TMI Blog2022 (3) TMI 1343X X X X Extracts X X X X X X X X Extracts X X X X ..... on the basis of settled principle of law but we are to decide this issue on the basis of particular facts of this case. In the instant case, we are of the considered view that when after due enquiry, the AO has taken plausible view on the issue in question by calling necessary information from the assessee, such assessment order cannot be held to be prejudicial to the interest of the revenue. So we are of the considered view that very initiation of proceedings by invoking the provisions contained under section 263 of the Act by the Ld. PCIT lacks jurisdictional error and as such not sustainable in the eyes of law. We are of the considered view that very initiation of the proceedings under section 263 of the Act are not sustainable in the eyes of law for lack of jurisdiction as required under section 263(2) to Explanation 1 of the Act, hence ordered to be quashed. Since the assessee has got the relief on legal issue, we find no need to go into the merits of this case. Resultantly, appeal filed by the assessee is allowed. - ITA No.749/M/2021 - - - Dated:- 29-3-2022 - Shri M. Balaganesh, Accountant Member And Shri Kuldip Singh, Judicial Member For the Assessee : Shri Sujit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ain filed revised return of income on 29.03.2012 at the total income of ₹ 23,92,94,596/-. Assessment was framed under section 143(3) of the Act at ₹ 2,96,66,390/- under the normal provisions and book profit of ₹ 76,40,58,837/- under section 115JB of the Act. 3. Subsequently, on the basis of information received from DDIT(Inv.) assessment was reopened by way of initiating the proceedings under section 147/148 of the Act qua the alleged bogus sub-contract expenses claimed by the assessee of ₹ 3,83,95,000/- and ₹ 4,09,73,000/- (total ₹ 7,93,68,000) from M/s. Kumar Enterprises and M/s. Shivam Enterprises respectively. Consequently, the Assessing Officer (for short the AO) framed the assessment at the total income of ₹ 26,07,45,648/- under normal provisions of the Act and book profit at ₹ 76,40,58,837/- under section 115JB of the Act. 4. However, the Ld. PCIT by invoking the revisionary jurisdiction issued a notice under section 263 of the Act by flagging the issue that during the year under consideration assessee company has made payment of ₹ 4,05,25,000/- to M/s. Shivam Enterprises and ₹ 3,29,00,000/- to M/s. Kumar Ente ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we would like to extract the notice issued by the Ld. PCIT under section 263 of the Act and reply filed thereto by the assessee, which are as under: Notice issued by the Ld. PCIT: (i) On perusal of the records, the assessment was reopened u/s.147 as it was found that the alleged payments totaling to ₹ 7,93,68,0007-; to two entities viz. M/s. Kumar Enterprises - ₹ 83,95,0007- and to M/s. Shubham Enterprises -₹ 4,09,73,0007-, respectively , for nonexistent persons as pointed out by the DDIT. The matter was referred to the AO, after due process the AO initiated the reassessment proceedings and during the course of those proceedings, letters and notices issued to the above two parties were returned unserved by the postal authorities and you were a/so not able to produce those parties for verification despite making such huge payments. Therefore, the AO held the same to be non genuine and accommodation entries and an amount equal to 12.5% of the sales was added back to the income of the assessee. (ii) This decision of the AO to only add back 12.5% of the sales is an error and is also prejudicial to the interests of the revenue. As when the transact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applied his mind and added GP @ 12.5%. In view of the above, the notice u/s. 263 on this issue may kindly be dropped. Issue No. 2: It is proposed to add an amount of ₹ 6.57 crores relating to Arbiration awards received during the year which was claimed as deduction by the assessee and allowed in assessment. On merits: AO has applied his mind before allowing the deduction and based on submissions made by us. After applying his mind and considering our submissions, the deduction allowed by the AO was of₹ 6.57 crores minus ₹ 0.37 crores = ₹ 6.20 crores. AO explained the reasons for reducing the deduction claimed for arbitration awards in the return of income and restricted the deduction to ₹ 6.20 crores (instead of₹ 6.57 crores claimed in the return) and recorded the reasons in para 4.1 of the assessment order on page no.4 of assessment order dated 05.03.2014. The deduction allowed was being consistently allowed to the assessee since AY 2004-05 and is based on the decision on the Hon'ble Supreme Court in the case of Hindustan Land Development Corporation. AO therefore applied his m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sue flagged by the Ld. PCIT as to the alleged bogus sub-contract expenses