TaxTMI 
TaxTMI 
2025 (6) TMI 155
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....39;) has erred in passing an order under section 263 of the Act seeking to revise the assessment order passed under section 147 of the Act which is neither erroneous nor prejudicial to the interest of revenue. 2. On facts and circumstances of the case and in law, the Ld. PCIT erred in passing the order under section 263 without appreciating the fact that appropriate inquiries and verification were conducted by the Ld. AO while completing the assessment under section 147 of the Act and the action of Ld. PCIT in revising the assessment order passed after verification of the details on record lacks judicial propriety and jurisdiction. 3. On facts and circumstances of the case and in law, the Ld. PCIT has erred holding the assessment order is erroneous and prejudicial on the ground that the addition of 6% on alleged bogus purchase made by the Ld. Assessing Officer (Ld. AO) is based on some random Gujarat High Court decision without reference to the binding decisions of the jurisdictional High Court and without adequate inquiry. The Ld. PCIT has failed to appreciate the fact that the reassessment was made solely on the ground of alleged bogus transactions and the impug....
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....sposal and no revisionary power can be exercised on this aspect." 3. The relevant facts in brief are that the Assessee, a private limited company, was engaged in the business of business of advertising and trading of PVC and its derivatives (import and domestic sale). During the relevant previous year, the Assessee-company earned passive income in the nature of dividend, interest, etc. The Assessee filed its return of income for the Assessment Year 2018-2019 on 30/10/2018 declaring business loss of INR.55,83,331/-. The case of the Assessee was not picked up for regular scrutiny assessment under section 143(3) the Act. However, subsequently, reassessment proceedings under Section 147 of the Act were initiated in the case of the Assessee on the premise that the Assessee is one of the beneficiaries of accommodation entry of bogus purchase/sales based on the information received from Investigation wing/GST department in case of M/s. Mahalaxmi Enterprise and its group entities (namely, M/s. MM9 International and M/s. Wittenela Multitrading Private Limited). During the re-assessment proceedings, the Assessing Officer issued notice under Section 142(1) of the Act seeking further detail....
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....ere furnished by the Assessee to prove the genuineness of the sale/purchase transaction entered with MM9 and Witteneia: Sr. No. Particulars of documents Relevance of document 1. Detailed bifurcation of purchases and sales made 2. Copy of Invoices received from the parties and issued to the parties Document evidencing that the Assessee has purchased and sold goods. 3. Copy of relevant Form GSTR-2ASystem generated statement of inward supplies of the Assessing reflecting purchases from MM9 International and Witteneia Contains details of purchases made which is auto-populated based on sales details submitted by the seller in Form GSTR-1. This evidences that transaction have duly been recorded in the GST returns of both the buyer and the seller. 4. Copy of Form GSTR 1 and Form GSTR9 Contains details of sales made and annual report containing the details of transaction entered. 5. Purchases and sales ledger To demonstrate that purchases and sales are recorded in the books of accounts of the Assessee 6. Lorry receipt To establish the actual movement of goods. 7. Bank statement To establish that the transaction ....
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....usiness or profession." 9. Thus, the Assessing Officer had made the aforesaid disallowance/addition observing that the possibility of suppression of income as a result of the claim of bogus purchase expenditure cannot be ruled out. 10. We note that in notice, dated 14/08/2024, issued under Section 263(1) of the Act, the Learned PCIT has recorded that the Assessing Officer had relied upon the above judgment of Hon'ble Gujarat High Court without proper verification of facts and without considering the applicability of other judgments on the same issue. Subsequently, while setting aside the Assessment Order, dated 19/03/2024, the Learned PCIT recorded as under: "In this case, assessment under Section 143(3) read with Section 147 read with Section 144B of the Act was completed on 19/03/2024 and the Assessing Officer made addition of 6% on the alleged bogus purchases in the hand of the Assessee. 2. It was noticed that the Assessing Officer had followed some random Gujarat High Court decision to come to the conclusion that 6% was the appropriate addition in the case of Alleged Bogus Purchases (ABP) without reference to the binding decisions of the jurisdictional H....
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....lished that the case before is not a case of lack of adequate inquiry. we note that while the Learned PCIT has given general directions to the Assessing Officer to carry out requisite inquires and frame denovo assessment after granting the Assessee adequate opportunity of being heard, the same run contrary to specific direction to bring to tax 25% of the alleged bogus purchases in the hands of the Assessee. Further, the Learned PCIT has not invoked the provisions contained in Explanation 2 to Section 263 of the Act. Therefore, it cannot even be contended on behalf of the Revenue that the Assessment Order should be deemed to be erroneous in so far as prejudicial to the interest of Revenue on account of lack of proper verification. 12. The decision of the Learned PCIT is based upon the judgment of Hon'ble Supreme Court in the case of N. K. Protein Ltd. Vs Deputy Commissioner of Income Tax [2017] 84 taxmann.com 195 (SC). On the abovesaid judgment of the Hon'ble Supreme Court we find that the Special Leave Petition filed by the Assessee against the judgment of Hon'ble Gujarat High Court [N.K. Industries Ltd. v. Dy. CIT [2016] 72 taxmann.com 289 (Guj.)] was dismissed by the Hon'ble S....