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TMI Blog2023 (7) TMI 121X X X X Extracts X X X X X X X X Extracts X X X X ..... f assessment proceedings is not borne out of record and is in face of specific findings recorded by the AO disallowing certain expenses. Unsecured loans raised during the year, the assessee in its submissions before the AO has submitted that it has taken unsecured loan from related persons/entities namely Piyush Ruhela, Ruhela Constructions Company and Satish Ruheja and in support, the copy of ledger account detailing the transactions during the year and necessary confirmation have also been filed during the course of assessment proceedings. Assessee has regular dealings with these related persons/entities and necessary confirmation is on record and therefore, the findings of the ld PCIT that no documents have been filed by the assessee is not borne out of records. As regarding, the advances given by the assessee during the year, the assessee during the assessment proceedings has submitted that no advances were given during the year and therefore, the findings of the ld PCIT is again not borne out of records. We agree with the alternate contention of the ld AR that the matter has been duly examined by the AO as he has raised necessary queries on these points vide notice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax took different grounds and without giving the opportunity to the assessee of being heard, passed order u/s 263. (Though even the grounds taken later by Principal Commissioner of Income Tax was duly considered by The A.O. while framing assessment.) Therefore the notice u/s 263 was on different grounds and the order u/s 263 is on different grounds. Hence, the order u/s 263 is bad in law, unjustified, against facts and circumstances of the case, and is against statutory as well as natural justice may kindly be quashed. And the assessment order u/s 143(3) dated 24.12.2019 may kindly be sustained and restored. 2. Briefly the facts of the case are that the assessee filed its return of income declaring total income of Rs. 60,45,540/-. Subsequently, the assessment was completed under section 143(3) at an assessed income of Rs. 62,95,540/-. Thereafter, assessment records were called for and examined by the Ld. Pr. CIT and a show cause under section 263 was issued as to why the assessment order so passed by the AO should not be set aside as the same is erroneous in so far as prejudicial to the interest of the Revenue. 2.1 In the show cause notice, it has been stated that one ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd there is a specific findings to this effect which has been recorded while passing the assessment order. 3.2 Regarding initiation of penalty proceedings, it was submitted that Section 270A does not direct the AO to impose penalty mandatorily as the section has used the term may and has not used the term shall . It was further submitted that Section 270A(6)(b) clearly states that no penalty should be levied where the addition / disallowance are made on estimate basis. 3.3 It was accordingly submitted that the assessment order so passed by the Assessing Officer was neither erroneous nor prejudicial to the interest of the Revenue. 4. The submissions so filed by the assessee were considered but not found acceptable to the Ld. Pr. CIT and he has recorded the following findings: 4. I have gone through the submissions of the assessee and perused the assessment record and following observations are made with regard to the assessment order u/s 143(3) passed by the AO being considered as erroneous. 1. The case was picked up for limited scrutiny through CASS under limited scrutiny category to examine high ratio of refunds. In order to do this, the AO was to examine t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... but no such details filed during assessment proceedings. (a) Furnish details of all expenses but no such details filed during assessment proceedings. After perusal of assessment record and the issues discussed above, it is clear that the Assessing Officer has passed the assessment order on 24.12.2019 u/s 143(3) of the Act without verifying details asked for or conducting enquiries on various issues as discussed above, which were mentioned in the questionnaire issued but neither examined nor enquiry done by the AO in absence of any submissions filed by the assessee in this regard. 4.1 In light of the aforesaid findings, the Ld. Pr. CIT set aside the assessment order to be framed denovo as per law after providing reasonable opportunity to the assessee. 5. Against the said findings and the order of the Ld. Pr. CIT, the assessee is in appeal before us. 6. During the course of hearing, the Ld. AR drawn our reference to the show cause notice issued by the Ld. Pr. CIT wherein broadly three issues have been raised by the Ld. Pr. CIT (which we have already taken note of and the same are not been repeated for the sake of brevity) and it was submitted that on receipt of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it was accordingly contended that the impugned order has been passed without providing an opportunity of being heard to the assessee and thus, the same deserve to be set-aside being in violation of basic cannon of justice that the assessee be allowed an opportunity of being heard before any adverse view is taken in its case. There is no dispute on the legal proposition so canvassed by the ld AR that the assessee deserve an opportunity of being heard before the ld PCIT passes an order setting aside the assessment order holding the same to be erroneous in so far as prejudicial to the interest of Revenue. More so, where the principle of natural justice has been ingrained in the statue itself while providing such powers to the ld PCIT where he intends to unsettle a settled position emerging out of tax filings of the assessee as examined by the Assessing officer. It is equally a settled position that the powers of the ld PCIT are not limited to the matters contained in the initial show-cause notice, and therefore, during the course of revisionary proceedings, where he come across other matters, he is equally empowered to enquire about the same and pass appropriate orders and all that i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cial statements of the assessee company and to conduct further enquiries as to whether profits declared were correct or had been understated. We find that the said finding is in context of the same issue of high ratio of refund which is part of the initial show-cause notice and thus, the assessee has been provided an opportunity in this context and the same cannot be held as any new matter/issue in respect of which the assessee has not been an opportunity of being heard. 