Shri Mohd. Saeed Khan, Chittorgarh V. PCIT, Udaipur

ITA 16/JODH/2021

• Counselvise Citation: [2021] 104 COUNSELVISE.COM (IT) 9112 (ITAT-JODHPUR)
• Duration Of Justice: 7 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-11-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2016-2017
• Appeal Filed On: 29-03-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANCHITA KUMAR
• Assessee Lawyers: SHYAM SINGHVI
• Keywords: Revision of order; Additional evidence; Agreed addition; Set aside
• Section: 119

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, JODHPUR BENCH, JODHPUR BEFORE SHRI SANDEEP GOSAIN, JUDICIAL MEMBER AND SHRI VIKRAM SINGH YADAV, ACCOUNTANT MEMBER ITA No. 16/JODH/2021 (Assessment Year 2016-17) Mohd. Saeed Khan, Prop.-Rubina Enterprises, Kazi Manzil, Goverdhan Nagar, Nimbahera-312601. Distt.-Chittorgarh. Vs. P.C.I.T. Udaipur. PAN No. ABFPK 1125 L O R D E R PER: SANDEEP GOSAIN, J.M. The present appeal has been filed by the assesee against the order of the Ld Principal CIT, Udaipur dated 25/02/2021 for the A.Y. 2016-17 passed u/s 263 of the Income Tax Act, 1961 (in short, the Act), wherein following grounds have been raised by the assessee: “1. The Ld PCIT Udaipur has grossly erred on facts and law in holding the order by the AO to be erroneous and prejudicial to the interest of revenue. 2. The Ld PCIT Udaipur has grossly erred on law and facts to set aside the order passed by the AO directing him to modify the assessment order dated 03/12/2018. 3. The appellant reserves his right to add/alter/ amend/ withdraw any/all grounds of the appeal. Assessee by Shri Shyam Singhvi (CA) Revenue by Smt. Sanchita Kumar, CIT-DR Date of Hearing 12/08/2021 Date of Pronouncement 08/11/2021 2 ITA 16/Jodh/2021 Md. Saeed Khan Vs PCIT 2. The brief facts of the case are that the assessee is proprietor of M/s Rubina Enterprises which is engaged in the contract business of limestone drilling, dozing, excavation etc. The assessee had filed his return of income for A.Y. 2016-17 on 23.07.2016 declaring income of Rs. 3,15,86,700/-. Thereafter, the case was selected for scrutiny by CASS and finally the assessment was completed u/s 143 (3) of the Act vide order dated 03/12/2018. The ld. Pr.CIT issued notice dated 15/01/2021 u/s 263 of the Act and the ld. PCIT held that the said assessment has been erroneous and prejudicial to the interest of revenue inasmuch as the AO has failed to adopt income at rate of 70% of the professional receipt declared by the assessee that has been upheld by ITAT in his own case in AY 2014-15. Whereas the assesee has declared 60% of the professional receipts and the AO has assessed income @ 65% besides other undisputed income. Against which the assessee has preferred the present appeal before the ITAT. 3. The main grievance of the assessee relates to challenging the order of the ld. PCIT passed U/s 263 of the Act. In this regard, the ld. AR appearing on behalf of the assessee has reiterated the same arguments as were raised before the ld. PCIT. He has further submitted that the impugned order is not maintainable as mandatory requirement provided in the Act for a valid initiation of proceedings u/s 263 of the Act remains unfulfilled and unsatisfied. The order passed by the AO is considered erroneous in so far as prejudicial to the interest of revenue in the stipulated circumstances as provided in explanation 2. It provides set guideline for the PCIT in forming 3 ITA 16/Jodh/2021 Md. Saeed Khan Vs PCIT their opinion about the order to be hold erroneous in so far as it is prejudicial to the revenue namely if the order is passed without making proper enquiries/ verification or order is passed without enquiring into the claim or order made without following direction by the CBDT u/s 119 or order passed without following direction of the jurisdictional High Court or Supreme Court. 