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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 ..... for further additions to be made based on the entries in the books of accounts? 2. Whether when such estimation of profit is made, the Commissioner under Section 263 of the Income Tax Act, 1961, can revise the assessment order finding prejudice on the revenue, which is an essential ingredient in invoking Section 263, along with an erroneous finding by the Assessing Officer? 2. The learned Standing Counsel for the revenue argued that in the present case, the assessee was a works contractor, who in addition to the said income had income from other sources, in the subject assessment year, being 2012-13. The Assessing Officer looked at the books of accounts and directed the assessee to produce the bills and vouchers of the materials purcha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T vs. Salauddin; (2019) 414 ITR 335 (Pat-HC). Reliance is also placed on CIT vs. Aggrawal Engg. Co (Jal.); (2008) 302 ITR 246. 5. We will first consider the decisions placed on record and then look at the application of the dictum to the facts of the case. The first of the cases placed before us is CIT vs. Aggrawal Engg. Co (supra) of the Punjab and Haryana High Court. Therein, the assessee being a civil contractor filed the return based on which the assessment was made, which was cancelled under Section 263 of 'the Act'. A fresh assessment was made which was challenged in appeal before the Commissioner. The Commissioner deleted two additions made by the Assessing Officer, on account of cash introduced in the books and payments made for pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s having not been relied upon; which dictum is not applicable to the above case. 7. In Salauddin (supra) a works contractor with the main source of income from the contract awarded by the Railways and the Public Works Department, disclosed a total receipt slightly above that of the previous year. The Assessing Officer rejected the books of accounts and determined the net profit at the rate of 8% as against the net profit declared of 5.10% by the assessee; only slightly above the 5% declared for the preceding year. The assessee challenged the order before the Commissioner, who made a further addition on the basis of profit not disclosed. The Tribunal found that once the books of assessee has been rejected and net profit estimated at 8% ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich, 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 Assessing Officer 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. 10. In the present case, the assessee was a works contractor as is disclosed from Annexure-2 order under Section 263 of 'the Act', who had executed contracts awarded by various State government departments. There is no questi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... non-payment of tax deducted at source. 13. 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 assessee and in favour of the Revenue, especially on the facts of this case. The order of the Tribunal setting aside the orde ..... X X X X Extracts X X X X X X X X Extracts X X X X
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