Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2022 (11) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2022 (11) TMI 1196 - ITAT CHANDIGARHRevision u/s 263 - undisclosed income of the firm - PCIT went on to hold that neither the assessee firm was covered under the provisions of section 44AD and nor was the calculation made by the AO @ 8% justified as the AO was required to treat the entire gross receipts as undisclosed income of the firm - PCIT concluded that the assessment order was passed without making inquires or verification and, therefore, the order of the AO was erroneous - HELD THAT:- AO had made necessary inquiries regarding assessee's claim of having earned income from sub-contract work and, thereafter, after considering the reply submitted by the assessee, the AO has rejected such claim of the assessee regarding its working as a subcontractor. AO proceeded to hold that the assessee's work was in the nature of providing accommodation entries and based on this conclusion, the AO held that a rate of 8% should be applied being percentage of commission earned on providing the accommodation entries. Thus, in view of the questionnaires issued by the AO and the replies submitted by the assessee, the conclusion reached by the AO of rejecting the assessee's claim apparently proves that the AO had made proper inquiries and had also duly applied his mind to the facts of the case. Contention of the Ld. PCIT that no enquiry was made by the AO is factually incorrect. Having said that, in the present case, PCIT has not specifically pointed out as to what further inquires or verification should have been carried out by the AO in this regard. Merely because the Ld. PCIT felt that further inquiry should have been made does not make the order of the AO erroneous and prejudicial to the interest of the Revenue. It is not a case where the AO has upheld the applicability of section 44AD as alleged by the Ld. PCIT. Rather, the AO has rejected the assessee's claim of business income under section 44AD of the Act and has determined the true nature of assessee's activities as that of an accommodation entry provider rather than provider of sub-contractor services as so claimed by the assessee. Having arrived at the true nature of assessee's activities of that of an accommodation entry provider, the AO has applied commission rate of 8% on total receipts/transaction value of entries - PCIT has not pointed out how rate of 8% being the commission income so determined by the AO is unsustainable in the eyes of law and whether there are other benchmark of estimating commission income which the AO should have applied and which he has failed to apply. There is thus no incorrect application of law by the AO in the present case and further, the AO, after making inquiries and examining the records, has taken a view which is one of the possible views, and since this view is not unsustainable in law, it cannot be said that the order passed by the AO was erroneous in so far as being prejudicial to the interest of Revenue. Thus following the decision of the Coordinate Benches in case of Shiv Shakti Constructions [2022 (10) TMI 972 - ITAT CHANDIGARH] the order so passed by the Ld. PCIT u/s. 263 is set-aside and the order of the AO is sustained. Assessee appeals stands allowed.
|