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2022 (10) TMI 900

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....erials available on record. We find that assessee is involved in the activities of civil work by being a developer of infrastructure projects. The assessee filed its revised return of income for the A.Y.2009-10 on 03/09/2010 declaring total income of Rs.128,80,55,960/-. The assessment was completed u/s.143(3) of the Act on 27/12/2011 determining total income of the assessee at Rs.128,85,69,751/- after making disallowance u/s.14A of the Act in the sum of Rs.1,56,850/- and on account of software charges in the sum of Rs.3,56,941/-. In the said assessment proceedings, the ld. AO did ask for queries for complete reconciliation of TDS vis a vis its related income. All those details were duly filed before the ld. AO by the assessee. In the said assessment, TDS credit claimed by the assessee in the sum of Rs.30,73,98,902/- was restricted to Rs.28,43,90,544/- by the ld. AO. Subsequently on 10/09/2012, a rectification order u/s.154 of the Act was passed by the ld. AO revising the TDS credit figure to Rs.29,94,75,453/- after due verification of the TDS reconciliation vis a vis its income. 3.1. A search and seizure operation as carried out at the premises of the assessee u/s.132 of the Act o....

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....e did not match. According to ld. PCIT, non-consideration of both these issues had made the order of the ld. AO erroneous warranting revision u/s.263 of the Act. The ld. PCIT also observed that there is an amount of Rs.335.32 Crores representing increase in advance from contractees appearing in the balance sheet which has also been subjected to TDS but the same is not offered as income in the P & L account. According to the ld. PCIT, since this amount has been subjected to TDS, the same even though reflected in the balance sheet of the assessee is required to be taxed as income of the assessee for the year under consideration. The ld. PCIT issued first show-cause notice dated 17/03/2022 expressing his mind to invoke revision jurisdiction u/s.263 of the Act. In this show-cause notice dated 17/03/2022, the ld. PCIT had not even mentioned anywhere in the show-cause notice that the aforesaid aspects were not examined or verified by the ld. AO. Hence, there was not even a whisper about lack of enquiry by the ld. AO on the aforesaid two issues. Subsequently, the show-cause notice dated 23/03/2022 was issued to the assessee wherein the ld. PCIT had observed that there was a complete failu....

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....vances from contractees in the sum of Rs.332 Crores was subjected to TDS but not offered to tax by the assessee and similarly there was an excess TDS credit granted by the ld. AO in the sum of Rs.67,84,772/-. In this regard the assessee submitted that there were three proceedings that had been completed on the assessee wherein the aforesaid issues were duly examined by the ld. AO:- (i) During original assessment proceedings completed on 27/12/2011 u/s.143(3) of the Act (ii) During rectification proceedings u/s 154 of the Act completed on 10/09/2012 (iii) During first search assessment proceedings completed u/s.143(3) r.w.s. 153A of the Act dated 29/05/2014 3.6. It was submitted that in all these proceedings, the detailed reconciliation statement was filed by the assessee with regard to turnover as per Form 26AS and turn over as per profit and loss account and the TDS credit as per Form 26AS vis a vis TDS claimed by the assessee. It was specifically brought to the attention of the ld. PCIT that a sum of Rs.332 Crores was shown as advance in the balance sheet towards mobilisation advance on which tax has been deducted at source but income is not eligible to be offered by the a....

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....led detailed reconciliation statement for both before all the authorities including the ld. PCIT during the revision proceedings. 3.7. The ld. PCIT completely ignored all the aforesaid contentions of the assessee and proceeded to treat the order passed by the ld. AO as erroneous and prejudicial to the interest of the Revenue on the ground that the ld. AO had not made complete enquiries with regard to these issues and by invoking Explanation 2 to Section 263 of the Act which came into effect only from 01/06/2015, set aside the assessment order to redo the assessment in respect of aforesaid two issues after conducting necessary enquiries thereon. Aggrieved, the assessee is in appeal before us. 3.8. At the outset, we find that assessment for A.Y.2009-10 was an unabated assessment as on the date of second search conducted on 21/07/2017. Admittedly, there was absolutely no incriminating material found during the course of second search relatable to mismatch in turnover between 26AS and profit and loss account and mismatch in TDS credit by the search party. The Hon'ble Jurisdictional High Court in the case of Continental Warehousing Corporation reported in 374 ITR 645 had categorically....

