issued wherein following details were sought on 21.11.2016. (i) Clarification on alleged stock difference, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed as required vide summons dated 13.12.2016. 204 - 294 23. 28.12.2016 Reply filed on 29.12.2016 wherein information containing details of name, identity proof, revenue records along with copies of revenue records were submitted as required vide summons dated 15.11,2016. 49 - 200 24. 02.02.2017 Statement of Arvindbhai P. Patel, Managing Director was recorded wherein he was shown list of some agriculturist identified by the ADIT randomly and asked him to given clarification on discrepancies found on matching those name with Electoral data and Revenue records. 44-48 25. 07.02.2017 ADIT was requested to provide the electoral data and Revenue Records so that reply can be field on so called discrepancies. 43 26. 11.02.2017 Reply filed on 15.02.2017 wherein details sought as per summons dated 15.11.016 was submitted -regarding stock tally. 17-42 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by way of such purchases. Thus, the entire exercise becomes tax neutral, in the sense that if the purchases are disbelieved and corresponding closing stock and the sale of the subsequent year should also be disbelieved on the same parameter. As such the revenue cannot take different stand with respect to the common transactions having impact on purchases, closing stock and the sales. All these transactions are interconnected and linked with each other. If any of the transaction is doubted then corresponding transaction should also be carrying same shadow of doubt. In other words, part of the transactions cannot be accepted as genuine and part of the transaction cannot accepted as bogus. Either the entire transaction to held as bogus or should be treated as genuine without making any cherry pick-up. Thus, for this reason as well, the assessment order cannot be held either erroneous or prejudicial to the interest of revenue. 10.4 As regards the contention of the learned AR for the assessee that the order of the AO got merged the order of the learned CIT-A, we are not in agreement with the assessee. It is for the reason that the issue before the learned CIT-A was with respect to t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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