M/S RITHWIK RK JOINT VENTURE, V. PR. CIT, Allahabad

ITA 99/ALLD/2017

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 3351 (ITAT-ALLAHABAD)
• Duration Of Justice: 5 year(s) 2 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-07-2022
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: DB
• Assessment Year: 2012-2013
• Appeal Filed On: 02-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Revision of order; Assessment record; Revised return; TDS; Liquidation
• Section: 263; 10; 143(3); 142(1); 40(a)(ia); 80G; 12A; 10B; 143(2); 64; 43

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL ALLAHABAD BENCH, ALLAHABAD BEFORE SHRI.VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ITA No.107/ALLD/2016 ITA No.99/ALLD/2017 A.Y. 2011-12 A.Y. 2012-13 M/s Rithwik RK Joint Venture, #171/A, Ashok Nagar, Allahabad, Present Address:#1-2-49/15, 1 st Floor, Nizampet Road, Hydernagar, Kukatpally, Hyderabad-500072 PAN-AAAAR9816N v . The Pr. Commissioner of Income Tax, Aaykar Bhawan, 38, M.G. Marg, Civil Lines, Allahabad (Appellant) (Respondent) Appellant by: Sh. Pawan Chakrapani, C.A. Respondent by: Sh. Ramendra Kumar Vishwakarma, CIT DR Date of hearing: 31.05.2022 Date of pronouncement: 26.07.2022 O R D E R SHRI VIJAY PAL RAO, JUDICIAL MEMBER: These two appeals by the assessee are directed against the two separate orders of Pr. CIT dated 18.03.2016 and 09.03.2017 passed under section 263 of Income Tax Act for the assessment years 2011-12 and 2012-13, respectively. 2. For the assessment year 2011-12, the assessee has raised the following grounds:- 1. The order of the learned Principal Commissioner of Income Tax, Allahabad, passed under Section 263 of the Act in so far as it is against the Appellant is opposed to law, equality, weight of evidence, probabilities and the facts and circumstances in the Appellant’s case. 2. The learned Pr. CIT has grossly erred in revision the order passed by the learned assessing officer without appreciating that there is no error, much less prejudicial to the interests of the Revenue to warrant a revision and therefore the order passed by the learned Pr. CIT is ultra vires to the scope of Section 263 and requires to be cancelled under the facts and circumstances of the Appellant’s case. ITA No. 107/Alld/2016 ITA No. 99/Alld/2017 M/s Rithwik RK Joint Venture 2 3. The Ld. Pr. CIT failed to appreciate that the direction to make fresh assessment amounts to ordering for making fishing and roving enquires without any material in support thereof and consequently the impugned order passed is bad in law is liable to be cancelled. 4. The Pr. Commissioner of Income Tax is not justified in directing the assessing officer to compute the income derived from the execution of huge project worth Rs. 1,37,21,75,327/- under the facts and circumstances of the Appellant’s case. 5. The Pr. Commissioner of Income Tax is not justified in directing to examine the difference of Rs. 1,10,53,576/- under the facts and circumstances of the Appellant’s case. 6. The Pr. CIT ought to have considered the fact that there are no amounts which have been transferred by the Appellant as bank guarantee nor any collateral security given by the Appellant, under the facts and circumstances of the case. 7. The Pr. Commissioner of Income Tax ought to have considered the fact that, the learned Assessing Officer has already considered the TDS documents before passing the order of assessment, under the facts and circumstances of the case. 8. The Pr. CIT ought to have considered the fact that, the lease advance amount being Rs. 10,00,000/- is a refundable advances and hence shown in the assets side of balance sheet under the hand current assets, loans and advances under the facts and circumstances of the case. 9. The Pr. Commissioner of Income Tax has erred by not appreciating the settled position of law that were there are two opinions possible on an issue, section 263 cannot be exercised to invoke such an issue. 10. The Ld. CIT has grossly erred in revising the order passed by the learned assessing officer without appreciating that there is not error, much less prejudicial to the interest to the Revenue to warrant a revision and therefore the order passed by the ld. Pr. CIT is ultra vires to the scope of Section 263 and requires to be cancelled under the facts and circumstances of the Appellant’s case. 11. The Ld. Pr. CIT failed to appreciate that the Ld. Assessing officer had passed the order after verifying the books, records and other documents produced and more specifically all the agreements as is evident from the order sheet nothing and submissions and hence section 263 cannot be invoked under the facts and circumstances of the case. 12. Without prejudice to the above the learned Pr. CIT ought to have appreciated that the aforesaid issue on which the learned Pr. CIT Had sought to revise the assessment order is a conscious view adopted by the learned assessing officer, which is not shown to be erroneous and consequently, the jurisdiction under section 263 of the Act stands ousted and accordingly the impugned order passed deserves to be cancelled. 13. The appellant craves leave to add, alter, delete or substitute any of the grounds urged above.” 14. In the view of the above and other grounds that may be urged at the time of hearing of the appeal, the Appellant prays that the appeal may be allowed in the interest of justice and equity.” ITA No. 107/Alld/2016 ITA No. 99/Alld/2017 M/s Rithwik RK Joint Venture 3 3. Ground Nos. 1, 2 & 9 to 12 are regarding validity of invoking of the provisions of section 263 of the Income Tax Act and consequently the impugned revision order passed under section 263 is sought to be cancelled. The assessee is an Association of Person, formed as a special purpose vehicle (SPV) having two Joint Venture partners namely M/s Rithwik Projects Private Limited & M/s R.K. Infra & Engineering (India) Private Limited. The assessee filed its return of income for the year under consideration on 30.09.2011 declaring total income at Nil. The assessee also filed revised return of income on 31.08.2012 declaring total income at Nil but claimed refund on account of TDS of Rs. 5,37,892/-. The case was selected for scrutiny under CASS and scrutiny assessment was completed under section 143(3) on 07.03.2014 by accepting the return of income at Nil. Thereafter, the Pr. CIT on examination of the assessment record, noticed that M/s Ratna Infrastructure Project Private Limited was awarded a contract of Rs. 1,37,21,75,327/- on 18.05.2010 by Meja Urja Nigam Private Limited for side levelling and infrastructure work package. Subsequently, a work contract agreement was signed between Meja Urja Nigam Private Limited and M/s Ratna Infrastructure Project Private Limited on 21.9.2010. This project work was further sub-contracted by M/s Ratna Infrastructure Project Private Limited to the assessee Joint Venture on 28.07.2010 having two Joint Venture partners i.e. M/s Ratna Infrastructure Project Private Limited and R.K. Infra and Engineering (I) Private Limited. The Pr. CIT further noted that the assessee Joint Venture received the payments from M/s Ratna Infrastructure Project Private Limited and passed on the same in equal proportion to the two Joint Venture partners. He has also noticed the discrepancies in the contract receipts shown by the assessee and the receipts reflected in the bank account statement of the assessee to the extent of Rs. 1,10,43,376/-. The Commissioner found that the assessee has not indicated what profit has been derived from the business affairs and activities undertaken by the Joint Venture as well as by the two members after execution of the job. The profit from the activity undertaken by the Joint Venture is to be assessed in the hand the ITA No. 107/Alld/2016 ITA No. 99/Alld/2017 M/s Rithwik RK Joint Venture 4 Joint Venture only and not in the hands of the members. He also noted that the there is a violation of provisions of section 40(a)(ia) on account of payment of Rs. 20,33,34,166/- to the members of the Joint Venture and hence it should have not been treated as allowable expenditure in the hand of the Joint Venture and should have been added to the income of the Joint Venture. He has also observed that the agreement between M/s Ratna Infrastructure Project Private Limited and the Joint Venture show that the Joint Venture shall provide a bank guarantee of Rs. 10 Crore but the same does not find place in the balance-sheet or in the Audit Report. Further, the mobilization advance of 2% of the contract value and addition mobilization of advance of Rs. 3 Crore does not find place anywhere in the balance-sheet or in the qualification in the Audit Report. Accordingly, the Pr. Commissioner was of the view that there were certain infirmities in the assessment order passed by the Assessing Officer in respect of the above mentioned discrepancies