Tribunal upholds revisional jurisdiction for alleged bogus purchases, deems Section 263 invocation justified.

The Tribunal partly allowed the appeal for Assessment Year (AY) 2009-10, finding no error in the assessment order regarding purchases from one entity but upholding revisional jurisdiction for alleged bogus purchases from another entity. For AY 2010-11, the Tribunal dismissed the appeal, upholding revisional jurisdiction for similar reasons as in AY 2009-10. The Principal Commissioner of Income Tax's invocation of Section 263 was deemed justified, as the Tribunal found no violation of natural justice in the process.

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Issues Involved:
1. Invocation of revisional jurisdiction under Section 263 by the Principal Commissioner of Income Tax (Pr.CIT).
2. Alleged bogus purchases from M/s. Utkantha Trading Pvt. Ltd. and M/s. Realstone Exports Ltd.
3. Opportunity of hearing and principles of natural justice.

Issue-Wise Detailed Analysis:

1. Invocation of Revisional Jurisdiction under Section 263:
The assessee contested the invocation of revisional jurisdiction under Section 263 by the Pr.CIT for the Assessment Years 2009-10 and 2010-11. The Pr.CIT set aside the assessment order dated 28/03/2016 and directed the Assessing Officer (AO) to make a fresh assessment. The assessee argued that the Pr.CIT erred in passing the order without giving a proper, reasonable, and appropriate opportunity of hearing, which is against the principles of natural justice and equity. The Tribunal examined the facts and found that the Pr.CIT had issued a show-cause notice to the assessee, which was duly responded to. Therefore, the Tribunal did not find any violation of natural justice.

2. Alleged Bogus Purchases:
The Pr.CIT invoked Section 263 on the grounds that the assessee made alleged bogus purchases amounting to Rs. 211.87 Lacs from M/s. Utkantha Trading Pvt. Ltd. and Rs. 1247.51 Lacs from M/s. Realstone Exports Ltd. The Tribunal noted that the information regarding these bogus purchases was received from the DGIT (Investigation) and was available at the time of the exercise of revisional jurisdiction. The Tribunal relied on the judgment of the Hon’ble Apex Court in CIT Vs. Shree Manjunathesware Packing Products & Camphor Works, which clarified that the term 'record' includes all records available at the time of examination by the Commissioner. Therefore, the Pr.CIT was justified in considering this information to invoke Section 263.

3. Opportunity of Hearing and Principles of Natural Justice:
The assessee argued that the Pr.CIT did not provide the requisite details/information related to the alleged bogus purchases, which is against the principles of natural justice. However, the Tribunal found that the Pr.CIT had issued a show-cause notice and the assessee had responded to it. The Tribunal noted that the assessee did not demonstrate how the figures were not matching and thus did not find any violation of natural justice.

Separate Judgments:
For AY 2009-10, the Tribunal found that the assessee had not made any purchase from M/s. Realstone Exports Ltd. during the relevant year, as wrongly noted by the Pr.CIT. Therefore, the assessment order could not be termed erroneous and prejudicial to the interest of the revenue regarding this entity. However, the Tribunal upheld the revisional jurisdiction with respect to the alleged bogus purchases from M/s. Utkantha Trading Pvt. Ltd. Thus, the appeal for AY 2009-10 was partly allowed.

For AY 2010-11, the Tribunal upheld the revisional jurisdiction assumed by the Pr.CIT with respect to the alleged bogus purchases from M/s. Utkantha Trading Pvt. Ltd., as the facts and circumstances were identical to those in AY 2009-10. Therefore, the appeal for AY 2010-11 was dismissed.

Conclusion:
The appeal for AY 2009-10 (ITA No. 3503/Mum/2018) was partly allowed, while the appeal for AY 2010-11 (ITA No. 3504/Mum/2018) was dismissed.

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