TMI Blog2023 (3) TMI 517X X X X Extracts X X X X X X X X Extracts X X X X ..... l for the assessee that the ld.CIT could not have been referred to the records of the subsequent year i.e. Asst.Year 2015-16 for exercising his revisionary jurisdiction for the impugned year i.e. Asst.Year 2014-15 is rejected. Whether issue of purchases from these very same parties was examined during the assessment proceedings? - It is a fact on record that in subsequent year i.e. Asst.Year 2015-16 when these very same parties, from whom purchases were made in the impugned year, were examined and inquired into by the AO during assessment proceedings, it revealed that all these parties were bogus and non-existent even in the impugned year. The inquiry revealed that these parties did not have TIN for the impugned year, having surrendered it in earlier year. In the impugned year, the inquiry by the AO was clearly inadequate. The Ld.CIT has pointed out from the records that in response to inquiry conducted u/s 133(6) of the Act, these parties had responded in identical format. This ideally should have raised suspicion and prompted further inquiry. But the AO accepted their responses and treated the parties as genuine. Therefore, the inquiries conducted by the AO being inadequate, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... RDER PER ANNAPURNA GUPTA, ACCOUNTANT MEMBER Present appeal has been filed by the assessee against order passed by the ld.Commissioner of Income Tax-1, Ahmedabad [hereinafter referred to as Ld.CIT ] by exercising revisionary power under section 263 of the Income Tax Act, 1961 ( the Act for short) dated 8.3.2019 pertaining to the Asst.Year 2014.15. 2. The grounds raised in the appeal are as under: 1. The learned Pr. CIT- 2 Ahmedabad has erred both in law and in fact in passing an order u/s 263 of the Income tax Act, 1961 revising the assessment order passed u/s 143(3) by the AO after application of mind and considering the facts and records of the case. The order being neither erroneous nor prejudicial to the interest of Revenue, the revision order passed by Id Pr CIT is untenable, illegal and invalid. It be so held and the order be set aside. 2. The Id Pr.CIT further erred in law and on facts in observing that purchases from four parties listed in his order was bogus and that it required further verification hence the assessment order was erroneous. The purchases being duly supported by documentary evidences and goods also duly received there under, the ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R, K. Trading Prop. Shri Ramesh Parmar TIN-24075002688 Rs. 15,00,152 Vishakha Enterprise Porp, Shri Dineshkumar Kashyap TIN- 24070702033 Rs, 30,02,268 M/s, Zenith Sales Corporation 1 Prop. Shri Vimal R Rathod TIN- 24070600063 Rs. 30,01,356 TOTAL Rs 1,00,04,171 It is further seen from records that for A Y 2015-16, the Assessing Officer had conducted certain verifications and found many instances where the parties from whom purchases were claimed to have been made were actually bogus. The above mentioned entities, with whom transactions made pertained to A.Y. 2014-15, were among such bogus parties-cither not in existence or not having any such business. It is seen from the assessment records for A Y 2014-15 that assessment was finalized without disallowing the above claim of purchases though in reality the parties were not in existence as held in the assessment order for A Y 2015-16, Thus the assessment order for A Y 2014-15 dated 02.12.,2016 got passed erroneously and without making suitable inquiries/verific ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M/s. Zenith Sales Corporation Prop. Shri Vimal R Rathod 24070600063 01/07/2002 03/02/20014 Accordingly the A.O. ought to have disallowed such bogus purchases in respect of four parties with whom transactions were claimed in the year relevant to A.Y.2014-15. Records reveal that during the assessment proceedings for A Y 2014-15, the Assessing Officer failed to take into consideration the above issues before accepting the claim of above purchases. It is also noticed that the Assessing officer had also issued notices u/s. 133(6) of the Act to various parties and had received replies in identical format from all these four parties which is highly unusual and the same required further verification to prove the veracity and genuineness of transactions contained therein. The Assessing Officer, however, failed to make further verifications due to which such bogus claim of purchases got accepted thus making the assessment order erroenoeous and prejudicial to the Interest of revenue. 