TaxTMI 
TaxTMI 
2023 (6) TMI 972
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....easons for the alleged difference between income reported by the Appellant and amount reflected in Form 26AJ In respect of various flats. Ground No. 4: The Hon'ble Principal Commissioner of Income Tax - 4, Hyderabad 1ailed to appreciate that any difference in income reported by the Appellant and amount reflected in Form 26AS is on account of timing of revenue recognition resulting in timing differences, and as such is not a valid ground to invoke the provisions of Section 263 of the Act. Ground No. 5: The Hon'ble Principal Commissioner of Income Tax - 4, Hyderabad failed to appreciate that the twin conditions prescribed to invoke the provisions of Section 263 of the Act, i.e., order being erroneous and prejudicial to the interests of the revenue are not satisfied in the present case. Ground No. 6: The Hon'ble Principal Commissioner of income Tax - 4, Hyderabad failed to appreciate that the assessment order passed u/s 143(3) of the Act is not erroneous in so far as it is prejudicial to the revenue as envisaged under Explanation 2 to Section 263 of the Act. Ground No. 7: The Hon'ble Principal Commissioner of Income Tax - 4, Hyderaba....
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....ous in so far as it is prejudicial to the interest of revenue. Accordingly, the issue of differences in receipts as per the 26AS statement and that of assessee's books of Accounts, as discussed above, is set aside to the file of Assessing Officer for necessary verification. If assessee fails to substantiate the difference, the AO is directed to work out the total difference in the sales reported as per return of income and 26AS statement and such difference shall be treated as unaccounted receipts and bring the same to tax. The AO shall afford reasonable opportunity of being heard to the assessee before passing the consequential order." 6. Aggrieved with such order of the learned PCIT, the assessee is in appeal before the Tribunal. 7. The learned Counsel for the assessee, at the outset, submitted that the Assessing Officer in the original assessment proceedings has sought to examine the limited scrutiny issue and for that purpose the Assessing Officer had issued show-cause notice to the assessee. In reply to the show-cause notice, the assessee had furnished the details as called for and our attention was drawn to page 27 of the Paper Book wherein the reply of the assessee....
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....itted that the Assessing Officer has not examined the issue during the scrutiny assessment and had merely relied upon the statement of the assessee. He drew the attention of the Bench to the original assessment order wherein in Para 3 it was mentioned as under: "3.0 Facts & Findings of the Case: The case was selected for Limited scrutiny under CASS for A.Y. 2016-17 with a reason to verify "1.Real estate business with high closing stock 2. Sale consideration of property in ITR is less than sale consideration reported in Form 26QB". The assessee was asked to submit relevant submissions. In response, the assessee vide e-filing portal submitted relevant information. As regards the high closing stock the assessee submitted that "We are identifying the turnover under percentage completion method. We have declared turnover(cumulative) of Rs. 13,96,49,302/- upto 31.03.2016. The balance expenditure incurred was transferred to Closing work in progress and the closing work in progress as on 31.03.2016 is Rs. 19,55,59,271/-. A sheet explaining the same is enclosed" Further assessee submitted that "another project Balaji Aavaas is also under progress as the firm has got the pl....
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....lso furnished the detailed chart/working in response to the questionnaire No.2 which is placed at pages 29 to 34 of the Paper Book. After considering the reply and the documents placed on record, the Assessing Officer has passed the assessment order on 24.5.18. Admittedly, the present case is not a case of no query raised by the Assessing Officer or no reply submitted by the assessee. Rather in the present case, the assessee furnished a reply in response to the question raised by the Assessing Officer and had taken a plausible stand explaining the mismatch in Form 26AS and the amount received and also had submitted the year of taxation of the receipts and further had made out a case that the assessee has opted for percentage completion method and therefore, the accounting treatment given by the assessee to the receipts is in accordance with law. The learned PCIT despite the above said material had failed to bring on record how the method of accounting opted by the assessee was erroneous and prejudicial to the interest of the Revenue when the method of accounting opted by the assessee was proper under AS-7 and further the learned PCIT has also failed to bring on record after making ....