4. The Ld AR further contended that factual justification for declaring estimated income @ 60% of the professional receipts has been explained in detail vide letter dated 26.11.2018 in detail at pg no. 8. These have been explained by additionally supported evidences i.e. copy of work order indicating scope of services to be rendered and copy of invoices raised by the assessee to correlate area of expenditure in the work order with expenses stated have been incurred by the assessee in his reply. 5. The Ld AR further contended that the AO discussed these facts at length at page no 3 of the assessment order about reasonability of application of estimated income @ 65% (against 60% declared in the ITR) of the professional receipts in the light of additional supporting evidences before him in the assessment proceeding against estimation of 70% held by Hon’ble ITAT in AY 2014-15. This is besides another fact that it was an agreed addition offered by the assessee to avoid protracted litigation to save the resources of the either. Ld AR added that error envisaged in section 263 is either of fact or of law and certainly not one that depends on possibility or 4 ITA 16/Jodh/2021 Md. Saeed Khan Vs PCIT guess work. In present case, it has been a matter of estimation since declaration of the income to the assessment and ultimately by ITAT and therefore not hit by the term erroneous. Whereas, the AO has come to a definite conclusion on the application of estimation rate of income from professional receipts. The reliance was placed on the finding by the Hon’ble Apex court in the following cases to support the contention made herein above are cited as under:  (2018) 400 ITR (All) 458; PCIT v/s Atlantis Multiplex Pvt Ltd.  (2017) 395 ITR (SC) 001; Kwality Steel Suppliers v/s CIT  (2012) 345 ITR (Del) 193; Ranbaxy Laboratories v/s CIT  (2003) 259 ITR (Guj) 502; CIT v/s Arvind Jewellers  (2002) 243 ITR (SC) 83; Malabar Industrial Co Ltd v/s CIT The Ld AR vehemently argued that Ld. PCIT has failed in appreciating the facts considered by ITAT in AY 2014-15 vis-à-vis additional facts available on record before the AO in reaching conclusion in AY 2016-17 and has mechanically invoked provision of Section 263 of the Act, thus order passed u/s 263 be quashed and the appeal prayed allowed. 6. The Ld. CIT-DR has vehemently supported the order passed by the ld. Pr.CIT and submitted that the order passed by the A.O. was without making necessary inquiries and verification so it is found to be erroneous in so far as it is prejudicial to the interests of the Revenue. 7. We have considered the rival contentions, carefully perused the order u/s 263 passed by the ld. Principal CIT vis-à-vis the material placed on 5 ITA 16/Jodh/2021 Md. Saeed Khan Vs PCIT record and case laws cited in the course of arguments. It is emerged from page no. 3 of the assessment order as well as additional evidences produced by the assesee in the assessment proceedings in response to notice u/s 142 (1) and 143 (2) of the Act to justify income @ 60% on professional receipts (though has been assessed @ 65% and agreed by the assesee as per assessment order) and the ITAT order in AY 2014-15, we have reached two fold conclusions. Firstly the AO has categorically reached at a definite conclusion in consideration of every facts and order before him and these are part of the order too and secondly the finding of the Coordinate Bench of this Tribunal as in AY 2014-15 in assesee’s own case is not applicable since the basis of estimation in AY 2014-15 and the year under consideration are different and has been taken care by the AO in the assessment order. 8. In light of the above discussion, we hold that the order u/s 263 cannot be sustained as we find that the assessment order by the AO cannot be said to be erroneous or prejudicial to the interest of the revenue and accordingly the order passed u/s 263 of the Act is quashed. 9. In the result, this appeal of the assessee stands allowed. Sd/- Sd/- (VIKRAM SINGH YADAV) (SANDEEP GOSAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER Jodhpur Dated 08/11/2021 *Ranjan 6 ITA 16/Jodh/2021 Md. Saeed Khan Vs PCIT Copy to: 1. The Appellant 2. The Respondent 3. The CIT 4. The CIT (A) 5. The DR 6. Guard File Assistant Registrar Jodhpur Bench