Ajay Kalishchandra Bohra (assessee) is a proprietary concern of M/s Ashutosh Industries. The assessee’s case was reopened on the basis of ITO information. The information related to survey action in the case of M/s Union Polypack. It was recorded that the accountant of Polypack made a statement that they made bogus purchases from the assessee’s proprietary concern.
The Assessing Officer (AO) issued notice to the assessee in the reassessment proceedings. The assessee filed a reply with financial statements, bank account statements, VAT returns details of sales made to M/s Unique Polypack, and several other documents. Therefore, the AO accepted the explanation of the assessee and passed an assessment order without making any additions.
The Principal Commissioner of Income Tax (PCIT) invoked section 263 of the Income Tax Act and issued notice to the assessee raising a similar issue. The PCIT observed that the Assessment order passed by AO was erroneous and prejudicial to the revenue.
Therefore, the PCIT passed an order by revising the order of the AO. Aggrieved by the order of the PCIT, the assessee filed an appeal before the ITAT.
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The counsel for the assessee submitted that the AO passed a plausible, reasonable, and legally sustainable order. The counsel also submitted that once AO has taken a reasonable view, the PCIT cannot invoke his revisional jurisdiction.
On the other hand, the counsel for the revenue supported the decision of the PCIT and sought to dismiss the appeal of the assessee.
The two-member bench comprising Pawan Singh (Judicial Member) and Bijayananda Pruseth (Accountant Member) observed that the AO reopened the proceeding by virtue of the ITO report. The tribunal observed the AO acknowledged that the assessee complied with notices and submitted necessary documents.
The tribunal observed that the AO made necessary inquiries during the assessment and satisfied with the explanation of the assessee. The tribunal further observed that the AO considered the report of the ITO for assessment. Therefore, the tribunal held that the PCIT’s revisional order was not sustainable. The tribunal also set aside the PCIT’s order. The appeal of the assessee was allowed.
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