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2016 (2) TMI 1232 - AT - Income TaxRevision u/s 263 - difference of contract receipt as per TDS certificate and as per profit and loss account of the assessee - AO has passed the order u/s. 143(3) - case of the assessee was selected for scrutiny and notice u/s. 142(1) was issued to the assessee and the assessee was specifically asked to reconcile contract receipts shown in its books of account vis- -vis that when in 26AS - HELD THAT - We are of the view that in the instant case, CIT's revisional power is uncalled for and unjustified. We find that it is in the nature of reviewing the fishing inquiry. CIT proceeded on the assumption that no such information was furnished to him at the time of assessment order. Commissioner has mentioned that the AO has not examined the profit and loss account assuming so, this made the order erroneous, but it is not prejudicial to the interests of revenue. In the instant case, the AO has verified the reconciliation of statements and it is mentioned in paragraph 4 of the assessment order. AO has taken one of the possible views. Therefore, we allow the appeal of the assessee and we hold that the AO has applied his mind. Therefore, the impugned assessment order cannot be leveled as erroneous and prejudicial to the interests of the revenue under the ambit of provisions of Section 263 . The assessee's case is squarely covered by the decision of Malabar Industrial Co. Ltd. vs. CIT 2000 (2) TMI 10 - SUPREME COURT - Decided in favour of assessee.
Issues involved:
- Discrepancy in contract receipts and income offered for assessment - Validity of Commissioner's order under section 263 of the Income-tax Act, 1961 Analysis: Issue 1: Discrepancy in contract receipts and income offered for assessment The appeal pertains to the assessment year 2010-11 where the assessee claimed TDS of &8377; 13,18,714 from contractual receipts of &8377; 6,15,83,252. However, the assessee offered only &8377; 5,81,89,973 as income under Construction Receipts. The Commissioner of Income-tax directed the addition of &8377; 33,93,315 to the total income, stating that the order of the Assessing Officer (AO) was erroneous. The assessee contended that reconciliation of contract receipts was provided to the AO, and the AO had made an addition of &8377; 86,438 after considering the details and evidence. The Commissioner set aside the assessment order for further inquiry by the AO. The authorized representative argued that the AO's order was not erroneous as detailed explanations were provided, and the AO had made a reasoned addition of &8377; 86,438 based on the reconciliation statements. The representative further explained the mercantile system of accounting followed by the assessee. The Tribunal found that the AO had considered the reconciliation statements and made a reasoned addition, and hence, the Commissioner's revisionary power under section 263 was not justified. The Tribunal held that the AO's order was not erroneous or prejudicial to revenue's interests, allowing the appeal of the assessee. Issue 2: Validity of Commissioner's order under section 263 of the Income-tax Act, 1961 The Commissioner directed the AO to verify the discrepancy in contract receipts between what was shown by the assessee and in the 26AS statement. The authorized representative argued that the AO had already verified the difference and made a specific addition based on detailed inquiries and explanations provided by the assessee. The representative contended that the Commissioner's revisionary power under section 263 was not warranted as the AO had taken a possible view after detailed inquiry. The Tribunal noted that the AO had applied his mind, considered the reconciliation statements, and made a specific addition of &8377; 86,438. Citing the decision in Malabar Industrial Co. Ltd. vs. CIT, the Tribunal held that the AO's order was not erroneous or prejudicial to revenue's interests, and the Commissioner's revisionary power was unjustified. The appeal of the assessee was allowed based on these findings. This detailed analysis of the judgment provides a comprehensive understanding of the issues involved and the Tribunal's decision on each issue.
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