M/S R.R.D.DEVELOPERS ,GWLIOR vs. PR.CIT.,, GWALIOR

Upon perusal of assessment order, it could be seen that the assessee’s return of income was scrutinized and during the course of assessment proceedings, notices u/s 142(1) were issued from time to time which were duly been responded to by the assessee. Accepting the same, Ld. AO accepted the returned income of the assessee. The assessee acted as a land developer.

Subsequently, Ld. Pr. CIT, upon perusal of case records, observed that the assessee reflected deposits form customers for Rs.25.34 Crores on liabilities side of the Balance Sheet. The same were stated to be received against booking of flats. However, the Ld. AO did not verify the deposits by invoking the provisions of Sec.133(6) or Sec.131. The assessee claimed huge development expenses and material expenses but Ld. AO did not examine the same. Accordingly, the assessee was show-caused. The assessee refuted all these allegations and stated that the details of depositors were duly submitted by the assessee. The amount was received from customers and the same were not sundry creditors. The provisions of Sec.68 would not apply in such a case. On the issue of expenses, it was submitted that all the expenditure was capitalized in the books of accounts and therefore, there was no question of claiming any expenditure. However, Ld. Pr. CIT rejected the same and directed Ld. AO to verify above issues and reframe the assessment. Aggrieved, the assessee is in further appeal before us.

It could be observed that the assessee’s case was subjected to scrutiny. During the course of assessment proceedings, various queries were raised by Ld. AO calling for various documents and explanations which were duly been furnished by the assessee. Having satisfied with assessee’s claim, Ld. AO accepted the returned income. The assessee would not have control over the manner in which the assessment order has been drafted by Ld. AO. After due consideration of assessee’s replies and documents on record, Ld. AO accepted the claim of the assessee. It could very well be said that the flagged issues were well documented by the assessee and the same were duly been enquired into by Ld. AO during the course of assessment proceedings itself. After due consideration of assessee’s submissions, Ld. AO accepted the claim of the assessee with due application of mind. In our opinion, the allegations in the proposed revision are not well founded. The impugned order seeks to make fishing and roving enquiries only. No concrete finding has been rendered as to how the assessment was erroneous and prejudicial to the interest of the revenue which runs contrary to the decision of Hon’ble Delhi High Court in the case of ITO vs. DG Housing Projects Ltd. (20 Taxmann.com 587). In the present case, there is no finding on merits as to how the order was erroneous and prejudicial to the interest of the revenue. The mere advances as received by the assessee from its customers would not trigger the provisions of Sec.68. On the issue of expenditure, it was stated by the assessee that no expenditure was claimed by the assessee. Both these arguments have not been met on merits in the impugned order. This being so, the impugned revision of the order could not be sustained in law.