2020 (1) TMI 1218

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....hort 'the Act'. Heard both the parties. Case file(s) perused. 2. Both the learned representative(s) at the outset takes us to the PCIT's detailed discussion holding the regular assessment in question dated 24.03.2016 as an erroneous one causing prejudice to interest of the Revenue reads as under:- "2. The above assessment order has been examined by me along with the assessment record. As found by me from the Profit and Loss Account, the assessee has shown purchase of Rs. 42,90,22,980/- and sale of Rs. 42,46,70,330/-. In the assessment order, the AO has given a finding that purchase of the proprietor concern is inflated but no further enquiry in the genuineness of the purchase declared by the assessee, has been made. In case of V....

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....e provisions of section 263 to correct the errors discussed in the previous para. ln response to this notice, Shri Jaydeep Chakraborty, Advocate appeared on 19.03.2018 along with Vakalatnama on behalf of the assessee company as its authorized representative, hereinafter referred as the Ld. AR and filed a written submission. This written submission is reproduced as under:- "That the main ground of objection for 263 is regarding the inflated purchases value. That Your Honour, we would like to bring to your notice that during the course of assessment proceedings the assessee produced all the relevant documents before the Ld. A.D. relating to its purchase and expenditure. A disallowance of 25% on purchase ad hoc without any ev....

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....in the eyes of law especially when Assessee has maintained books of account with supporting. Reliance is also further placed in the case of Balbir Singh Vs. ACIT (ITAT Jaipur) where it has been opined that expenses can't be disallowed on estimation basis without verification of genuineness. Considering the above facts and circumstances it is very clear that the queries raised by you have duly been considered by the A.G. at the time of making assessment u/s 143(3), therefore, Your Honour is requested to drop the proceedings u/s :?63 of the I.T. Act 1961." 4. In the above written submission, the Ld. AR has mainly argued against the ad hoc disallowance of purchases contending that during the course of assessment ....

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....lowed due to purchase parties could not be traced out and genuineness of purchase bills could not be verified. Therefore, in this case also, the AO is directed to make necessary enquiries and verification of purchases to find out about the genuineness of purchases-and the bills shown in their names and then, depending upon the result of enquiries, make appropriate disallowance out of purchases keeping in view the rates laid down by Gujarat High Court in case of Vijay Proteins (Supra)." 3. We have heard rival pleadings against and in support of the PCIT's action under challenge assuming sec.263 revision jurisdiction. Case file perused. There can hardly be any dispute about the settled legal proposition in Malabar Industrial Co. Ltd. vs. C....