TaxTMI 
TaxTMI 
TaxTMI 
2025 (8) TMI 1167
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....gainst the Ld. AO's order dated 20.12.2016 for AY 2014-15 in the case of the assessee. The Ld. AO had passed the said order after accepting the returned income. 1.1 The Ld. PCIT noticed that the assessee had shown gross contractual receipts at Rs. 14,24,49,527/- but in the computation of income he deducted Rs. 1,38,54,942/- as "retention money". This action of the assessee allegedly resulted in a loss of Rs. 98,65,419/-. On this issue, the Ld. PCIT noticed that the so called "retention money" was not debited in the P&L Account but was straightway adjusted in the computation of income. This action of the assessee was treated as a case of the assessment order being erroneous in so far as it was prejudicial to the interest of revenue. 1.2 Th....
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....x paid - Rs. 9,538,668/- Retention money 2013-14 - Rs. 13,854,942/- However, it is further seen that as per A.Y. 2013-14 the corresponding disallowance made was of Rs. 23,419,610/-. The A.O. obviously has not looked into this disallowance also." 2.0. Aggrieved with the action of Ld. PCIT, the assessee is in appeal before us with the following grounds of appeal: "Ground number 1 Was not justified in initiating proceedings under Section 263 of the Act since the order under Section 143(3) of the Act dated 20 December 2016 was neither erroneous nor prejudicial to the interest of revenue. Ground number 2 erred in initiating revision proceedings under Section 263 of the Act, without appreciating that the learned AO had passed the ass....
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....t is evident that there is absolutely no discussion in the assessment order regarding this issue and it is not evident as to whether any cognizance was taken at all about the same or not. 3. We have carefully considered the facts of the case and gone through the impugned order as also the contents of the paper book before us. Right at the outset, it needs to be mentioned that w.e.f. 01.06.2015 a clarificatory amendment has been brought into the existing statute as under: "Explanation 2.-For the purposes of this section, it is hereby declared that an order passed by the Assessing Officer for the Transfer Pricing Officer, as the case may be,) shall be deemed to be erroneous in so far as it is prejudicial to the interests of the revenue, if....
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....see an opportunity of being heard and after making an enquiry pass an order modifying the assessment made by the Assessing Officer or cancelling the assessment and directing fresh assessment. 53.2 The interpretation of expression "erroneous in so far as it is prejudicial to the interests of the revenue" has been a contentious one. In order to provide clarity on the issue, section 263 of the Income-tax Act has been amended to provide that an order passed by the Assessing Officer shall be deemed to be erroneous in so far as it is prejudicial to the interests of the revenue, if, in the opinion of the Principal Commissioner or Commissioner, (a) the order is passed without making inquiries or verification which, should have been made; (b) the ....