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TMI Blog2012 (12) TMI 404X X X X Extracts X X X X X X X X Extracts X X X X ..... o M/s. Gammon India Limited on back to back basis considering the experience in civil work to be executed and provided 0.75% of the contract value to be paid for technical services. 2.1 During the year under consideration, the assessee had undertaken the project work of Delhi Metro Rail Corporation Ltd. to make elevated structure. The return of income was filed at a loss of Rs..14,725/- on 28.11.2003 along with tax audited report u/s.44AB, balance sheet, profit and loss account along with its annexure. The case was selected for scrutiny and the A.O. required the assessee to furnish the following details :- 1) Details note on the business activities. 2) Details of work executed receipt shown in P & L account with supporting evidenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 263 proposing to cancel the assessment order passed u/s.143(3) being erroneous in so far as it is prejudicial to the interest of the Revenue. In the show cause notice, the Ld. CIT(A) has pointed out two issues which was for the sake of ready reference is reproduced herein below :- "3. On perusal of the assessment record in your case for A.Y. 2003-04, it is noticed that you received Rs..73,72,12,582/- and Rs..3,35,86,097/- as per enclosed TDS certificates dtd. 30.06.2003 aggregating to Rs..77,07,98,679/-. The note on computation of total income filed alongwith the return confirm the advance receipt of Rs..9,63,94,337/- relevant to F.Y. 2002- 03 (A.Y. 2003-04). Thus, you have received aggregate payment of Rs..86,71,93,016/- (77,07,98,679 + 9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s..77,07,98,679/- as per TDS Certificates and TDS of Rs..1,38,13,136/-. (Rs..1,32,01,915 + Rs..6,11,221) were deducted before 31.03.2006. Thus the assessee earned income of Rs..77,07,98,679/- as per TDS Certificates in A.Y. 2003-04. Further, the assessee filed a chart claiming the receipt of Rs..77,07,98,679/- as per TDS Certificates while no TDS was deducted on the payments received and offered for taxation at Rs..14,33,33,016/-. (Rs..84,73,84,585 - Rs..14,33,33,016) on receipt basis. But, the assessee declared its income at Rs..84,73,84,585/- on the basis of bills submitted at Rs..70,40,51,569/- and receipt of Rs..14,33,33,016/- from them to M/s. DMRC Ltd. The assessee, thus, followed hybrid system against the accounting practice of merca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... between the show cause notice and the finding given by the Ld. CIT in the impugned order which can be seen from the following comparison :- As per Section 263 Notice As per Section 263 Order 1. TDS certificate receipts Rupees 77,07,98,679 No such finding or observation Add : Advance receipts 9,63,94,337 Less : Receipts declared in Profit & Loss Account 86,71,93,016 Short disclosure 84,73,84,584 (Para 3 of Section 263 Notice) 1,98,08,432 No mention in the show cause notice 1. Assessee followed a hybrid system of accounting against the mercantile system. The Assessee received Rs..91,41,31,695 and hence showed a lesser income to the extent of : Less :Rs..91,41,31,695 Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the principal of natural justice to be followed, whereby the Ld. CIT has to give an opportunity to the assessee. Such a violation of natural justice is itself fatal to the entire proceedings of section 263. Even on the issue of expenses of Rs..14,725/-, nowhere the Ld. CIT has pointed out that the A.O. has failed to examined this issue. He has simply stated that "the A.O. may also examine whether Rs..14,725/- were incurred wholly and exclusively for business purpose or not during the assessment proceedings." There is no finding as to how the A.O.'s order is erroneous in this regard and that whether the A.O. has failed to examine this issue. On the contrary as per the query letter issued by the A.O. and reply submitted by the assessee, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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