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2016 (10) TMI 696 - ITAT AHMEDABAD

2016 (10) TMI 696 - ITAT AHMEDABAD - TMI - Revision u/s 263 - not offering the sales income to tax - charging of interest u/s.220(2) - Held that:- In the present case, we find that during the course of assessment proceedings AO had raised a specific query wherein the assessee was asked to furnish the details of income from all operations alongwith the necessary evidences. The query was replied by the assessee . It is seen that on receipt of reply from Assessee, no adjustment to the sales was mad .....

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exercising of revisionary powers u/s. 263 of the Act. In view of it we are of the view that in the present case Ld. CIT was not justified in resorting to revisionary powers u/s. 263 of the Act, we therefore set aside the order of CIT cancelling the order dated 28/03/2013 passed u/s. 143(3) of the Act. Thus, the grounds of the Assessee are allowed. - I.T.A. No.1461/Ahd/2015 - Dated:- 31-8-2016 - SHRI RAJPAL YADAV, JUDICIAL MEMBER And SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER For The Appellant : Sh .....

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esale basis. Assessee filed its return of income for AY 2010-11 on 30/09/2010 declaring total income of ₹ 7,66,12,650/-. The case was finalized u/s.143(3) vide order dated 28/03/2013 and the total income was determined at ₹ 10,68,65,351/-. Thereafter, on examination of the assessment records, ld.CIT noticed that as per computation of income assessee had claimed TDS of ₹ 3,16,99,286/- as against the professional income of ₹ 29,19,49,163/- shown by the assessee in the Profi .....

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showing less income to the extent of ₹ 2.5 crores (rounded off) is factually incorrect because the TDS was deducted on the amount of bill including service tax. Since service tax was not the income of the assessee, assessee was not crediting or debiting service tax to its P&L A/c. Assessee also inter-alia objected to the initiation of proceedings u/s.263 of the Act. The submission of the assessee was not found acceptable to ld.CIT. He held that assessee had not disclosed the income cor .....

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aised following grounds:- 1. a) The learned Principal Commissioner of Income Tax-1, Ahmedabad has erred in law and on facts of the case in assuming jurisdiction u /s. 263 of the Income Tax Act and passing the order under that Section whereby by he has cancelled the assessment order u/s. 143(3) dated 28/03/2013 passed by the Deputy Commissioner of Income Tax, Circle 4, Ahmedabad by capriciously holding that the assessment order is erroneous and prejudicial to the interest of the revenue. b) The l .....

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s income to the extent of ₹ 2,50,43,697/-. The learned Principal Commissioner of Income Tax-1, Ahmedabad has erred in law and on facts of the case in passing the impugned order without appreciating the fact that while making the payments to the appellant assessee towards the professional fees, the deductor company has also made TDS from the service tax charged by the appellant on the invoices of the deductor company and that the service tax so collected by the appellant is not revenue rece .....

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payer has deducted tax at source is not includible in the total income of the appellant company and that the appellant company has not included the same in the receipts and also that the appellant has not separately claimed deduction for the service tax by separately debiting it to the Profit & Loss Account. The learned Principal Commissioner of Income Tax-1, Ahmedabad has erred in law and on facts of the case in passing the impugned order without appreciating the fact that in the course of .....

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th necessary evidence" and incompliance therefore the appellant had vide written submission dated 27/11/2012 furnished the requisite information. Thus, the issue with respect to the professional receipts from which TDS of ₹ 3,16,99,286/- was made has also been duly considered and verified by the Assessing Officer in the course of assessment proceedings. It is therefore prayed that the impugned order may please be cancelled. 2. a) The learned Principal Commissioner of Income Tax-1, Ahm .....

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not paid within the specified time of 30 days. The Pr. CIT failed to appreciate that the issue of charging interest u/s. 220(2) does not arise at the stage of passing the assessment order u/s. 143(3) but arises only when the assessee fails to pay the demand raised as per the assessment order within the stipulated time. There is no provision in the Income Tax Act for charging interest u/s. 220(2) before the demand has fallen due for payment. Therefore, there is no error in the assessment order u .....

