TaxTMI 
TaxTMI 
2022 (4) TMI 545
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.... by the Appellant. 3. The appellant craves leave to add, amend or alter the aforesaid grounds of appeal at the time of hearing, if the need arise." 2. Brief facts of the case are that the assessee is a company engaged in business of electrical installation and commissioning activities, filed its return of income for Assessment Year (AY) 2013-14 declaring income of Rs. 96,72,140/-. The return of income was selected for scrutiny. The Assessing Officer after making various enquiries made various additions/disallowance consisting of disallowance on account of delay in deposit in contributions of employ EPF and ESI, disallowance of interest under section 40A(ia)(a) of the Income Tax Act, 1961 (in short, the Act) and disallowance out of interest paid on TDS and disallowance under section 14A, while passing assessment order 15.01.2016. The assessment order was revised ld. Pr.CIT by exercising his jurisdiction under section 263 dated 20.03.2018. Before passing, the revision order, the ld. Pr. CIT, on perusal of assessment record noted that assessee has shown the sales of services above ten lakh and have shown total revenue on account of rendering service of Rs. 25,40,05,845/-. ....
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.... Advance Received Year in which sales booked 1. Weal Developers 1526795 30557 1175280 F.Y. 203-14 2. Synegry Developers 1000650 20013 997877 F.Y. 2014-15 3. Sar Infracon 5241574 104831 5031461 F.Y. 2014-15 4. GurangYogeshbhai Shah 8124446 162489 0 F.Y. 2012-13 HaziraLng Pvt Ltd 1686271 36556 0 F.Y 2012-13 1. Section 194C of the income tax Act provides that" if tax is to he deducted either at the time of credit of such a sum to the account of the payee, or at the time of payment thereof in cash or by issue of cheque or by any other mode whichever i$ earlier". By following this clause weal Developers, Synergy Developers & Sar Infracon, has deducted TDS while making advances to assessee. Hence the assessee has not taken advances as sales. Assesses has already shewn, as sales in the year when work is completed. 2. In Sr. No. 4, we are providing ledger of Gaurang Yogeshbhai Shah (Prop. of Tejasvi Const.) for your kind verification. 3. In Sr. No, 5, information provided in notice was found clerical mistake as amount of service match with the name. Adani Hazira po....
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....ommitted clerical mistake while preparing audit report and a certificate from the auditor regarding the same has been submitted. In certificate dated 12.03.2018 auditor stated that by mistake while report in form 3CD (item 21(ii) of report) in respect of state sale tax, custom duty, excise duty or any other indirect tax, levy cess, import etc. has wrongly mentioned that schedule 22, other expenses shown service tax (Sr. No. 22) and VAT (Sr. No. 31 as expense, so it shown that its already passed through profit and loss account. During the assessment proceedings, the Assessing Officer has not seen this issue which is erroneous and requires that detail verification, which ought to have been made in this case. 6. On the basis of his above observation, the ld. Pr. CIT, held that the assessment order is erroneous in so far it is prejudicial to the interest of revenue. The assessment order was set aside with the direction to frame the assessment de novo after granting reasonable opportunity of hearing to the assessee. Aggrieved by the order of ld. Pr.CIT, the assessee has filed present appeal before this Tribunal. 7. We have heard both the submissions of Learned Authorized Represent....
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....ipts of all claimed TDS/TCS certificates were shown in A.Y. 2013-14. ii) Copies of acknowledgments of return of income and computation related to brought forward losses, if any. iii) Copy of assessment order passed in your case under Section. 143(3)/144 in last four years, if any." 9. The ld. AR of the assessee further submits that assessee filed its reply/explanation vide reply dated 23.11.2015, along with reply, filed the copy of assessment order of Assessment Year 2010-11 and 2012-13 and audited accounts and evidence in support of service tax payment in addition to other details. The assessee vide its reply dated 23.12.2015 furnished reconciliation of figures mentioned in Form 26AS regarding TDS and TDS as per books of assessee and TDS as per income tax return in the following memo. "II. Above difference comprised of TDS reported by following parties: (ii)(a) Rahul Raj Estates Pvt. Ltd. Rs. 46,917/- (ii)(b) Rahul Raj Estate Pvt. Ltd. Rs. 1,877/- III. Out of Rs. 46,917/- mentioned at (ii)(a) for Rahul Raj Estate Pvt. Ltd. Rs. 25,350/- pertains to sales made by Sach Electro Mech Pvt. Ltd. (assessee). Rs. 21,567/- does not pertain ....
