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2020 (7) TMI 680 - AT - Income TaxRevision u/s 263 - difference in the amount of gross receipt was not verified by the AO during the assessment proceedings - assessee has shown less amount of gross receipts in comparison to the amount of gross receipt shown in the form 26AS - HELD THAT - Queries were raised by the AO during the assessment proceedings about the mismatch of the TDS credit claimed by the assessee viz a viz the TDS credit reported in the form 26AS. Similarly, the query was raised regarding the contracts which were completed in the year under consideration. There was no enquiries raised by the AO about the mismatch in the amount of gross receipts shown by the assessee viz a viz reported in the form 26AS on which TDS was deducted. There was no verification carried out by the AO during the assessment proceedings with respect to the amount of gross receipt shown by the assessee viz a viz the gross receipt reported in the form 26AS. It is the settled law that the order of the AO can be held as erroneous insofar prejudicial to the interest of revenue if there was no enquiry conducted by the AO during the assessment proceedings. See MALABAR INDUSTRIAL CO. LTD. VERSUS COMMISSIONER OF INCOME-TAX 2000 (2) TMI 10 - SUPREME COURT - Decided against assessee. Order being pronounced after ninety (90) days of hearing - COVID-19 pandemic and lockdown - HELD THAT - Taking note of the extraordinary situation in the light of the COVID-19 pandemic and lockdown, the period of lockdown days need to be excluded. See case of DCIT vs. JSW Limited 2020 (5) TMI 359 - ITAT MUMBAI
Issues Involved:
1. Validity of the order passed under section 263 of the IT Act by the Principal Commissioner of Income Tax (CIT). 2. Whether the Assessing Officer (AO) conducted necessary verification regarding the difference in gross receipts shown by the assessee in the books of accounts and form 26AS. 3. The impact of the COVID-19 pandemic on the pronouncement of the order beyond the statutory period. Issue-wise Detailed Analysis: 1. Validity of the order passed under section 263 of the IT Act by the Principal Commissioner of Income Tax (CIT): The assessee contended that the Principal CIT erred in passing the order under section 263 of the IT Act, claiming it was unwarranted, unjustified, and bad in law. The Principal CIT held that the order passed by the AO under section 143(3) was erroneous and prejudicial to the interest of revenue due to non-verification of the difference in gross receipts between the books of accounts and form 26AS. The Principal CIT directed the AO to make a fresh assessment after necessary enquiries. 2. Whether the Assessing Officer (AO) conducted necessary verification regarding the difference in gross receipts shown by the assessee in the books of accounts and form 26AS: The assessee argued that the AO had made due verification and applied his mind during the assessment proceedings. The AO had raised specific queries under section 142(1) regarding TDS credit reconciliation and work orders, which the assessee duly replied to. However, the Tribunal found that while the AO raised queries about TDS credit and contract completion, there was no enquiry regarding the mismatch in gross receipts. The Tribunal cited the Supreme Court's judgment in Malabar Industries Co. Ltd. vs. CIT, emphasizing that an order can be considered erroneous and prejudicial to the revenue if the AO fails to conduct necessary enquiries. Thus, the Tribunal upheld the Principal CIT's order under section 263. 3. The impact of the COVID-19 pandemic on the pronouncement of the order beyond the statutory period: The Tribunal acknowledged the unprecedented challenge posed by the COVID-19 pandemic, which led to a nationwide lockdown and disruption of judicial work. Citing the Hon’ble Mumbai Tribunal's decision in JSW Limited Vs Deputy Commissioner of Income Tax and the Supreme Court's extension of limitation periods, the Tribunal justified the delay in pronouncing the order beyond the statutory 90-day period. The Tribunal emphasized the need to consider ground realities and pragmatic approaches in such exceptional circumstances. Conclusion: The Tribunal dismissed the appeal of the assessee, upholding the Principal CIT's order under section 263. The Tribunal found no infirmity in the Principal CIT's decision, concluding that the AO had not conducted necessary verification regarding the gross receipts mismatch. The Tribunal also addressed the delay in pronouncing the order due to the COVID-19 pandemic, aligning with the broader judicial and administrative measures taken during the crisis. The order was pronounced in open court on June 1, 2020.
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