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....he contentions of the assessee in the said search assessment. Even if there is some error in that order, again the section 263 time limit for the ld. PCIT would expire by 31/03/2017 in terms of Section 263(2) of the Act. Hence, by in any case, the invocation of the revisionary jurisdiction by the ld. PCIT u/s.263 of the Act in March 2022 is squarely barred by limitation. Reliance in this regard is placed on the decision of the Hon'ble Supreme Court in the case of Alagendran Finance Ltd reported 293 ITR 1 wherein it was held as under:- "15. We, therefore, are clearly of the opinion that keeping in view the facts and circumstances of this case and, in particular, having regard to the fact that the Commissioner of Income-tax exercising its revisional jurisdiction reopened the order of assessment only in relation to lease equalization fund which being not the subject of the reassessment proceedings, the period of limitation provided for under sub-section (2) of section 263 of the Act would begin to run from the date of the order of assessment and not from the order of reassessment. The revisional jurisdiction having, thus, been invoked by the Commissioner of Income-tax beyond the per....

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....rounds:- a) It is barred by limitation; b) A.Y.2009-10 being unabated assessment as on the date of search on 21/07/2017 and admittedly there was no incriminating material found during the course of search relatable to mismatch in gross receipts and mismatch in TDS credit. Hence, the ld. AO could not have disturbed the earlier concluded assessments in view of the decision of the Hon'ble Jurisdictional High Court in the case of Continental Warehousing Corporation reported in 374 ITR 645; c) Explanation 2 to Section 263 of the Act has been invoked only in the revision order passed in the 263 of the Act without giving show-cause notice to the assessee in that regard. Hence, by placing reliance on the decision of the Hon'ble Gujarat High Court in the case of Shreeji Prints Pvt. Ltd., reported in 130 taxmann.com 293, the order passed by the ld. PCIT u/s.263 of the Act becomes unsustainable in the eyes of law; d) Adequate enquiries with regard to the disputed issues were already carried out by the Assessing Officer in three independent proceedings; e) Even on merits, the assessee had furnished detailed reconciliation statement explaining the mismatch in receipts and mismatch in ....

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....s related income. All those details were duly filed before the ld. AO by the assessee. 5.2. A search and seizure operation as carried out at the premises of the assessee u/s.132 of the Act on 04/01/2013. Pursuant to the search, notice u/s.153A of the Act was issued on 27/11/2013 for A.Yrs.2007-08 to 2012-13. In response to the said notice, the assessee filed the return of income on 24/12/2013 for the A.Y.2010-11 declaring income of Rs.82,82,95,860/- as additional income pertaining to alleged payments to sub-contractors and vendors which was accepted by the assessee in the statement recorded u/s.132(4) of the Act at the time of search on 04/01/2013. The first search assessment u/s.143(3) r.w.s. 153A of the Act was completed on 29/05/2014 determining the total income of the assessee at 79,66,03,129/- under normal provisions of the Act and book profit of Rs.22,87,65,750/- u/s.115JB of the Act. In the said search assessment dated 29/05/2014, credit for TDS was given by the ld. AO at Rs.38,95,20,180/-. 5.3. Subsequently, a rectification order u/s.154 of the Act was passed on 14/07/2014 wherein credit for advance tax of Rs.9,12,19,787/- was given by the ld. AO. Further, yet another rec....

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.... the revision order passed u/s 263 of the Act by the ld. PCIT in respect of these two issues i.e. (a) and (b) above are hereby quashed. 5.8. With regard to direction given by the ld. PCIT to the ld. AO to verify with regard to taxability of share of profit from AOP in the sum of Rs.10.53 Crores while computing book profit u/s.115JB of the Act is concerned, we find that the said sum has already been added by the ld. AO in the second search assessment completed on 19/06/2019. This goes to prove complete non-application of the mind on the part of the ld. PCIT. Hence, the revision order passed u/s 263 of the Act by the ld. PCIT in respect of these two issues i.e. (c) above is hereby quashed. 5.9. We find that assessee vide letter dated 05/09/2022 had raised the following additional ground:- "That the Ld. Pr. CIT erred in law and on facts in invoking the provisions of section 263 of the Act as the order passed u/s 153A r.ws. 143(3) after getting mandatory approval of JCIT u/s 153D of the Income tax Act cannot be subjected to revision without revising the approval of JCIT." 5.10. We find that this is purely a legal issue raised by the assessee and it does not require examination of ....

