TaxTMI 
TaxTMI 
TaxTMI 
2023 (7) TMI 121
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....4.12.2019 may kindly be sustained and restored. 2. The setting aside of assessment order is unjustified, against facts and circumstances of the case and unlawful. Therefore, the order by Ld. Principal Commissioner of Income Tax for denovo reassessment may kindly be quashed. And the assessment order u/s 143(3) dated 24.12.2019 may kindly be sustained and restored. 3. That the Ld. Principal Commissioner of Income Tax issued notices u/s 263 on certain grounds and the assessee filed proper details before Ld. Principal Commissioner of Income Tax. (Though these replies were already filed before the A.O by the assessee). The Ld. Principal Commissioner of Income Tax ignored it. Now, the Principal Commissioner of Income Tax took different grounds and without giving the opportunity to the assessee of being heard, passed order u/s 263. (Though even the grounds taken later by Principal Commissioner of Income Tax was duly considered by The A.O. while framing assessment.) Therefore the notice u/s 263 was on different grounds and the order u/s 263 is on different grounds. Hence, the order u/s 263 is bad in law, unjustified, against facts and circumstances of the case, and is against statu....
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....bmitted that in the present case the Revenue has been recognized on the real value and no estimation was required as no work was pending. It was accordingly submitted that since there is no opening or closing stock and all the work under the various contracts have been executed and completed during the year, all the receipts under the contracts have been duly recognized as Revenue for the F.Y. 2016-17 and corresponding expenses which were attributable to the said contracts were also claimed. 3.1 It was further submitted that the assessee produced all the books of accounts i.e; Cash Book, Ledger, Vouchers, Registers etc. before the AO who after examining the same has disallowed a sum of Rs. 2.5 Lakh and there is a specific findings to this effect which has been recorded while passing the assessment order. 3.2 Regarding initiation of penalty proceedings, it was submitted that Section 270A does not direct the AO to impose penalty mandatorily as the section has used the term "may" and has not used the term "shall". It was further submitted that Section 270A(6)(b) clearly states that no penalty should be levied where the addition / disallowance are made on estimate basis. 3.3 It was ....
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....bed format along with confirmed copies of account from these parties regarding the amount of transaction and amount outstanding during the year. No details asked for in this regard including confirmation was filed during assessment proceedings by the assessee. (d) Name of the persons to whom advances have been given, interest if any charged on the same and also establish business relations with them was asked during assessment proceedings was also asked for by the A.O. No details in response to the same were filed during assessment proceedings by the assessee. (e) To furnish copies of Sales Tax /VAT/Service Tax Returns for the period under consideration but no such details filed during assessment proceedings. (a) Furnish details of all expenses but no such details filed during assessment proceedings. After perusal of assessment record and the issues discussed above, it is clear that the Assessing Officer has passed the assessment order on 24.12.2019 u/s 143(3) of the Act without verifying details asked for or conducting enquiries on various issues as discussed above, which were mentioned in the questionnaire issued but neither examined nor enquiry done by the AO in abse....
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....r contra, the Ld. CIT DR relied on the findings of the Ld. Pr. CIT which we are already taken note of in para 4 supra. 8. We have heard the rival contentions and purused the material available on record. The principal contention which has been raised by the ld AR seeking setting aside of the impugned order is that the order has been passed by the ld PCIT on matters/issues which are different from the matters/issues which were part of the initial show-cause and thus, not part of the initial show-cause notice and secondly, even during the course of revisionary proceedings, the assessee was never confronted with these fresh matters/issues and it was accordingly contended that the impugned order has been passed without providing an opportunity of being heard to the assessee and thus, the same deserve to be set-aside being in violation of basic cannon of justice that the assessee be allowed an opportunity of being heard before any adverse view is taken in its case. There is no dispute on the legal proposition so canvassed by the ld AR that the assessee deserve an opportunity of being heard before the ld PCIT passes an order setting aside the assessment order holding the same to be erro....
