TaxTMI 
TaxTMI 
2021 (6) TMI 168
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.....107/SRT/2020 for AY 2015-16, in the case of Shyam Corporation, have been taken into consideration for deciding the above appeals en masse. 3. The grounds of appeals raised by the assessee in lead case in ITA No.107/SRT/2020 for AY 2015-16 are as follows: "1. On the facts and in circumstances of the case as well as law on the subject, the learned Pr. CIT has erred in passing the order u/s 263, although the assessment order passed u/s 143(3) of the I.T. Act, 1961 was neither erroneous nor prejudicial to the interest of the revenue. 2. On the facts and in circumstances of the case as well as law on the subject, the learned Pr. CIT has erred in setting aside the assessment with the direction to frame the assessment de novo after rejecting the allowance of claim of expenses u/s 37 of the Act and allowance of set off of carry forwarded losses. 3. It is therefore prayed that above order passed by Pr. CIT u/s 263 may please be quashed or modified as your honours deem it proper. 4. Appellant craves leave to add, alter or delete any ground(s) either before or in the course of hearing of the appeal." 4. The relevant material facts, as culled out from....
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....accordingly. However, against the disclosed income of Rs. 8,20,00,000/-, the firm has shown total income of Rs. 7,88,56,573/- in the return of income for A.Y. 2015-16 which is less by Rs. 31,43,427/-. You have claimed this amount of Rs. 31,43,427/- as expenses against the disclosed income, which is irregular in view of provisions of section 115BBE of the Act. As per the provisions of section 115BBE(2) of the I.T. Act, no deduction in respect of any expenditure or allowance shall be allowed to the assessee under any provision of the Act in computing the income referred to in clause (a) of sub- section (1) i.e. the amount of income-tax calculated on income referred to in section 68, section 69A, section 69B, section 69C or section 69D, at the rate of thirty per cent. Despite such facts and circumstances and specific provisions of law in section 115BBE(2) of the Act, Assessing Officer has completed assessment determining total at Rs. 7,88,56,573/- and thereby allowing your erroneous claim to the tune of Rs. 31,43,427/-, rendering the assessment so completed as erroneous in so far it is prejudicial to the interest of revenue. 3. The undersigned, therefore, propose to ....
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....te business income. Copy of VAT Assessment order is enclosed herewith for your kind consideration. Copy of letter filed with the service tax department for payment made on disclosed income is enclosed herewith in support of service tax paid by us and treated as a business income during the income tax survey was borne by us as it is inclusive of taxes and hence debited to the profit and loss account against amount of declared income credited to the profit and loss account. The indirect taxes i.e. service tax and VAT are directly related to the disclosed income which is credited to profit and loss account hence the claim of such taxes made by us against the income disclosed in the survey is correct and allowed in the natural justice. During the survey proceeding, the statement recorded and the partner has stated that this income is on money received of the project of the partnership firm. Survey resulted in disclosing the additional income of Rs. 8,20,00,000/- for the A.Y.2015-16. We have credited the same in the profit and loss account, Further, in the computation of income, the income from business and profession of the year is set off by the brought forward losse....
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....y much clear that the we have not availed or taken benefit of any incentive scheme of government hence it will not affect the revenue of the government, Further, Now there is no sale pending of flats in our project and hence if the department makes addition to our total income in the A.Y.2015-16, the amount disallowances has to be carried forward to the subsequent years in which we have already paid income tax on the total income and the benefit of set off of carried forward losses is not available as the project is completed and the firm has closed the business activity therefore we can set off this losses against the business income and hence it will create unnecessary dispute litigation in the future and not affect the revenue of the government. Considering the above facts in case the department is not allowing such business expenses against the declared business income credited to the profit and loss account than the business loss of same amount will be carried forward and eligible for set off against the business income of AY 2016-17 in which total taxable income is of Rs. 1,08,40,065/- which is more than the amount of total expenses debited to the profit and loss acc....
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....clared by him as income from business, "over and above" the money disclosed by him under the head business income. Learned Counsel took us through paper book page no.14, wherein computation of total income and details of taxes paid by assessee has been stated. The notice issued by the ld. PCIT under section 263 of the Act, is placed on paper book page No.11. Learned Counsel pointed out that ld. PCIT did not find any error in the assessment order and he stated that where two views are possible and the Assessing Officer has adopted one view on which the ld. PCIT does not agree, that does not mean that the order passed by the Assessing Officer is erroneous. Learned Counsel submitted that assessee disclosed the 'on money', under the head business income, therefore, he is entitled to claim the expenses relating to that income. The ld Counsel took us through paper book at page no.34 where under the head indirect expenses VAT expenses to the tune of Rs. 17,24,736/- has been shown by the assessee. Learned Counsel submitted that assessee has only said project and he has income from that project only. Learned Counsel also took us through paper book page no.42 wherein answer and questions ....