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.... dated 29/05/2014, credit for TDS was given by the ld. AO at Rs.47,72,11,950/-. 7.3. Subsequently, a rectification order u/s.154 of the Act was passed on 24/06/2014 wherein further TDS credit of Rs.6,59,95,848/- was allowed by the ld. AO.. Further, yet another rectification order u/s.154 of the Act was passed on 29/12/2014 wherein again the income determined under normal provisions of the Act and book profit u/s.115JB of the Act was not disturbed therein but the excess TDS credit granted vide 154 order dated 24/06/2014 in the sum of Rs.6,59,95,848/- was reduced to Rs.3,44,56,725/-. 7.4. Subsequently the second search u/s.132 of the Act took place in the premises of the assessee alongwith ABIL group on 21/07/2017. Pursuant to the search fresh notice u/s.153A of the Act was issued on 13/04/2019 for the A.Y.2011-12. In response to the said notice, the assessee filed return of income on 11/05/2019. The second search assessment was completed u/s.143(3) r.w.s. 153A of the Act on 19/06/2019 determining total income of the assessee at Rs.51,60,99,980/- under normal provisions of the Act and book profit of Rs.285,63,64,560/- u/s.115JB of the Act. In the said assessment order, the ld. AO h....

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.... with the audited accounts of the assessee which had been approved by the shareholders in Annual General Meeting. Reliance in this regard is placed on the decision of Hon'ble Supreme Court in the case of Apollo Tyres Ltd reported in 255 ITR 273(SC). Hence we hold that the ld. AO had correctly followed the ratio decidendi of Hon'ble Apex Court in Apollo Tyres Ltd referred supra. Hence there cannot be any addition to book profit u/s 115JB of the Act in respect of alleged non-genuine purchases. Accordingly, there cannot be any error in the order of the ld. AO in this regard. Hence the revision order u/s 263 of the Act passed by the ld. PCIT in this regard deserves to be quashed and is hereby quashed. 7.9. We find that assessee vide letter dated 05/09/2022 had raised the following additional ground:- "That the Ld. Pr. CIT erred in law and on facts in invoking the provisions of section 263 of the Act as the order passed u/s 153A r.ws. 143(3) after getting mandatory approval of JCIT u/s 153D of the Income tax Act cannot be subjected to revision without revising the approval of JCIT." 7.10. We find that this is purely a legal issue raised by the assessee and it does not require examin....

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....l loss to be carried forward to subsequent years. In the said search assessment dated 29/05/2014, credit for TDS was given by the ld. AO at Rs.67,50,20,743/-. 9.3. Pursuant to the order of ld. CIT(A) dated 28/08/2014, the ld. AO passed a consequential order thereon on 25/09/2014 determining total income of the assessee at Rs.49,25,40,739/- under normal provisions of the Act and book profit of Rs.198,00,22,260/- u/s.115JB of the Act. In the said order dated 25/09/2014, the ld. AO granted TDS credit of Rs.67,50,20,743/-. Subsequently, a rectification order u/s.154 of the Act was passed on 29/10/2014 wherein credit for advance tax of Rs.15 Crores was granted to the assessee and TDS credit already granted in the sum of Rs.67,50,20,743/- was not disturbed. 9.4. Subsequently the second search u/s.132 of the Act took place in the premises of the assessee alongwith ABIL group on 21/07/2017. Pursuant to the search fresh notice u/s.153A of the Act was issued on 13/04/2019 for the A.Y.2012-13. In response to the said notice, the assessee filed return of income on 11/05/2019. The second search assessment was completed u/s.143(3) r.w.s. 153A of the Act on 19/06/2019 determining total income o....

