APACE DEVELOPERS PRIVATE LIMITED,UTTAR PRADESH vs. PR. CIT, DELHI-1, DELHI

The case of assesse is that initially assessee mistakenly filed incorrect figures and on query filed correct details of expenditure booked (Pg. 61-62 of PB), but AO mentioned wrong figure of expenditure of material of project Royal Home Town as per earlier incorrect statements i.e. 2,30,64,136/- against correct figure of Rs. 1,06,79,248/-though all other amounts against all projects including Royal is correctly taken as per revised statement at page 5 of his order. Due to this mistake, AO reflected excess expenditure of Rs.1,32,34,888/- (actually 1,23,84,888) against Royal Project despite booking said expenditure against Elora Infratech thus booked this amount twice which is crystal clear from order. As per revised statement, there was already profit of Rs. 29,32,028/- in Royal project with less than 25% completion so AO has not disallowed anything but disallowed total expenditure of Elora Infratech Rs. 1,32,34,888/- correctly.

Ld. Pr. CIT in issuing the notice u/s 263 reproduced statement as per page 5 of AO order which is made basis for issuing the notice. Assessee claims that ld. PCIT, without verifying apparent calculation mistake and despite assesse clarifying same vide reply filed as per PB - 17A/17B, directed AO to enhance assessment by Rs. 94,52,860/- based on wrong figures and without any opportunity as sought.

Now as a matter of fact this Tribunal considered the mistake specifically with reference to Royal/Elora Project and vide order dated 22.09.2022 in ITA No.643/D/2021 has recorded that as per AR, there is a computational mistake, correction of which would result in a proposition that order of the AO is not erroneous and Ld. DR fairly agreed that there is a mistake in computation which is prima facia rectifiable u/s 154 and so remanded back the matter to the Id. Pr. CIT for correction of computation mistake.

Assessee filed appeal in 2nd round whereby again this Tribunal vide ITA No. in para 9 held that AO can not disallow expenditure not claimed and while undisputedly total material cost/labour of Rs. 2,88,30,170/48,86,855 is claimed but as per PCIT, total cost of expenditure comes to Rs. 4,12,15,058/- and Rs.57,36,855/- which is more than Rs. 1,32,34,888/- than the claimed. Matter was thus again remanded on the issue of computation mistake in terms of original order dt.22.09.2022 as per last lines of para 10 and asked to apportion cost project wise.

Ld. Counsel has submitted that before ld. PCIT, Assessee again demonstrated error at length and even filed ledger a/c of all the four projects giving bill wise/party wise details but unfortunately, ld PCIT after very detailed discussion even beyond the subject matter held that assessee could not prove typographical error and upheld the original order.

What we find now is that in first round itself this Tribunal had accepted computational mistake which was even conceded by Id. D.R and Bench specifically directed for correction of same as on correction of same the order of AO would not be left erroneous or prejudicial, but ld. PCIT instead of carrying out directions is repeatedly holding there is no mistake while computational mistake has been elaborately discussed too in second round and for completeness we reproduce the same here in below;

Notice u/s 263 itself makes it crystal clear whereby allocation of expenditure to other projects is not doubted rather disallowance of Ellora project was appreciated but found recognition of revenue/expenditure against Royal Project wrong due to less than 25% completion of project obviously based on incorrect figure of material mentioned in order i.e. 2,30,64,136/- against correct figure of Rs.1,06,79,248/-. After correction of mistake non-recognition of revenue/expenditure will decrease income instead of any enhancement, thus Id. AO has chosen to recognise both.

We find that AO has accepted revised figures except committing typing and computational error in one figure and based only on such figures disallowed huge expenditure of Rs.1,32,34,888/- pertaining to Ellora Infratech out of total expenditure of Rs. 3,37,17,025/- which would mean around 39%, of the expenditure, which cannot be logical and reasonable. AO has accepted accounts without invoking 145(3) or 144 of the Act, but that being matter of regular appeal filed by assessee, we find it a case where invoking powers of section 263 of the Act was not justified.

As a consequence of aforesaid discussion we are inclined to now sustain the grounds and allow the appeal. The impugned order is quashed.