and violation of provisions of section 40(a)(ia) as well as the income assessable in the hand of the Joint Venture on which the Assessing Officer has not conducted any enquiry. The order passed by the Assessing Officer was found to be erroneous and prejudicial to the interest of the Revenue. Accordingly, the Commissioner issued a show cause notice under section 263 dated 7.10.2015 whereby the assessee was asked to show cause and explain as to why the assessment order passed by the Assessing Officer be not treated as erroneous and prejudicial to the interest of the Revenue and be cancelled to be revised under the provisions of section 263 of the Income Tax Act. The assessee represented before the Pr. CIT through his Authorized Representative and filed its submissions / reply to the show cause notice. The Commissioner was not satisfied with the reply and explanation of the assessee on the various issues raised in the show cause notice and held that the assessment order passed by the Assessing Officer was not only erroneous but also prejudicial to the interest of the Revenue and consequently the same was cancelled with the directions to the Assessing Officer to frame fresh assessment in accordance with specific directions on each of the issues. ITA No. 107/Alld/2016 ITA No. 99/Alld/2017 M/s Rithwik RK Joint Venture 5 4. Before the Tribunal, the learned AR of the assessee has submitted that the assumption of the jurisdiction by the learned Pr. CIT is bad in law and consequently the order passed under section 263 of the Act is required to be cancelled in toto. It is submitted that the jurisdiction under section 263 of the Act can be assumed only when the assessment order is erroneous so far as prejudicial to the interest of the Revenue. He has referred to the notice issued by the Assessing Officer under section 142(1) and questionnaire annexed to the said notice as well as the reply and record filed by the assessee in response to the notice issued under section 142(1). The learned AR has submitted that the assessee produced all the documents and information as desired by the Assessing Officer. The Assessing Officer after perusing and considering the books of accounts, relevant record, submissions and explanation arrived at the conclusion and completed the assessments by accepting the return income. When the Assessing Officer has verified the books of accounts, records, vouchers and other documents before completing the assessment, then it cannot be said that the order passed by the Assessing Officer is erroneous and prejudicial to the interest of the Revenue. The Assessing Officer has applied due application of law and mind while passing the assessment order therefore, the order passed by the Assessing Officer cannot be said to be erroneous and prejudicial to the interest of the Revenue. Once the Assessing Officer has examined the relevant record and was satisfied with the claim of the assessee that the income is not assessable in the hand of the Joint Venture but the same is assessable in the hand of the partners of the Joint Venture then the same does not suffer with lack of enquiry or inadequate enquiry. It is only on presumption of the learned Pr. CIT. The order passed by the Assessing Officer cannot be treated as erroneous and prejudicial to the interest of the Revenue. For the purpose of section 263, the Commissioner has to assume jurisdiction only when twin conditions are satisfied together being the order passed by the Assessing Officer is erroneous and the same is prejudicial to the interest of the Revenue. The Assessing Officer has taken one of the possible view while passing the assessment ITA No. 107/Alld/2016 ITA No. 99/Alld/2017 M/s Rithwik RK Joint Venture 6 order then the provisions of section 263 cannot be invoked merely because the Commissioner does not agree with the view taken by the Assessing Officer. The Assessing Officer has clearly stated in the assessment order that the assessee furnished required information, detailed document and explanation which were perused and placed on record. The case was discussed at length. The Assessing Officer has accepted the fact that as per the Joint Venture agreement for execution of work, the sub contract is on 100% back to back basis with 50% share to each of the Joint Venture partners and accordingly the Assessing Officer has accepted the total income at nil as returned by the assessee. The learned AR has referred to the various clauses of the sub contract / Joint Venture agreement to show that the Joint Venture was constituted by Joint Venture agreement for execution of work on 100% back to back basis with 50% share for each of the Joint Venture partners and consequently the income from the work contract has to be assessed in the hand of the Joint Venture partners. The assessee passed on the receipts in the ratio of 50-50 to each of the Joint Venture partners after deduction of TDS which is a matter of record. Further, the various issues raised by the Pr. CIT at the time of issuing the show cause notice were duly explained and are reconciled by the assessee as there is no discrepancy either in the actual receipts or receipts in the balance sheet in comparison to the receipts reflected in the bank account of the Joint Venture as well as the amount shown as receivable from M/s Ratna Infrastructure Project Private Limited. He has explained that the Commissioner has assumed the discrepancies without considering the correct facts of mobilization charges, mobilization advance received by the assessee through M/s Ratna Infrastructure Project Private Limited which were adjusted proportionately in the running bills for each year. Therefore, there is no such discrepancy in respect of the amount received or receivable. Further, the bank guarantee was provided by M/s Ratna Infrastructure Project Private Limited and not by the assessee Joint Venture therefore, the question of the same reflected in the books of accounts and particularly in the balance-sheet does not arise. Hence, the ITA No. 107/Alld/2016 ITA No. 99/Alld/2017 M/s Rithwik RK Joint Venture 7 learned AR has contended that the Commissioner has invoked the provisions of section 263 only on presumption of facts and not based on the correct facts. 5. In support of his contention, he has relied upon the decision in the case of Commissioner of Income Tax vs. Amit Corporation 213 taxman 19 and submitted that the Hon'ble High Court has held that when during the course of framing the assessment, the Assessing Officer had access to all the record of the assessee. After pursuing such record the Assessing Officer framed the assessment, such assessment could not have been reopened in exercising revision power under section 263 of the Act for making further enquiry. He has then referred to the judgment of Hon'ble Delhi High Court in the case of Commissioner of Income Tax vs. Sun Beam Auto Limited 332 ITR 167 and submitted that the Hon'ble High Court has analyzed the scope of the exercising of the power of the CIT under section 263 of the Income Tax Act and held that if there was any enquiry even inadequate that would not by itself give occasion to the CIT to pass order under section 263 of the Act merely because he has different opinion in the matter. It is only in the cases of lack of enquiry that such a course of action would be open. Once the Assessing Officer has called for explanation on a particular item from the assessee and the assessee furnished his explanation which was considered by the Assessing Officer and was satisfied with the aforesaid explanation the CIT cannot invoke the provisions of section 263 on the ground that the Assessing Officer should have made further enquiries rather than accepting the explanation. The learned AR has also relied upon the following decisions:- 1. CIT vs. Amit Corporation 21.taxmann.com 64 2. CIT vs. Sun Beam Auto Limited 332 ITR 167 3. CIT vs. Gabriel India Limited 203 ITR 108 4. CIT vs. Vikas Polymers 194 taxman 57 5. CIT vs. G.M. Mittal Stainless Steel (P) Ltd.203 ITR 255 6. Sarvana Developers vs. CIT in ITA No. 620/Bang./2011 7. Malbar Industrial Co. Ltd. vs. CIT2 43 ITR 83 8. CIT vs. Max India Limited 295 ITR 282 9. CIT vs. D.G. Gopala Gowda 254 ITR 501 10. Linde AD, Linde Engineering Division VWP No.3917/2012 vs. DDIT ITA No. 107/Alld/2016 ITA No. 99/Alld/2017 M/s Rithwik RK Joint Venture 8 11. CIT vs. Oriental Structural Engineers Pvt. Ltd. ITA No. 444/2014 12. KCL AMRCL JV vs. ITO ITA No. 1409/H/16 6. On the other hand, the learned CIT DR has referred to the show cause notice issued by the Commissioner and submitted that the Pr. Commissioner has observed from the record that there are various points and discrepancies on the record which were not examined by the Assessing Officer and submitted that the assessee has evaded the tax liability by not showing even the quantum of profit from the business