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It is therefore prayed that the impugned order may please be cancelled. 3. a) The learned Principal Commissioner of Income Tax-1, Ahmedabad has erred in law and on facts of the case in passing the impugned order holding that the assessment order was made without appreciating the provisions of law correctly and the income of the assessee was assessed after allowing in admissible deductions without pinpointing in the impugned order any item of deduction that is inadmissible but has been allowed by .....

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28/03/2013, notice u/s. 143(2) was issued on 24/08/2011 and detailed questionnaire and notice u/s. 142(1) were issued and the Assessing Officer had made enquiries in accordance with the provisions of the Income Tax Act. The claim of credit for tax deducted at source and the corresponding income relating to such TDS was also examined by the AO in the course of assessment proceedings. It is therefore prayed that the impugned order may please be cancelled. 4. The learned Principal Commissioner of I .....

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Pr. Commissioner of Income Tax is not justified in exercising revisionary power u/s. 263 in respect of an assessment order which has already merged with an appellate order passed by the CIT(Appeals) which included the issue relating to determination of the total income. 3. At the time of hearing it was pointed to ld.AR that the grounds raised by the assessee are not in consonance with Rule 8 of the Income Tax (Appellate Tribunal) Rules 1963 as they are descriptive and argumentative in nature to .....

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that the initiation of revisionary proceedings has been initiated at the instance of audit party objections. He further submitted that the assessment order has been passed after proper verification of the facts and the evidences produced by the AO and there is no loss of Revenue to the exchequer as alleged by ld.CIT in the order passed u/s.263 of the Act. He further submitted that before passing the order u/s.143(3), the AO had issued detailed notice and questionnaire and called for the details .....

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s amount which included service tax and were also deducting TDS on the reimbursement of expenses. He submitted that assessee was following mercantile system of accounting wherein on the basis of invoices raised, the income was booked at the time of raising of invoice itself and the payments was received later on and in such situation the question of not recognizing the revenue did not arise. He further submitted that the service tax collected by the assessee does not constitute income chargeable .....

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f the assessee to pay the amount specified as tax payable in a notice of demand issued u/s.156 of the Act. In the present case for AY 2010-11, at the time of passing the assessment order u/s.143(3) of the Act there was no tax payable by the assessee pursuant to notice of demand issued u/s.156 of the Act or an intimation issued u/s.143(1) for that year and therefore the question of charging of any interest u/s.220(2) at the time of passing of order u/s.143(3) does not arise. He therefore, submitt .....

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e the record of any proceeding under this Act, and if he considers that any order passed therein by the ITO is erroneous in so far as it is prejudicial to the interests of the Revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh a .....

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een that Section 263 has been invoked by ld.CIT on two grounds namely assessee had not offered the income corresponding to the claim of TDS made by Assessee and AO had not charged interest u/s.220(2) of the Act. 4.4. In the present case, we find that during the course of assessment proceedings AO had raised a specific query wherein the assessee was asked to furnish the details of income from all operations alongwith the necessary evidences. The query was replied by the assessee . It is seen that .....

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3) of the Act, there was any tax that was payable by the assessee pursuant to the notice u/s.156 of the Act and that there was failure on the part of assessee to pay the tax. 4.6. On the issue of what orders can be termed as erroneous and prejudicial to the interest of Revenue, we would like to refer to the decision of Hon ble Bombay High Court in the case of CIT vs. Gabrial India Ltd (1993) 203 ITR 108 (Bom) where the Hon ble Bombay High Court has held as under:- An order cannot be termed as er .....

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ines the accounts, makes enquiries, applies his mind to the facts and circumstances of the case and determines the income either by accepting the accounts or by making some estimates himself. The Commissioner, on perusal of the records, may be of the opinion that the estimate made by the officer concerned was on the lower side and, left to the Commissioner, he would have estimated the income at a higher figure than the one determined by the ITO. That would not vest the Commissioner with power to .....

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