| The Tax Publishers2021 TaxPub(DT) 3043 (Sur-Trib) INCOME TAX ACT, 1961
Section 263
Where AO having examined the books of accounts namely cash book, Ledger, Bank Book, bills & vouchers/invoices and the bank statements etc. and having satisfied himself about the correctness of the same and taking into account explanation of the assessee, completed the assessment and, therefore, there cannot be a reason to say that the AO has failed to conduct necessary enquiry before accepting the claim of the assessee. The view taken by the AO was one of the possible views and the assessment order passed by him could not be held to be erroneous and prejudicial to the interests of revenue. There is difference between 'Lack of enquiry' and 'inadequate enquiry'. It is for the AO to decide the extent of enquiry to be made as it is his satisfaction as what is required under law.
|
Revision under section 263 - Erroneous and prejudicial order - No lack of enquiry on AO's part -
Assessee was engaged in the business of construction. Pr. CIT treated order passed by AO as erroneous and prejudicial to the interest of revenue on the ground that AO had not examined the aspect of receipt of on-money towards sale of plots. The PCIT noticed from the records that a survey action under section 133A of the Income Tax Act was carried out and statement of one of the partners of the firm, was recorded on oath under section 131 of the Act. In his statement, the partner admitted receipt of unaccounted income of the firm, in the form of 'on money' at Rs. 8,20,00,000. He disclosed the same as 'income over and above the regular income' of the firm for the F.Y. 2014-15. The firm has shown the amount of Rs. 8,20,00,000 in the Profit and Loss account under the head 'Income declared in Survey' and computed the income accordingly. Against the disclosed income of Rs. 8,20,00,000, the firm has shown total income of Rs. 7,88,56,573 in the return of income for assessment year 2015-16, which was less by Rs. 31,43,427 (Rs. 8,20,00,000 - Rs. 7,88,56,573). The PCIT took his view that assessee had claimed this amount of Rs. 31,43,427 as expenses against the disclosed income, which was irregular in view of the provisions of section 115BBE of the Act. In view of the above facts, PCIT has issued a show cause notice under section 263 of the Act. PCIT rejected the contentions of the assessee and observed that assessee had claimed expenses towards total service tax paid of Rs. 25,33,800, total VAT of Rs. 17,24,738. Further the firm has also set off carried forward losses of Rs. 2,79,361, Business loss of Rs. 2,52,799 and unabsorbed depreciation of Rs. 26,592. In view of such claims the assessee had returned income at Rs. 7,88,56,573 against the income disclosed at Rs. 8,20,00,000 during the course of survey under section 133A of the Act. Therefore, PCIT noticed that assessee had claimed this amount of Rs. 31,43,427 (Rs. 8,20,00,000 - Rs. 7,88,56,573) as expenses against the disclosed income, which was irregular in view of the provisions of section 115BBE of the Act. In view of the facts and circumstances of the case, the assessment order under section 143(3) was found to be erroneous in so far as it is prejudicial to the interest of Revenue. Held: Assessee disclosed on-money', under the head 'business income', where the head indirect expenses, VAT expenses had been claimed by assessee. Assessee did not have any other source of income, except income from that project (Shrungal Residency) only. AO after doing detailed examination of documents and taking into account submissions of assessee, passed assessment order with proper application of mind. Therefore, order passed by AO was neither erroneous nor prejudicial to the interest of revenue.
Applied :Plastic Concern v. ACIT 1998 TaxPub(DT) 0586 (Cal-Trib) : (1998) 61 TTJ 87 (Cal),CIT v. Sunbeam Auto Ltd. 2011 TaxPub(DT) 0088 (Del-HC): (2010) 332 ITR 167 (Del).
 SUBSCRIBE FOR FULL CONTENT
|