activity carried out. He has further submitted that once the assessee has raised the invoices to M/s Ratna Infrastructure Project Private Limited and received the contract receipt then the profit on such business activity is required to be declared and disclosed by the assessee. The assessee has even not reported the quantum of the profit derived by the members of the Joint Ventures independently and had not explained on what ground the assessment of the same be not made in the hands of the Joint Venture as its income. Similarly, the other discrepancies pointed out by the Pr. CIT are a matter of record as relevant details are given in the show cause notice itself. In the absence of any verification and enquiry conducted by the Assessing Officer to ascertain the correctness of the Revenue received by the assessee and reported in the books of accounts, the assessment order passed by the Assessing Officer is erroneous and prejudicial to the interest of the Revenue due to lack of enquiry. He has submitted that the Pr. CIT has given the details of the disclosed receipts by the assessee at Rs. 20,33,34,166/- in the profit and loss account whereas on perusal of the bank account, it has been noted that total of Rs. 13,84,42,383/- was credited during the year under consideration and a sum of Rs. 7,59,45,359/- has been disclosed in the financial accounts as receivable. Thus the total gross receipts comes at Rs. 21,43,87,742/- as against the receipts disclosed by the assessee at Rs. 20,33,34,166/-. Therefore, there is a difference of Rs. 1,10,43,576/- which was neither considered by the Assessing Officer nor verified or examined during the assessment. The assessee has simply taken the stand that the receipts have been ITA No. 107/Alld/2016 ITA No. 99/Alld/2017 M/s Rithwik RK Joint Venture 9 transferred to the members of the Joint Venture who are independent entities assessed separately without disclosing the quantum of profits transferred to the individual member. The assessee has also not brought any material on record to show that the individual member has offered the income received from the Joint Venture to tax. Since the assessee has not reported the quantum of profit derived by the members independently and had not explained why the assessment of the same be not made in the hand of the Joint Venture. Accepting the return income at nil by the Assessing Officer without conducting a proper enquiry and verification of the relevant details certainly renders assessment order erroneous and prejudicial to the interest of the Revenue. Though the difference in the total receipts shown by the assessee and reflected from the bank account as well as the receivables reported by the assessee was claimed by the assessee on account of deposits of mobilization advance received from M/s Ratna Infrastructure Project Private Limited which was to be adjusted against the subsequent running bills however the correctness of the claim was not verified. Further, the funds were released by Meja (NTPC) to M/s Ratna Infrastructure Project Private Limited after making various deduction mobilization advance recovery, interest on mobilization advance, Income Tax TDS, Work Contract Tax, TDS, Labour Cess, liquidation damages etc., which was released to the Joint Venture after making further deductions in IT TDS, its markup commission etc. Therefore, the assessee failed to explain the difference of the said amount of Rs. 1,10,43,576/- as raised by the Pr. Commissioner. The Assessing Officer never asked for these details and did not verify them to cross check the correctness of the details therefore, the lack of enquiry on the part of the Assessing Officer renders the assessment order passed by him as erroneous and prejudicial to the interest of the Revenue. The ld. CIT DR has placed reliance on explanation 2 to section 263(1) of the Income Tax Act and submitted that without conducting a proper enquiry shall be deemed to be erroneous so far as which is prejudicial to the interest of the Revenue. As regards, the decisions relied upon by the learned AR of the assessee, the learned ITA No. 107/Alld/2016 ITA No. 99/Alld/2017 M/s Rithwik RK Joint Venture 10 CIT DR has submitted that when it is apparent from the record that the Assessing Officer has not applied the mind and no enquiry was conducted in respect of the various issues raised by the Pr. CIT in the show cause notice issued under section 263 of the Act then those decisions cannot be applied to the facts of the present case. In those cases, it was held that there was no lack of enquiry and therefore, the view taken by the Assessing Officer was one of the possible view and the same cannot be revised under section 263 merely because the Commissioner was having a different opinion in the matter. The ld. CIT DR has contended that when the Assessing Officer has not taken any view and there is a complete lack of enquiry in the case of the assessee then the decisions relied upon by the ld. AR are not applicable to the present case. He has pointed out that in the case in hand, there are multiple issues which were noticed by the Pr. CIT on which the Assessing Officer has not conducted any enquiry or taken any view then the order passed by the Assessing Officer is certainly erroneous and prejudicial to the interest of the Revenue. Hence, the learned DR has submitted that the Pr. CIT has rightly invoked the provisions of section 263 when the order of the Assessing Officer was found to be erroneous and prejudicial to the interest of the Revenue. The AOP is an independent assessable entity different and distinct from its members and hence the profit or loss is required to be assessed in the hand of the AOP. The learned DR has relied upon the following decisions as under:- “C.I.T. Vs. Smt. Indira Balakrishanan, (1960) 39 ITR 546,551 (S.C.) C.I.T. Vs. Buldana District Main Cloth Importers Group, (1961) 42 ITR 172 (S.C.). Murugesan & Brothers Vs. C.I.T. (1973) 88 ITR 432 (S.C.). V. Shanmugam & Co. Vs. C.I.T. (1971) 81 ITR 310 (S.C.) Birla Tyres Vs. JCIT (2003) 80 TTJ 915 (Cal.-T) (T.M.)” 7. We have considered the rival submissions as well as relevant material on record. The assessee Joint Venture was formed by its two partners namely M/s Rithwik Projects Private Limited & M/s R.K. Infra & Engineering (India) Private Limited. The assessee filed its return of income declaring nil income by claiming that Joint Venture was created to enter into sub contract with M/s Ratna Infrastructure ITA No. 107/Alld/2016 ITA No. 99/Alld/2017 M/s Rithwik RK Joint Venture 11 Projects Private Limited on 100% back to back basis. The Assessing Officer accepted return income while passing the assessment order under section 143(3) on 7.3.2014 as under:- “In this case assessee has e-filed his revised return of income for A.Y. 2011-12 declaring taxable income at Nil vide acknowledgement no. 47819688310812 on 31.08.2012. Original ITR was e-filed on 30.09.2011 vide acknowledge no. 300342981300911. The case was selected for scrutiny. Notice U/s 143(2) dt. 12.08.2013 was issued fixed hearing on 02.09.2013 and was served through registered post. Thereafter notice u/s 142(1) of the income tax was issued on 17.10.2013 along with questionnaire requiring assessee to furnish required information and documents. Shri Pawan Kumar Chakrapani FCA attended on 21.10.2013 and submitted power of attorney. He also received a copy of notice u/s 142(I) dt. 17.10.2013. On change of incumbent again notice u/s as issued fixing date of compliance on 11.02.2014. RITHWIK- RK JOINT VENTURE is joint venture constituted by RITHWIK and RK INFRA by entertaining into Joint Venture Agreement for execution of work “Site Leveling & Infrastructure works package for Meja thermal Power Project for Meja Urja Nigam Pvt. Ltd.” with 50% share to each of the JV Partner on 28.07.2010. RITHWIK – RK JOINT VENTURE approached RATNA for work. Ratna agreed to sub-contract the total scope of work to RITHWIK – RK JOINT the reply submitted by AR of the assessee on 100% back to back basis. A.R. of the assessee attended from time to time and furnished required information detailed documents and explanations which were perused and placed on the records, the basic issue of the selection of case under scrutiny was confronted with the assessee on which and on other queries he submitted requisite documents/proof/explanations which are placed on record. The case was discussed at length. RITHWIK – RK JOINT VENTURE is joint venture constituted by RITHWIK and RK INFRA by entering into joint Venture Agreement for execution of work “site Leveling & Infrastructure works Package for Meja Thermal Power Project for Meja Urja Nigam Pvt. Ltd.” on 100% back to back basis with 50% share to each of the JV Partner on 28.08.2010. RITHWIK - RK JOINT VENTURE approached RATNA for work. Ratna agreed to sub-contract the total scope of work to RITHWIK – RK JOINT VENTURE on 100% back to back basis. After considering all the material on record and discussion made with the authorized representative, the assessment is made on total income of Rs. NIL as returned by the assessee. Allow TDS as per a database. Issue notice of demand. Copy of ITNS 150 is enclosed.” 