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....y reported by auditor that indirect taxes were not passed through profit and loss account, although, it was actually passed through profit and loss account which is evident from Schedule-22 of other expenses where service tax and VAT has been mentioned at serial No. 25 & 31 respectively. The ld. AR of the assessee submits that the assessment for the A.Y. 2010-11 and 2012-13 were also made under scrutiny assessment on 20/03/2013 and 03/03/2015 respectively. The assessee's method of accounting regarding mercantile system and inclusive method were accepted by the assessing officer in those years also. No addition for difference between TDS reflected in Form No. 26AS and TDS embedded in actual sales was made in the past. 13. The ld. Pr.CIT while issuing show cause notice on 07/02/2018 alleged that in respect of five parties although sales were exceeding Rs. 10.00 lacs as reflected in Form 26AS which was not shown in the list of the details of the sales exceeding Rs. 10 lacs during the assessment proceedings and that service tax and VAT were not routed through profit and loss account as mentioned in item no. 21 (ii) of Form No. 3CD, the sales shown the assessee were exclusive of thes....
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....required to be shown by the assessee, even when mercantile system of accounting was followed. In respect of Gaurang Yogeshbhai Shah, proprietor of Tejasvi Construction, the ld. Pr.CIT stated that the matter required to be verified whether the assessee has offered the income from sales or not. Regarding fifth party namely Hazira Lng Pvt. Ltd., the ld. Pr.CIT has not made any comment. On the second issue, with regard to indirect taxes, not routed through profit and loss account and that the assessing officer has not seen this issue and the assessment order was erroneous and required verification. The ld. AR of the assessee submits that the assessing officer passed the assessment order after making proper inquiry, which should have been made by him. The ld. AR reiterated that the assessee has reconciled the difference as per the receipt in the bank as not all the receipts from the customers partake character of income in the current year as the assessee is maintaining the accounts on mercantile basis. Though, the customers are obliged to deduct tax under Section 194C of the Act on the payment made but the assessee is not required to offer the income on advances received. The income....
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....ymers [341 ITR 537] (Delhi HC) 20. CIT vs Ganpat Ram Bishnoi [296 ITR 0292] (Raj HC) 21. CIT vs Jain Constructions Co [257 ITR 0336] (Raj HC) 22. Sree Alankar vs. PR.CIT [ITA no. 108/CTK/2018] (CTK Trib.) 23. JRD Tata Trust vs. DCIT [122 taxmann.com 275] (Mum. Trib.) 24. Narayan Tatu Rane v/s ITO [2016] 70 taxmann.com 227 (Mum) (Trib) 25. Indus Best Hospitality & Realtors Pvt. Ltd. vs. PR.CIT [ITA No. 3125/mum/2017] (Mum Trib) 26. Shanti Krupa Estate Pvt. Ltd. vs. ACIT - [1252/Ahd/2015] (Ahd Trib) 14. The assessee has also filed following documents on record: • Letter filed by assessee before PR.CIT, • Letter filed by Auditor before PR.CIT., • Notice issued by PR.CITunder Section 263, • Assessment Order passed under Section 143(3), • Letter filed before assessing officer in assessment proceedings, • Letter filed before assessing officer in assessment proceedings, • Acknowledgement of Return of Income along with Computation of Total Income, • Audit Report along with Audited Financial Statements, • Audit....
