TMI Blog2022 (10) TMI 900X X X X Extracts X X X X X X X X Extracts X X X X ..... s.263 of the Act becomes unsustainable in the eyes of law; Adequate enquiries with regard to the disputed issues were already carried out by the Assessing Officer in three independent proceedings; Even on merits, the assessee had furnished detailed reconciliation statement explaining the mismatch in receipts and mismatch in TDS credit before the ld. AO in three independent proceedings and before the ld. PCIT in Section 263 proceedings; PCIT had never pointed out by any error in the order of the ld. AO by making preliminary enquiries with regard to submissions made by the assessee before him. Reliance in this regard is placed on the decision of Jabalpur Tribunal in the case of Jashn Beneficiary Trust vs. ACIT [ 2017 (8) TMI 362 - ITAT JABALPUR ] We find that this is purely a legal issue raised by the assessee and it does not require examination of any fresh facts. Hence, the said additional ground is admitted herein. But in view of the decision rendered by us hereinabove wherein 263 order passed by the ld. PCIT is quashed the adjudication of additional ground becomes academic in nature and hence, it is left open. Direction given by the ld. PCIT to the ld. AO to verif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titute his view , which is patently illegal, in the place of view already taken by the ld. AO, which, in our considered opinion, cannot be done by invoking revision jurisdiction u/s 263 of the Act. Hence we have no hesitation in quashing the revision order passed u/s 263. Mismatch in gross receipts and mismatch in TDS credit for various assessment years - We find that the revenue declared by the assessee in its profit and loss account from Asst Years 2011-12 to 2017-18 is much more than the revenue reflected in Form 26AS. This goes to prove that there would always be mismatch in revenue with corresponding impact in TDS. Hence the revenue reconciliation statement and TDS reconciliation statement filed by the assessee assumes greater importance, which had been duly verified by the ld. AO in all the assessment years. We find that the assessee had duly explained as to why certain receipts though subjected to TDS, would not be liable to be offered to tax such as mobilization advance. This had been completely ignored by the ld. PCIT while exercising his revision jurisdiction u/s 263 of the Act. This goes to prove that the revision jurisdiction u/s 263 of the Act had been exercised b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e u/s.132 of the Act on 04/01/2013. Pursuant to the search, notice u/s.153A of the Act was issued on 27/11/2013 for A.Yrs.2007-08 to 2012-13. In response to the said notice, the assessee filed the return of income on 24/12/2013 for the A.Y.2009-10 declaring income of Rs.137,73,57,710/- wherein an additional income of Rs.8,87,87,959/- was offered pertaining to alleged payments made to sub-contractors and vendors which was accepted by the assessee in the statement recorded u/s.132(4) of the Act at the time of search on 04/01/2013. The first search assessment u/s.143(3) r.w.s. 153A of the Act was completed on 29/05/2014 determining the total income of the assessee at 137,73,57,710/-. In the said search assessment dated 29/05/2014, credit for TDS was given by the ld. AO at Rs.30,73,98,902/-ignoring the 154 order dated 10/09/2012 wherein the TDS credit was restricted to Rs.29,94,75,453/-. 3.2. Subsequently, the second search u/s.132 of the Act took place in the premises of the assessee alongwith ABIL group on 21/07/2017. Pursuant to the search fresh notice u/s.153A of the Act was issued on 13/04/2019 for the A.Y.2009-10. In response to the said notice, the assessee filed return of in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat there was a complete failure to conduct relevant enquiries by the ld. AO on the aforesaid issues, i.e. mismatch of gross receipts and mismatch in TDS credit. The assessee furnished detailed submissions in response to both the show-cause notices vide submissions dated 25/03/2022. In the said submissions, the assessee had primafacie raised a preliminary objection that both the issues pointed out by the ld. PCIT in the two show-cause notices were already the subject matter of examination and adjudication in the original scrutiny assessment proceedings framed u/s 143(3) of the Act dated 27/12/2011; next in the rectification proceedings u/s 154 of the Act dated 10/09/2012; and in the first search assessment order u/s 143(3) r.w.s. 153A of the Act dated 29/05/2014 and hence, the time limit to invoke revision jurisdiction in terms of Section 263(2) of the Act had already expired and that the present show-cause notices dated 17/03/2022 and 23/03/2022 of the ld. PCIT are barred by limitation. Further in this regard the assessee placed reliance on the decision of the Hon ble Supreme Court in the case of CIT vs. Alagendran Finance Ltd., reported in 293 ITR 1 in support of its contentions. