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2015 (10) TMI 2552 - AT - Income TaxRevision u/s 263 - turnover non disclosure - Held that - We are of the view that on the facts and turnover available on record, AO has already verified and reconciled Form 16 of the respective companies. It shows that all the gross turnovers were properly reported and offered for tax. Relying on the judgment of the Hon ble Gujarat High Court in case of CIT Vs. Smt. Minalben S. Parikh (1994 (10) TMI 9 - GUJARAT High Court ), there has to be twin test, not only erroneous but also prejudicial to the interests of revenue. In the given case, the turnover relating to assessee and JV companies were submitted before AO and also reconciled with the statutory form 16 filed by M/s FA CAO (Construction) and South Central Railway with books of the assessee and JV companies. It demonstrates that there is no escapement of income or prejudicial to the interests of revenue. Moreover, if we add the turnover of the JV companies to the assessee s gross turnover, it amounts to double taxation. Accordingly, we hereby reject the observations of the Pr. CIT and quash the order passed by him u/s 263 of the Act. - Decided in favour of assessee.
Issues:
Challenging order passed under section 263 of the Income-tax Act for the Assessment Year 2011-12. Analysis: 1. The assessee filed a return of income admitting NIL income for the AY 2011-12, which was processed under section 143(1). The AO estimated business profit at 9% on the turnover due to discrepancies in vouchers and use of Plant & Machinery. The AO rejected the books of account under section 145, resulting in an estimated income calculation. 2. The Principal CIT identified issues not examined by the AO during assessment under section 143(3), including discrepancies in the turnover adopted and the revised Profit & Loss Account submitted. The Principal CIT issued a notice under section 263 to reassess the assessment. 3. The assessee argued that the turnover included amounts from Joint Venture (JV) companies to meet tender eligibility criteria. The AR highlighted that the AO had verified the books of account and Form No. 16 of the JV companies before accepting the turnover. The AR also cited relevant case laws to support the argument against the Principal CIT's decision. 4. The Tribunal considered whether the inclusion of JV turnover in the assessee's gross turnover was erroneous and prejudicial to revenue. After reviewing the material on record and relevant judgments, the Tribunal found that the turnover was properly reported and reconciled, indicating no revenue loss or double taxation. The Tribunal rejected the Principal CIT's observations and set aside the order under section 263. 5. The Tribunal emphasized the importance of the twin test requirement for revision under section 263, i.e., the assessment must be both erroneous and prejudicial to revenue. In this case, since there was no revenue loss or double taxation, the Tribunal allowed the assessee's appeal and quashed the Principal CIT's order under section 263. 6. The Tribunal's decision was based on the proper reconciliation of turnover, absence of revenue loss, and adherence to statutory forms. The judgment highlighted the need for a thorough assessment of facts and compliance with accounting principles to avoid erroneous conclusions that could be deemed prejudicial to revenue. This detailed analysis covers the issues raised in the legal judgment before the Appellate Tribunal ITAT Hyderabad regarding the assessment under section 263 of the Income-tax Act for the Assessment Year 2011-12.
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