2017 (3) TMI 383

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....e-tax Act, 1961 (in short 'the Act') and consequential assessment order passed pursuant thereto respectively. ITA No.1475/Ahd/2011 - AY 2006-07 2. We shall therefore first address the issues arising out of the order of the CIT passed u/s 263 assailed by the assessee. 3. The assessee filed return of income for AY 2006-07 declaring total income of Rs. 8,77,710/-. Assessment u/s 143(3) was completed on a total income of Rs. 9,38,990/-. Subsequently, on examination of the assessment records, it was observed by the Commissioner that the TDS (Tax Deducted at Source) Certificates (Form 16A) filed by the assessee showed labour charges receipt amounting to Rs. 1,10,82,073/-. However, in the Profit & Loss Account, the labour charges received....

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....omotive Ltd. recorded the aforesaid expenses in the subsequent year i.e. FY 2005-06 relevant to AY 2006-07. The TDS was accordingly deducted in the subsequent year by the deductor. The difference in the accounting treatment between by the assessee (payee) qua the payer has resulted in the aforesaid difference of Rs. 16,03,521/-. While the assessee has accounted for the aforesaid income in the AY 2005-06, the payer namely M/s. Setco Automotive Ltd. has recorded the expenditure in the subsequent year. Therefore, in essence, there is no under assessment but the difference is owing to recording of income in the different financial year than what is controverted by the CIT. The TDS credit has been, albeit, claimed in the subsequent year which ou....

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....ous and prejudicial to the interests of the Revenue. Thus, recourse under Section 263 of the Act cannot be taken unless the twin conditions of order being (i) erroneous as well as (ii) prejudicial to the interests of the Revenue is satisfied. Both the conditions are cumulative and to be satisfied simultaneously. In the background of the aforesaid mandate of law, we shall now test the action of the Commissioner u/s 263 of the Act. We note the facts marshaled on behalf of the assessee that the income towards differential amount of Rs. 16,03,521/- noticed by the Commissioner has been already offered for taxation in the year prior to the impugned AY 2006-07. The TDS has been claimed in the current assessment year as per certificate issued by th....