Power of revision cannot be exercised solely because of a difference of opinion between the AO and CIT

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Power of revision cannot be exercised solely because of a difference of opinion between the AO and CIT

Maharashtra Engineering Vs PR CIT
Power of revision cannot be exercised solely because of a difference of opinion between the AO and CIT and where the issue at hand has otherwise been properly enquired into by the AO.
– Assessee’s appeal allowed: PUNE ITAT
THE assessee is a partnership firm who filed the return of income for the relevant AY. Certain information had come to the AO that the assessee was beneficiary from bogus Hawala purchases during the relevant year. Consequently, the case of the assessee was reopened and notices were issued and the accounts of the assessee was examined. Details were called and assessment was completed wherein the transactions were verified. During the course of assessment proceedings, AO verified that the documentary proof for pruchases from Hawala dealers and its subsequent sales thereof. The AO had verified the transactions and recorded the assessment order that the cheques had been issued in regards to the purchases and the cheques were also received from the parties to whom the sales had been made. The assessee was unable to produce alleged Hawala parties from whom the assessee had made purchases. Consequently, the AO assessed 5% of the purchases as income on the transactions. It was submitted that subsequently a show cause notice was issued by the PCIT asking the assessee to submit a reply.
On appeal, the Tribunal held that,
Whether power of revision can be exercised solely because of a difference of opinion between the AO and CIT and where the issue at hand has otherwise been properly enquired into by the AO – NO: ITAT
++ it was noticed that the reopening the assessment had been done for specific purpose of examining the purchases. The AO after considering the evidences produced came to the conclusion that the addition representing disallowance of 5% of the total purchases would meet the ends of justice. The issue because of which reopening was done, was examined by the AO and after verifying the evidences. the decision had been taken by the AO while passing the assessment order. A perusal of the order passed by the CIT shows that in the show cause notice, the PCIT had mentioned that the disallowance of 5% of the total of such purchases was erroneous and prejudicial to the interest of revenue within the meaning of sec. 263 of the Act. However, when it came to the order passed u/s 263 he does not say as to how the assessment order passed for the AY 2010-11 was erroneous insofar as it was prejudicial to the interest of revenue. CIT failed to answer primary question that if the purchases were going to be treated as bogus and the addition was to be made on the entire purchases what happens to the sales that have been disclosed, as also the stocks by treating the purchases as bogus. A perusal of the assessment order however, shows that these have been examined by the AO and after considering the facts the estimated addition of 5% of purchases hae been made by the AO. Thus, the issues had been examined by the AO and just because the opinion as arrived by the AO was at a variation of the opinion of the PCIT, would not grant the PCIT the powers of revision u/s 263 of the Act. Thus, on merits, the order passed u/s 263 stands set aside. The tribunal were not going into the technical issues as had been discussed in this order as the tribunal had on merits set aside the revisional order passed u/s 263 of the Act
ITA No. 859/Pun/2018
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