TaxTMI 
TaxTMI 
2022 (12) TMI 834
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.... In the case of the assessee, an information from the Assistant Director of Income-tax (Investigation), Gandhidham vide letter dated no. ADIT(Inv.)/GIM/survey report/c/2014-15 dated 20-01-2015 has been received regarding the assessee. As per the letter, it is found that a survey u/s 133A of the Act has been carried out at the premises of the assessee and some incriminating documents were found during the survey operation. 3.1 Further it was found that during the assessment proceeding Shri Parvinbhai B Hadia director of M/s ICC Projects been admitted that the assessee had claimed bogus expenses in respect of bill amounting to Rs.72,22,453/- bearing bill no NIL dated 02-10-2012which was issued by M/s Nehal Construction. It is also noticed that the assessee during the year under consideration i.e. FY 2011-12 claimed the expenses of Rs. 15,55,005/- in respect of the bill issued by the M/s Nehal Construction. 3.2 Similarly, the assessee has claimed the expenses of Rs. 8,92,640/- during the year under consideration in the name of M/s Harsh Construction. However, the proprietor namely Shri Sunil G pharmar, of M/s Harsh Construction in his statement recorded u/s 131(1A) of the Act ha....
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....erification was done by AO by issuing show cause notice u/s 142(1) of the Act where the assessee was asked to explain about the income admitted by M/s Nehal construction and M/s Harsh construction along with the balance sheet, P&L Account, ITR, Bank statement which were duly complied by letter dated 18-09-2019. 3) Likewise, the assessee submitted that the above mention parties whose statements were recorded by ADIT(Inv) Gandidham, further clarifies the fact that the specific bogus bills pertain to AY 2013-14 not pertain to AY 2012-13. 4) In the year under consideration, the assessee has made payment to both parties and deducted TDS. They filed their income tax return and claimed the TDS against income tax payable. Further M/s Nehal Construction falls under the service tax provision and levied service tax in its bill. Therefore the fact of the year under consideration is quite different from the fact of AY 2013-14. 5) Further, the assessee submitted that the principle of res-judicata does not apply to income tax proceedings. 6) Without prejudice to the above, the assessee further submitted that the action u/s 263 of the act has been taken up due t....
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....that the assessment order is erroneous and causing prejudice to the interest of Revenue in the given facts and circumstances. 6.1 The Ld. AR further submitted in respect M/s Nehal Construction, copy of ITR along with computation of income, Copy of bill, copy of profit & loss account, copy of ledger account in the books of the party, 26AS and form 16A of the party, service tax return along with service tax payment challan and in respect of M/s Harsh Construction, Copy of ITR along with computation of income, Copy of bill, copy of form 26AS and form 16A of the Party were filed. 7. On the contrary, the learned DR vehemently supported the order of the authorities below. 8. We have heard the rival contentions of both the parties and perused the materials available on record. The issue in the present case relates whether the assessment order has been passed by Ld. AO without making inquiries or verification with respect of the parties who issued bogus bill pertaining to AY 2013-14 as discussed above and hence the assessment is erroneous insofar prejudicial to the interest of the Revenue and thus requiring revision by Pr. CIT u/s 263 of the Act. 8.1 An inquiry made by the Asse....
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....hat of the Income-tax Officer, who passed the order unless the decision is held to be erroneous. Cases may be visualised where the Income-tax Officer while making an assessment examines the accounts, makes enquiries, applies his mind to the facts and circumstances of the case and determines the income either by accepting the accounts or by making some estimate himself. The Commissioner, on perusal of the records, may be of the opinion that the estimate made by the officer concerned was on the lower side and left to the Commissioner he would have estimated the income at a figure higher than the one determined by the Income-tax Officer. That would not vest the Commissioner with power to re-examine the accounts and determine the income himself at a higher figure. It is because the Income-tax Officer has exercised the quasi-judicial power vested in him in accordance with law and arrived at conclusion and such a conclusion cannot be termed to be erroneous simply because the Commissioner does not feel satisfied with the conclusion. 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....
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....ableness in the facts and circumstances of the case. Hence, in our considered view, what is relevant for clause (a) of Explanation 2 to sec. 263 is whether the AO has passed the order after carrying our enquiries or verification, which a reasonable and prudent officer would have carried out or not. It does not authorise or give unfettered powers to the Ld Pr. CIT to revise each and every order, if in his opinion, the same has been passed without making enquiries or verification which should have been made. In our view, it is the responsibility of the Ld Pr. CIT to show that the enquiries or verification conducted by the AO was not in accordance with the enquries or verification that would have been carried out by a prudent officer. Hence, in our view, the question as to whether the amendment brought in by way of Explanation 2(a) shall have retrospective or prospective application shall not be relevant." 8.5 The Hon'ble Supreme Court in recent case of Principal Commissioner of Income-tax 2 v. Shree Gayatri Associates [2019] 106 taxmann.com 31 (SC), held that where Pr. CIT passed a revised order after making addition to assessee's income under section 69A in respect of onmoney....
