TaxTMI 
TaxTMI 
2025 (12) TMI 591
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.... Explanation 2 of section 263 and direct the AO to conduct fresh enquiries and passed the speaking order. 2. Brief facts of the case are that the assessee into the business of trading and manufacture of handloom items in Panipat and case of assessee was reopened u/s 148 vide notice issued on 29.03.2022. The reason for reopening was that the assessee had purchased blankets from M/s Radha Kanheya Exports which was found to be a non-genuine entity. Accordingly, based on the statements of one Sh. Rajesh Mittal managing and controlling the above stated entity, the AO disallowed the purchases of Rs. 53,04,000/- as not genuine in terms of the order passed u/s 147 r.w.s. 143(3) of the Act on 27.03.2023. Against the said order, assessee has filed....
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....ding the purchases as bogus against which first appeal is pending before the ld. CIT(A). As per ld. AR, the AO has taken a plausible view by disallowing the purchases after making proper and adequate enquiries with. He states that such purchases were duly recorded in the books of accounts maintained in regular course thus the immediate source of such purchases cannot be doubted solely for the reason that the supplier was found non-existent. The provisions of section 69C of the Act can be invoked where the assessee has not been able to explain the source of the expenditure. He thus, submits that the provisions of section 69C cannot be invoked on the facts of the present case and, therefore, the assessment order is neither erroneous nor preju....
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....ned u/s 147 of the Act for the reason that purchases made from M/s Radha Kanhaya Exports of Rs. 53,04,000/- is bogus and thereafter, the AO referred to the statements of person managing and controlling that firm and accordingly disallowed the purchase of Rs. 53,04,000/- by holding the same as bogus purchase. The Ld. PCIT in terms of the show cause notice dated 29.07.2024, based on the audit objection by the ITO, issued the show cause notice which reads as under: NOTICE FOR THE HEARING M/s/Mr/Ms Subject: Notice for Hearing in respect of Revision proceedings u/s 263 of the Income Tax Act, 1961-Assessment Year 2018-19. In this regard, a hearing in the matter is fixed on 12/08/2024 at 11:00 AM. You are reques....
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.... section i.e. 69C of the Income Tax Act, 1961 and tax has been charged a normal rates. ii) The relevant provision of section 69C is produced as under: "69C Where in any financial year an assessee has incurred any expenditure and he offers no explanation about the source of such expenditure or part thereof, or the explanation, if any, offered by him is not, in the opinion of the Assessing Offertory the amount covered by such expenditure or part thereof at the case may be may se deemed to be the income of the assessee by such for such financial year. Provided that notwithstanding anything standing contained in any other provision of this Act such unexplained expenditure which deemed to be he income of the assessee s....
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....t, 1961. 4. As per provisions of section 263 of the Income Tax Act, 1961, you are hereby given an opportunity to file your reply/objections, if any, to the proposed action on or before 12.08.2024. You may submit your reply along with supporting documentary evidence, if any, through e-mail at [email protected] or via post to Olo the Pr. Commissioner of Income Tax, First Floor, Aayakar Bhawan, Near Mansarovar Park, Rohtak-124001, by the above date which shall be duly considered before taking final decision in the matter. 6. From the perusal of the above stated notice, it could be seen that Ld. PCIT has alleged that the purchases held as bogus should be disallowed u/s 69C of the Act. The relevant provisions of section 69....
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....wance related to expenses incurred by the assessee in relation to subcontractor which were not found to be genuine. Section 69C on the other hand, brings to tax the disallowance related to expenses incurred by the assessee, source of which remain unexplained. Therefore, purview and scope of section 69C is totally different from the disallowance of expenses found to be not genuine. The basic premise with the Id. Pr. CIT therefore for finding error in the order of the AO, that the disallowance made by him of contractors' expense came under the purview of section 69C of the Act is found to be untenable in law. This finding of error, as a consequence whereof, that the same not being subjected to tax at a special rate provided under section ....