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not eligible to be offered by the assessee during the year under consideration. It was explained that mobilisation advance is primarily received after furnishing all bank guarantees in favour of the payee customer for the execution of work allotted. The payee has a right over the bank guarantees to invoke it, in case of any issue such as cancellation of the order, stopping of work and even after partial execution of work, without compensating for TDS deducted. Therefore, the advance received by the contractor i.e. assessee, in the form of mobilisation / secured advance is recoverable by the contractee, in case of non-execution of contract, delay in execution of contract etc. Therefore, it is more like a loan or capital receipt given by the contractee to a contractor in order to enable it to deploy machinery and manpower in sufficient quantity at the work site awarded to the assessee. The assessee also explained the provisions of Section 198 and 199 of the Act read with Rule 37BA of the Income Tax Rules wherein it only says that these are only machinery provisions dealing with the matters of the procedure and they do not deal with either the computation of income or chargeability ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reported in 374 ITR 645 had categorically held that unabated assessments should not be disturbed while framing search assessment if there is no incriminating material found during the course of search relatable to each addition that is contemplated in the search assessment. The ld. AO in true spirit and correct understanding of the provisions of the Act had resorted not to make any disturbance in the already assessed income of the assessee for A.Y.2009-10, had accepted the contentions of the assessee and not examined this issue of mismatch in gross receipts and mismatch in TDS during the course of second search assessment proceedings completed on 19/06/2019. This can by any stretch of imagination cannot be considered as erroneous order on the part of the ld. AO . Infact, the ld. AO had passed a correct legal order in this regard. On the contrary, if he had sought to disturb the original concluded assessment order, only then his order would become erroneous in view of the decision of the Hon ble Jurisdictional High Court referred to supra. Hence, invocation of revision jurisdiction u/s.263 of the Act for the A.Y.2009-10 grossly fails on this count. 3.9. Moreover, we find from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Commissioner of Income-tax beyond the period of limitation, it was wholly without jurisdiction rendering the entire proceeding a nullity. 3.10. Hence, we hold that the 263 order passed by the ld. PCIT on 31/03/2022 for A.Y.2009-10 is barred by limitation and hence, is hereby quashed. 3.11. We also found that the ld. PCIT had sought to invoke provisions of Explanation-2 to Section 263 of the Act in the instant case on the ground that the ld. AO had not made proper enquiries or verification which should have been made in the instant case. From the perusal of the two show-cause notices dated 17/03/2022 and 23/03/2022 which are enclosed in pages 1-5 of the paper book, we find that the ld. PCIT nowhere had sought to invoke the provisions of Explanation 2 to Section 263 of the Act. We find that the provisions of Explanation 2 to Section 263 of the Act had been directly invoked by the ld. PCIT only in the final revision order passed u/s.263 of the Act. Hence, no opportunity at all was given to the assessee to give its explanation on the applicability of provisions of Explanation 2 to Section 263 of the Act. In this regard, reliance has been rightly placed by the ld. AR on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statement explaining the mismatch in receipts and mismatch in TDS credit before the ld. AO in three independent proceedings and before the ld. PCIT in Section 263 proceedings; f) The ld. PCIT had never pointed out by any error in the order of the ld. AO by making preliminary enquiries with regard to submissions made by the assessee before him. Reliance in this regard is placed on the decision of Jabalpur Tribunal in the case of Jashn Beneficiary Trust vs. ACIT reported in 88 taxmann.com 824. 