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....hat income arose from other sources, he could and ought to have so held in the order of revision. There was simply no necessity to remand the proceedings to the Assessing Officer when no further inquiries were called for or directed" 8.7 From an analysis of the above judicial precedents, the principle which emerges is that the phrase 'prejudicial to the interests of the revenue' has to be read in conjunction with an erroneous order passed by the Assessing Officer. Every loss of revenue as a consequence of an order of the Assessing Officer cannot be treated as prejudicial to the interests of the revenue, for example, when an Assessing Officer adopts one of the course permissible in law and it has resulted in loss of revenue; or where two views are possible and the Assessing Officer has taken one view with which the Commissioner of Income-tax does not agree, it cannot be treated as an erroneous order causing prejudice to the interests of the Revenue unless the view taken by the Assessing Officer is unsustainable in law, or the AO has completely omitted to make any enquiry altogether or the order demonstrates nonapplication of mind. 8.8 Now in the facts before us, in the....
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....s found which may remotely indicate that these parties have not carried out any work for the assessee company for the year under consideration. The statement recorded during the survey relates to the two bills found and admitted as unexplained. However, this cannot tantamount to be global practice to raise such bills in past as well. 3.0 This fact was further clarified before the ADIT (Inv), Gandhidham who had recorded the statement of these two parties on 03.11.2014. The relevant portion of replies given by these parties to the ADIT runs as under: (i) Smt. Nehaben Ishwarbhai Hadiya Prop. Of Nehal Construction. Q. 2. What is your source of income? Ans. I am proprietor of M/s Nehal Construction and filing return of income since 6 years. Q.3. I am showing your statement recorded u/s 131(1A) on 03.11.2012 wherein in reply to Q. 2 you had stated that you are a housewife and has no source of income and did not know about Nehal Construction. However, in today's statement it is contradictory. Ans. On 03.11.2012 there were action of survey on M/s Nehal construction, ICC project and at that time I was at our resident where I and my f....
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....ent recorded on 03.11.2012 wherein in reply to Q. 9- 11 you had stated that you did not work for ICC Projects whereas today you stated that except FY 2012-13 you did job-work for ICC Projects. Both the statements are contradictory. Please explain. Ans. By keeping in mind my statement dated 03.11.2012 that I am proprietor of Harsh construction and I did work for ICC projects in past and received payment. In FY 2012-13 I had closed down Harsh construction. In reply to Q 2 and 7 of statement dated 03.11.2012 it was clearly stated that I had done jobwork for Ishwar construction and ICC Projects. On that day I was shown bill dated 01.10.2012 for Rs. 90,12,525.10 which was not related to me and I did not work for the details shown in the bill. I had replied Q 9-11 by keeping in mind that bill. My statement is considered on wrong angle. Q. 5 Are you filing return of income and maintain Books of accounts which include Harsh construction. Ans. Sir, I had filed all my returns of income incorporating all source of Income. I had sown receipts from ICC Projects and other firms and paid tax thereon. For your verification I produce books of accounts and returns of incom....
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.... in the case of GIT vs. Neo poly Pack P. Ltd 245 ITR 492 held that; "The doctrine of res judicata does not apply to income tax proceedings since each assessment year is independent of the other but where an issue has been decided consistently in a particular manner for earlier assessment years, for the sake of consistency the same view should continue to prevail for the subsequent years unless there is material change in the facts." 7.0 However, in order to appreciate the facts in proper perspective copies of ITR of Shri Smt. Nehaben Ishwarbhai Hadiya Prop of Nehal Construction and Shri Sunil G. Parmar Prop of Harsh Construction for AY 2012-13 along with the copies of income ledgers, service tax return, service tax payment challan and bills raised, TDS details etc. are attached herewith. It may be appreciated that whatever work done by these two sub-contractors necessary tax was deducted at source and the contractors have claimed its adjustments in their returns. Hence question of any bogus bills raised by these parties for the year under consideration for which the assessment is reopened does arise. 8.0 Further in AY 2012-13 the assessee has paid service tax on t....