2022 (7) TMI 957

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....iture trading business had initially filed its regular return of income on 26.09.2012 declaring total income at Rs. 49,75,500/-. Subsequently, certain information was received from ADIT (Inv.)-II, Rajkot that a search action under Section 132 of the Act was carried out on the group of Angadiyas and Shroffs who were found to be indulging in providing bogus billing through their dummy concerns, receiving proceeds of under-invoiced sale in cash in their bank accounts and also indulging in issuing Cheque/DD in lieu of cash to many business parties in and around Rajkot. On the basis of alleged incriminating documents found during the course of search, the beneficiaries of their modus operandi were identified by the Investigation Wing where the assessee was also found one of the beneficiaries of the claim of bogus billing receiving proceeds of under-invoiced sale and receive Cheque/DD in lieu of cash. 3. Upon taking prior approval from the competent authority, a notice under Section 133(6) of the Act dated 26.02.2019 was issued to the assessee requesting him to furnish the detail of evidences to prove the genuineness of the transaction alongwith documentary evidences, copy of all bank a....

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....ue/DD in lieu of cash and for the year under consideration you have received such benefit amounting to Rs. 1,00,000/-from M/s National Shroff which was engaged in the business of shroff/angadiya and various bank account controlled by these group. Cheques/DDs were issued in lieu of cash and also cash was delivered to the beneficiaries which have been deposited in the bank account from locations spread across the country. The details of the transactions mentioned above are as under: Bank Date Particulars Deposit Branch Code/Place of Deposit for cash deposit Name Name, Address of entity 22-EAGLEAXIS-911020004388635 01/02/2012 BY CASH 100000 1182-poona. Nileshzinjuvadiya Parin Furniture Private Limited, Gondal Road Highway, Vavdi, Rajkot : 360004, Land Mark: Opposite Jay Ganesh Auto Center, 02813300777, 09916191226, Rajkot@parinfurnit ure.com, www.parinfurniture .com, Amitbhai 2.2 Hence, during the course of assessment proceedings cash book, purchase register, expense ledger, cash sales register, etc. were called for to verify and to arrive at a true picture of the affairs of the business activity carried out by you. The details submitted by you were duly co....

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.... unrecorded transactions of the assessee and the entire amount should have been added to the assessed income. Instead the AO added 30% of the GP ratio which was incorrect as the transactions were not recorded in the books of accounts. 3. In view of the facts mentioned above, it is clear that the amount of Rs. 1,00,000/- received from M/s National Shroff group during the year are unrecorded transactions of the assessee and one of the beneficiary of the scam of bogus billing, and the same has not been added by the AO during the- Assessment proceedings. Therefore, 100% of an amount of Rs.1,00,000/- is required to be added as;, unexplained expenses u/s.69A to the total income of the assessee. 4. In view of the above and in the light of facts and circumstances of the case, the order passed by the AO, u/s 143(3) of the IT Act is erroneous and prejudicial to the interest of revenue and therefore needs to be revised u/s 263 of the IT Act. Therefore, I hereby initiate proceedings u/s 263 of the Act with a view to pass a suitable order. Before passing of such order, you are hereby given an opportunity of being heard in the matter. In this connection you are requested to furnish your repl....

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....ion 263 of the Act by holding the order passed by the Ld. AO erroneous and prejudicial to the interest of Revenue. In our considered opinion, the same is premature. In this regard, we have also considered the judgment passed by the Allahabad High Court in the case of CIT, Meerut vs. Vam Resorts & Hotels Pvt. Ltd., reported in (2019) 111 taxmann.com 62 (Allahabad) as relied upon by the Ld. A.R. We find that on the identical situation the Hon'ble Court was pleased to quash the order passed under Section 263 of the Act. During the pendency of the appeal preferred by the assessee under Section 250 of the Act while upholding the order passed by the Tribunal in holding the order exercising power under Section 263 was barred by Clause (c) of Explanation 1 of Section 263 of the Act the Hon'ble Court observed as follows: "25. As, Clause (c) of Explanation 1 to Section 263 of the Act provides that when an appeal is pending before the Commissioner, the exercise of jurisdiction under Section 263 of the Act by CIT is barred. Thus, in the present case, the CIT wrongly exercised jurisdiction under Section 263 of the Act by remanding back the matter to assessing authority on 25.3.2013, while the....