H.KANNAN,MADURAI vs. ACIT NON CORPORATE CIRCLE 2, MADURAI

O R D E R

PER DUVVURU RL REDDY, JUDICIAL MEMBER:

1. The impugned order is barred by limitation as the order was despatched only on 05.04.2019 and received by the assessee on 06.04.2019.

2. The impugned order is illegal and invalid as notice under section 263 was issued on one ground but the order was passed on different ground without giving notice to the assessee.

2.1 On examination of assessment records, the ld. PCIT observed that the assessee had shown the contract receipts of ₹.35,11,55,068/- in the profit and loss account and the same was accepted in the assessment order. However, As per Form 26AS, the total contract receipts were ₹.42,97,03,041/- and TDS was ₹.53,48,216/-. Thus, the difference amount of ₹.7,85,46,973/- [₹.42,97,03,041 – ₹.35,11,55,068] was found omitted to be added to the assessed income of the assessee while passing assessment order. Since the above assessment order is erroneous and prejudicial to the interest of Revenue, a show-cause notice was issued and served on 28.09.2018. The AR of the assessee Shri SL. Sethumadava, CA filed a reply to the show-cause notice in letter dated 04.10.2018. Subsequently, the assessee’s AR Shri Sethumadava submitted additional details of show cause notice related in the letter dated 12.02.2019. Since the reconciliation statement for the variation between the contract receipts as per profit and 3 loss account and aggregate contract receipts as per Form 26AS have not been properly enquired and verified and the difference, if any, was not brought to tax, the ld. PCIT set aside the assessment order and directed the Assessing Officer to frame the assessment afresh after making necessary enquiries and verification.

3. The assessee is in appeal before the Tribunal against the order passed under section 263 of the Act raising various grounds as reproduced hereinabove.

5.1 The next grounds raised by the assessee are that the impugned order is illegal and invalid as notice under section 263 of the Act was issued on one ground, but the order was passed on different ground without giving fresh notice to the assessee. Under section 263 of the Act, the assessee was show-caused to file reply with regard to the variation between the contract receipts as per profit and loss account and aggregate contract receipts as per Form 26AS. On examination of the assessment records, the ld. PCIT has noticed that the conciliation statement filed before him for the variation between the contract receipts as per profit and loss account and aggregate contract receipts as per Form 26AS was also filled by the assessee before the Assessing Officer. From the reconciliation statement, the ld. PCIT noted in respect of party in Sl.No. 19 [Velammal Medical College] that as against the sale bill of ₹.3,46,46,850/-, the assessee has accounted the sale of ₹.1,55,21,027/- in the profit and loss account, wherein, the price difference of ₹.1.08 crores has been claimed, despite the fact that the party had paid ₹.3.5 crores by deducting TDS. Similarly, in respect of number of parties, the sale value has been reduced from sales, with the narration of “ceded as discount there is no chances of recovery” running into lakhs of rupees though they were not part of Form 26AS. From the above, we find that the ld. PCIT has rightly observed that the reconciliation statement filed on record was not examined by the Assessing Officer and thus, the assessment order is erroneous and prejudicial to the interest of Revenue. The reduction of sale value by the amount purported to be not recoverable amounted to writing off of bad debts, which stood allowed in absence of any examination or inquiry by the Assessing Officer and thereby, the ld. PCIT directed the Assessing Officer to frame the assessment afresh after making necessary enquiries and verification. The entire findings of the ld. PCIT are totally related to the ground for which the notice under section 263 of the Act was issued and he has not deviated or taken any new/fresh ground while passing order under section 263 of the Act. Thus, ground No. 2 & 3 raised by the assessee are dismissed.