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2022 (5) TMI 41 - AT - Income TaxRevision u/s 263 by CIT - AO has not made proper enquiry in regard to the difference in the receipts as reflected in the 26AS statement and the profit and loss account - HELD THAT - The orders of the co-ordinate Bench for AY 2008-09, 2011-12 and 2012-13, wherein revenue recognition method adopted by the assessee are accepted. Undoubtedly, it is not the case of the Revenue that the amounts received by the assessee as disclosed in form no.26AS has not been offered by assessee as its income in terms of the agreement with the parties or it is in violation of method of accounting followed consistently. We also found that amount of sum received from Goodwork Communication Pvt. Ltd there is no difference between amount received as per from no. 26AS and amount shown as income. With respect to Reliance Big Entertainment Pvt. Ltd. the amount of receipt shown in form no. 26AS is related to agreement for five years. This amount has been offered for taxation by the assessee in five different years. Similarly, amount received from EPIC channel was provided in agreement for three years and same has also been disclosed as income in three different years - assessee has shown party wise, assessment year wise income offered by it. Such working was based on number of days. In view of this, we hold that learned Assessing Officer has made complete inquiry between mismatch of receipt as per 26AS and income recognized in profit and loss account. Further, as assessee has a method of recognizing revenue as per terms of agreement, over a period of time on the basis of program telecast on number of days, which is also approved by ITAT in its own case, consistently followed by assessee, we do not find that following that method makes the order of learned Assessing Officer erroneous. - Decided in favour of assessee.
Issues Involved:
1. Whether the Principal Commissioner of Income Tax (Pr. CIT) was justified in passing an order under section 263 of the Income-Tax Act, 1961 without granting the appellant a proper opportunity to represent its case. 2. Whether the Pr. CIT was justified in passing the order without sending any intimation of the notice by email or SMS to the appellant. 3. Whether the Pr. CIT erred in holding that the Assessing Officer (AO) did not make proper inquiries regarding the difference in receipts as reflected in the 26AS statement and the profit and loss account. 4. Whether the Pr. CIT erred in holding that the order of the AO is erroneous and prejudicial to the interest of the revenue. 5. Whether the issue of taxing the entire receipt as income in the year of contract has already been settled in favor of the appellant. Issue-wise Detailed Analysis: 1. Opportunity to Represent: The appellant contended that the Pr. CIT passed the order under section 263 of the Income-Tax Act, 1961 without granting a proper opportunity to represent its case. The Tribunal noted that the order was passed ex-parte, and the appellant claimed not to have received any notices, thereby depriving them of a reasonable opportunity of hearing. However, since the Tribunal found that the AO had made due inquiries and satisfactorily explained the issues, it did not find it proper to restore the matter to the Pr. CIT. 2. Intimation of Notice: The appellant argued that the Pr. CIT passed the order without sending any intimation of the notice by email or SMS, depriving them of a reasonable opportunity to defend their case. The Tribunal dismissed this ground, stating that since the AO had made the necessary inquiries, the order of the Pr. CIT was not sustainable, and thus re-sending the matter to the Pr. CIT was unnecessary. 3. Proper Inquiry by AO: The Pr. CIT held that the AO did not make proper inquiries regarding the difference in receipts as reflected in the 26AS statement and the profit and loss account. The Tribunal found that the AO had indeed raised specific queries and received detailed explanations from the appellant, including the nature of business, reconciliation of receipts, and copies of agreements. The AO had accepted the explanation after satisfying himself about the correctness of the method of accounting and the quantum of income offered. Therefore, the Tribunal concluded that the AO had made a complete inquiry, and the order was not erroneous. 4. Erroneous and Prejudicial Order: The Pr. CIT held that the order of the AO was erroneous and prejudicial to the interest of the revenue. The Tribunal referred to various judgments, including those of the Hon'ble Kolkata High Court and the Hon'ble Supreme Court, which stated that an order could be deemed erroneous if the AO did not make proper inquiries or verification. However, in this case, the Tribunal found that the AO had conducted adequate inquiries and that the appellant's method of revenue recognition was consistent and approved in previous years. Therefore, the Tribunal quashed the order of the Pr. CIT. 5. Taxing Entire Receipt in Year of Contract: The appellant argued that the issue of taxing the entire receipt as income in the year of contract had already been settled in their favor. The Tribunal noted that the appellant had a method of recognizing revenue as per the terms of the agreement over a period of time, which was approved by the ITAT in previous years. The Tribunal found that the AO had accepted this method after proper inquiry, and thus, the order was not erroneous. Conclusion: The Tribunal concluded that the AO had made necessary inquiries and verified all relevant details, and the order was neither erroneous nor prejudicial to the interest of the revenue. Therefore, the order passed by the Pr. CIT was quashed, and the appeal filed by the assessee was partly allowed.
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