6. It is seen that during the instant proceedings also the assessee has no where put forth any evidence to prove that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on making no disallowance of purchase after considering all the evidences filed by the assessee to prove its genuineness; iii) That ld.CIT has restored the issue back to the AO for examination afresh, thus, he hadnot arrived at any final conclusion of the error; that his assumption of jurisdiction under section 263 in such circumstances was flawed. He relied on the decision of the ITAT in the case of Ashish Dham Vs. PCIT, in ITA No.2181/Del/2017 dated 25.10.2021. Copy of the order was placed before us. 6. The ld.DR on the other hand countered all the arguments of the ld.counsel for the assessee stating that i) records as defined u/s 263 itself are not restricted to that of the year under consideration which were there with the AO while framing the assessment order, and in fact expand to all records available with the department relating to the issue; ii) That the argument that the AO had taken conscious decision on the issue of genuineness of purchases after examining the same during the assessment proceedings, was not tenable in view of the fact that while doing so, he had not made further inquiry vis- -vis the creditors involved which inquiry in subsequent year ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the subsequent Asst.Year 2015-16,the AO had conducted inquiry relating to the purchases made from four parties as noted above in para-2 of the Ld.CIT s order, which is reproduced above, and had found the parties to be bogus and purchases made from to be also bogus. He noted the fact that these parties had cancelled their TIN s well before purchases were made by the assessee from them proving that the parties were not genuine. The ld.CIT noted that the assessee had made purchases from these very same parties in the impugned year also, totaling to Rs.1,00,04,171/- and found that the AO s inquiry during the impugned year had not gone to the extent of revealing this fact. He noted that despite the replies furnished by these parties to the AO during assessment proceedings in response to notice issued u/s 133(6) of the Act, all being in the same format, which should have raised suspicion calling for further inquiry the AO went on to accept these parties as genuine without making any further inquiries. He held that inadequate inquiry conducted by the AO had resulted in these bogus purchases being allowed to the assessee i.e. causing prejudice to the Revenue to the said extent. Therefore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l reading of clause (b) reveals that records include all records relating any proceedings under this Act which is available with the ld.CIT at the time of examination. There is no restriction in the Explanation 1(b) to section 263 ,where the term records is specifically defined, restricting records in any manner more so to a particular year only. Therefore, applying principle of literal interpretation, we see no reason to restrict the definition of records to that relating to the year for which revisionary jurisdiction is exercised, when the definition of the term clearly states that it includes all or any records relating to the assessee available with the ld.CIT at the time he examines it. In view of the same, the contention of the ld.counsel for the assessee that the ld.CIT could not have been referred to the records of the subsequent year i.e. Asst.Year 2015-16 for exercising his revisionary jurisdiction for the impugned year i.e. Asst.Year 2014-15 is rejected. 15. Now taking up next contention of the ld.counsel for the assessee that the issue of purchases from these very same parties was examined during the assessment proceedings, the ld.counsel for the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f error without conducting any inquiry and without making any further investigation into the issue. The ld.CIT had clear cut information that the creditors relating to these purchases were bogus. He had given sufficient opportunities to the assessee during the revisionary proceedings to counter this fact, but the same was not done by the assessee. Therefore in the absence of any explanation furnished by the assessee to controvert the findings of the Ld.CIT that the purchases were bogus, the ld.CIT, we hold, rightly found the assessment order erroneous causing prejudice to the Revenue in accepting assesses claim to such purchases as being genuine. And in all fairness he has still gone ahead and given an opportunity to the assessee to come up with his case now before the AO in the restored proceedings to the AO. This plea of the ld.counsel for the assessee also is rejected. 17. The case law relied upon by the ld.counsel for the assessee in the case of Ashish Dham(supra) is distinguishable on facts wherein the ITAT noted that the assessment order had been set aside by the Ld.PCIT u/s 263 of the Act to the AO for fresh assessment without the Ld.PCIT having himself done any exercise ..... X X X X Extracts X X X X X X X X Extracts X X X X
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