TaxTMI 
TaxTMI 
2025 (11) TMI 414
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....the assessee filed the return of income u/s 139(1) of the Act on 21.10.2020, declaring total income at Rs.181,54,59,090/-, which was selected for scrutiny for the reasons namely; (i) stock valuation (ii) Claim of any other amount allowable as deduction in Schedule BP (iii) Refund Claim (iv) ICDS Compliance and Adjustment (v) Expenses Incurred for earning exempt income. The assessment was framed by the ld. AO vide order dated 20.09.2022, passed u/s 143(3) read with section 144B of the Act, assessing the income at Rs.1,84,58,86,675/- after making disallowance u/s 14A and 37. 04. The ld. PCIT on perusal of the assessment records observed that income chargeable under the head profit and gains of business or profession shall be computed in accordance with the income computation and disclosure standard (ICDS) as notified by the Government. The ld. PCIT observed that the assessee's treatment of ICDS adjustment as noted in Para No.3 page 1 does not seem to be not in order. The ld. PCIT noted from the submission that in A.Y. 2020-21, Rs.91,97,826/- has been debited in the Profit and Loss account on account of anticipated loss in Engineering, Procurement and Construction (EPC) contracts, ....
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....the same was added back while calculating the total income and as such it has resulted in increase in profit as per ICDS. The ld. AR referred to the computation of income, ITR, TAR as enclosed in the annexure 2G. The ld. AR further submitted that in A.Y. 2019-20, the assessee had anticipated the loss from EPC contracts amounting to Rs.3,94,10,268/- which was debited in the profit and loss account of the assessee resulting in decrease in anticipated loss as compared to previous year amounting to Rs.2,74,40,647/-, which was calculated by subtracting the current year anticipated loss of Rs.3,94,10,268/- from the total anticipated loss from EPC contracts in A.Y. 2018-19, of Rs.6,68,50,515/- and the same was deducted from the income while calculating the total income and as such it has resulted in decrease in profit as per ICDS. The copies of computation of income, ITR, acknowledgement, TAR, are enclosed as annexure "2H". Further, in A.Y. 2020-21, the assessee company has estimated anticipated loss from EPC contracts amounting to Rs.91,97,826/-, which was debited in the profit and loss account of the assessee which has resulted in decrease in anticipate loss as compared to previous year....
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....enue, unless view taken by the ITO is unsustainable in the eyes of law or contrary to the facts. In defense of his argument the learned CIT (A) relied on the decision of CIT Vs. Max India Ltd. (213 ITR 266) (SC). The learned Authorized Representative therefore prayed that the revisionary jurisdiction exercised by the learned PCIT is invalid and may kindly be quashed. The learned Authorized Representative also relied on the decisions of DIT Vs. Jyoti Foundation 357 ITR 388 (Delhi) and ITO vs. DG Housing Projects Ltd. 343 ITR 329 (Delhi). Finally, the learned Authorized Representative submitted that the order of learned PCIT passed u/s 263 of the Act may kindly be quashed as being nullity and invalid in the eyes of law. 07. The learned DR on the other hand relied on the order of learned PCIT by submitting that no prejudice is going to be caused to the assessee as the assessee would be heard fully in the set aside proceedings and only then the assessment order would be passed. The learned DR further submitted that the learned PCIT has already issued direction to the learned AO in that regard in the revisionary order. Therefore the pleas and arguments of the ld AR need to be brushed....
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....ssed 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 interest of the revenue, for example, when an Income Tax Officer adoptedon of the courses permissible in law and it has resulted in loss of revenue, or where two views are possible and the Income Tax Officer has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the Revenue unless the view taken by the Income Tax Officer is unsustainable in law." 09. In our opinion, once the learned AO has carried out investigation into the issue and has not made any addition then it can be presumed that he has accepted the plea and stand of the assessee. The PCIT has to prove that the assessment framed by the AO is wrong as there was failure to investigate. In our opinion the PCIT has to record the abject failure and lapse on the part of the assessee which rendered the assessment as erroneous and prejudicial to the interest of the revenue and not otherwise. The case of the assessee is squarely covered by the decision of Hon'ble Apex Court in the case of M/s V-Con ....