3.14. We find that assessee vide letter dated 05/09/2022 had raised the following additional ground:- That the Ld. Pr. CIT erred in law and on facts in invoking the provisions of section 263 of the Act as the order passed u/s 153A r.ws. 143(3) after getting mandatory approval of JCIT u/s 153D of the Income tax Act cannot be subjected to revision without revising the approval of JCIT. 3.15. We find that this is purely a legal issue raised by the assessee and it does not require examination of any fresh facts. Hence, the said additional ground is admitted herein. But in view of the decision rendered by us hereinabove wherein 263 order passed by the ld. PCIT is quashed the adjudica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for advance tax of Rs.9,12,19,787/- was given by the ld. AO. Further, yet another rectification order u/s.154 of the Act was passed on 03/09/2014 wherein again the income determined under normal provisions of the Act and book profit u/s.115JB of the Act was not disturbed but further TDS credit of Rs.9,64,84,656/-(48,60,04,836-38,95,20,180) was granted by the ld. AO. 5.4. Assessment was reopened for the A.Y.2010-11 to bring to tax the share of profit from AOP in the sum of Rs.10,53,43,872/- while computing book profit u/s.115JB of the Act. This was added vide order u/s.143(3) r.w.s. 147 of the Act dated 05/12/2017. In this reassessment, TDS credit of Rs.48,55,95,799/- was granted to the assessee as against Rs.48,60,04,836/- already granted by the ld. AO vide 154 order dated 03/09/2014. 5.5. Subsequently the second search u/s.132 of the Act took place in the premises of the assessee alongwith ABIL group on 21/07/2017. Pursuant to the search fresh notice u/s.153A of the Act was issued on 13/04/2019 for the A.Y.2010-11. In response to the said notice, the assessee filed return of income on 11/05/2019. The second search assessment was completed u/s.143(3) r.w.s. 153A of the Act o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd that this is purely a legal issue raised by the assessee and it does not require examination of any fresh facts. Hence, the said additional ground is admitted herein. But in view of the decision rendered by us hereinabove wherein 263 order passed by the ld. PCIT is quashed, the adjudication of additional ground becomes academic in nature and hence, it is left open. 5.11. In view of the above, we have no hesitation in quashing section 263 order by the ld. PCIT for the A.Y. 2010-11. Accordingly, the original grounds raised by the assessee are allowed. 6. In the result, appeal of the assessee for A.Y.2010-11 is partly allowed. ITA No.1139/Mum/2022 (A.Y.2011-12) 7. Though the assessee has raised several grounds of appeal, the effective issue to be decided is as to whether the ld. PCIT was justified in invoking revisionary jurisdiction u/s.263 of the Act in the facts and circumstances of the instant case both on law as well as on merits of the case. 7.1. We have heard rival submissions and perused the materials available on record. We find that assessee is involved in the activities of civil work by being a developer of infrastructure projects. The assessee filed i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sions of the Act and book profit of Rs.285,63,64,560/- u/s.115JB of the Act. In the said assessment order, the ld. AO had specifically stated that the credit for TDS and prepaid taxes need to be given after due verification in para 8 of his assessment order. Ultimately, the TDS credit in the second search assessment order dated 19/06/2019 was given by the ld. AO at Rs.51,16,68,675/-. 