2015 (9) TMI 1555 - AT - Income Tax

Tribunal overturns Tax Commissioner's decision under Section 263 of Income Tax Act

The Tribunal set aside the Principal Commissioner of Income Tax's order assuming jurisdiction under Section 263 of the Income Tax Act. The Tribunal found ... Revision u/s 263 - unexplained cash deposits - Held that:- As seen from the data slips received by the AO from the bank, it refers to the same bank account and the transaction amount but the details were sent twice, as assessee’s account is a joint account with his wife. In fact AO issued a show cause notice letter dt. 04-02-2013, for which assessee replied on 25-02-2013. Ld. Pr.CIT was not correct in stating that AO has not examined vide the notice U/s. 142(1) dt. 03-07- 2012. He simply ignored the subsequent notice available on record and therefore, we are of the opinion that the opinion expressed by the Pr.CIT that AO has not examined second bank account is not correct, both on facts and/or on law. Since the issue was examined by the AO in the course of scrutiny proceedings and has concluded that there is only one account which was already accounted by assessee, no prejudice is caused to Revenue, at least in assessee’s case. Therefore, Pr.CIT is not correct in exercising jurisdiction on this issue. Excess credit - Held that:- AO had examined the turnover in this year and reduced the mobilization advance and also the turnover considered twice for deduction of tax by M/s. Megha Engineering & Infra and accordingly determined the gross receipts. He also concluded the assessee accounted the turnover in later AY. 2011-12 and gave credit for the taxes accordingly. Since this issue was also examined and determined by the AO, we do not find any reason to hold that order is erroneous. Pr.CIT himself has taken the excess credit as turnover, directed to be added as escaped turnover, which in our view is not correct. Moreover, an issue which was already examined by the AO and application of mind by the AO before passing the assessment order cannot be re-examined by Pr.CIT in the course of proceedings U/s. 263. - Assessee appeal allowed. Issues:1. Jurisdiction under Section 263 of the Income Tax Act regarding assessment proceedings.2. Examination of cash deposits, turnover, and TDS credit by the Assessing Officer.3. Errors in the assessment order identified by the Principal Commissioner of Income Tax.4. Disallowance under Section 40(a)(ia) dropped by the Principal Commissioner of Income Tax.Analysis:1. The appeal was against the Principal Commissioner of Income Tax's assumption of jurisdiction under Section 263 of the Income Tax Act, questioning issues examined by the Assessing Officer during assessment proceedings. The Assessee, engaged in civil contracts, filed a return admitting an income of Rs. 52,98,910. The AO estimated income at Rs. 66,11,712, and the total income was assessed at Rs. 69,16,742. The Pr.CIT identified errors in the assessment order related to cash deposits, turnover, and TDS credit, leading to the assumption of jurisdiction under Section 263.2. The Assessee contended that there was only one bank account with Axis Bank, which was properly explained during proceedings. The Pr.CIT disagreed, stating that the assessment order was finalized without proper examination. Regarding excess TDS credit, the Pr.CIT directed a fresh assessment, setting aside the order under Section 263. The Assessee raised grounds challenging the assumption of jurisdiction by the Pr.CIT and the errors identified in the assessment order.3. The Assessee provided documents to support their claim of having only one bank account, which was corroborated by the AO's examination. The Tribunal found that the Pr.CIT's opinion on the second bank account was incorrect as the issue was examined by the AO, causing no prejudice to the Revenue. Similarly, the Tribunal upheld the AO's examination of turnover and TDS credit, finding no reason to hold the order as erroneous.4. Citing legal precedents, the Tribunal emphasized that the Commissioner's power under Section 263 is not limited to existing records but requires prima facie material to show that the tax lawfully exigible has not been imposed. The Tribunal highlighted that loss of revenue due to a permissible course of action by the AO does not make an order prejudicial to Revenue. Based on the principles laid down in legal cases, the Tribunal concluded that the Pr.CIT's jurisdiction under Section 263 was not warranted in this case, setting aside the Pr.CIT's order and allowing the Assessee's appeal.