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....tated by the ld PCIT that since the case was flagged for high ratio of refund, the expenses claimed in the P&L Account needs to be examined and verified minutely and judiciously and the AO should have verified some of the claims of the assessee company through third party enquiry which was not undertaken. Lastly it has been stated that since the AO has made the addition while passing the assessment order, he was required to initiate penalty proceedings under section 270A of the Act. 11. Now, if we look at the findings of the ld PCIT, in para 4(1), he says that in order to examine high ratio of refunds, the AO was to examine the financial statements of the assessee company and to conduct further enquiries as to whether profits declared were correct or had been understated. We find that the said finding is in context of the same issue of high ratio of refund which is part of the initial show-cause notice and thus, the assessee has been provided an opportunity in this context and the same cannot be held as any new matter/issue in respect of which the assessee has not been an opportunity of being heard. 12. In para 4(2)(a), the ld PCIT talks about increase in unsecured loans raised b....
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.... to examine the same and thereafter, taking into consideration the submissions of the assessee, the ld PCIT has recorded his specific findings highlighting specific areas where though questionnaire was issued by the AO but in absence of details/submissions filed by the assessee, the same were neither examined nor verified by the AO. We are therefore unable to accede to the contention so raised by the ld AR in terms of divergent issues on which findings have been recorded by the ld PCIT vis-à-vis the issue raised in the show-cause notice without providing an opportunity to the assessee. 15. Now, coming to other contention advanced by the ld AR that even on the issued raised by the ld PCIT, the matter has been duly examined by the AO and thus, the order so passed by him cannot be held as erroneous in so far as prejudicial to the interest of the Revenue. In this regard, we refer to the specific findings as recorded by the Ld. PCIT in para 4 of the impugned order and the assessee's point wise reply in its written submissions which read as under: As per PCIT's order As per assessee's submission 1. The case was picked up for limited scrutiny through CASS under....
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....es of accounts from these parties regarding the amount of transactions and amount outstanding during the year was asked for by the AO. "Trade payable shown under the head' current liabilities' as on 31.03.2017 are at Rs. 3,91,11,110/- as compared to Rs. 7,75,000/- only last year. No details in this regard including confirmation was filed by the assessee during assessment proceedings." * This issue/ query has not been raised by PCIT in Notice issued u/s 263 of the Act. * However, the query raised by the AO at serial no. 06. * It is submitted the reply of the assessee filed before the AO is on page no. 165(PB), at serial no. 06 of the questionnaire. * Thus the reply was filed before the AO. c. The AO asked assessee to file details of Trade receivable as on 31.03.2017 shown at Rs. 2,11,09,872/- in prescribed format along with confirmed copies of accounts from these regarding the amount of transaction and amount outstanding during the year. "No details asked for in this regard including confirmation was filed during assessment proceedings by the assessee." * This issue/ query has not been raised by PCIT in notice issued u/s 263 of the Act. * However, the query raised ....
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.... The details of account receivables have also been filed during the course of assessment proceedings. Therefore, as far as contract revenues are concerned, the matter has been duly examined by the AO and even as per the ld PCIT, there is no adverse finding which has been recorded as far as reporting of contract revenues and any mismatch of such revenues in Form 26AS and corresponding account receivables are concerned. 17. As far as contract costs and other expenses are concerned, as per audited financial statements, the assessee has claimed cost of material amounting to Rs 13,26,00,458/- , finance cost amounting to Rs 9,84,739/-, employee benefit cost amounting to Rs 19,52,855/-, depreciation and amortization amounting to Rs 15,67,496/- and other expenses amounting to Rs 90,90,087/-. During the course of assessment proceedings, the AO vide questionnaire dated 24/10/2019 has asked the details of all sites where contractual work has been done by the assessee during the year or in progress, details of material purchased along with documentary evidences, site wise labour charges along with documentary evidences and details of other expenses along with supporting documentary evidences.....
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....ssessee. The same shows that the AO did examine the matter and applied his mind to the submissions made by the assessee and after analyzing the documentation so produced, he accepted the claim of the expenses subject to certain disallowances. Therefore, the findings of the ld PCIT that no details of expenses have been filed during the course of assessment proceedings is not borne out of record and is in face of specific findings recorded by the AO disallowing certain expenses. 19. As far as unsecured loans raised during the year, the assessee in its submissions before the AO has submitted that it has taken unsecured loan from related persons/entities namely Piyush Ruhela, Ruhela Constructions Company and Satish Ruheja and in support, the copy of ledger account detailing the transactions during the year and necessary confirmation have also been filed during the course of assessment proceedings. It is noted that the assessee has regular dealings with these related persons/entities and necessary confirmation is on record and therefore, the findings of the ld PCIT that no documents have been filed by the assessee is not borne out of records. Further, regarding, the advances given by t....