7.5. We find that the ld. PCIT by invoking his revision jurisdiction u/s.263 of the Act is seeking to revise the second search assessment framed u/s. 143(3) r.w.s. 153A of the Act dated 19/06/2019 on the following grounds for the A.Y.2011-12:- (a) Mismatch of receipts as per 26AS with receipts as per profit and loss account. (b) Mismatch of TDS credit as per 26AS and TDS claimed by the assessee. (c) Directing the ld. AO to verify the computation of book profits u/s.115JB of the Act vis- -vis share of income from AOP in the sum of Rs.3.43 Crores exempt under proviso (a) to Section 86 of the Act. (d) Directing the ld. AO to verify the computation of book profits u/s.115JB of the Act vis- -vis alleged bogus payment made to sub-contractors and vendors i.e. in respect of non-genuine purchases ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... approval of JCIT. 7.10. We find that this is purely a legal issue raised by the assessee and it does not require examination of any fresh facts. Hence, the said additional ground is admitted herein. But in view of the decision rendered by us hereinabove wherein 263 order passed by the ld. PCIT is quashed, the adjudication of additional ground becomes academic in nature and hence, it is left open. 7.11. In view of the above, we have no hesitation in quashing section 263 order by the ld. PCIT for the A.Y. 2011-12. Accordingly, the original grounds raised by the assessee are allowed. 8. In the result, appeal of the assessee for A.Y.2011-12 is partly allowed. ITA No.1140/Mum/2022 (A.Y.2012-13) 9. Though the assessee has raised several grounds of appeal, the effective issue to be decided is as to whether the ld. PCIT was justified in invoking revisionary jurisdiction u/s.263 of the Act in the facts and circumstances of the instant case both on law as well as on merits of the case. 9.1. We have heard rival submissions and perused the materials available on record. We find that assessee is involved in the activities of civil work by being a developer of infrastruct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of income on 11/05/2019. The second search assessment was completed u/s.143(3) r.w.s. 153A of the Act on 19/06/2019 determining total income of the assessee at Rs.51,08,51,558/- under normal provisions of the Act and book profit of Rs.200,03,29,415/- u/s.115JB of the Act. In the said assessment order, the ld. AO had specifically stated that the credit for TDS and prepaid taxes need to be given after due verification in para 6 of his assessment order. Ultimately, the TDS credit in the second search assessment order dated 19/06/2019 was given by the ld. AO at Rs.67,49,76,609/-. 9.5. We find that the ld. PCIT by invoking his revision jurisdiction u/s.263 of the Act is seeking to revise the second search assessment framed u/s. 143(3) r.w.s. 153A of the Act dated 19/06/2019 on the following grounds for the A.Y.2012-13:- (a) Mismatch of receipts as per 26AS with receipts as per profit and loss account. (b) Mismatch of TDS credit as per 26AS and TDS claimed by the assessee. (c) Directing the ld. AO to verify the computation of book profits u/s.115JB of the Act vis- -vis share of income from AOP in the sum of Rs.2.03 Crores exempt under proviso (a) to Section 86 of the Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1. We have heard rival submissions and perused the materials available on record. We find that assessee is involved in the activities of civil work by being a developer of infrastructure projects. A search and seizure operation as carried out at the premises of the assessee u/s.132 of the Act on 04/01/2013. Being the year of search, notice u/s.143(2) was issued to the assessee. The assessee filed its return of income for the A.Y.2013-14 on 30/11/2013 declaring total loss of Rs.165,27,85,649/-. In the said assessment proceedings, the ld. AO did ask for queries for complete reconciliation of TDS vis a vis its related income. All those details were duly filed before the ld. AO by the assessee. The assessment was completed u/s 143(3) of the Act on 29/05/2014 determining the total loss at Rs 165,12,14,527/- after making disallowance u/s 14A of the Act in the sum of Rs 15,69,613/-. In the said assessment dated 29/05/2014, credit for TDS was given by the ld. AO at Rs.Nil. 11.2. Subsequently, a rectification order u/s.154 of the Act was passed on 30/03/2015 wherein TDS TCS credit was granted at Rs 39,04,86,084/-. 11.3. Subsequently the second search u/s.132 of the Act took place in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation in quashing section 263 order by the ld. PCIT for the A.Y. 2013-14. Accordingly, the original grounds raised by the assessee are allowed. 