TaxTMI 
TaxTMI 
2020 (9) TMI 615
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.... both the parties. Case file(s) perused. 2. With the able assistance of both the learned representative(s), we notice from a perusal of the case file that the PCIT has exercised his sec. 263 revision jurisdiction to hold that the regular assessment in question dated 24.03.2016 framed in assessee's case as an erroneous one causing prejudice to interest of the Revenue. The said assessment order reveals that the Assessing Officer held that the assessee had been actually been put up for the purpose of inflating purchase and sales of M/s. Network Industries Ltd. He thus disallowed / added 5% of its carriage and wages expenses of Rs. 80,80,34,415;- coming to Rs. 4,40,672/-. The PCIT is revision order under challenge include that the Assessing Of....
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....rchases shown by the assessee, the above-mentioned assessment order dated 24.03.2016 passed in case of the assessee for A.Y. 2013-14 u/s 143(3) has been found to be deemed to be erroneous in so far as in prejudicial to the interest of revenue in view of Clause (a) of Explanation 2 of section 263. 3. After finding the assessment order dated 24.03.2016 being erroneous and prejudicial to the interest of revenue as discussed in .previous para, a notice dated 13.03.2018 is issued to the assessee asking it to explain as to why the above mentioned assessment order should not be revised as per the provisions of section 263 to correct the errors discussed in the previous para. In response to this notice, Shri Jaydeep Chakraborty, Advocate appeare....
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....dition. Reliance is further placed in the case of K.P. Varghese Vs . ITO, Ernakulam and Another 131 ITR 597 (SC) wherein the Supreme Court held that assessee must be shown to have received more than what is declared or disclosed ~Y him as consideration and only then addition can be sustained. 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 263 of the....
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.... to be inflated, an appropriate percentage of such purchases should be disallowed by the AO following the decision of Vijaye Protein (supra) in which 25% of purchases were disallowed 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). 5. In view of my above decision, the assessment order dated 24.03.2016 is set as....
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....ed 5% of the expenses which was revised in 263 proceedings. This tribunal's co-ordinate bench's decision in ITA No.1027/Kol/2018 decided on 22.01.2020 has reversed the said revision action as under:- "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. Commissioner of Income Tax (2000) 243 ITR 83 (SC) and Commissioner of Income Tax vs. Max India (2007) 295 ITR 282 (SC) that before an assessment is held as erroneous causing prejudice to interest of the Revenue, both these conditions have to be simultaneously satisfied. And that an assessmen....