AL A S REAL ESTATE ANS DEVELOPERS P LTD,RATLAM vs. THE ITO -1 ,RATLAM, RATLAM

आदेश / O R D E R

Per B.M. Biyani, A.M.:

Feeling aggrieved by revision-order dated 27.03.2023 passed by learned Pr. Commissioner of Income-Tax, Indore-1 [“PCIT”] u/s 263 of Income-tax Act, 1961 [“the Act”], which in turn arises out of assessment-order dated 24.03.2021 passed by learned National e-assessment Centre, Delhi [“AO”] u/s 143(3) of the act for Assessment-Year [“AY”] 2018-19, the assessee has filed this appeal on the grounds raised in Appeal-Memo (Form No. 36).

Page 1 of 14

AL A S Real Estate and Developers P. Ltd., Ratlam vs. Pr. CIT-1, Indore ITA No. 181/Ind/2023 – AY 2018-19

assessee filed return of income of relevant AY 2018-19 declaring a total

income of Rs. Nil. The return was selected under scrutiny-assessment for

“verification of genuineness of expenses” and statutory notices u/s

143(2)/142(1) were issued. Ultimately, the AO completed assessment u/s

143(3) vide order dated 24.03.2021 accepting the returned income declared

by assessee. Subsequently, Ld. PCIT examined the record of assessment-

proceeding and viewed that the assessment-order passed by AO is erroneous

in so far it is prejudicial to the interest of revenue which attracts

revisionary-jurisdiction u/s 263. Accordingly, the PCIT issued show-cause

notice dated 04.03.2023 and finally passed revision-order dated 27.03.2023.

Aggrieved by such revision-order, the assessee has come in this appeal

before us.

notice to point out the premise on which the PCIT has conducted revision.

These paras are re-produced below:

“4. On perusal of Assessment records, it is found that during the course of scrutiny assessment the genuineness of the payment of Rs. 2,76,06,810/- done by the assessee company to the M/s. A.D. Enterprises, Prop. Nilima W/o Ashish Daniel has not been verified. The AO should have called for the complete vouchers details of the job work done by M/s. AD Enterpsies by referring the matter to the Verification Unit for physical verification but the AO failure to do so, resulted in the under assessment of income to the tune of Rs. 2,76,06,810/-. After going through the case history in the departmental ITBA database of the said case, it was observed that during the course of assessment proceedings, the assessee submitted its copy of bank statement showing the payment against job work done by the M/s. AD Enterprises, copies of TDS challan and ledger of M/s. AD Enterprises. It is evident from the documents presented by the assessee that the payment was done to M/s. AD Enterprises, but the fact remains unverified whether the work for which the payment to the tune of Rs. 2,76,06,810/- was made, actually done by M/s.

Page 2 of 14

AL A S Real Estate and Developers P. Ltd., Ratlam vs. Pr. CIT-1, Indore ITA No. 181/Ind/2023 – AY 2018-19

AD Enterprises or they were just bogus entries. It is also to be noted that M/s. AD Enterprises Prop. Nilima W/o Ashish Daniel did not file her ITR for the A.Y. 2018-19 despite receiving huge payments from the assessee. During the course of assessment proceedings M/s. AD Enterprises was issued notice u/s 133(6) but no response was received. Therefore, the expenses made by M/s. AD Enterprises of the job work viz. Moram filling, Chambers, Cement Concrete Road, boundary wall, drainage line etc. were still unverified.

assessee filed a detailed reply to Ld. PCIT in response to above show-cause

notice but the PCIT rejected assessee’s reply. Further, the PCIT also

observed that since the section 263 has been amended and Explanation 2 as

reproduced below had been introduced therein, the assessment-order is

deemed to be erroneous-cum-prejudicial to the interest of revenue if the

same had been passed without inquiries or verification which should have

been made:

“Explanation 2 – “For the purpose of this section, it is hereby declared that an order passed by the Assessing Officer shall be deemed to be erroneous in so far as it is prejudicial to the interest of revenue, if in the opinion of the Principal Commissioner or Commissioner - (a) The order is passed without making inquiries or verification which should have been made; (b) The order is passed allowing any relief without inquiring into the claim; (c) ….