12. In the result, appeal of the assessee for A.Y.2013-14 is partly allowed. ITA No.1142/Mum/2022 (A.Y.2014-15) 13. Though the assessee has raised several grounds of appeal, the effective issue to be decided is as to whether the ld. PCIT was justified in invoking revisionary jurisdiction u/s.263 of the Act in the facts and circumstances of the instant case both on law as well as on merits of the case. 13.1. We have heard rival submissions and perused the materials available on record. We find that assessee is involved in the activities of civil work by being a developer of infrastructure projects. The assessee filed its return of income for the A.Y.2014-15 on 28/11/2014 declaring total income of Rs.Nil. The assessment was completed u/s.143(3) of the Act on 29/07/2016 determining total income at Rs.Nil. In the said assessment proceedings, the ld. AO did ask for queries for complete reconciliation of TDS vis a vis its related income. All those details were duly filed before the ld. AO by the assessee. In the said assessment, T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d we hold that the directions given in item (c) above is actually redundant. In respect of this issue, we hold that the ld. PCIT had invoked his revision jurisdiction in the instant case u/s 263 of the Act by by directing the ld. AO to make roving and fishing enquiries , which is not permissible u/s 263 of the Act. We find from the perusal of the order of the ld. PCIT u/s 263 of the Act, no where the ld. PCIT had stated as to how the order of the ld. AO is erroneous in respect of item (c) above. As stated earlier, this issue in item (c) above gets already covered in items (a) and (b) above and hence the direction of the ld. PCIT in this regard is treated as redundant and since the ld. PCIT s order u/s 263 of the Act is quashed in respect of items (a) and (b) above, the same is hereby quashed for item (c) also above. 13.6. We find that assessee vide letter dated 05/09/2022 had raised the following additional ground:- That the Ld. Pr. CIT erred in law and on facts in invoking the provisions of section 263 of the Act as the order passed u/s 153A r.ws. 143(3) after getting mandatory approval of JCIT u/s 153D of the Income tax Act cannot be subjected to revision without revising ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e said assessment order, the ld. AO had specifically stated that the credit for TDS and prepaid taxes need to be given after due verification in para 13 of his assessment order. Ultimately, the TDS credit in the search assessment order dated 19/06/2019 was given by the ld. AO at Rs.25,59,97,832/-. 15.3. We find that the ld. PCIT by invoking his revision jurisdiction u/s.263 of the Act is seeking to revise the search assessment framed u/s. 143(3) r.w.s. 153A of the Act dated 19/06/2019 on the following grounds for the A.Y.2015-16:- (a) Mismatch of receipts as per 26AS with receipts as per profit and loss account. (b) Mismatch of TDS credit as per 26AS and TDS claimed by the assessee. (c) Directing the ld. AO to verify how the unbilled Revenue amounting to Rs.292.27 crores has been accounted by the assessee in its books of accounts. (d) Directing the ld. AO to verify the nature of transactions entered by the assessee with its Subsidiaries / Associates and consequently to verify whether the assessee company had failed to comply with the provisions of section 92E of the Act. 15.4. We hold that the observations given by us hereinabove for the A.Y. 2009-10 in respect of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act letter dated 04/07/2016. In this letter, the assessee had duly furnished the complete details of related party transactions before the ld. AO. The ld. AO after examination of the same had come to a conscious conclusion that the domestic transfer pricing issues cannot be made applicable to the assessee in the instant case and hence there was no need to refer the case to Learned Transfer Pricing Officer. We hold that the ld. PCIT is only trying to substitute his view , which is patently illegal, in the place of view already taken by the ld. AO, which, in our considered opinion, cannot be done by invoking revision jurisdiction u/s 263 of the Act. Hence we have no hesitation in quashing the revision order passed u/s 263 of the Act by the ld. PCIT in respect of item (d) above. 