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....iction necessary to assume revisional jurisdiction is there existing before the Pr. CIT to exercise his power. For that, we have to examine as to whether in the first place the order of the Assessing Officer found fault by the Principal CIT is erroneous as well as prejudicial to the interest of the Revenue. For that, let us take the guidance of judicial precedents laid down by the Hon'ble Apex Court in Malabar Industries Ltd. vs. CIT [2000] 243 ITR 83(SC) wherein their Lordship have held that twin conditions needs to be satisfied before exercising revisional jurisdiction u/s 263 of the Act by the CIT. The twin conditions are that the order of the Assessing Officer must be erroneous and so far as prejudicial to the interest of the Revenue. In the following circumstances, the order of the AO can be held to be erroneous order, that is (i) if the Assessing Officer's order was passed on incorrect assumption of fact; or (ii) incorrect application of law; or (iii)Assessing Officer's order is in violation of the principle of natural justice; or (iv) if the order is passed by the Assessing Officer without application of mind; (v) if the AO has not investigated the issue before him; then the....
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....ntially completed in the assessment year 2015-16 and after completion of the said project there is no other project in the hand of the assessee so that he can claim remaining expenses of Rs. 31,43,427/-. Taking into account these factors, the assessing officer took the possible view that let the assessee should claim remaining expenses of Rs. 31,43,427/- out of the Revenue income of Shrugal Residency. The statement taken by the survey team during the survey, vide answer to question no.3 (paper book page 37), where the assessee has stated clearly that he does not have any income other than "construction activities", therefore, the assessee does not have any option but to set off remaining expenses of Rs. 31,43,427/- from the construction income. We note that Shri Jigneshbhai Naranbhai Balar, has admitted receipt of unaccounted income of the firm, in the form of 'on money' of Rs. 8,20,00,000/- and disclosed the same as income over and above the regular income of the firm. The phrase "over and above the regular income of the firm" does not mean that it is not a business income of the firm. The 'on money' of Rs. 8,20,00,000/- is business income of the firm and the assessee nowhere s....
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....to 42. The assessee`s paper book page no.43, answer to question no.14, the assessee stated that Shyam Corporation has only one project which is 'Shrungal Residency' which has completed up to 70% level. It is quite clear that the assessee had made the compliance during the assessment proceedings and submitted every type of document and explanation required by the assessing officer. The Assessing Officer after doing detailed examination of the documents and taking into account the submissions of the assessee, passed the assessment order. The assessment order was passed by AO with proper application of mind. Therefore, these papers and documents submitted by the assessee clearly show that the assessee was very serious in submitting the documents before AO and making the compliance of notices under section 142(1) during the assessment stage and the Assessing Officer after doing detailed scrutiny of these documents and evidences, has passed the assessment order. Based on the facts and documents submitted by assessee during assessment stage, it can be said that Assessing Officer has applied his mind and hence the order passed by the Assessing Officer should not be erroneous. 14. The l....
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....to the interest of revenue. Therefore, based on this factual position, the order passed by the AO under section 143(3) should not be erroneous. We note that Coordinate Bench of I.T.A.T., Kolkata in the case of Plastic Concern vs. ACIT [61 TTJ 87 (Cal) has held that mere possibility of gathering more material to prove the claim of the assessee wrong would not make the concluded assessment erroneous so long as the ld. A.O. had acted judiciously and conducted enquiries in the course of assessment proceedings. We note that Ld. A.O. having examined the books of accounts namely cash book, Ledger, Bank Book, bills & vouchers/invoices and the bank statements etc. and having satisfied himself about the correctness of the same and taking into account explanation of the assessee, completed the assessment and, therefore, there cannot be a reason to say that the A.O. has failed to conduct necessary enquiry before accepting the claim of the assessee. 15. We note that Ld. Pr. C.I.T. on analysis of assessment records derived satisfaction for issuing the impugned show-cause notice u/s. 263 of the Act. The expression 'record' as used in section 263 of the Act is comprehensive enough to incl....