8. Thus, it is clear that the Assessing Officer had not discussed anything in the assessment order and therefore, it does not exhibit any thought process of the Assessing Officer with regard to the issue of taxability of income in the hands of the ITA No. 107/Alld/2016 ITA No. 99/Alld/2017 M/s Rithwik RK Joint Venture 12 assessee Joint Venture. The Assessing Officer has just reproduced the submissions of the assessee summarily. The learned AR of the assessee has argued before the Tribunal that during the course of assessment proceedings, the Assessing Officer issued notice under section 142(1) alongwith the questionnaire. We find that the questionnaire annexed to the notice under section 142(1) for the assessment year 2011-12 is placed at page no. 439 of the paper book filed by the assessee which is reproduced as under:- 1. Copy of Memorandum and Bylaws of the society/trust constituted under society registration act, 1860/ copy of registered trust deed established under the Indian Trust Act, 1882 and registered with the concerned authorities as applicable in your case. 2. Copy of registration certificate under Section 12AA, U/s 10 (23C) (vi)/(via) and approval u/s 80G (5)(vi) of the IT Act, 1961. 3. Details of bank A/c and copies bank statements for the period under consideration. Details of FDRs and other investments made with the Banks and other persons/institutions. 4. Details of additions made to the fixed assets with evidences/copies of invoices and vouchers etc. 5. Copy of return of income alongwith audited account and audit report duly signed by the CA in Form No. 10B for earlier two years to show the option exercised under Section 1191) of the IT Act, 1961. 6. Details of grants receipts during the period under consideration with documentary support/ sanctioned orders of the concerned Department/organization 7. Evidences/Vouchers of expenditure made during the period under consideration debited in the income and expenditure account. 8. Details of the secured Loan. i. Name and address of the Bank. ii. Copy of confirmation of Loan iii. Assets offered as security / the hypothecation of stock against which the loan is availed. 9. Details of unsecured loan in the given format. S. No. Name and address of the person from whom loan is availed PAN Amount Mode of payment Whether assessed to tax 10. Details of donations received during F.Y. 2010-11 with dates and amounts and mode of receipts with the identity of donors. Also give details of contribution and community contribution with evidences. 11. Details of the sundry creditors and debtors in the following format. ITA No. 107/Alld/2016 ITA No. 99/Alld/2017 M/s Rithwik RK Joint Venture 13 S. No. Name & address of the Creditors/Debtors PAN Amount Whether assessed to tax Relationship with the assessee 12. Furnish copy of 24Q and 26Q. Also furnish copies of Farm 16 and 16A TDS. Also state the headwise payments and amount of TDS where TDS has been deducted from payments made. 13. Please give a brief description of all the charitable activities carried out by your trust/society during the period under consideration. 9. From this questionnaire, it is clear that all the queries raised by the Assessing Officer are totally irrelevant and not relating to the assessee or the assessment of the assessee. Thus, it is apparent that the Assessing Officer has issued this questionnaire without application of mind. In response to the said notice, the assessee though filed a reply dated 13.11.2013 and explained that the assessee is not a society or trust registered under section 12A of the Act and therefore, all these queries raised by the Assessing Officer are irrelevant. This itself shows that the Assessing Officer has not applied his mind while issuing notice under section 142(1) dated 17.10.2013 therefore, mere filing of the document by the assessee in response to the notice under section 142(1) does not lead to the conclusion or inference that the Assessing Officer has applied his mind and conducted a proper enquiry on the various issues which were taken up by the Pr. CIT while invoking the provisions of section 263 of the Income Tax Act. For ready reference, we reproduce the show cause notice issued by the Pr. CIT dated 7.10.2015 as under:- “It was the 1st year of business and the assessee showed receipts of Rs. 20,33,34,166/- the bank statements available on record have been examined and it has been noticed that the following receipts are reflected in the bank statements. i. 3 February 2011 Union Bank of India 4,90,00,000 ii. 16 November 2010 Union Bank of India 10,000 iii. 11 February 2011 Union Bank of India 6,36,13,531 iv. 27 October 2010 Axix Bank 2,58,18,852 As is apparent from the above data, the joint venture received Rs. 13,84,42,388/- from Ratna. Further Rs. 7,59,45,359/- have been shown as receivable from Ratna. As such the total receipts for the year to be considered for the assessment of income is at Rs. 21,43,87,742/- . As such the joint venture has suppressed the ITA No. 107/Alld/2016 ITA No. 99/Alld/2017 M/s Rithwik RK Joint Venture 14 receipts to the extent of Rs. 1,10,43,576/-. Accordingly, the assessment order passed by the assessing officer is erroneous in as much as the receipts of Rs. 1,10,53,576/- have not been included in the income and accordingly you are hereby required to explain why the assessment order be not cancelled and passed after taking into consideration the undisclosed receipts as noted above for the purposes of assessment of income. It is also noticed that the amounts received from Ratna have been passed on to the two members of the joint venture i.e. Rithwik Projects Private Limited and RK Infra and Engineering (India) Pvt. Ltd. However, the details submitted do not indicate anywhere what profits have been derived by the two members after the execution of the job. Since any profit derived from the business affairs and activities undertaken by the joint venture is to be assessed in the hands of the joint venture only and not in the hands of the members as such, therefore, you are hereby required to report the quantum of profits derived from the execution of the sub-contract by the members independently. You are also required to explain why the same be not assessed in the hands of the joint venture as its income. It is observed that all the receipts have been directly passed on in equal shares to both the members of the joint venture. As both the members are independent entities assessed separately, therefore, while the sub-contracts were being passed on to these members for execution, tax should have been deducted at source as the receipts were against a contract in the hands of the joint venture and in the hands of the members as well. Accordingly, there is violation of provisions of Section 40(a)(ia) on account of the payment of Rs. 20,33,34,166/- to the members of the joint venture and hence it should had not been treated as allowable expenditure in the hands of the joint venture and should have been added to the income. You are hereby required to explain why this amount be not added to your income of this year. Further, it is noticed that the agreement entered into by Ratna and the joint venture indicates that the joint venture shall be providing with a bank guarantee of Rs. 10 crores. The same does not find place in the balance sheet anywhere or in the audit report. Further the securities to be offered, the mobilization advance of Rs. 3.0 crore by RK infra to be offered by Rithwik does not find place anywhere in the balance sheet or in the qualifications in the audit report. You are hereby required to give your comments with regard to how these amounts have been handled in your account. In view of the above observations you are hereby required to appear before the undersigned on 29.10.2015 at 11:00 AM at 38, MG Marg, Civil lines, Allahabad and explain why the assessment order passed in your case be not treated as erroneous and prejudicial to the interests of revenue and be cancelled to be revised under the provisions of Section 263 of the I.T. Act, 1961.” 