15.7. We find that assessee vide letter dated 05/09/2022 had raised the following additional ground:- That the Ld. Pr. CIT erred in law and on facts in invoking the provisions of section 263 of the Act as the order passed u/s 153A r.ws. 143(3) after getting mandatory approval of JCIT u/s 153D of the Income tax Act cannot be subjected to revision without revising the approval of JCIT. 15.8. We fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s) Mumbai [ ld. CIT(A) in short]. This appeal was disposed of by the ld. CIT(A) vide his order dated 23/07/2021 granting partial relief to the assessee. The ld. AO passed giving effect order to ld. CIT(A) order on 06/09/2021 determining total income of the assessee at Rs 37,22,55,070/- under normal provisions of the Act and book profit of Rs 5,15,60,633/- u/s 115JB of the Act. In the said giving effect order, the ld. AO granted TDS credit of Rs 33,04,95,566/-. 17.3. We find that the ld. PCIT by invoking his revision jurisdiction u/s.263 of the Act is seeking to revise the search assessment framed u/s. 143(3) r.w.s. 153A of the Act dated 19/06/2019 on the following grounds for the A.Y.2016-17:- (a) Mismatch of receipts as per 26AS with receipts as per profit and loss account. (b) Mismatch of TDS credit as per 26AS and TDS claimed by the assessee. 17.4. We are conscious of the fact that assessment for the A.Y. 2016-17 is an abated assessment as on the date of search on 21/07/2017 and hence there is no need for existence of any incriminating material found during the course of search relatable to TDS mismatch and mismatch in turnover. The only assessment framed for this A. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hough the assessee has raised several grounds of appeal, the effective issue to be decided is as to whether the ld. PCIT was justified in invoking revisionary jurisdiction u/s.263 of the Act in the facts and circumstances of the instant case both on law as well as on merits of the case. 19.1. We have heard rival submissions and perused the materials available on record. We find that assessee is involved in the activities of civil work by being a developer of infrastructure projects and also engaged in hospitality industry. A search and seizure action u/s.132 of the Act took place in the premises of the assessee along with ABIL group on 21/07/2017. Pursuant to the search, notice u/s.153A of the Act was issued on 13/04/2019 for the A.Y.2017-18. In response to the said notice, the assessee filed return of income on 11/05/2019 declaring total income of Rs 9,29,92,541/-. In the said assessment proceedings, the ld. AO did ask for queries for complete reconciliation of TDS vis a vis its related income. All those details were duly filed before the ld. AO by the assessee. The search assessment was completed u/s.143(3) r.w.s. 153A of the Act on 19/06/2019 determining total income of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nabove wherein 263 order passed by the ld. PCIT is quashed, the adjudication of additional ground becomes academic in nature and hence, it is left open. 19.7. In view of the above, we have no hesitation in quashing section 263 order by the ld. PCIT for the A.Y. 2017-18. Accordingly, the original grounds raised by the assessee are allowed. 20. In the result, appeal of the assessee for A.Y.2017-18 is partly allowed. 21. Before parting, we would like to bring on record the conduct of the assessee and the revenue with regard to common issue of mismatch in gross receipts and mismatch in TDS credit for various assessment years in a tabular form as under:- TDS CHART Asst. Year TDS as per Return (11.05.2019) 2nd Search TCS Total TDS/TCS as per return TDS allowed by AO in the Asst. Order Dated 19.06.2019 As per last order (Prior to order dated 19.06.2019) 2009-10 30,65,93,960 8,04,942 30,73,98,902 30,73,98,902 30,73,98,902 2010-11 49,78,18,576 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11,90,018 6 2014-15 13,45,80,37,030 l l,05,l2,25,653 2,40,68,l 1,378 7 2015-16 14,99,46,30,000 12,99,39,03,344 2,00,07,26,656 8 2016-17 20,14,03,65,307 16,04,35,82,744 4,09,67,82,563 9 2017-18 17,44,06,65,835 13,58,91,99,435 3,85,14,66,400 21.1. From the above tabulation, we find that the revenue declared by the assessee in its profit and loss account from Asst Years 2011-12 to 2017-18 is much more than the revenue reflected in Form 26AS. This goes to prove that there would always be mismatch in revenue with corresponding impact in TDS. Hence the revenue reconciliation statement and TDS reconciliation statement filed by the assessee assumes greater importance, which had been duly verified by the ld. AO in all the assessment years. We find that the assessee had duly explained as to why certain receipts though subjected to TDS, would not be ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
