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TMI Blog2023 (3) TMI 517X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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 order of AO could not be held to be erroneous and prejudicial to interest of revenue. It be so held now. 3. The Id Pr CIT also erred both in law and on facts in not appreciating that each year being separate and independent and merely based on the basis of a decision in later year which is also further challenged by the appellant, it cannot be held that the said decision would lead to similar erroneous conclusion regarding erroneous nature of order of AO. It be so held now and order passed u/s 263 be cancelled. 4. The order passed by the Id Pr. CIT is illegal, invalid and bad in law as there is no records for the year under consideration based on which revision proceedings u/s 263 could be initiated. The order suffers form the vice of application of mind hence deserves to be quashed. It be quashed now. 5. The conclusion re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15 dated 02.12.,2016 got passed erroneously and without making suitable inquiries/verifications, making the order prejudicial to the interest of revenue, view of the above , a notice u/s 263 of Act was issued on 21.01.2019, upon the assessee on 23.01.2019 with a view to propose the revision said order for A.Y.2014-15. 4. He contended thereafter that after being confronted with the same, due reply was filed by the assessee. The ld.CIT after considering the same held the assessment order in the present case to be erroneous so as to cause prejudice to the Revenue since the AO had not investigated the bogus claim of purchases pertaining to these parties. Our attention was drawn to para 4.1 to 7 of the order as under: "4.1 During the course of assessment proceedings for A.Y.2015-16, the Assessing Officer carried out enquiries regarding purchases made by the assessee from various parties besides making verifications from sales-tax authorities. While carrying out extensive enquiries in this regard, the assessing officer noticed that the assessee had claimed to have made certain purchases from few parties during immediately preceding year (A.Y.2014-15), but these parties were not found ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... This is not correct as the Assessing Officer had failed to conduct necessary enquiries to ascertain the veracity of purchases and accepted whatever was presented by the assessee through the manipulated accounts due to which the disallowance of these purchases remained to be made. Thus, this is a clear case where the assessee concealed the true state of affairs by making bogus claim and the same was not appropriately investigated by the Assessing Officer, The Assessing Officer while finalizing the assessment had failed to take correct view without appreciating the discrepancies on record due to which the assessment order has become erroneous and prejudicial to the interest of revenue. Hence the said order to be revised u/s.253 of the Act. The Assessing Officer is directed to take into consideration all the material available on records for A.Y.2014-15 as well as A.Y.2015-16 and after giving proper opportunity of being heard to the assessee, determine the genuineness of expenses claimed by the assessee in its accounts, including the above instances of bogus purchases and accordingly determine the correct taxable income. Any further enquiry or verification can also be made, if consi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on to para-6 of the ld.CIT wherein in the absence of any evidence submitted by the assessee to him during the revisionary proceedings, despite being confronted with the information revealed during the assessment proceedings for the Asst.Year 2015-16, the ld.CIT noted that the assessee had nothing more to say than to reiterate what was stated before the AO, and therefore, his finding of the error in the order of the AO in this regard was correct, the ld.DR contended. 7. At this juncture, the ld.counsel for the assessee pointed out that in Asst.Year 2015-16, the addition made on account of bogus purchases had been challenged before the ld.CIT(A) who had restricted the addition to the extent of gross profit involved therein. He contended that the order of the ld.CIT(A) was available with the ld.CIT and the same had merged with order of the AO for the same year. Therefore, the findings of the ld.CIT that the purchases in the impugned year were also bogus entirely were incorrect on facts. 8. To this, the ld.DR countered by stating that the ld.CIT(A) had held the purchases to be bogus, but had restricted the addition to the extent of gross profit involved therein, and therefore, it did ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y jurisdiction in the present case was exercised by the ld.CIT. Having stated so, we shall now deal with each contention of the ld.counsel for the assessee. 12. Taking up the first contention that records of subsequent years could not have been considered by the ld.CIT for arriving at a finding that there was an error in the impugned order. We are not in agreement with the same. As rightly pointed out by the Ld.DR the provisions of section 263 itself define "records" as all records available with the Commissioner while examining them. For the sake of convenience, we reproduce section 263(1)of the Act for clarity, as under: 263. (1) The [Principal Chief Commissioner or Chief Commissioner or Principal Commissioner] or Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the Assessing Officer [or the Transfer Pricing Officer, as the case may be,] is erroneous in so far as it is prejudicial to the interests of the revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es to be genuine. We are not convinced with this contention of the ld.counsel for the assessee also. 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, and the records of the Asst.Year 2015-16 revealing these parties to be non-existent and bogus, it cannot be said that the AO had taken a plausible view accepting the purchases from these parties as genuine. This plea of the assessee is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e with all adverse material available with him. But the assessee did not respond on the adverse material. Therefore the facts of the case of Ashsish Dham (supra) being distinguishable the proposition laid down therein will not apply to the present case. 18. Before parting, we are also dealing with last contention of the ld.counsel for the assessee which was, we have noted, suitably countered by the ld.DR during the course of hearing before us. The ld.counsel for the assessee has contended that addition made on account of bogus purchases in Asst.Year 2015-16 which was basis with the ld.CIT(A) for finding error in the order of the AO in the impugned year, had been challenged before the ld.CIT(A) who had restricted the addition to the extent of gross profit element therein only; that therefore, the ld.CIT noting that the purchases in the impugned year were also bogus in entirety was incorrect on facts. The counter of the ld.DR to this argument, we find is apt and appropriate with the fact that the ld.CIT(A) restricted the addition to the GP element therein only in Asst.Year 2015-16 does not take away the fact that the purchases from these parties in any case was found to be bogus, as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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