10. As it is evident from the show cause notice, the Commissioner has raised various points / issues which were not taken up by the Assessing Officer in the scrutiny assessment. Most of these issues are factual in nature and can be considered ITA No. 107/Alld/2016 ITA No. 99/Alld/2017 M/s Rithwik RK Joint Venture 15 only by examination and verification of the relevant record including the various contract / agreements. Apart from the issue of taxability of the contract receipts in the hand of the assessee Joint Venture, the Pr. Commissioner has pointed out various other issues of discrepancies in the receipts declared by the assessee in comparison to the figures appearing in the bank account of the assessee and the amount shown by the assessee as receivable. Secondly, the Pr. Commissioner has also raised the issue of violation of provisions of section 40(a)(ia) which was not even taken up by the Assessing Officer in the assessment proceedings. Though the assessee has submitted that all the contract receipts and payments are subjected to TDS however, this fact is also required to be verified from the record. 11. The next issue raised by the Pr. CIT was regarding bank guarantee of Rs. 10 Crore and advance mobilization of 2% of the contract value as well as additional mobilization advance of Rs. 3 Crore and noted that these amounts does not find place in the balance-sheet of the assessee or in the Audit Report. The learned AR of the assessee has pointed out that the bank guarantee was not provided by the assessee Joint Venture but it was furnished by M/s Ratna Infrastructure Projects Private Limited and therefore, the question of showing the same in the balance-sheet does not arise. This contention of the learned AR cannot be accepted without verifying the relevant record and the arrangements between the party by going through the various agreements entered into right from the awarding of work contract by Meja Urja Nigam Private Limited a Joint Venture of NTPC and U.P. Rajya Vidyut Utpadan Nigam Ltd., in favour of the M/s Ratna Infrastructure Projects Private Limited. Prior to that, M/s Ratna Infrastructure Projects Private Limited entered into MOU dated 18.11.2009 with M/s Rithwik Projects Private Limited having a pre understanding that in the event work being awarded to M/s Ratna Infrastructure Projects Private Limited it shall in turn sub contract the whole of the work on 100% back to back basis to M/s Rithwik Projects Private Limited who shall mobilize material and machinery to execute the work within time and as per the ensure quality. Thereafter, M/s ITA No. 107/Alld/2016 ITA No. 99/Alld/2017 M/s Rithwik RK Joint Venture 16 Rithwik Projects Private Limited constituted a Joint Venture with M/s R.K. Infra & Engineering (India) Private Limited (in short “R.K. Infra”) vide joint venture agreement dated 28.7.2010 to undertake the execution of total scope of work from M/s Ratna Infrastructure Projects Private Limited on alleged 100% back to back basis. Therefore, there is a complexed structure of arrangements between these parties right from the awarding of contract by the Meja Urja Nigam Private Limited to M/s Ratna Infrastructure Projects Private Limited and also having a Mamorandum of Understanding (MoU) between M/s Ratna Infrastructure Projects Private Limited and M/s Rithwik Projects Private Limited and further forming a Joint Venture between M/s Rithwik Projects Private Limited & M/s R.K. Infra & Engineering (India) Private Limited. Without going through the terms and conditions of each of these contracts and memorandum of understanding the true nature of arrangements between the parties and flow of work as well as the contract receipts including the mark up of intermediateries parties the taxability of the income in the hand of each of the parties cannot be determined. Further when the Pr. Commissioner has raised various other issues and discrepancies with respect to the total contract receipts compliance of provisions of section 40(a)(ia) and non disclosure of bank guarantee and mobilization advances in the books of the assessee which were not taken up by the Assessing Officer clearly manifest that there is a complete lack of enquiry on the part of the Assessing Officer on these issues, much less an appropriate enquiry. Once the Assessing Officer has not conducted a proper enquiry and the case falls in the category of complete lack of enquiry then it would render the order passed by the Assessing Officer as erroneous so far as prejudicial to the interest of Revenue. It may turn out to be not prejudicial to the interest of the Revenue if the assessee is able to establish that the income is not assessable in the hands of the assessee as the total receipts were passed on to the Joint Venture partners in the ratio of 50-50. However, without conducting an enquiry and examination of relevant record including the agreements and memorandum of understanding bringing into the existence the ITA No. 107/Alld/2016 ITA No. 99/Alld/2017 M/s Rithwik RK Joint Venture 17 arrangements between the parties this claim of the assessee cannot be accepted just on the basis of the contentions and the reference to the sub contract of work on 100% back to back basis. 12. The decisions relied upon by the learned AR of the assessee laid down the basic principle on the point that where there are two possible views on an issue and the Assessing Officer has taken one of the possible views then the Commissioner is not allowed to invoke the provisions of section 263 merely because he does not agree with the view taken by the Assessing Officer. However, when the order of the Assessing Officer suffers from a complete lack of enquiry, then the above said principle has no application due to the obvious reason that the Assessing Officer has not taken a view by conducting a proper enquiry and further the acceptance of claim by the Assessing Officer without conducting an enquiry would not be regarded as a possible view on the issue. When the Assessing Officer has not even taken up many of the issues raised by the Pr. CIT in the show cause notice, then the case of the assessee does not fall in the category of taking a possible view by the Assessing Officer. Therefore, to the extent of invoking the provisions of section 263 of the Act, we do not find any error or illegality because there is a complete lack of enquiry on the part of the Assessing Officer. 13. Ground no. 3 is dependent on the outcome of the other grounds raised by the assessee on the merits of the various issues therefore, this ground will be taken at the end after the adjudication of the other grounds raised by the assessee. 14. Ground no. 4 is regarding directions given by the Pr. CIT to compute the income derived from execution of the project worth Rs. 1,37,21,75,327/-. The learned AR of the assessee has submitted that the assessee has received the contract receipts of Rs. 20,33,34,166/- which is net of mobilization charges which were already received as mobilization advance by the assessee and adjusted against the running bills @ of 2% of bill amount. Therefore, the Pr. CIT has misconceived the amount of ITA No. 107/Alld/2016 ITA No. 99/Alld/2017 M/s Rithwik RK Joint Venture 18 contract receipt by considering the entire deposits in the bank account of the assessee which includes mobilization advance receipt without verifying the correct details on this issue. He has further contended that when the contract receipts for the year under consideration is only to the extent of Rs. 20.33 crores , then the income cannot be computed by considering the entire contract amount of Rs. 137.21 Crores. Further, the learned AR has contended that once the sub contract was given to M/s Rithwik Projects Private Limited on 100% back to back basis which in turn formed the Joint Venture with M/s R.K. Infra & Engineering (India) Private Limited which is a Special Purpose Vehicle just to get the experience certificate of execution of a big size of project though the work was executed by the Joint Venture partners themselves and not by the assessee Joint Venture. The assessee have just passed on the entire contract receipts to the Joint Venture partners in the ratio of 50-50. Thus, the learned AR has submitted that the income from the execution of the work contract is not assessable in the hand of the assessee which is only a pass through entity formed by the two partners who had executed the work. The assessee Joint Venture was not formed to execute the project. The learned AR has relied upon the judgment of Hon'ble Delhi High Court in the case of Commissioner of Income Tax vs. M/s Oriental Structual Engineers Private Limited and KMC Construction Pvt. Ltd,. Joint Venture dated 10.02.2015 in ITA No. 444 of 2014 and submitted that the Hon'ble High Court has held that a Joint Venture was formed only to secure contract in turn of which the scope of each Joint Venture partner’s task was distinctly outlying the entire work was split between the two Joint Venture partners and they completed the task through sub contract and were responsible for the satisfaction of the principle. Therefore, it was held that the Joint Venture was not an association of a persons and liable to be taxed on that basis. He has relied upon the judgment of Hyderabad Benches of the Tribunal dated 29.11.2017 in the cases of KCL AMRCL Joint Venture vs. Income Tax Officer, PSR-AMRCL Joint Venture vs. Income Tax Officer, CCPL-AMRCL Joint Venture vs. Income Tax Officer, Income Tax Officer vs. KCL AMRCL Joint Venture ITA No. 107/Alld/2016 ITA No. 99/Alld/2017 M/s Rithwik RK Joint Venture 19 and Income Tax Officer vs. PSR-AMRCL Joint Venture. Thus, the learned AR has submitted that the assessee is not a separate taxable entity when all the risk and rewards for execution of the work were that of two Joint Ventures partners. 