TaxTMI 
TaxTMI 
2021 (6) TMI 70
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....x Act, 1961, directing the Ld. AO to make further inquiries into the business affairs of the appellant, ignoring that the order passed u/s 143(3) r.w.s. 147 on 07.12.2016 was after making all such enquiries and therefore the oder u/s 263 dt. 29.03.2019 be held to be bad-in-law and quashed. 3. The brief facts of the case are that the assessee filed its return of income on 20/09/2011 for the AY 2011-12, declaring a total income to the tune of Rs. 4,70,270/-. The return was processed u/s 143(3) r.w.s. 147 of the Act on 07/12/2016 determining the total income to the tune of Rs. 8,53,370/-. The case of the assessee was reopened u/s 263 of the Act by virtue of notice dated 05/03/2019 on account of following reasons. "The case record of the assessment proceedings for AY 2011-12 in this case were called for an examined and on examination it was found the following facts which are as illustrated below. In the above mentioned case, information was received from Safes tax Department and the office of DGIT(INV) that the abovementioned assessee was involved tor taking entries of bogus purchases to the tune of Rs. 1,84,45,1737- for A.Y. 2011-12 . In this case, the assessee had claimed that ....
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....as directed to consider the addition @12.5% of the bogus purchases which is not justifiable in accordance with law, hence the order u/s 263 of the Act is liable to be set aside. In support of these contentions the Ld. AR for the assessee has placed reliance on the decision in the case of CIT vs. Nirav Mody, 390 ITR 292 (Bom), CIT vs Amitabh Bachchan, 384 ITR 200 (SC) and CIT vs Gabriel India Ltd. 203 ITR 108 (Bom) and Maharashtra Engineering vs PCIT Kolhapur in ITA No.859/Pun/2018. On the other hand, the Ld. DR has refuted the said contention and argued that the provisions u/s 263 has rightly been invoked by the PCIT and in support of his contentions the Ld. DR has placed reliance on the decision of Chandigarh Bench in the case of Sphinx Precision Ltd. Vs. CIT, Shimla (2007) 11 SOT 498 (Chd). We have heard the rival contentions and perused the relevant material available on record. Copy of the assessment order 07/12/2016 is on the file which speaks that the issues of bogus purchase has already been considered by the AO and the AO has considered the GP ratio @2.28% upon the total bogus purchase in sum of Rs. 1,68,02,711/- which comes to the tune of Rs. 3,83,102/- and added to the i....
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.... 6. Undoubtedly, the issue has been already considered by the AO while passing the order dated 07/12/2016 and on the same ground reopening u/s 263 of the act is not justifiable. The Hon'ble ITAT Pune Bench has passed order in ITA NO. 859/Pun/2018 dated 20/12/2020. The relevant findings are hereby produced below. 5. We have heard the rival contentions and perused the material on record. It is noticed that the reopening of the assessment has been done for the Mah. Engg. Kolhapur A.Y. 2010-11 specific purpose of examining the said purchases from C.R. enterprises. The A.O after considering the evidences produced came to the conclusion that the addition representing disallowance of 5% of the total purchases would meet the ends of justice. Thus, the reasons have been recorded for the purposes of reopening of the assessment. The issue on the basis which reopening has been done, has been examined by the A.O and after verifying the evidences, a conscious decision has been taken by the A.O when passing the assessment order on 11-3-2016. A perusal of the order u/s 263 passed by the learned CIT shows that in the show cause notice, the learned Pr. CIT has mentioned that the disallowance of 5....
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....and law. 12. However, before arriving at any conclusion, the A.O shall give an opportunity to the assessee to adduce evidence in support of its claim of purchases, verify its allowability in the light of the prevailing position of law. Hence, to ensure that the assessee is given proper opportunity of being heard and for substantiating its claim, it would be just and proper to set aside the assessment completed on 11-3-2016 for the A.Y. 2010- 11 for de-novo examination of facts. This being done in spirit of the Hon'ble Supreme Court's decision in the case of Rampyari Devi Saraogi Vs. CIT (1969) 67 ITR 84 (SC) wherein it is held that since the assessee is getting an opportunity of being heard, no prejudice is caused to the assessee if the order is set aside. 13. In the result the assessment order as referred above is set aside." 6. The learned Pr. CIT also fails to answer the very primary question that if the purchases are going to be treated as bogus and the addition is going to be made of the entirety of the purchases what happens to the sales that have been disclosed, as also the stocks by treating the said purchases as bogus. Sales which have been disclosed cannot b....