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TMI Blog2024 (8) TMI 114X X X X Extracts X X X X X X X X Extracts X X X X ..... en from the explanation offered by the assessee before the Commissioner for the subject assessment year, came to Rs. 3,44,84,318/-; out of which, the liability in the previous year was Rs. 1,92,98,140/-. Hence the sundry credit claimed by the assessee came to Rs. 1,51,86,178/-. Obviously, this was not noticed by the AO and presumably the same was not accounted in the total receipts, as undisclosed income. If the sundry credits are not explained properly, then disclosing that in the books of accounts would amount to a device employed to suppress the income received, as a credit taken by a third party, with whom the assessee had a transaction. In the present case, the assessee was a works contractor as is disclosed from Annexure-2 order u/s 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion was sought. We also have to notice that in the present case the Commissioner under Section 263 of the Act had also reckoned non-payment of tax deducted at source. Essentially, the Commissioner has found the order to be erroneous for reason of non payment into the treasury, of the tax deducted at source having not been verified and also the sundry creditors having not been examined; the latter of which ground results in the finding that the estimation of profit on the contract receipts alone would be an erroneous exercise and it causes prejudice to the interest of the revenue. We find absolutely no reason to interfere with the order of the Commissioner and set aside the order of the Tribunal answering the questions of law against the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the gross receipts of the assessee to which the other incomes were added. 3. The Commissioner under Section 263 of the Income Tax Act, 1961 (for brevity, the Act ) found the assessment order to be erroneous on two counts. The payment of tax deducted at source claimed of Rs. 2,64,000/- having not being proved and the Assessing Officer having not reckoned the sundry creditors of the assessee especially when no bills and vouchers were produced. The order of the Commissioner under Section 263 of the Act is asserted to be perfect, in all respects, by the Revenue, since the assessment order is both erroneous and prejudicial to the revenue. The learned Senior Standing Counsel also relies on the decision in Malabar Industrial Co. Ltd. vs. Commi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fit of 10% being applied, there is no reason for the further additions. We are perfectly in agreement with said findings especially since it has to be presumed from the facts available in the judgment that the receipts of the assessee were confined to the civil contracts. When the gross receipts were taken and an assessment made estimating the book profit, the defects and defalcations in the books of accounts is reckoned to be taken into account. In this context, we only raise one reservation, as to whether in reckoning the total income for the purpose of computing the gross income, it is not discernible from the judgment, whether the cash introduced and the purchases made outside the books of accounts were included or not. 6. Prasad Constr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 8. Malabar Industrial Co. Ltd. (supra), relied on by both the parties held that to invoke Section 263 of the Act two conditions must co-exist; that the order of the Assessing Officer should be erroneous and it should also be prejudicial to the interest of the revenue. It was declared that the mere fact that the order of the Assessing Officer is erroneous would not necessarily lead to invocation of Section 263 of the Act ; since when two views are possible and the Assessing Officer has chosen one of them; giving the assessee relief to an extent, the mere fact that the revenue collected less tax would not enable invocation of Section 263 of the Act . However, when the order is erroneous and the revenue loses tax, lawfully payable by a perso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the assessment order, the assessee has income from different sources; from a firm, house property and other sources. Hence, the income declared by the assessee is not solely from the contract work. When the assessment made is of income from one single source, if the total contract receipts are taken to estimate the gross profit, necessarily there cannot be any further additions made. In consonance with the reservation made by us, while dealing with Prasad Construction Co. (supra), applied to the present case; if the gross receipts are taken, on which the net profit is assessed, the entire receipts are not reflected, then definitely there is scope for addition, to the receipts. The sundry creditors, if not explained will have to be added ..... X X X X Extracts X X X X X X X X Extracts X X X X
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