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....jected to revision without revising the approval of JCIT." 9.9. We find that this is purely a legal issue raised by the assessee and it does not require examination of any fresh facts. Hence, the said additional ground is admitted herein. But in view of the decision rendered by us hereinabove wherein 263 order passed by the ld. PCIT is quashed, the adjudication of additional ground becomes academic in nature and hence, it is left open. 9.10. In view of the above, we have no hesitation in quashing section 263 order by the ld. PCIT for the A.Y. 2012-13. Accordingly, the original grounds raised by the assessee are allowed. 10. In the result, appeal of the assessee for A.Y.2012-13 is partly allowed. ITA No.1141/Mum/2022 (A.Y.2013-14) 11. Though the assessee has raised several grounds of appeal, the effective issue to be decided is as to whether the ld. PCIT was justified in invoking revisionary jurisdiction u/s.263 of the Act in the facts and circumstances of the instant case both on law as well as on merits of the case. 11.1. We have heard rival submissions and perused the materials available on record. We find that assessee is involved in the activities of civil work by being a ....

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.... also except with variance in dates and variance in figures. Hence the revision order passed u/s 263 of the Act by the ld. PCIT in respect of these two issues i.e. (a) and (b) above are hereby quashed. 11.6. We find that assessee vide letter dated 05/09/2022 had raised the following additional ground:- "That the Ld. Pr. CIT erred in law and on facts in invoking the provisions of section 263 of the Act as the order passed u/s 153A r.ws. 143(3) after getting mandatory approval of JCIT u/s 153D of the Income tax Act cannot be subjected to revision without revising the approval of JCIT." 11.7. We find that this is purely a legal issue raised by the assessee and it does not require examination of any fresh facts. Hence, the said additional ground is admitted herein. But in view of the decision rendered by us hereinabove wherein 263 order passed by the ld. PCIT is quashed, the adjudication of additional ground becomes academic in nature and hence, it is left open. 11.8. In view of the above, we have no hesitation in quashing section 263 order by the ld. PCIT for the A.Y. 2013-14. Accordingly, the original grounds raised by the assessee are allowed. 12. In the result, appeal of the ....

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.....11. Crores has been accounted by the assessee in its books of accounts. 13.4. We hold that the observations given by us hereinabove for the A.Y. 2009-10 in respect of items (a) and (b) above would hold good for A.Y. 2014-15 also except with variance in dates and variance in figures. Hence the revision order passed u/s 263 of the Act by the ld. PCIT in respect of these two issues i.e. (a) and (b) above are hereby quashed. 13.5. With regard to directions of the ld. PCIT to the ld.AO to verify as to how the unbilled revenue of Rs 91.11 crores is accounted by the assessee in its books, we find that the assessee had given detailed explanation as to why this sum of Rs 91.11 crores is not to be routed through profit and loss account before the ld. PCIT in para 6.4. of submissions dated 25/03/2022 . This submission has been ignored by the ld. PCIT. We find that this issue in any case would get covered in the original directions given by the ld. PCIT in respect of items (a) and (b) above and we hold that the directions given in item (c) above is actually redundant. In respect of this issue, we hold that the ld. PCIT had invoked his revision jurisdiction in the instant case u/s 263 of the....

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....16/12/2015 declaring the same loss. The assessment was completed u/s.143(3) of the Act on 07/11/2016 determining total income at Rs.Nil. In the said assessment proceedings, the ld. AO did ask for queries for complete reconciliation of TDS vis a vis its related income. All those details were duly filed before the ld. AO by the assessee. In the said assessment, TDS credit granted by the ld. AO was Rs.25,59,02,323/-. 15.2. Subsequently the search u/s.132 of the Act took place in the premises of the assessee alongwith ABIL group on 21/07/2017. Pursuant to the search fresh notice u/s.153A of the Act was issued on 13/04/2019 for the A.Y.2015-16. In response to the said notice, the assessee filed return of income on 11/05/2019. The search assessment was completed u/s.143(3) r.w.s. 153A of the Act on 19/06/2019 determining total income of the assessee at Rs.18,21,47,223/- under normal provisions of the Act and book loss of Rs.204,31,39,264/- u/s.115JB of the Act. In the said assessment order, the ld. AO had specifically stated that the credit for TDS and prepaid taxes need to be given after due verification in para 13 of his assessment order. Ultimately, the TDS credit in the search asses....

