Assessment Order passed after making necessary Inquiries can’t be 'Erroneous': ITAT quashes Revisional Order [Read Order]

While quashing the revisional order passed by PCIT the Rajkot bench of the Income Tax Appellate Tribunal held that the assessment order passed after making necessary inquiries can’t be “Erroneous’.

The assessee is a partnership firm engaged in the business of Real Estate. The PCIT found that the assessee has shown the gross value of services provided at ) 5,31,80,902.00 whereas the assessee has shown the gross value of the sales in the profit and loss account for ) 4,66,04,750.00 leading to a difference of ) 65,76,152.00 only. According PCIT initiated the proceedings under section 263 of the Act.

 It was submitted by the assessee that the service tax is charged on the value of services provided whereas tax is charged on the principle of the accrual/receipt of income, so the difference arising between the amount shown in the service tax return and the financial statement does not reflect the income of the assessee. The assessee contended that the assessment was framed by the AO after considering the necessary details and verification and application of mind.

Shri Waseem Ahmed, accountant member and Shri Siddhartha Nautiyal, judicial member quashed the order of PCIT in the absence of any specific finding with respect to the enquiries which should have been made and observed that all the details with respect to the service tax were available before the AO during the assessment proceedings.

The Tribunal observed that there is no law which provides the extent of inquiries to be made by the Assessing Officer and the Commissioner of Income Tax by invoking revisionary powers under section 263 of the Act cannot impose his own understanding of the extent of inquiry. It was evident that the AO had made enquiries and after consideration of materials placed on record accepted the genuineness of the claim of the assessee. 

The appeal filed by the assessee was allowed. Shri Mehul Ranpura appeared for the appellant and Shri Sanjeev Jain appeared for the respondent.

To Read the full text of the Order CLICK HERE

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