claimed by the assessee from M/s. Kumar Enterprises and M/s. Shivam Enterprises for an amount of ₹ 7,93,68,000/- are concerned, we have perused the assessment order in question particularly para 6 of the assessment order wherein detailed discussion has been made. During the assessment proceedings the assessee was called upon to submit summary of payments, ledger accounts, specimen copies of bills, work order accounting entries and copy of TDS certificate to prove the genuineness of the transactions in question, to which the assessee company has filed reply as under: 6.3 Further, vide its letter dated 14.9.2017, the assessee has stated that it is a part of Shapoorji Palonji group and is involved in the execution of large and complex civil engineering projects in India as well as abroad. Further, it has contended that it sub-contracts a part of the main contract work to other sub-contractors, in order to ensure timely completion of the contract. It stated that the above two entities M/s. Kumar Enterprises and M/s. Shivam Enterprises are two such sub-contractors, whose services were availed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uent sale of goods which were undisputed. 19. When we examine aforesaid findings returned by the AO in the light of the mandate given by section 263(1), Explanation 2 there is nothing on record to make out if the assessment order was passed without making any enquiry or verification or given any relief without enquiring into the claim. In response to the explanation called by the AO assessee company brought on record the summary of payment; ledger account; specimen copies of bills, work orders, accounting entries; TDS certificate, bank statement showing payments made to the aforesaid two parties which are available at page 80 of the paper book. 20. Thereafter, the AO issued notice under section 133(6) to both the parties which remained unserved and assessee company has shown its helpless to produce the parties. Thereafter the AO, by relying upon the law laid down by the Hon ble Rajasthan High Court reported in (2002) 178 CTR (Rajasthan) 420 and Tribunal s orders in case of CIT vs. M/s. Golcha Properties Pvt. Ltd. (in liquidation) (1996) 136 CTR 222 (Raj.), M/s. Kachwala Gems vs. JCIT (ITA No.134/JP/2002 dated 10.12.2003, CIT vs. Saravana Constructions Pvt. Ltd. (2012) 72 DTR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of arbitration credit taken to P L account was reduced from profit for the year under consideration while computing the income in the second revised return. The assessee has challenged the impugned order passed under section 263 of the Act qua income from arbitration award on two grounds: one that exercise of revisionary jurisdiction by Ld. PCIT under section 263 of the Act is hopelessly time barred; two that ingredients laid down to invoke the revisionary jurisdiction under section 263 of the Act are not satisfied. 24. So far as question of invoking the revisionary jurisdiction by Ld. PCIT under section 263 of the Act being time barred are concerned, undisputedly impugned order passed under section 263 of the Act is dated 24.03.2021 seeking to review the order passed by the AO on 05.03.2014. It is also not in dispute that limitation period for reason of assessment order under section 263 of the Act is within two years from the end of the financial years in which the order sought to be revised was passed. By applying the aforesaid principle the limitation to review the order dated 05.03.2014 under section 263 of the Act expired on 31.03.2016 as per the provisions contained unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is brought on record by the assessee that on identical issue order passed by the Ld. PCIT for A.Y. 2014-15 in assessee s own case has been quashed by the Tribunal vide order dated 17.03.2020 in ITA No.3159/M/2019 for A.Y. 2014-15 by taking the view that once a possible view is taken in the matter by the AO provisions contained under section 263 of the Act cannot be invoked. 30. However, we are of the considered view that the said order was passed on the basis of settled principle of law but we are to decide this issue on the basis of particular facts of this case. In the instant case, we are of the considered view that when after due enquiry, the AO has taken plausible view on the issue in question by calling necessary information from the assessee, such assessment order cannot be held to be prejudicial to the interest of the revenue. So we are of the considered view that very initiation of proceedings by invoking the provisions contained under section 263 of the Act by the Ld. PCIT lacks jurisdictional error and as such not sustainable in the eyes of law. 31. In view of what has been discussed above, we are of the considered view that very initiation of the proceedings under ..... X X X X Extracts X X X X X X X X Extracts X X X X
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