TaxTMI 
TaxTMI 
TaxTMI 
2022 (4) TMI 545
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...., 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/-. It was further noted that the assessee has claimed TDS credit of R....
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.... 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 port Pvt. Ltd. as per 26AS and Hazira Ing Pvt Ltd. have sales below 10 lacs 4. In the scrutiny assessment proceedings for the AX 2013-14, MAS already reviewed in the submiss....
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....ke 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 Representative (ld. AR) for the assessee and Learned Commissioner of Income tax- Departmental Representative (ld. CIT-DR) for the Revenue and have gone through the order of lower authorities carefully. ....
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.... 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 to sales of the assessee. Rs. 21,567/- are REPORTED incorrectly M/S Rahul Raj Estate Pvt. Ltd. And they have filed a correction form for rectifying above mistake. IV. Balance Rs. 25,350/- pertains to sales made by the assessee. The assessee has offered sales to its incom....
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....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 these items. The assessee filed its detailed reply vide letter dated 12.03.2018 in response to show cause notice issued under Section 263 of the Act. With reply, the assessee furnished reconciliation of Form No. 26AS and sales in tabular form. Even during the course of assessment proceedings, the a....
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....egarding 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 is required to be offered by assessee only after raising of the bill on completion of work as per mercantile system of accounting. The same method of accounting was being followed by the assessee in past years where scrutiny assessment was made. The payments of service tax and VAT are duly refle....
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....] (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 Report along with Return of Income, * Statement showing partywise sales of more than 10 lacs, * Ledger A/c of Weal Developers for A.Y. 2013-14 to 2015-16,L * Ledger A/c of Synergy Developers for A.Y. 2013-14 to 2015-16, * Ledger A/c of Sar Infracon for A.Y. 2013-14 to 2015-16, * Ledger A/c of Gaurang Yogesh Bhai Shah, * Ledger A/c of Hazira LNG Pvt. Ltd., * Ledger A/c of Adani Hazira Port Pvt. Ltd. 15. On the other hand, the ld. CIT-DR appearing on behalf of the Revenue has supported the order of the ld. Pr.CIT. The ld. CIT-DR submits that the assessment ord....
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....port. 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 record, explaining that the State Sales Tax, Custom duty and Excise duty or any other indirect tax, levy, cess, import etc. as mentioned wrongly that such indirect taxes are not passed through profit and loss account. We find that in Schedule-22 (other expenses), forming part of profit and loss account, the assessee has included service tax and VAT, thus it is routed through profit and loss account. Even otherwise, the assessee had pleaded that they were following inclusive method of accounting for the purpose of indirect taxes. Such method is regularly followed by the assessee. This fact is not disputed by ld Pr CIT, despite bringing this fact to his notic....
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....eived 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 list. The amount of Rs. 6,45,286/- as referred by the ld. Pr.CIT in his show cause notice was in respect of Adani Hazira Port Pvt. Ltd. and therefore it was a clerical mistake committed by the ld. Pr.CIT. We find that the assessee has also explained the facts before assessing officer. In our view, the assessing officer after considering the reply of assessee has adopted a reasonable, plausible and legally sustainable view. 20. The Hon'ble Supreme Court in the case of Malabar Industrial Co. Ltd. v. CIT[2000] 243 ITR 832 (SC), held that the prerequisite for the exercise of jurisdiction by the Commissioner suo-motu is that the order of the Income-tax Officer i....
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....ce 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 is a defect that is jurisdictional in its nature, and does not refer to the judgment of the Assessing Officer in fixing the amount of valuation of the property. Similarly, 'erroneous judgment' means 'one rendered according to course and practice of Court, but contrary to law, upon mistaken view of law, or upon erroneous application of legal principles. The Hon'ble High Court also held that from the definitions it is clear that an order cannot be termed as erroneous unless it is not in accordance with law. If an assessing officer acting in accordance with law makes a certain assessment, the same cannot be branded as erroneous by the Commissioner simpl....
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.... 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 power. It is well-settled that when exercise of statutory power is dependent upon the existence of certain objective facts, the authority before exercising such power must have materials on record to satisfy it in that regard. If the action of the authority is challenged before the Court, it would be open to the Courts to examine whether the relevant objectives were available from the records called for and examined by such authority. The decision of the ITO could not be held to be 'erroneous' simply because in his order he did not make an elaborate discussion in that regard. Moreover, the Commissioner himself, even after initiating proceedings for revision ....