Tribunal Quashes Time-Barred Assessment, Upholds AO's Decision

The Tribunal held that the assessment order dated 31/03/2016 was barred by limitation under section 153-B of the Income Tax Act, 1961. As the order was deemed non-est due to being time-barred, the Principal Commissioner of Income Tax lacked jurisdiction to revise it under section 263. The dismissal of the Special Leave Petition by the Supreme Court did not constitute a judgment affecting the assessment order. The Tribunal also found the Assessing Officer's decision to restrict the disallowance of bogus purchases to a certain percentage was a plausible view, not subject to revision. Consequently, the Tribunal quashed the revision order, allowing all appeals of the assessee.

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Issues Involved:
1. Whether the assessment order dated 31/03/2016 was barred by limitation under section 153-B of the Income Tax Act, 1961.
2. Whether the Principal Commissioner of Income Tax (Pr.CIT) had the jurisdiction under section 263 of the Act to revise an assessment order deemed non-est due to being barred by limitation.
3. Whether the dismissal of the Special Leave Petition (SLP) by the Supreme Court could be considered a judgment affecting the assessment order under explanation 2(d) to section 263(1) of the Act.
4. Whether the Pr.CIT was justified in directing the Assessing Officer (AO) to add the entire amount of bogus purchases to the income of the assessee.
5. Whether the AO's decision to restrict the disallowance to a certain percentage of the bogus purchases was a plausible view and thus not subject to revision under section 263 of the Act.

Issue-wise Detailed Analysis:

1. Limitation under Section 153-B:
The Tribunal examined whether the assessment order dated 31/03/2016 was barred by limitation under section 153-B of the Act. The search was conducted on 23/08/2012, and the return of income was filed on 17/11/2014. An application before the Income Tax Settlement Commission was filed on 18/02/2015, and the order under section 245-D (2C) was passed on 09/04/2015. The Tribunal concluded that the limitation period for concluding the assessment expired on 31/03/2015, and even if the 60-day extension was allowed, the order should have been passed by 07/06/2015. Therefore, the assessment order passed on 31/03/2016 was barred by limitation.

2. Jurisdiction under Section 263:
The Tribunal held that since the assessment order was barred by limitation, it was non-est in the eyes of law. Following the principle established in Kiran Singh & Ors. V. Chaman Paswan & Ors. [1955] 1 SCR 117, a decree passed without jurisdiction is a nullity and cannot be revised under section 263 of the Act. The Tribunal cited similar decisions from ITAT Mumbai and Kolkata Benches, reinforcing that a non-est order cannot be revised under section 263.

3. Dismissal of SLP and Explanation 2(d) to Section 263(1):
The Tribunal addressed whether the dismissal of the SLP by the Supreme Court could be considered a judgment affecting the assessment order. Citing Kunhayammed & Ors vs State Of Kerala, [2001] 245 ITR 360, the Tribunal clarified that the dismissal of an SLP does not amount to a judgment by the Supreme Court. Therefore, the Pr.CIT's reliance on the dismissal of the SLP to invoke explanation 2(d) to section 263(1) was incorrect.

4. Addition of Entire Amount of Bogus Purchases:
The Pr.CIT directed the AO to add the entire amount of bogus purchases to the income of the assessee, based on the decision in NK Proteins Ltd Vs. DCIT. The Tribunal, however, found that the AO had conducted a thorough inquiry and reached a conclusion that the material purchased was bogus. The AO had recalculated the gross profit at 9% of the sales turnover, which was a plausible view considering the nature of the assessee's business.

5. Plausibility of AO's Decision:
The Tribunal emphasized that the AO's decision to restrict the disallowance to a certain percentage of the bogus purchases was a plausible view. The AO had considered the nature of the business and the improbability of a 94% profit margin. The Tribunal held that when two views are possible, and the AO has taken one of the possible views, the Pr.CIT cannot substitute his opinion under section 263. The Tribunal cited decisions from the Hon'ble Jurisdictional High Court and the Hon'ble Apex Court, supporting the principle that section 263 cannot be invoked when the AO's view is plausible.

Conclusion:
The Tribunal quashed the order passed by the Pr.CIT under section 263, holding that the assessment order was barred by limitation and that the AO's decision was a plausible view not subject to revision. All three appeals of the assessee were allowed.

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