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....tes and Joint Ventures formed for the specific purpose of the eligible works and accordingly the provisions of section 92, 92C, 92D and 92E of the Act per se would not be applicable at all in the instant case. This submission has been ignored by the ld. PCIT. In respect of this issue, we hold that the ld. PCIT had invoked his revision jurisdiction in the instant case u/s 263 of the Act by by directing the ld. AO to make roving and fishing enquiries , which is not permissible u/s 263 of the Act. We find from the perusal of the order of the ld. PCIT u/s 263 of the Act, no where the ld. PCIT had stated as to how the order of the ld. AO is erroneous in respect of item (d) above. In any case, we find that the ld. AO in the original scrutiny assessment proceedings framed u/s 143(3) of the Act on 07/11/2016 had duly examined this aspect which is evident from the reply given by the assessee vide letter dated 11/07/2016 in response to notice u/s 142(1) of the Act letter dated 04/07/2016. In this letter, the assessee had duly furnished the complete details of related party transactions before the ld. AO. The ld. AO after examination of the same had come to a conscious conclusion that the dom....

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....e to the said notice, the assessee filed return of income on 11/05/2019. In the said assessment proceedings, the ld. AO did ask for queries for complete reconciliation of TDS vis a vis its related income. All those details were duly filed before the ld. AO by the assessee. The search assessment was completed u/s.143(3) r.w.s. 153A of the Act on 19/06/2019 determining total income of the assessee at Rs.52,16,83,323/- under normal provisions of the Act and book profit of Rs.8,45,97,392/- u/s.115JB of the Act. In the said assessment order, the ld. AO had specifically stated that the credit for TDS and prepaid taxes need to be given after due verification in para 13 of his assessment order. Ultimately, the TDS credit in the search assessment order dated 19/06/2019 was given by the ld. AO at Rs.32,89,30,132/-. 17.2. Against this assessment order, the assessee preferred an appeal before the learned Commissioner of Income Tax (Appeals) Mumbai [ ld. CIT(A) in short]. This appeal was disposed of by the ld. CIT(A) vide his order dated 23/07/2021 granting partial relief to the assessee. The ld. AO passed giving effect order to ld. CIT(A) order on 06/09/2021 determining total income of the as....

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.... provisions of section 263 of the Act as the order passed u/s 153A r.ws. 143(3) after getting mandatory approval of JCIT u/s 153D of the Income tax Act cannot be subjected to revision without revising the approval of JCIT." 17.6. We find that this is purely a legal issue raised by the assessee and it does not require examination of any fresh facts. Hence, the said additional ground is admitted herein. But in view of the decision rendered by us hereinabove wherein 263 order passed by the ld. PCIT is quashed, the adjudication of additional ground becomes academic in nature and hence, it is left open. 17.7. In view of the above, we have no hesitation in quashing section 263 order by the ld. PCIT for the A.Y. 2016-17. Accordingly, the original grounds raised by the assessee are allowed. 18. In the result, appeal of the assessee for A.Y.2016-17 is partly allowed. ITA No.1145/Mum/2022 (A.Y.2017-18) 19. Though the assessee has raised several grounds of appeal, the effective issue to be decided is as to whether the ld. PCIT was justified in invoking revisionary jurisdiction u/s.263 of the Act in the facts and circumstances of the instant case both on law as well as on merits of the ca....

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....6-17 in respect of items (a) and (b) above would hold good for A.Y. 2017-18 also except with variance in dates and variance in figures. Hence the revision order passed u/s 263 of the Act by the ld. PCIT in respect of these two issues i.e. (a) and (b) above are hereby quashed. 19.5. We find that assessee vide letter dated 05/09/2022 had raised the following additional ground:- "That the Ld. Pr. CIT erred in law and on facts in invoking the provisions of section 263 of the Act as the order passed u/s 153A r.ws. 143(3) after getting mandatory approval of JCIT u/s 153D of the Income tax Act cannot be subjected to revision without revising the approval of JCIT." 19.6. We find that this is purely a legal issue raised by the assessee and it does not require examination of any fresh facts. Hence, the said additional ground is admitted herein. But in view of the decision rendered by us hereinabove wherein 263 order passed by the ld. PCIT is quashed, the adjudication of additional ground becomes academic in nature and hence, it is left open. 19.7. In view of the above, we have no hesitation in quashing section 263 order by the ld. PCIT for the A.Y. 2017-18. Accordingly, the original gro....