9911796707
TMI Blog2022 (3) TMI 1343X X X X Extracts X X X X X X X X Extracts X X X X ..... er due application of mind, had passed a detailed order restricting the additions to 12.5% (and not 100%) after considering the extensive submissions and judgments placed by the appellant. Therefore the Ld. PCIT has committed an error of fact and law in holding that there was no application of mind by the AO. 3. That the impugned order is contrary to established principles of law laid down by this Tribunal and other High Courts. B: Addition in respect of interest on arbitration awards 1. That findings in the impugned order on this issue is bad in law for want of any specific conclusion on the subject and failure to make a reference to the original order under revision. 2. That in any case, any findings under Section 263 on this issue were barred by limitation, having been passed beyond two years from the date of the order under revision and also contrary to the law on merits and the Ld. Assessing Officer had rightly allowed the concerned deduction under Paragraph 4 of its order dated 05.03.2014 with a detailed reasoning." 2. Briefly stated facts necessary for adjudication of the controversy at hand are : the assessee company filed a return of income on 25.09.2010 declaring ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9,000/- to the total income instead of Rs. 37,75,625/- as the assessee has been following mercantile system of accounting. 5. Declining the contentions raised by the assessee the Ld. PCIT proceeded to conclude that the assessment order passed by the AO under section 143(3) read with section 147 of the Act is erroneous and prejudicial to the interest of the revenue and directed the AO to reframe the assessment afresh after giving due opportunity to the assessee. 6. Consequently, the Ld. PCIT found the assessment order passed by the AO erroneous and prejudicial to the interest of the revenue and invoked the jurisdiction under section 263 of the Act by way of issuance of notice and thereby passed the impugned order under section 263 of the Act. Feeling aggrieved from the impugned order passed by the Ld. PCIT under section 263 of the Act, the assessee has come up before the Tribunal by way of filing the present appeal. 7. We have heard the Ld. Authorised Representatives of the parties to the appeal, perused the orders passed by the Ld. Lower Revenue Authorities and documents available on record in the light of the facts and circumstances of the case and law applicable thereto. 8. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n or verification. This clearly shows that the said order passed by the AO is erroneous and prejudicial to the interests of revenue." "Reply filed by the assessee: "Issue No. 1: In respect of two vendors who had allegedly given 'accommodation invoices' additions @ 12.5% of invoice values, (considering gross profit) was made in assessment order passed u/s. 147. Citing the case of N.K. Proteins Pvt. Ltd. vs. DCIT, notice u/s.263 propose to make addition @100% of invoice values. Our submissions * Principles laid down in N.K. Proteins cannot be applied in our case. * In N.K. Proteins incrimination documents were found in the premises of assessee and the assessee confessed that invoices were fake. * In our case reopening was done based on information from DDIT(lnv.) New Delhi. * No independent enquiries were made by AO (other than writing a letter to bankers of vendors). * We had submitted the 'measurement books' of the vendors which are maintained by the project teams for certifying work done by vendors. * For work done by these vendors, we in turn raised bills on our clients. * Our above facts have hot been disputed by the AO in his order. AO un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M/s. Kumar Enterprises and M/s. Shivam Enterprises with whom the assessee had business transactions were shell entities and they have not filed their returns of income despite having allegedly received substantial sum of money from the assessee. 12. Provisions contained under section 263(1), Explanation 2 laid down the criteria for invoking revisionary jurisdiction under section 263 of the Act only when the order sought to be revised is prejudicial to the interest of the revenue and the AO has framed the assessment inter alia that without making enquiries or verification which should have been made; that the order is passed allowing any relief without enquiring into the claim; that order has not been made in accordance with any order, directions or instructions issued by the Board under section 119 or; that the order has not been passed in accordance with any decision which is prejudicial to the assessee, rendered by the jurisdictional High Court or Hon'ble Supreme Court in case of the assessee of any other person. 13. We would examine the order passed by the Ld. PCIT under section 263(1), Explanation 2 qua both the issues flagged by the Ld. PCIT. 14. So far as issue flagged by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the assessee. Addition made by the AO has been accepted by the assessee company by not filing any further appeal. 17. The Ld. D.R. for the Revenue, on the other hand, contended that there is nothing on record, if services were actually procured by the assessee from the contractor. However, answer to this question has been given by the AO himself by treating the transactions as non genuine/accommodation entries. The Ld. D.R.'s contention that 100% amount of bogus transactions should have been added and relied upon the decision rendered by co-ordinate Bench of the Tribunal in case of ITO vs. Ashok V. Viradia in ITA No.646/M/2016 dated 25.09.2017 and decision rendered by Hon'ble Bombay High Court in case of Shoreline Hotel (P.) Ltd. vs. CIT (2018) 98 taxmann.com 234 (Bombay). 18. However, we are of the considered view that on this issue divergent judgments have been passed by the Hon'ble High Courts as in case of CIT vs. Bholanath Polyfab Pvt. Ltd. (2013) 355 ITR 290 and CIT vs. Simit P. Sheth (2013) 356 ITR 451 (Guj.). Hon'ble High Court permitted addition of partial amount of accommodation entries due to the fact that there were subsequent sale of goods which were undisputed. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... circumstances, it is again settled principle of law that "where two views are possible, as the AO has taken one view and Ld. PCIT did not agree with him" on this ground only the order cannot be treated as erroneous in so far as prejudicial to the interest of the revenue as has been held by Hon'ble Bombay High Court in case of Grasim Industries Ltd. vs. CIT (2010) 321 ITR 92 (Bom). 22. In these circumstances, we are of the considered view that when the assessment order which was subject matter of section 263 of the Act was passed after discreet enquiry and applying its mind the same cannot be revised under section 263 of the Act. Since order passed by the Ld. PCIT does not fulfill the condition laid down under section 263 of the Act the same is not sustainable in the eyes of law, so far as issue as to the bogus sub-contract expenses claimed by the assessee are concerned. 23. Now we take up the second issue on which revisionary jurisdiction under section 263 of the Act was invoked by Ld. CIT(A) i.e. AO without any discussion or verification allowed the claim of the assessee to reduce a sum of Rs. 6,57,89,000/- on account of arbitration credit taken to P&L account was reduced from p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned by the AO qua income from arbitration award in the assessment order dated 05.03.2014 passed under section 143(3) read with section 144C(3) of the Act shows that due enquiry was carried out by the AO and decided the issue by applying his mind by returning following findings: "Arbitration Awards : 4.1 Vide its written submissions dated 15.01.2014, the assessee has stated that in its return of income for A.Yr. 2010-11, it had reduced the sum of Rs. 6,57,89,281/- on account of 'arbitration credits taken to Profit & Loss Account' on the basis that the awards are being challenged by the clients before higher forums i.e. before the High Court.. However, now it is learnt by the assessee that some of the arbitration awards and interest thereon was not challenged by the client viz. Chennai Port Trust. Such amount comes to Rs. 37,75,265/-. Hence, Rs. 37,75,265/- is added to the total income of the assessee. Penalty proceedings u/s.271(1){c) of the Act are hereby initiated for furnishing inaccurate particulars of income / concealment of particulars of income." 29. Moreover, it is brought on record by the assessee that on identical issue order passed by the Ld. PCIT for A.Y. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