15. On the other hand, learned DR has submitted that when the assessee has issued the bills / running bills to M/s Ratna Infrastructure Project Private Limited and receiving the contract amount in its own name then the income derived from the execution of work through its two partners is liable to be assessed to tax in the hand of the assessee. He has further contended that the Joint Venture is a separate tax entity as covered under section 2(31) of the Income Tax Act, as an association of person. He has relied upon the decision of Hon'ble Supreme Court in the case of CIT vs. Smt. Indira Balakrishnan, [1960] 39 ITR 546, 551 (S.C.) and Birla Tyres vs. JCIT [2003] 80 TTJ 915 (Cal.-T)(T.M.). Thus, the learned CIT DR has contended that a Joint Venture is a person defined under Income Tax Act being association of persons and a separate taxable entity and hence is liable to be assessed for the income arising from execution of the project. The assessee has disclosed the receipts in its profit and loss account and also shown in the bank account which is liable to be assessed. The net result of the business carried out by the assessee may be a profit or loss but the income from the activity undertaken by the assessee Joint Venture is liable to be assessed to tax. He has relied upon the impugned order of the Pr. Commissioner. 16. We have considered the rival submissions as well as relevant material on record. The first question arises is whether the assessee is a taxable entity or not? We are of the considered opinion that the assessee a Joint Venture clearly falls in the definition of persons provided under section 2(31) being an association of persons or a body of individuals whether incorporated or not? However, the income which is derived from the execution of the work under consideration is liable to be assessed in the hands of the assessee or in the hands of the Joint Venture partners depends upon the specific arrangements and facts including the risk and reward undertaken by the parties in terms of the various contracts and agreements entered into. ITA No. 107/Alld/2016 ITA No. 99/Alld/2017 M/s Rithwik RK Joint Venture 20 Therefore without examination of a true nature of the arrangements which is complexed structure created by way of various agreements / contracts and sub contracts in respect of the execution of the work original awarded by Meja Urja Nigam Private Limited to M/s Ratna Infrastructure Projects Private Limited this question of taxability of income in the hand of JV cannot be answered. Further, the assessee though claimed that the contract amount received by the assessee was directly passed and distributed to two Joint Venture partners in 50-50% as per the Joint Venture agreement and therefore, the assessee is not liable to be assessed to tax on such receipts which is passed on to the Joint Venture partners under the sub contract agreement 100% back to back basis however, the assessee has not produced any material to show that the Joint Venture partners have offered the income from the contract receipts to tax in their return of income. Since the Joint Venture partners are assessable to tax at a different places of jurisdiction therefore, without production of the relevant record and particularly the return of income filed by the Joint Venture partners, it was not possible for the Assessing Officer to ascertain this fact though the Assessing Officer has not made any attempt to verify this. The Pr. CIT has taken a view that the income derived from the execution of the contract is liable to be assessed in the hands of the assessee and this view is taken by the Commissioner without analyzing the terms and conditions of the various contracts, sub contracts, Joint Venture agreements, memorandum of understanding between the parties to bring into existence a multilayer and structure and arrangements under which the status of being assessee intermediatery or a pass through entity not liable to assessed to tax to be ascertained. Therefore, we modify the finding and decision of the Pr. CIT on this issue and direct the Assessing Officer to properly verify the facts emanates from the various contracts, the sub contracts, MOU, Joint Venture agreement as well as the arrangements made between the parties so as to ascertain the risk and rewards owned by which party. Therefore, the Assessing Officer is free to examine this issue and adjudicate the same on the basis of the enquiry conducted on the facts as well as ITA No. 107/Alld/2016 ITA No. 99/Alld/2017 M/s Rithwik RK Joint Venture 21 terms and conditions of the various contracts, sub contracts, agreements as well as arrangements made between the parties. Needless to say the legal precedents relied upon by the parties are also required to be considered on the specific facts arrived as a result of the enquiry. Further, the income if any assessable to tax in the hand of the assessee shall be by considering the actual receipt during the year and not on the total value of the project. 17. Ground no. 5 is regarding the directions given to the Assessing Officer to examine the difference of Rs. 1,10,53,573/- between contract receipts declared by the assessee and the receipts reflected in the bank account as well as outstanding. The learned AR of the assessee has submitted that the Commissioner has misunderstood the facts regarding the contract receipts of the assessee during the year under consideration. He has pointed out that the assessee has declared the correct contract receipt during the year under consideration which is against the running bill raised by the assessee after adjustment of the mobilization advance which were already received and reflected in the bank account of the assessee. He has pointed out that during the year under consideration, the assessee has raised three bills of total value of Rs. 20,33,34,166/- against which the assessee received a sum of Rs. 11,26,13,531/- and further deduction was made towards mobilization advance of Rs. 32,29,354/-. He has further submitted that there was a TDS @ 2%, WCT @2%, labour cess @ 1%, interest @ 14.5%, retention L.D. of Rs. 36,01,960/- which comes to a total amount of deduction made by the NTPC of Rs. 1,42,62,384/-. Further, the TDS was deducted by M/s Ratna Infrastructure Project Private Limited of Rs. 5,37,872/- and the gross total amount of deduction and TDS comes to Rs. 1,48,00,276/-. After deducting this amount as well as the amount already received from the debtor from the total value of bills the balance receivable comes to Rs. 7,59,20,359/-. Since there was a cash deposit of Rs. 25,000/- at the time opening of escrow account, the total amount of debtor as shown in the books of accounts on 31 st March, 2011 is Rs. 7,59,45,359/-. Hence, the learned AR has submitted that if all these details are taken into ITA No. 107/Alld/2016 ITA No. 99/Alld/2017 M/s Rithwik RK Joint Venture 22 consideration, there is no discrepancy or difference in the total contract receipts shown by the assessee. The difference as per the calculation of the Pr. CIT comes only due to taking the entire deposits in the bank account which includes the mobilization advance and deposit made at the time of opening of escrow account without considering the fact that the mobilization advance is being adjusted against the running bills and therefore, the entire mobilization advance cannot be considered as contract receipt for the year under consideration. He has further contended that when the assessee has prepared and maintained the books of accounts which were duly audited. Then there was no reason for calculating the contract receipt by taking the deposit in the bank account and comparing with the closing debtor. The matter of calculation and the difference arrived at by the Pr. CIT is against the principle of accounting. Hence, he has submitted that the Pr. CIT is not justified in holding the assessment order as erroneous and prejudicial to the interest of the Revenue to the extent of this issue. 18. On the other hand, the learned DR has submitted that though the assessee has explained the difference in contract receipts by giving these details however, the Assessing Officer has neither considered nor examined these details. Therefore, in the absence of any enquiry, the order of the Assessing Officer is erroneous and the correctness of the details can be accepted only after verification and examination of the same. He has further contended that the Pr. CIT has directed the Assessing Officer to examine and verify the difference on account of the contract receipt hence, no prejudice is caused to the assessee if the correctness of the details and re-conciliation of the difference as pointed out by the Pr. CIT is produced before the Assessing Officer for his examination and verification. 