|The Tax Publishers2020 TaxPub(DT) 4969 (Mum-Trib)
INCOME TAX ACT, 1961
Since two views were possible and AO had taken one of the possible views to which CIT did not agree, this would not make assessment order erroneous, though it might be prejudicial to the interest of revenue.
Revision under section 263 - Erroneous and prejudicial order - AO took one of the possible views -
Assessee was found to be beneficiary of Hawala dealers. Accordingly, AO treated purchases claimed by assessee as bogus. As there was no dispute as regards corresponding sales, AO estimated GP at the rate of 1.5% on accommodation entries to bring to tax profit embedded in such bogus transactions. Pr. CIT invoked revisional jurisdiction under section 263 as he did not concur with view taken by AO in estimating GP on alleged accommodation entries. Pr. CIT further rejected AO's assumption that assessee had made purchases from grey market. Held: Pr. CIT has over stepped while exercising his revisional powers. AO had passed order by estimating GP after examining documents on record and considering various judicial pronouncements. AO had taken one of the possible views by making reasonable assumption that assessee might have procured goods from grey market. This assumption had been accepted in various decisions where revenue had accepted sales/ turnover corresponding to alleged bogus purchases. Since two views were possible and AO had taken one of the possible views to which CIT did not agree, this would not make assessment order erroneous, though it might be prejudicial to the interest of revenue. Since both conditions to trigger section 263 were not satisfied, Pr. CIT erred in invoking his revisional power.
Supported by:CIT v. Max India Ltd. (2007) 295 ITR 282 (SC) : 2007 TaxPub(DT) 1548 (SC), Malabar Industrial Co. Ltd. v. CIT (2000) 243 ITR 83 (SC) : 2000 TaxPub(DT) 1227 (SC), Pr. CIT v. Paramshakti Distributors Pvt. Ltd. 2019 TaxPub(DT) 5788 (Bom-HC), Pr. CIT v. Mohommad Haji Adam & Co. [ITA No. 1004 OF 2016 with 1013 of 2016 with 1059 of 2016 with 1064 of 2016 with 1075 of 2016 with 1095 of 2016 with 1204 of 2016 with 1012 of 2016, dt. 11-2-2019].
FAVOUR : In assessee's favour.
A.Y. : 2011-12 to 2013-14
IN THE ITAT, MUMBAI BENCH
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