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2023 (4) TMI 630 - AT - Income TaxRevision u/s 263 by CIT - difference in cash sales and sales reflected in the profit/loss account - disclosure of total sales in the profit/loss account lower than the cash sales - HELD THAT - We find that the assessee has provided the necessary explanation regarding the difference in cash sales and sales reflected in the profit/loss account which is on account of manner of reflection of VAT amount collected from the customers. In the profit/loss account, the sales have been shown net of VAT and VAT has been shown separately and therefore, merely on account of separate reflection of sales and VAT and in absence of any other discrepancy, the order so passed by the AO cannot be held as erroneous in so far as prejudicial to the interest of the Revenue and thus, the findings of the ld PCIT in this regard are set-aside. No details of quantum of sale on commission basis affected by the assessee provided - As per assessee s own submissions before the AO, the assessee was a sub-dealer of M/s Agarwal Autosales, Sitapur till June 2016 and used to collect the sales proceeds of bikes and deposit the same in her bank account maintained with Vijay Bank and subsequently, the same was transferred to the account of M/s Agarwal Autosales, Sitapur. The collections so made from the customers were thus in cash and how the same has been accounted for in its books of accounts and offered to tax is clearly within the mandate of limited scrutiny for which the matter was selected under CASS to examine the cash deposits during the year. During the course of assessment proceedings, the matter relating to cash deposits was enquired by the AO and in response to the notices issued, the assessee filed her submissions which were examined and thereafter, the assessment order was passed wherein there is a clear mention of the transactions effected by the assessee on behalf of M/s Agarwal Autosales, Sitapur. It is therefore not a case of lack of enquiry on part of the AO Assessee has obtained and filed a fresh certificate during the course of revisionary proceedings before the ld PCIT bringing out the fact that during the financial year 2016-17, 490 vehicles were sold by the assessee on behalf of M/s Agarwal Autosales, Sitapur which were duly recorded in the books of accounts of M/s Agarwal Autosales, Sitapur and for which commission was paid to the assessee after deducting of TDS. The ld PCIT has not pointed out any defect in the said certificate and even during the course of proceedings before us, the ld CIT DR couldn t point out any discrepancy in the certificate so filed by the assessee and what further enquiries/verification were required. Where the sales were effected by the assessee on behalf of M/s Agarwal Autosales, Sitapur which were duly recorded in the books of accounts of M/s Agarwal Autosales, Sitapur, and the cash collections so made on behalf of M/s Agarwal Autosales, Sitapur were duly transferred to the account of M/s Agarwal Autosales, Sitapur and for such activities, the commission earned by the assessee has been duly offered in the return of income and which has been accepted by the AO, the order so passed by the AO cannot be held as erroneous in so far as prejudicial to the interest of the Revenue. Order passed by the ld PCIT u/s 263 is set-aside and that of the AO is sustained. Decided in favour of assessee.
Issues Involved:
1. Validity of initiation of proceedings under Section 263. 2. Justification of setting aside the assessment order. 3. Assessment of the details filed by the assessee in response to the notice under Section 263. Summary: 1. Validity of Initiation of Proceedings under Section 263: The assessee argued that the initiation of proceedings under Section 263 was unwarranted as all details were filed and duly considered by the Assessing Officer (AO) during the assessment. The Principal Commissioner of Income Tax (Pr. CIT) did not appreciate the difference among total sales, cash sales, and sales with VAT, and the commission declared by the assessee tallied with Form 26AS. Therefore, the assessment order was neither erroneous nor prejudicial to the revenue. 2. Justification of Setting Aside the Assessment Order: The Pr. CIT set aside the assessment order on two grounds: - Discrepancy in sales declared in the Profit & Loss (P&L) Account and cash sales disclosed by the assessee. - Lack of detailed documentation regarding sales on commission basis for M/s Agarwal Autosales, Sitapur. The Tribunal found that the discrepancy was due to the manner of disclosure in the P&L account where sales were reflected net of VAT, and the necessary reconciliation was provided by the assessee. Regarding the sales on commission basis, the Tribunal noted that the AO had enquired into the matter during the assessment proceedings, and the assessee had provided a certificate from M/s Agarwal Autosales, Sitapur confirming the sales and commission details. 3. Assessment of Details Filed by the Assessee: The assessee provided explanations and documentation during the assessment and revisionary proceedings, including a fresh certificate from M/s Agarwal Autosales, Sitapur detailing the sales and commission. The Tribunal found no defects in the certificate and concluded that the AO had duly verified the transactions. The Tribunal held that the order passed by the AO was not erroneous or prejudicial to the revenue. Conclusion: The Tribunal set aside the order passed by the Pr. CIT under Section 263 and restored the assessment order passed under Section 143(3). The appeal of the assessee was allowed, and the stay petition was dismissed as infructuous. Order Pronounced: The order was pronounced in the open Court on 13/04/2023.
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