AI Drafter 
TaxTMI 
TaxTMI 
2023 (5) TMI 950
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....order dated 27.12.2018, under challenge in first appeal, being invalid for wrongful assumption of jurisdiction u/s.147/148, could not be set-aside by ld. PCIT u/s.263, unless its validity u/s.147/148 was first upheld. 3. That when the assessee's first appeal, disputing the reopening u/s. 147 as also the additions made in order dt.27.12.2018, having close bearing on purchases doubted by PCIT, was pending, the jurisdiction u/s.263 could not be invoked in law. 4. That when all the relevant details and documents were filed in reassessment, and examined by the ld. lTO qua the issues as per 'reasons recorded', the ld. PCIT erred in assuming the purchases of 18 parties as bogus, to hold the order as erroneous and prejudicial u/s.263. 5. That the order under appeal is wholly against law and facts of the case." 2. The ld. Counsel for the assessee (in short AR) argued and submitted a written submission which is kept on record. First, the ld. AR invited our attention in the assessment order, on dated 27.12.2018 u/s 143(3)/147 of the Act. The relevant paragraph of the assessment order is extracted as below: "In view of above position, the purc....
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....he alleged bogus purchases of Rs.1,97,93,175/- from 18 parties, which are proposed to be disallowed, the humble assessee, while seeking not to give recourse to any such action, has to advance his case as follows: i) It is admittedly true that M/s Guru Teg Bahadur Rice Mill did not figure in the list of 18 parties, with alleged cancelled TINs. Therefore, the reduction of purchases of the said party, from the amount of purchases made in r/o 18 parties, was not called for. To this extent, the observation made in the SCN is not objected to. But, this act on the part of AO, would not by itself, justify the other view taken that the whole of the purchases made from said 18 parties, being bogus and unverifiable, was required to be added as against the addition of Rs.9,24,491/- made on account of 5% VAT disallowed. ii) Firstly, for reopening of this case, when it had already been assessed u/s.143(3), in which the trading results were verified and accepted after inviting all relevant details of purchases/sales/expenses, the reasons as recorded by the ld.ITO u/s.148, were silent as to the source of information received by him, in respect of the bogus purchases, which, now a....
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.... lack of his understanding the issues and skill to marshal the facts and spell out his versions unambiguously, drafted the order with loose ends. His act of reducing the purchases of M/s Guru Teg Bahadur Rice Mill from the impugned purchases, when this party did not even figure in the list of such parties, is ample testimony of his inept working. That each time, the axe is to fall on assessee for the lapses of the incumbent AO, is indeed coercive, more particularly when a good case is made a no case, making room for assessee to suffer the aftermaths repeatedly. v) Nonetheless, it is vehemently denied that the purchases made from the said 18 parties were bogus or for that matter, the VAT paid was faulty. To say the least, the actual purchases made from these parties, rather far exceeded the amount sought to be disallowed, as discerns well from the list now drawn, placed below at Page 14, which bears the value of purchases made as per list at Rs.1,97,93,175/- and as per books of assessee at Rs.3,43,66,084/23. In fact the list received from Inv.Wing, casually made, without stating as to how and wherefrom the figures were drawn, is prima facie not reliable. If it has originate....
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....ing stock of Rs.1.53 crores was also held. When none of the sales made by assessee have been brought in dispute, nor for that matter, the trading results, which are progressive, were disputed, it is well neigh impossible to infer, that the purchases of a huge value of Rs.1.97 crores (actual figure is over Rs.3.43 crores) were bogus. Rather it reflects of the satisfaction of the AO that the purchases as such were not bogus. viii) One more point, important and relevant to part with, is that the assessee in that year, had a fleet of about 25 trucks of his own, besides a tractor trolley, (as evident from the schedule of fixed assets enclosed at Page 82), deployed to lift the stocks of rice husk from various suppliers and deliver the same directly at the premises of respective buyers. This was necessitated as it was not viable to first take delivery of rice husk, a light weight heavy volume by- product obtained from shelling of paddy, at assessee's premises and then to reload and deliver it at the premises of buyers, by incurring heavy labour for its rehandling, besides arranging huge space for storage. For this reason, while outside transport bills were not available, but expe....
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....ow payments by cheques/RTGS. h) Annpurna Rice & General Mills, Jalandhar (S.No.14 of list) Their copy of a/c as per assessee's ledger is placed at page 57and their parallel a/c is placed at page 58-59, which fully tally besides showing all payments of cheques/RTGS. i) Arora Rice Mills, Rayya (S No.16 of list) Their copy of a/c as per our ledger is at page 61 and their parallel a/c is at page 62. Also enclosed is copy of Form No.23, at page 63-64 which shows assessee as their purchaser. j) Malhotra Rice & General Mills, Rayya (S No.18 of list) Their copy of a/c as per our ledger is at pg.66 with their confirming a/c at page 67 showing mode of payment being thru bank. x) Besides the above documents, copies of a few purchase bills received from parties amongst the list of 18, are also enclosed at Page 89-104 which bear the relevant details of goods supplied, value thereof and their TINs . These bills also bear the Truck details, which belong to assessee and prove the point that assessee deployed own trucks to lift the material. xi) To establish the factum of purchases & sales actually made, as declared in audited ....
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.... on which he came to the prima facie conclusion that the capital borrowed by the firm was utilised for purposes other than that of the firm's business. When the assessee filed a detailed written statement before him, the Commissioner did not deal with any of the points raised in the statement. He thought that the best course in the circumstances was to remand the matter to the Income-tax Officer for consideration of the points raised in the assessee's written statement. That certainly was not the proper course to be adopted by him. It was necessary for the Commissioner to state in what manner he considered that the order of the Income-tax Officer was erroneous and prejudicial to the interests of the revenue and what the basis was for such a conclusion. After indicating his reasons for such a conclusion, it would certainly have been open to him to remand the matter to the Income-tax Officer for such other investigation or enquiry as might be necessary. But that was not the course which the Commissioner pursued. The Tribunal was, therefore, justified in setting aside the order of the Income-tax Commissioner. The learned counsel for the revenue urged that, while setting aside ....