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....Ltd. (2013) 32 taxmann.com 153 (Calcutta) and the decision of this Tribunal in the case of Anuj Jayendra Shah Vs Pr.CIT in ITA No. 2546/Mum/2015 dated 30/12/2015. 16. We have considered the rival submissions of the parties and have gone through the orders of the lower authorities. Basically, the ld. Pr.CIT in his show cause notice under Section 263 of the Act identified two issues i.e. first relates to the issue of TDS reflected in Form 26AS in respect of five parties, of which the sales has shown is exceeding Rs. 10.00 lacs and second, the service tax and VAT were not routed through profit and loss account as mentioned in item No. 21(ii) of audit report. 17. First we take the second issue for our consideration. We find that in reply to the show cause notice under Section 263, the assessee specifically stated that while reporting in Form No. 3CD (audit report), at item No. 21(ii) of the report and note No. 22 of other expenses of service tax or VAT debiting from profit and loss account, the assessee explained that it was auditor's made clerical mistake while preparing report. The assessee furnished certificate from auditor dated 12/03/2018, copy of which was also placed on re....
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....t assessee while filing its reply vide dated 12.03.2018 to show cause notice issued under Section 263 of the Act, furnished reconciliation of Form No. 26AS and sales in tabular form, even during the course of assessment proceedings, the assessee reconciled the same with reference to the credit in the bank accounts. The assessee again explained in respect of first three parties viz. Weal Developers, Synergy Developers and Sar Infracon, the advances were received on which the TDS was made for which the sales was accounted in succeeding years in respect of the advances. For the fourth party i.e. Gaurang Yogeshbhai Shah, it was submitted that no advances were received and therefore the sales were shown in the list of sales exceeding Rs. 10 lacs. The fourth party i.e Gaurang Yogeshbhai Shah, who is the proprietor of Tejasvi Construction and the sales were shown in the name of Tejasvi Construction (Gaurang Shah) in the list. The allegation of the ld. Pr.CIT that the sales in respect of Gaurang Yogeshbhai Shah were not shown in the list was wrong. For fifth party i.e. Hazira Lng Pvt. Ltd. the assessee stated that the sales were less than Rs. 10 lacs and therefore were not shown in the lis....
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....gree, it cannot be treated as an erroneous order prejudicial to the interests of the revenue unless the view taken by the Income-tax Officer is unsustainable in law. 21. Further, Hon'ble Bombay High Court in CIT Vs Gabriel India Ltd (233 ITR 108 Bom /71 Taxman 585) held that the power of suo-moto revision under sub-section (1) of section 263 is in the nature of supervisory jurisdiction and the same can be exercised only if the circumstances specified therein exist. Two circumstances must exist to enable the Commissioner to exercise power of revision under this subsection, viz., (i) the order is erroneous; and (ii) by virtue of the order being erroneous prejudice has been caused to the interests of the revenue. It has, therefore, to be considered firstly as to when an order can be said to be erroneous. One finds that the expressions 'erroneous', 'erroneous assessment' and 'erroneous judgment' have been defined in Black's Law Dictionary. According to the definition, 'erroneous' means 'involving error; deviating from the law'. 'Erroneous assessment' refers to an assessment that deviates from the law and is, therefore, invalid, and....
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....nt also must be fulfilled. There must be some prima facie material on record to show that tax which was lawfully exigible has not been imposed or that by the application of the relevant statute on an incorrect or incomplete interpretation a lesser tax than what was just has been imposed. Therefore, in order to exercise power under section 263(1) there must be material before the Commissioner to consider that the order passed by the ITO was erroneous insofar as it is prejudicial to the interests of the revenue and that it must be an order which is not in accordance with the law or which has been passed by the ITO without making any enquiry in undue haste. An order can be said to be prejudicial to the interests of the revenue if it is not in accordance with the law in consequence whereof the lawful revenue due to the State has not been realized or cannot be realized. There must be material available on the record called for by the Commissioner to satisfy him prima facie that the aforesaid two requisites are present. If not, he has no authority to initiate proceedings for revision. Exercise of power of suo-moto revision under such circumstances will amount to arbitrary exercise of pow....