12. In para 4(2)(a), the ld PCIT talks about increase in unsecured loans raised by the assessee during the year under consideration and the fact that though the AO has raised a query in this regard, however, no documents have been filed by the assessee in support of unsecured loans raised during the year. Similarly, in para 4(2)(d), the ld PCIT talks about advances given by the assessee and no details on record to explain whether interest has been charged or business expediency of advancing such loans. Depending upon the financial implication of raising of unsecured loans during the year under consideration and whether any interest has been paid/charged by the assessee company in its profit/loss account which wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nced by the ld AR that even on the issued raised by the ld PCIT, the matter has been duly examined by the AO and thus, the order so passed by him cannot be held as erroneous in so far as prejudicial to the interest of the Revenue. In this regard, we refer to the specific findings as recorded by the Ld. PCIT in para 4 of the impugned order and the assessee s point wise reply in its written submissions which read as under: As per PCIT's order As per assessee's submission 1. The case was picked up for limited scrutiny through CASS under limited scrutiny category to examine high ratio of refunds. In order to do this , the AO was to examine the financial statements of the assessee company for the year under consideration and do further enquiries to ascertain whether profits declared were correct or had been understated. All financial statements were filed. Details of the contract receipts, copy of the contract orders, trade payables, trade receivables and all such details as were mentioned and required as per the questionnaire dated 24.10.2019 were filed. The questi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment proceedings. This issue/ query has not been raised by PCIT in Notice issued u/s 263 of the Act. However, the query raised by the AO at serial no. 06. It is submitted the reply of the assessee filed before the AO is on page no. 165(PB), at serial no. 06 of the questionnaire. Thus the reply was filed before the AO. c. The AO asked assessee to file details of Trade receivable as on 31.03.2017 shown at Rs. 2,11,09,872/- in prescribed format along with confirmed copies of accounts from these regarding the amount of transaction and amount outstanding during the year. No details asked for in this regard including confirmation was filed during assessment proceedings by the assessee. This issue/ query has not been raised by PCIT in notice issued u/s 263 of the Act. However, the query raised by the AO at serial no. 08 of the questionnaire. It is submitted the reply of the assessee filed before the AO is on page no. 165(PB), at serial no. 08. Thus the reply was filed before the AO. d. Name of persons to whom advances have b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led during the course of assessment proceedings. Therefore, as far as contract revenues are concerned, the matter has been duly examined by the AO and even as per the ld PCIT, there is no adverse finding which has been recorded as far as reporting of contract revenues and any mismatch of such revenues in Form 26AS and corresponding account receivables are concerned. 17. As far as contract costs and other expenses are concerned, as per audited financial statements, the assessee has claimed cost of material amounting to Rs 13,26,00,458/- , finance cost amounting to Rs 9,84,739/-, employee benefit cost amounting to Rs 19,52,855/-, depreciation and amortization amounting to Rs 15,67,496/- and other expenses amounting to Rs 90,90,087/-. During the course of assessment proceedings, the AO vide questionnaire dated 24/10/2019 has asked the details of all sites where contractual work has been done by the assessee during the year or in progress, details of material purchased along with documentary evidences, site wise labour charges along with documentary evidences and details of other expenses along with supporting documentary evidences. In response, the assessee vide its submission date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mine the matter and applied his mind to the submissions made by the assessee and after analyzing the documentation so produced, he accepted the claim of the expenses subject to certain disallowances. Therefore, the findings of the ld PCIT that no details of expenses have been filed during the course of assessment proceedings is not borne out of record and is in face of specific findings recorded by the AO disallowing certain expenses. 19. As far as unsecured loans raised during the year, the assessee in its submissions before the AO has submitted that it has taken unsecured loan from related persons/entities namely Piyush Ruhela, Ruhela Constructions Company and Satish Ruheja and in support, the copy of ledger account detailing the transactions during the year and necessary confirmation have also been filed during the course of assessment proceedings. It is noted that the assessee has regular dealings with these related persons/entities and necessary confirmation is on record and therefore, the findings of the ld PCIT that no documents have been filed by the assessee is not borne out of records. Further, regarding, the advances given by the assessee during the year, the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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