2026 (1) TMI 361

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....e, notably from one M/s Diwakar Enterprises, of Rs. 1,49,86,000/-. After relevant enquiries the Ld. AO concluded that purchases made from this entity were bogus. Thereafter, the Ld. AO rejected the offer of the assessee for the Ld. AO to add 12.50% of such purchases and proceeded ahead to disallow 25% of the said bogus purchases as shown by the assessee. 1.1 This matter was examined by the Ld. PCIT and based on the presumption that once purchases are held to be bogus then the entire quantum of purchases deserved to be disallowed, he initiated proceedings u/s 263 of the Act. The Ld. PCIT based himself on the judgments in the case of N.K. Proteins of the Hon'ble Gujarat High Court, the SLP against which was dismissed by the Hon'ble Supreme....

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....ection 263 of the Act by the learned PCIT is illegal and invalid as the assessment order passed under section 143(3) r.w.s. 144B of the Act is neither 'erroneous' nor 'prejudicial to the interest of the revenue'. 5. On the facts and circumstances of the case, the revision order passed under Section 263 of the Act by the learned PCIT is illegal and without jurisdiction, as the issue raised in the said order is already the subject matter of appeal before the Hon'ble CIT(A), in the appeal filed against the assessment order passed under Section 143(3)/144B of the Act sought to be revised by the PCIT. 6. On the facts and circumstances of the case, the learned PCIT has erred both on facts and in law in passing th....

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....by the learned AO under section 69C of the Act. (ii) That the learned PCIT has erred in exercising jurisdiction under section 263 of the Act despite the fact that this issue has already considered by the AO while passing the assessment order under section 143(3) r.w.s. 144B of the Act. 11. The appellant craves leaves to add, amend or alter any of the grounds." 2. Before us, the Ld. AR vehemently argued that the Ld. AO's order was neither erroneous nor was it prejudicial to the interest of Revenue. The Ld. AR presented a paper book of 179 pages and a compilation of case laws in support of his claim that the impugned order could not be legally sustainable. It was argued that apart from any other issue on merit that the as....

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....be disallowed. Thereafter, the Ld. DR supported and relied on the impugned order. 3. We have considered the rival submissions and have gone through the case records, along with the paper book and case laws filed by the assessee. The primary issue that needs to be decided in this case is whether when the AO has taken a considered view about a certain disallowance then is it open to the Pr. CIT to arrive at a different quantum of the disallowance from the same transaction. It is seen that while the Ld. AO has relied on certain case laws to arrive at a figure of 25% of the bogus purchases to be disallowed, the Ld. PCIT has also relied on certain case laws to arrive at the conclusion that 100% of bogus purchases deserve to be disallowed. Thu....