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Income Tax Appellate Tribunal, HYDERABAD BENCHES “A” : HYDERABAD
Before: SHRI A.MOHAN ALANKAMONY & SHRI S.S.GODARA
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES “A” : HYDERABAD (THROUGH VIDEO CONFERENCE) BEFORE SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI S.S.GODARA, JUDICIAL MEMBER I.T.A. Nos. 170 & 171/HYD/2021 Assessment Years: 2011-12 & 2012-13 M/s.Mech Engineers Deputy Commissioner and Erectors P. Ltd. Vs of Income Tax, New Paloncha, Central Circle-2(1), Khammam District Hyderabad [PAN: AAECM4494M] (Appellant) (Respondent) For Assessee : Shri M.V.Prasad, AR For Revenue : Ms. M.Narmada, CIT-DR Date of Hearing : 23-12-2021 Date of Pronouncement : 24-01-2022 O R D E R PER S.S.GODARA, J.M. : These two assessee’s appeals for AYs.2011-12 & 2012-13 arise from the PCIT-Hyderabad-4’s separate orders dated 26-03-2021 & 23-03-2021 passed in DIN & Order No. ITBA / REV / F / REV5 / 2020-21 / 1031782779(1) & 1031685969(1), involving proceedings u/s.263 of the Income Tax Act, 1961 [in short, ‘the Act’]; respectively. Heard both the parties. Case files perused.
We notice at the outset that the PCIT’s impugned Section 263 revision directions terming the corresponding twin Section 143(3) r.w.s.153A assessments framed on 26-04-2017 as erroneous ones, causing prejudice to interest of the Revenue. A combined perusal of both these files indicates that this
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assessee had filed its regular returns u/s.139(1) of the Act on 12-09-2011 and 13-09-2012; assessment-year wise; respectively. There is further no dispute even as per the assessment discussion in the latter assessment year that the Assessing Officer had framed his Section 143(3) assessment on 16-03-2015 assessing the total income at Rs.3,57,59,890/-.
It is further an admitted fact between the parties that the department had carried out a search operation in assessee’s case on 14-12-2015 leading to initiation of Section 153A proceedings vide notice(s) dt.26-12-2016. The Assessing Officer thereafter framed his impugned twin assessments on 26-04-2015 accepting the income(s) returned at the assessee’s behest. It is in this backdrop of facts that the learned PCIT holds in his Section 263 revision orders in issue that on account of the assessee having not deducted TDS, audit fee and difference in turnover of Rs.35,95,785/- in AY.2011-12 and similar differential amount of Rs.33,32,664/-; respectively, deserve to be revised since the impugned twin assessments have not verified all necessary facts.
We have given our thoughtful consideration to rival pleadings against and in support of the correctness of the PCIT’s foregoing revision directions and find no merit in the same. This is for the clinching reason that all the three foregoing issues i.e., disallowance of audit fee and payment of sub-contract expenses are not more material factors in both these assessment years once the Assessing Officer had
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subjected the assessee’s gross receipts on estimation basis only. Coupled with this the fact remains that the issue raised at the PCIT’s behest is that of sub-contract payments only which in any case stands covered in the foregoing estimation of income being on debit side of the turnover. Same reasoning applies qua assessee’s audit fee payment without non- deduction of TDS as well. We quote hon'ble jurisdictional high court’s decision in Indwell Constructions Vs. CIT [232 ITR 776] (AP) that such disallowances/additions are no more exigible in case of estimation of gross receipts of an assessee. We lastly refer to hon'ble apex court’s landmark decision in Malabar Industrial Co. Vs. CIT [243 ITR 83] (SC) held that an assessment has to be fell erroneous as well as prejudicial to the interest of the Revenue; simultaneously, before the CIT or the PCIT; as the case may be, invokes his Section 263 revision jurisdiction. We accordingly are of the opinion that the learned PCIT has erred in law and on facts in exercising his Section 263 revision jurisdiction in both these assessment years. This impugned action to this effect stands reversed.
These assessee’s twin appeals are allowed in above terms. A copy of this common order be placed in the respective case files. Order pronounced in the open court on 24th January, 2022
Sd/- Sd/- ( A. MOHAN ALANKAMONY ) ( S.S. GODARA ) ACCOUNTANT MEMBER JUDICIAL MEMBER Hyderabad, Dated: 24-01-2022 TNMM
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Copy to : 1.M/s.Mech Engineers and Erectors P.Ltd., C/o.Shri M.V.Prasad, Chartered Accountant, D.No.60-7-13, Ground Floor, Siddhartha Nagar, 4th Lane, Vijayawada. 2.The Dy.Commissioner of Income Tax, Central Circle-2(1), Hyderabad. 3.PCIT-4, Hyderabad. 6 4.D.R. ITAT, Hyderabad. 5.Guard File.