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TMI Blog2016 (7) TMI 271X X X X Extracts X X X X X X X X Extracts X X X X ..... al to the interest of revenue, as the issue raised by the CIT towards disallowance u/s 40(a)(ia) of the Act is not disallowable, because the assessee has proved that the impugned expenditure is paid during the same financial year. Therefore, we are of the view that the assessment order passed by the A.O. is not erroneous, in so far as it is prejudicial to the interest of the revenue, as there is no loss of revenue on account of non compliance with TDS provisions as the expenditure is not disallowable under sec. 40(a)(ia) of the Act in view of ITAT, Special Bench decision. The CIT without appreciating the facts revised the assessment order. Hence, we set aside the order passed by the CIT u/s 263 of the Act and restore the order passed by the A.O. u/s 143(3) of the Act. - Decided in favour of assessee X X X X Extracts X X X X X X X X Extracts X X X X ..... ment order passed by the A.O. u/s 143(3) of the Act dated 2.11.11 is erroneous in so far as it is prejudicial to the interest of the revenue. 4. In response to show cause notice, the assessee submitted that the assessment order passed by the A.O. u/s 143(3) of the Act is not erroneous in so far as it is prejudicial to the interest of the revenue, as the A.O. has examined the issue of TDS in respect of rent and hire charges. The assessee further submitted that it has furnished books of accounts and other relevant information at the time of assessment, the A.O. after satisfied with the details furnished by the assessee has accepted the income declared and completed the assessment. It was further submitted that it has been executing civil works for last two years and the income for the earlier 2 years was also declared at 3.5% to 4% on gross contract receipts. As regards the TDS on rent and hire charges, the A.O. has specifically called for details of TDS in respect of rent and hire charges, after fully satisfied with the explanations furnished by the assessee has accepted the claim, therefore, it is not correct to say that the A.O. has not examined the issue at the time of completio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act. The CIT(A) revised the assessment order for a simple reason that the A.O. has not examined the issue, ignoring the fact that whether any loss of revenue to the Government. The CIT cannot revise the assessment order just because the assessment order is erroneous, unless it is erroneous and also prejudicial to the interest of the revenue. Therefore, the order passed by the CIT should be set aside. 6. On the other hand, the Ld. D.R. strongly supported the order of the CIT(A). 7. We have heard both the parties and perused the materials available on record. The CIT assumed the jurisdiction to revise the assessment order for the reason that the A.O. has not conducted proper enquiry before completion of assessment, thereby the assessment order passed by the A.O. u/s 143(3) of the Act is erroneous in so far as it is prejudicial to the interest of the revenue. The CIT revised the assessment order for the reason that the net profit declared by the assessee is less and also the assessee has not proved whether TDS has been deducted in respect of expenditure incurred under the head rent and hire charges. It is the contention of the assessee that the issues raised by the CIT have bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder u/s 263 of the Act, but to invoke the provisions of section 263 of the Act, the twin conditions must be satisfied i.e. (1) the order of the A.O. is erroneous and (2) Further it must be prejudicial to the interest of the revenue. Unless both the conditions are satisfied, the CIT cannot assume jurisdiction u/s 263 of the Act. It is not necessary that every order which is erroneous may not be prejudicial to the interest of the revenue or vice versa. Unless the assessment order is erroneous, no action can be taken by the CIT u/s 263 of the Act, this is because the twin conditions i.e. the order is erroneous and the same is prejudicial to the interest of the revenue are co-exist. In the present case on hand, the A.O. has conducted detailed enquiry and also examined the issue of net profit and TDS on rent and hire charges. The assessee explained before the A.O. that it is consistently declared a net profit of 3.5% to 4% for the past 2 years. The A.O. after examining the books of accounts and other details furnished by the assessee has accepted the explanations and completed assessment accepting the returned income declared by the assessee. 10. As regards the TDS on rent and hire ch ..... X X X X Extracts X X X X X X X X Extracts X X X X
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