19. We have considered the rival submissions as well as relevant material on record. The Pr. CIT has considered this issue as under:- “On The first issue, the assessee submitted that the deposit of Rs. 2,58,18,852/- on 27.10.2010 in Axis Bank received from Ratna is Mobilization advance which have ITA No. 107/Alld/2016 ITA No. 99/Alld/2017 M/s Rithwik RK Joint Venture 23 been recovered by them subsequently in the running bills. Further, it has been submitted that Meja (NTPC) released funds to Ratna after making various deductions like Mobilization Advance recovery, Interest on Mobilization advance, Income Tax TDS, WCT TDS, labour Cess, Liquidated Damages etc., Ratna, in turn, while releasing funds to JV made further deductions like IT TDS, its Markup Commission etc., therefore, to arrive receivable amount from Ratna, the above mentioned deduction entries have also to be considered. The submission of the assessee on the account was examined. The assessee failed to explain the difference of Rs.1,10,43,576/- as raised at point no.1 of the notice u/s 263. Vide order sheet entry dated 9/10 th Dec., 2015, the assessee was required to furnish evidence in the form of payment vouchers to substantiate the payment of Rs. 2,58,18,852/- for mobilization advance and the various deductions as mentioned by it. The AO never asked for these details and obviously did not cross check and verify them thus rendering the order passed by him as erroneous and prejudicial to the interests of revenue especially in the light of sub-clause (a) of explanation 2 to clause (10 of Section 263. The assessee made its submission at page no. 6 at point no. 21(b) of its paper book to the second issue raised in the notice u/s 263 filed on 09.12.2015. The assessee simply tried to evade the issue by stating that the profits were passed on to the two members of the joint ventures in equal proportion and they must have disclosed these profits in their individual capacity in their returns of income which were filed at different stations other than Allahabad. In this connection, the assessee had not reported the quantum of profits derived by the members independently and had not explained why the assessment of the same be not made in the hands of the joint venture as its income. As per note sheet entry to register the hearing held on 09/10 th December, 2015 it has been categorically recorded by me that the assessee has not reported the quantum of profits derived by the members independently and has not explained why the assessment may not be made in the hands of the joint venture in its income. Further, in response to the query raised vide notice u/s 263, the assessee submitted that Rithwik in its individual capacity had given bank guarantee of Rs. 10 crores to Meja Urja Private Limited on behalf of Ratna and in lieu of this R.K. Infra had given collateral security of its machinery to Rithwik in its individual capacity. Thea assessee failed to give any satisfactory explanation on this account. Vide order sheet entry dated 09/10 th December, 2015, the assessee was required to furnish evidences in support of its submission. On both the above issue, the assessment order passed by the AO was squarely hit by the mischief of sub-clause (a) of explanation 2 to clause (1) of Section 263 which reads as under: Explanation 2. For the purposes of this section, it is hereby declared that an order passed by the Assessing officer shall be deemed to be erroneous in so far as it is prejudicial to the interests of the revenue, it, in the opinion of the Principal Commissioner or Commissioner. (a) The order is passed without making inquiries or verification which should have been made; ITA No. 107/Alld/2016 ITA No. 99/Alld/2017 M/s Rithwik RK Joint Venture 24 The AO did not carry out any investigation worth its name rendering the order passed by him as erroneous and prejudicial to the interests of revenue.” 20. Thereafter, the Pr. CIT has given its finding on this issue and directed the Assessing Officer as under:- “The assessee has failed to explain the reason for the suppression of Rs. 1,10,43,576/- which difference between the receipts to be considered for assessment (Bank deposits + receivable from Ratna) and the one shown by it in the profit and loss account. The AO is directed to examine the difference of Rs. 1,10,53,576/- between the disclosed receipts of Rs. 20,33,34,166/- and the deposits in the bank account receivable amounting to Rs. 21,43,84,742/-.” 21. Thus, it is clear that the Pr. CIT has held that the order passed by the Assessing Officer is erroneous and prejudicial to the interest of the Revenue because the Assessing Officer did not carry out any investigation on this point. The Commissioner has not accepted the explanation of the assessee and directed the Assessing Officer to examine the difference between the disclosed receipts and deposit in the bank account and receivable shown by the assessee. Prima facie, we find that the difference as pointed out by the Pr. CIT of Rs. 1,10,43,576/- on account of the contract receipt is due to the reason that he has considered the entire deposit made in the bank account which includes the mobilization advance received against the contract but only part of the said amount would be treated as contract receipts for the year under consideration being adjusted against the running bills value. However, since the Assessing Officer has not conducted any enquiry therefore, we do not find any reason to interfere with the order of the Pr. CIT directing the Assessing Officer to examine this issue. We clarify that the Assessing Officer is free to examine and verify the details to be produced by the assessee on this issue without having any influence of the observation as the receipts of the Pr. CIT in the impugned order. 22. Ground no. 6 is regarding the bank guarantee not reflected in the balance- sheet of the assessee. The learned AR of the assessee has submitted that the bank ITA No. 107/Alld/2016 ITA No. 99/Alld/2017 M/s Rithwik RK Joint Venture 25 guarantee of Rs. 10 Crore and additional guarantee of Rs. 3 Crore were given by M/s Rithwik Projects Private Limited in its individual capacity directly to M/s Meja Urja Nigam Private Limited as per the memorandum of understanding between M/s Ratna Infrastructure Project Private Limited and M/s Rithwik Projects Private Limited. This bank guarantee of Rs. 10 Crores and Rs. 3 Crores were given by M/s Rithwik Projects Private Limited on behalf of M/s Ratna Infrastructure Project Private Limited. These facts have been considered by the Assessing Officer at the time of passing the assessment order that the assessee has not paid the bank guarantee then the question of showing the same in the balance-sheet does not arise. The Pr. CIT cannot pick up such an issue for revising the order of the Assessing Officer and directing the Assessing Officer to examine without giving specific directions. 23. On the other hand, the learned DR has submitted that it is evident from the record that the Assessing Officer has not conducted any enquiry therefore, the Pr. CIT is justified in directing the Assessing Officer to verify this issue as to why the bank guarantee of Rs. 10 crores on addition guarantee Rs. 3 Crore was not shown in the books of accounts of the assessee. 24. We have considered the rival submissions as well as relevant material on record. At the outset, we note that though the Pr. Commissioner has raised this issue in the show cause notice however, this issue was not specifically discussed by the Pr. CIT in the impugned order except the finding and direction as under:- “The assessee failed to explain how it had shown the transactions mentioned in the agreement with Ratna or how the transactions regarding bank guarantee as submitted in the reply have been reflected in its balance sheet. The AO is directed to examine how the transactions regarding the bank guarantee of Rs. 10.0 crores, the securities to be offered, the mobilization advance of 2% of the contract value and an additional mobilization advance of Rs. 3.0 crores have been reflected in the balance sheet of the assessee.” 