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2023 (3) TMI 1225 - AT - Income TaxRevision u/s 263 by CIT - case was selected for scrutiny under CASS - As per CIT AO did not verified points related to Incorrect claim of pre-construction interest u/s. 24(b),Mismatch in interest income offered to tax and . Mismatch in Turnover - HELD THAT - No observation or findings on the issue for the reason for selection of scrutiny, which were required to be done by the AO. AO has raised questions and replies submitted by the assessee, however from the paper book posted before us, no details pertaining to interest from ING Vysya bank was filed before the AO was accepted and passed the assessment order. As noticed from reply submitted by the assessee before CIT that assessee had availed loan from ING Vysya Bank incurred during the FY 2005, 2006 and 2007 for construction purpose but no documents was submitted during the course of hearing before the AO and assessee has claimed it as expenditure for the interest incurred during the construction period of Rs.2,66,89,424/-, which is a 1/5th of Rs.13,34,47,122/- As noted that in respect of interest income, the assessee has filed only reconciliation statement but no external documents/evidences fled and we also noted that the CIT observed that there is a difference in the turnover declared but the assessee submitted that difference due to inclusive of VAT tax. As submitted reconciliation but no details regarding proof of payments of tax etc. were submitted during the course of proceedings. AO should have examined all these things with the supporting/external documents but he did not do so. We found substance on the submissions of the DR and also on the order of CIT, hence, the order passed by the AO is erroneous prejudicial to the interest of revenue. Appeal filed by the assessee is dismissed.
Issues Involved:
Challenging order passed by the ld. Pr.CIT u/s 263 of the Income Tax Act. Grounds of Appeal: 1. The order passed by the ld. Pr.CIT is opposed to law, natural justice, and facts. 2. Failure to consider objections filed in response to notice under section 263. 3. Error in invoking clause(a) to Explanation-2 to section 263. 4. Exercising revisionary powers without jurisdiction. 5. Directing AO to verify submissions without valid reason. 6. Claiming twin conditions under section 263 are satisfied. 7. Directing verification of preconstruction interest claim. 8. Directing verification of mismatch in income from other sources. 9. Directing verification of mismatch in turnover. 10. Invoking Explanation 2(a) to section 263 for the assessment year. Summary of Judgment: The assessee filed an appeal against the order passed by the Principal Commissioner of Income Tax-1, Bengaluru under section 263 of the Income Tax Act for the assessment year 2015-16. The appeal was based on various grounds challenging the validity and justification of the order. The appeal was initially deemed time-barred by 464 days, but the assessee argued that the appeal was filed within the time frame considering the exclusion of the period due to the COVID-19 pandemic, which was accepted. Therefore, the matter proceeded to be disposed of on merits. The main issue in contention was the order passed by the ld. Pr.CIT under section 263 of the Income Tax Act. The ld.Pr.CIT observed that the Assessing Officer (AO) had not adequately verified certain aspects related to the assessee's income, specifically regarding pre-construction interest, mismatch in interest income, and turnover. The ld.Pr.CIT found the AO's order to be erroneous and prejudicial to the revenue's interest, leading to directions for further verification by the AO. The assessee contended that all necessary details were provided during assessments, and the AO's order was not erroneous. However, the ld. DR argued that the AO had not thoroughly verified the documents and had accepted submissions without proper scrutiny, leading to a vague assessment order. Upon review, the Tribunal found that the AO had not adequately examined crucial aspects such as interest details and turnover discrepancies with supporting documents. As a result, the Tribunal upheld the ld.Pr.CIT's order, concluding that the AO's order was indeed erroneous and prejudicial to the revenue's interest. Consequently, the appeal filed by the assessee was dismissed by the Tribunal. Order pronounced on the 13th day of March, 2023.
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