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2014 (11) TMI 522 - AT - Income Tax
Revision of an order u/s 263 - Erroneous and prejudicial to the interest of revenue or not - Held that:- The assessee was contractor and executed contract with M/s. Era Infrastructure India Pvt. Ltd. at Meerut - the AO has considered the development expenses and found excessive and accordingly, disallowed ₹ 1,20,000/- out of this – AO recorded that the books of accounts were produced which have been examined - the assessee attended the proceedings from time to time and furnished the replies to the various queries raised by him - This fact shows that AO has applied his mind and gone through the books of accounts, considered the replies of the assessee and also taken cognizance of the development expenses and found them excessive and after applying his own mind, he disallowed ₹ 1,20,000/- treating the same as excessive - Thus, it is very clear that the AO has applied his mind, made investigations and reached at a conclusion - on this issue, the action of the CIT for invoking the provisions of section 263 is completely unjustified.
Relying upon CIT vs. Ram Narain Goel – [1996 (11) TMI 59 - PUNJAB AND HARYANA High Court] – the observation of the CIT that the AO during the course of assessment proceedings failed to inquire into the correctness of gross receipts, claim of expenses, the total contract work to be executed as per the work orders and the discrepancies therein, total receipts of the assessee as per Form 26AS vis-à-vis the receipts returned in the Profit & Loss account and did not raise a finger on the unverifiable nature of accounts maintained by the assessee was unjustified - this observation is factually incorrect - The assessee filed detailed chart giving details of work contracts, TDS amount, work contract tax amount, bill number with dates etc. - the total work contracts were three in the current year and one in previous year - The copy of contracts was enclosed - The assessee has also enclosed copy of bills and payment schedule of the company - These facts clearly show that observation of the CIT in this regard was completely against the factual position and, therefore, these observations were factually incorrect – the order of the CIT is set aside – Decided in favour of assessee.