25. The assessee has referred to the relevant record which includes the bank A/c copy, the copy of the bank guarantee issued by the Punjab National Bank in favour of ITA No. 107/Alld/2016 ITA No. 99/Alld/2017 M/s Rithwik RK Joint Venture 26 Meja Urja Nigam Private Limited, vide letter dated 1 st October, 2010 as well as bank guarantee deed placed at pages 134 & 135 to 435 including the bank guarantee deeds for renewal of the bank guarantee from time to time. All these bank guarantees were issued by Punjab National Bank in favour of Meja Urja Nigam Private Limited on behalf of M/s Ratna Infrastructure Project Private Limited. From these documents and records of bank guarantee, it is clear that these were not issued on behalf of the assessee Joint Venture and the amount was not blocked from the bank account of the assessee therefore, when the assessee has not made any payment towards these bank guarantee issued for performance security deposit as well as additional performance security deposits, then the question of the same being recorded in the balance-sheet of the assessee does not arise. The Commissioner has not even considered the bare fact as to who has arranged these bank guarantees or paid any sum towards the bank guarantee issued in favour of the Meja Urja Nigam Private Limited. Accordingly, the Assessing Officer is directed to verify the fact whether assessee was under obligation to furnish any bank guarantee or any amount was paid by the assessee towards bank guarantee in question and then decide this issue. 26. Ground no. 7 is regarding the directions to the Assessing Officer for verification of the violation of the provisions of section 40(a)(ia) for want of TDS. 27. We have heard the learned AR as well as learned DR and considered the relevant material on record. The assessee claimed to have deducted the TDS on the amounts which were paid to the partners of the Joint Venture. Hence, prima facie it is evident from the record of the Department that the assessee has deducted the TDS. We note that neither the Assessing Officer has considered this issue and nor the Pr. CIT has verified it from the details available on the data of the Department itself that the assessee has filed the statement of TDS submitted under section 200(3) in Form No. 26Q placed at page nos. 104 and 105 and the summary of the TDS as deducted by the assessee from the payment made to M/s R.K. Infra & Engineering (India) Private Limited & M/s Rithwik Projects Private Limited giving challan numbers is placed at ITA No. 107/Alld/2016 ITA No. 99/Alld/2017 M/s Rithwik RK Joint Venture 27 page no. 106 of the paper book. Therefore, prima facie it appears that the assessee has duly deducted the tax at source (TDS) and paid the same to the account of the Government however, the Assessing Officer is directed to verify these details of payment of TDS and if the same are found to be correct then there will be no question of violation of provision of section 40(a)(ia) or deduction of TDS. 28. Ground no. 8 does not emanate from the impugned order of the Pr. CIT hence, the same is dismissed. 29. Ground No. 3 stands disposed of in terms of finding on ground No. 4 to 7 of the appeal. 30. For the assessment year 2012-13, the assessee has raised the following grounds:- 1. The order of the learned Principal Commissioner of Income Tax, Allahabad, passed under Section 263 of the Act, in so far as it is against the appellant is opposed to law, equity, weight of evidence, probabilities and the facts and circumstances in the Appellant’s case. 2. The learned Pr. CIT has grossly erred in revising the order passed by the learned assessing officer without appreciating that there is no error, much less prejudicial to the interests of the Revenue to warrant a revision and therefore the order passed by the ld. Pr. CIT is ultra vires to the scope of Section 263 and requires to be cancelled under the facts and circumstances of the Appellant’s case. 3. The Ld. Pr. CIT failed to appreciate that the direction to make fresh assessment amounts to ordering for making fishing and roving enquires without any material in support thereof and consequently the impugned order passed is bad in law is liable to be cancelled. 4. The Ld. Pr. CIT is not justified to conclude that there is difference in the closing debtors, without appreciating the documents produced before the Ld. Pr. Commissioner of Income Tax under the facts and circumstances of the Appellant’s case. 5. Without prejudice to the above, the learned Pr. Commissioner of Income Tax is not justified in comparing the sub-contract income of an amount of Rs. 36,78,20,764/- with the amount credited into the bank accounts and arriving at the so called difference in the debtors an amount being Rs. 8,63,86,084/-, under the facts and circumstances of the Appellant’s case. 6. Further without prejudice to the above, the Learned Pr. Commissioner of Income Tax is not justified in following mixed accounting system, when the law permit following either mercantile accounting system or cash accounting system, under the facts and circumstances of the Appellant’s case. ITA No. 107/Alld/2016 ITA No. 99/Alld/2017 M/s Rithwik RK Joint Venture 28 7. The Ld. Pr. Commissioner of Income Tax is not justified in asking the Appellant to submit the profit earned by the Sub contractors from the subcontract given by the Appellant, under the facts and circumstances of the Appellant’s case. 8. Without prejudice to the above, the ld. Pr. Commissioner of Income tax, has failed to appreciate the fact that the Appellant is a separate entity as per the provisions of section 2(31) of the Act, under the facts and circumstances of the case. 9. The Ld. Pr. Commissioner of Income Tax ought to have considered the fact that there was no amounts which have been transferred by the Appellant as bank guarantee nor any collateral security given by the Appellant, under the facts and circumstances of the case. 10. The Ld. Pr. Commissioner of Income tax ought to have considered the facts that, the amount of bank guarantee an amount being Rs. 10crores, and additional mobilization advances an amount being Rs. 3crores, were not related to the impugned assessment year 2012-13, under the facts and circumstances of the case. 11. The Ld. Pr. Commissioner of Income Tax ought to have considered the facts that, the learned Assessing officer has already considered the T DS documents before passing the order of assessment, under the facts and circumstances of the case. 12. The Ld. Pr. Commissioner of Income Tax has erred by not appreciating the settled position of law that, where there are two opinions possible on an issue, section 263 cannot be exercised to invoke such an issue. 13. The Ld. Pr. Commissioner of Income tax has grossly erred in revising the order passed by the Ld. Assessing Officer without appreciating that there is no error, much less prejudicial to the interests of the Revenue to warrant a revision and therefore the order passed by the Ld. Pr. Commissioner of Income tax is ultra vires to the scope of Section 263 an requires to be cancelled under the facts and circumstances of the Appellant’s case. 14. The Ld. Pr. Commissioner of income Tax failed to appreciate that the learned assessing officer had passed the order after verifying the books, records and other documents produced and more specifically all the agreements as is evident from the order sheet nothing and submissions and hence section 263 cannot be invoked under the facts and circumstances of the case. 15. Without prejudice to the above the Ld. Pr. Commissioner of income Tax ought to have appreciated that the aforesaid issue on which the learned Pr. Commissioner of Income Tax has sought to revise the assessment order is a conscious view adopted by the learned assessing officer, which is not shown to be erroneous and consequently, the jurisdiction under section 263 of the Act stands ousted and accordingly the impugned order passed deserves to be cancelled. 16. The appellant craves leave to add, alter, delete or substitute any of the grounds urged above. 17. In the view to the above and other grounds that may be urged at the time of the hearing of the appeal, the Appellant prays that the appeal may be allowed in the interest of justice and equity. 31. It is clear from the grounds of appeal for the assessment year 2012-13 that all the grounds are identical to the grounds raised for the assessment year 2011-12 ITA No. 107/Alld/2016 ITA No. 99/Alld/2017 M/s Rithwik RK Joint Venture 29 except the alleged difference in the quantum of contract receipts. Since the issues are identical to the appeal for the assessment year 2011-12 therefore, our finding on these issues for the assessment year 2011-12 is applicable for the assessment year 2012-13 and accordingly, the impugned order of the Pr. Commissioner stands modified in terms of finding of assessment year 2011-12. 32. In the result, both the appeals of the assessee are partly allowed. Order pronounced in the open Court on 26.07.2022 at Allahabad, U.P. Sd/- Sd/- RAMIT KOCHAR VIJAY PAL RAO (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) Dated: 26.07.2022 sh Copy forwarded to: 1. Appellant –M/s Rithwik RK Joint Venture 2. Respondent –Pr. CIT, Allahabad 3. CIT(A),Allahabad 4. CIT 5. DR - By order Sr. P.S.