TaxTMI 
TaxTMI 
2026 (8) TMI 44
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....on 133A of the Act in Tri Connect Group, the Ld. Assessing Officer examined the payment of Rs. 1,47,12,318/-through bank to different parties and considering the same to be a bogus expenditure, the assessee's submissions and evidences were rejected and on the basis of a gross profit margin @ 15% of Rs. 1,45,40,521/-which works out to Rs. 21,81,078/-, the addition was made. 3.1 Further a commission income @ 5% as per the alleged prevailing market trend on the basis of providing accommodation entries to one of the searched parties was made thereby the total income was determined at Rs. 1,11,73,170/-. 4. Ld. PCIT (Revisional Authority) has held the assessment order to be erroneous so far as prejudicial to the interest of Revenue on two issues. The first, holding that the alleged bogus purchase or sub contract expenses should have been subject to full rejection as non-genuine expenditure and restricting addition to profit rate is not justified for which decision of Hon'ble Bombay High Court in PCIT -5 Mumbai vs. Kanak Impex (India Ltd.) ITA 791 of 2021 was relied. 4.1 Then Ld. Revisional Authority had alleged that the accommodation entry, addition has been incorrectly made....
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....hases were bogus and amounts were received back in cash, the AO mechanically applied 15% gross profit rate without providing any reasoning or factual foundation for doing so. This is not a case of the AO adopting one of the two permissible views after inquiry; instead, it is a case of passing an order without making necessary inquiries and without proper application of correct legal provisions, which falls squarely within the ambit of Explanation 2(a) to section 263 of the Act." 8. Now going through the material before us, at the outset, we of the considered view that once rectification order was passed by Assessing Officer under Section 154 on 29.03.2023 and the cognizance of the same has not been taken by the Revisional Authority while issuing notice under Section 263 of the Act dated 27.01.2026 so that itself shows that the Ld. Revisional Authority has not perused the records completely so far as to say that the impugned assessment order was erroneous so far as prejudicial to the interest of Revenue. 9. More particularly, with regard to the issue of additions made by Ld. Assessing Officer on the alleged seized loose paper, Revisional Authority's conclusion was to make a fu....
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.... paid by such parties to assessee firm. In the course of search no evidence has been found to show that any amount out of Rs. 1.45 crores debited in books has been refunded to assessee. Considering the facts and evidence on record there is no scope to allege the aforesaid sum as bogus expenditure in respect to purchase made and sub-contract expenses in order to make disallowance at the hand to assessee. It is settled position of law that no addition can be made merely on inference. In view of above it is humbly submitted that disallowance as proposed in the annexure be not made." 12. We find that thereafter taking into consideration the alleged incriminating material and the submissions of the assessee, Ld. Assessing Officer had concluded that the assessee booked bogus purchases of claim expenses and received back in cash form. 13. In the light of the aforesaid discussion, we fail to appreciate the allegation of Ld. Revisional Authority that there was lack of enquiry on the part of the Assessing Officer so as to invoke provisions of 263 of the Act by recourse to explanation 2(A). The directions issued by Ld. Revisional Authority for further enquiries and an investigation in c....
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....ation in order to ascertain that the findings arrived by the AO on that issue are erroneous, perverse and/or unsustainable in law. In the facts of the present case, this exercise has not been carried out by the CIT (Exemptions) and therefore the ITAT has rightly come to the conclusion that the CIT (Exemptions) could not show that the order passed by the AO was unsustainable in law and no inquiries had been made." 18. Rather, we are of the considered view that what all Ld. PCIT alleges to be lack of enquiry on the part of Ld. Assessing Officer, were actually not required from the perspective of Ld. Assessing Officer where Ld. Assessing Officer has discredited all the material evidences of the assessee out rightly and without pointing out any infirmities in the merits of the evidences placed on record by the assessee. 19. Thus, Once the transactions are duly recorded in the books of accounts and corroborated by material evidences discussed above and further no quantitative discrepancy was discovered on the basis of contract work executed by the assessee and reported in the form of income, corroborated duly by the GST return of respective parties, then the conclusion drawn to al....