2023 (3) TMI 517

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....d by Id Pr CIT is untenable, illegal and invalid. It be so held and the order be set aside. 2. The Id Pr.CIT further erred in law and on facts in observing that purchases from four parties listed in his order was bogus and that it required further verification hence the assessment order was erroneous. The purchases being duly supported by documentary evidences and goods also duly received there under, the order of AO could not be held to be erroneous and prejudicial to interest of revenue. It be so held now. 3. The Id Pr CIT also erred both in law and on facts in not appreciating that each year being separate and independent and merely based on the basis of a decision in later year which is also further challenged by the appellant, it cannot be held that the said decision would lead to similar erroneous conclusion regarding erroneous nature of order of AO. It be so held now and order passed u/s 263 be cancelled. 4. The order passed by the Id Pr. CIT is illegal, invalid and bad in law as there is no records for the year under consideration based on which revision proceedings u/s 263 could be initiated. The order suffers form the vice of application of mind....

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....lity the parties were not in existence as held in the assessment order for A Y 2015-16, Thus the assessment order for A Y 2014-15 dated 02.12.,2016 got passed erroneously and without making suitable inquiries/verifications, making the order prejudicial to the interest of revenue, view of the above , a notice u/s 263 of Act was issued on 21.01.2019, upon the assessee on 23.01.2019 with a view to propose the revision said order for A.Y.2014-15. 4. He contended thereafter that after being confronted with the same, due reply was filed by the assessee. The ld.CIT after considering the same held the assessment order in the present case to be erroneous so as to cause prejudice to the Revenue since the AO had not investigated the bogus claim of purchases pertaining to these parties. Our attention was drawn to para 4.1 to 7 of the order as under: "4.1 During the course of assessment proceedings for A.Y.2015-16, the Assessing Officer carried out enquiries regarding purchases made by the assessee from various parties besides making verifications from sales-tax authorities. While carrying out extensive enquiries in this regard, the assessing officer noticed that the assessee had cl....

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....formation furnished during the assessment proceedings for A.Y.2014- 15, the Assessing Officer had duly applied his mind and hence the same issue cannot be a subject matter of revision. This is not correct as the Assessing Officer had failed to conduct necessary enquiries to ascertain the veracity of purchases and accepted whatever was presented by the assessee through the manipulated accounts due to which the disallowance of these purchases remained to be made. Thus, this is a clear case where the assessee concealed the true state of affairs by making bogus claim and the same was not appropriately investigated by the Assessing Officer, The Assessing Officer while finalizing the assessment had failed to take correct view without appreciating the discrepancies on record due to which the assessment order has become erroneous and prejudicial to the interest of revenue. Hence the said order to be revised u/s.253 of the Act. The Assessing Officer is directed to take into consideration all the material available on records for A.Y.2014-15 as well as A.Y.2015-16 and after giving proper opportunity of being heard to the assessee, determine the genuineness of expenses claimed by the....

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.... contention was that inquiry conducted by the AO was not proper in the impugned year as rightly held by the ld.CIT. iii) On the contention of the ld.counsel for the assessee that there was no finding of error, he drew our attention to para-6 of the ld.CIT wherein in the absence of any evidence submitted by the assessee to him during the revisionary proceedings, despite being confronted with the information revealed during the assessment proceedings for the Asst.Year 2015-16, the ld.CIT noted that the assessee had nothing more to say than to reiterate what was stated before the AO, and therefore, his finding of the error in the order of the AO in this regard was correct, the ld.DR contended. 7. At this juncture, the ld.counsel for the assessee pointed out that in Asst.Year 2015-16, the addition made on account of bogus purchases had been challenged before the ld.CIT(A) who had restricted the addition to the extent of gross profit involved therein. He contended that the order of the ld.CIT(A) was available with the ld.CIT and the same had merged with order of the AO for the same year. Therefore, the findings of the ld.CIT that the purchases in the impugned year were also ....

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....f purported bogus purchases made from the four parties by the assessee during the impugned year totaling in all to Rs.1,00,04,171/- which parties were revealed to be bogus during the assessment proceedings for Asst.Year 2015-16, that the revisionary jurisdiction in the present case was exercised by the ld.CIT. Having stated so, we shall now deal with each contention of the ld.counsel for the assessee. 12. Taking up the first contention that records of subsequent years could not have been considered by the ld.CIT for arriving at a finding that there was an error in the impugned order. We are not in agreement with the same. As rightly pointed out by the Ld.DR the provisions of section 263 itself define "records" as all records available with the Commissioner while examining them. For the sake of convenience, we reproduce section 263(1)of the Act for clarity, as under: 263. (1) The [Principal Chief Commissioner or Chief Commissioner or Principal Commissioner] or Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the Assessing Officer [or the Transfer Pricing Officer, as the case may be,] i....

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....h various details of purchases contained in the Paper Book filed before us, pointing out that the question was raised during assessment proceedings relating to the very same purchases and due reply was filed by the assessee, and accordingly, the AO had taken conscious view holding the purchases to be genuine. We are not convinced with this contention of the ld.counsel for the assessee also. It is a fact on record that in subsequent year i.e. Asst.Year 2015-16 when these very same parties, from whom purchases were made in the impugned year, were examined and inquired into by the AO during assessment proceedings, it revealed that all these parties were bogus and non-existent even in the impugned year. The inquiry revealed that these parties did not have TIN for the impugned year, having surrendered it in earlier year. In the impugned year, the inquiry by the AO was clearly inadequate. The Ld.CIT has pointed out from the records that in response to inquiry conducted u/s 133(6) of the Act, these parties had responded in identical format. This ideally should have raised suspicion and prompted further inquiry. But the AO accepted their responses and treated the parties as genuine. The....