SHRI KAMALKANT SHANTILAL JARIWALA HUF,SURAT vs. PCIT-1, SURAT

The assessee has raised the following grounds of appeal: “1. On the facts and circumstances of the case as well as law on the subject, the learned Pr. Commissioner of Income-tax-1, Surat has erred in passing revisionary order u/s 263 of the I. T. Act, 1961 setting aside the order of Id. assessing officer passed u/s 147 r.w.s. 144B of the I. T. Act, 1961 dated 03.03.2023 for the year under consideration although said order is neither erroneous nor prejudicial to the interest of revenue 2. On the facts and circumstances of the case as well as law on the subject, the learned Pr. Commissioner of Income-tax has erred in holding that the assessee has made bogus purchases to the tune of Rs. 10,48,320/- and the same is not considered by assessing officer during the assessment proceedings. 3. It is therefore prayed that order passed by Pr. Commissioner of Income-tax u/s 263 of the I. T. Act, 1961 setting aside the order of assessing officer and directing assessing officer to pass fresh assessment order may please be quashed 4. Appellant craves leave to add, alter or delete any ground(s) either before or in the course of hearing of the appeal.” 3. The assessee filed return of income u/s.139(1) of the Income Tax Act, 1961 (in short, “the Act”) on 01.10.2018 for A.Y. 2018-19 declaring a total income of Rs.7,88,200/-. On the basis of credible information received from Investigation Wing, the Assessing Officer observed that the assessee was one of the beneficiaries who made bogus purchases to the tune of Rs.10,48,200/- (excluding GST) from bogus entity M/s. S. K. Enterprise during the year under consideration. The case of the assessee was reopened u/s 147 of the Act and notice u/s 148 of the Act was issued on 31.03.2022. The assessee filed response to show cause notice dated 28.01.2023 as well as on 17.12.2022. The assessee also filed audit report, ledger account of M/s. S. K. Enterprise in assessee’s book purchase invoices including delivery note, transportation receipts and bank statements highlighting payment made to M/s. S. K. Enterprise as well as a party-wise purchase summary before the Assessing Officer during the assessment proceedings. After taking cognizance of the details filed by the assessee, the Assessing Officer completed assessment on 03.03.2023 u/s 147 r.w.s. 144B of the Act thereby accepting the total return of income. The PCIT observed that while going through the transportation receipts, invoices are dated 2018, whereas, transporter’s receipts are dated 2017. Thus, PCIT observed that there is no co-relation between the purchases from the impugned parties and corresponding sales was established by the assessee. Therefore, the PCIT invoked Section 263 of the Act and issued show cause noticed on 25.09.2024. The assessee filed written submissions and the paper book before the PCIT. The PCIT, after taking into cognizance of the same, held that the assessment order passed on 03.03.2023 u/s 147 r.w.s. 144B of the Act is erroneous and prejudicial to the interest of Revenue and, thus, set aside the assessment order with a direction to the Assessing Officer to pass a fresh assessment order.

Being aggrieved by the order u/s 263 of the Act, the assessee filed appeal before us.

The Ld. Authorized Representative (in short “the Ld. AR”) for the assessee submitted that the Assessing Officer has reopened the assessee’s case on the very same basis of alleged bogus purchases from M/s. S. K. Enterprise and considering the assessee as one of the beneficiaries. The reopening u/s 147 of the Act was followed by the procedure and the assessee has given all the details including purchase invoices, delivery note, transportation receipts and bank statement highlighting payment made to M/s. S. K. Enterprise. The assessee has also given party-wise purchase summary, wherein the assessee has also stated the other parties from whom the assessee has purchased goods. The Ld. AR submitted that the PCIT has doubted the transportation bills/invoices thereby stating that the assessee has given invoices of 2018, whereas, transportation receipts are dated 2017. But, these are some of the exceptional invoices and all other invoices were verifiable and verified by the Assessing Officer during the assessment stage. The PCIT re-verified the evidences, which was already verified by the Assessing Officer at the reopening stage u/s 147 proceedings. Thus, the PCIT is not justified in refusing the view taken by the Assessing Officer and invoking revisionary jurisdiction u/s 263 of the Act.

The Ld. Departmental Representative (in short “Ld. DR”) submitted that the Assessing Officer has not properly enquired the evidences put up before him and there was no application of mind by the Assessing Officer and, therefore, the PCIT has rightly invoked Section 263 of the Act. The Ld. DR relied upon the order u/s 263 of the Act.

We have heard both the parties and perused all the relevant materials available on record. It is pertinent to note that the assessee has given the details related to the transportation from January 2018 which is in corresponding to the A.Y. 2018-19 and, therefore, the details were properly verified and, in fact, the payment to that was also reflected in the ledger account of the assessee, which is in February 2018 through RTGS, the assessee has given all the details before the Assessing Officer and also the Assessing Officer has pointed the question through various notes and show cause notices and has thoroughly enquired the details. Thus, the invocation of Section 263 of the Act by this PCIT is amounting to second opinion and, in fact, the genuineness of transaction was properly established by the assessee and, hence, revisionary power cannot be exercised in the present case as there is no prejudicial interest involved in the present assessee’s case.

In result, appeal of the assessee is allowed.

The Appellant 2. The Respondent 3. CIT- concerned 4. DR, ITAT, Surat 5. Guard File By order, Digitally signed by HEMA HEMA KISHORE KISHORE JAKKA JAKKA Date: 2026.10.29 18:17:49 +05'30' Assistant Registrar/Sr.PS/PS ITAT, Surat Bench