TaxTMI 
TaxTMI 
2018 (5) TMI 2102
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.... CIT has grossly erred in not appreciating the fact that there is neither lack of inquiry nor non application of competent mind by Assessing Officer while passing the assessment order. The contents of the assessment order and the assessment proceedings clearly proves that Assessing Officer has carried in-depth enquiries and applied his mind and adopted one of the plausible view legally allowable and therefore his order should not have been regarded as erroneous in as much as prejudicial to the interest of revenue." From the above, as per the assessee, the revision order of the Pr.CIT is unsustainable as the Pr. CIT invoked section 263 of the Act against the AO's order adding only 20% of the bogus purchases in the reassessment. Assessee argues that AO's decision constitutes one of the plausible views in the matter and a debatable issue. Further, Ground No.2 also raises the issue of AO's failure in conducting enquiries with regard to the claim relating to sundry creditors balances and other claims in the return of income. 3. Briefly stated relevant facts for the A.Y. 2009-10 are that the assessee is a company and is engaged in the business of cables, electrical, electronic and ....
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....e GP ratios of the assessee over the years and held making addition of GP of the said bogus purchases would meet the ends of justice. Relevant lines from Para 7 & 8 of the assessment are extracted here as under : "7 . . . . . . . . . . . . .Now, to arrive at the conclusion for amount of Rs. 3,47,78,546/-, the financials of the assessee were examined for the period relevant to A.Y. 2008-09 to 2011-12. . . . . . . . . . . . . . . . . . . . . . . 08. Now, to calculate the reasonable amount of addition on account of these bogus purchases, there are various methods which are discussed. a. First method is adding the whole amount of such bogus purchases which comes out to be Rs. 3,47,48,546/-. This is also unreasonable because bogus purchase is nothing but inflated purchase shown in the accounts to reduce the actual profit earned. b. Second method is calculating 20% of the total turnover of the assessee for the year under consideration, i.e. 20% of Rs. 1,21,31,76,927/- which comes out to be Rs. 24,26,35,385/-. This is not reasonable as the bogus purchases are only 2.8% of the total turnover. c. Third method is calculating 20% ....
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....eved with the said revision order of the Pr.CIT, assessee filed the present appeal with the grounds mentioned above. 7. Before us, Ld. Counsel for the assessee submitted that the main issue examined by the AO in the reassessment proceedings revolves around the said issue of bogus purchases only. The reasons recorded by the AO before issuing the said notice u/s.148 of the Act also evidences the above. Further, bringing our attention to the various pages of the paper book, Ld. Counsel for the assessee demonstrated the fact relating to furnishing of relevant purchase bills from the alleged suppliers for the years under consideration. Further, bringing our attention to various paragraphs of the re-assessment order, Ld. Counsel submitted that every aspect of the issue of bogus purchases was thoroughly examined by the AO before making an adhoc addition of 20% of the bogus purchases of Rs. 69,55,709/-. In doing so, AO relied on various decisions to support the GP additions only and not the entire such purchases. Therefore, according to Ld. AR for the assessee, the view taken by the AO is one plausible view. Further, mentioning that the issue of making entire addition is again a deba....
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....ication which he should have been done by the AO. Further also, on the other issues listed in Para 6.2 of his order, Ld. AR submitted that there is no error in the reassessment order that makes the order erroneous in so far as it is prejudicial to the interest of revenue. 9. On the other hand, Ld. DR for the Revenue relied heavily on the order of the Pr.CIT. AO's failure to make addition of 100% of entire bogus purchase of Rs. 3,47,78,546/- constitutes the order erroneous and AO's failure to conduct investigation to sundry creditors also makes the order erroneous in so far as it is prejudicial to the interest of the revenue. However, on debatability of the issue relating to bogus purchases, Ld. DR has nothing to mention. 10. We heard both the parties and perused the orders of the Revenue on the issue of bogus purchases and the need for making addition of entire such purchases, copies of decisions etc. We have also gone through the purchase bills, other documents filed in the form of paper book by the assessee. The case of the Pr.CIT in the revision order is that the AO failed to make enquiries before completing the assessment on the claims relating to bogus purchases and the ....