Page 3 of 14

AL A S Real Estate and Developers P. Ltd., Ratlam vs. Pr. CIT-1, Indore ITA No. 181/Ind/2023 – AY 2018-19

(d) …”

that the PCIT has wrongly invoked revisionary action. To explain this, Ld. AR

firstly submitted that the assessment u/s 143(3) had been made by AO

which is ‘National e-assessment Centre’ as per procedure of a rigorous

verification evolved by Govt. and therefore, there is no question of lack of

bona fides on the part of AO. Secondly, the documents forming part of

assessment-record held on record clearly show that during the course of

assessment proceeding, the AO has issued several notices u/s 142(1) to

assessee and the assessee has also filed adequate replies. This is evident

from following documents filed in Paper-Book:

(a) Paper-Book Page 25-26:

The AO issued notice dated 18.12.2020 u/s 142(1) and raised three

specific queries to assessee, viz. (i) to submit financial statements

alongwith annexure and computation of income, (ii) to provide details

of all payments above Rs. 10,000/- at one time and Rs. 50,000/- in

aggregate, made to contractors giving name, PAN, current address,

phone number of the contractors alongwith comparative details of

payments made in current year, immediately preceding year and

subsequent year, and (iii) to provide the details of services rendered by

the contractors.

(b) Paper-Book Page 27:

Page 4 of 14

AL A S Real Estate and Developers P. Ltd., Ratlam vs. Pr. CIT-1, Indore ITA No. 181/Ind/2023 – AY 2018-19

The AO again issued notice dated 01.02.2021 u/s 142(1) requiring

assessee to provide details as per aforesaid notice dated 18.12.2020.

(c) Paper-Book Page 28-30:

The assessee filed reply on 04.02.2021. In Point No. 1 to 3 of reply,

the assessee filed complete details as required by AO. The assessee

submitted complete set of financial statements including P&L A/c and

annexures. The assessee also submitted specific details of M/s AD

Enterprises, PAN of proprietor Smt. Nilima as BAIPN1871M, Current

address and phone number of Smt. Nilima. The assessee also filed

details of payments made during current year, preceding year and

subsequent year to M/s AD Enterprises. The assessee also narrated

the details of services rendered by M/s AD Enterprises.

(d) Paper-Book Page 42-43:

The AO issued follow-up notice dated 09.02.2021 u/s 142(1) making

exclusive queries qua M/s AD Enterprise in Annexure to the said

notice, re-produced below:

Page 5 of 14

AL A S Real Estate and Developers P. Ltd., Ratlam vs. Pr. CIT-1, Indore ITA No. 181/Ind/2023 – AY 2018-19

(e) Paper-Book Page 44-94:

The assessee filed a detailed reply dated 12.02.2021 which is re-

produced below:

Page 6 of 14

AL A S Real Estate and Developers P. Ltd., Ratlam vs. Pr. CIT-1, Indore ITA No. 181/Ind/2023 – AY 2018-19

Page 7 of 14

AL A S Real Estate and Developers P. Ltd., Ratlam vs. Pr. CIT-1, Indore ITA No. 181/Ind/2023 – AY 2018-19

Page 8 of 14

AL A S Real Estate and Developers P. Ltd., Ratlam vs. Pr. CIT-1, Indore ITA No. 181/Ind/2023 – AY 2018-19

The assessee filed all documentary evidences as mentioned in the

above reply copies whereof are also filed in the Paper-Book. These

documents include complete Ledger A/c of M/s AD Enterprises as

extracted from books of assessee, bank statements from which

payments were made to M/s AD Enterprises and the TDS returns

showing deduction and remittance of TDS to Income-tax Department

out of payments made to M/s AD Enterprises.

assessee has filed all details/documents to AO. These contemporary

documents clearly show that it is not a case of “no enquiry” as alleged by Ld.

PCIT. Ld. AR submitted that the PCIT has wrongly mentioned in Para No.

3.1 of revision-order that the “assessing officer has not considered and

examined the issue for which the selection for scrutiny was made” whereas

the AO has clearly noted in Para No. 1 and 2 of assessment-order as under:

“1. The case was selected for Limited Scrutiny assessment under the e- assessment scheme, 2019 on the following issues:- S.No. Issues i. Verification of Genuineness of Expenses 2. On the above issue, no addition is made and the returned income of the assessee is accepted.” Ld. AR submitted that the above noting made in assessment-order by the

AO who happens to be the National e-assessment Centre, Delhi is very clear

and leaves no ambiguity at all. This noting coupled with all queries raised by

AO through various notices u/s 142(1) and replies filed by assessee, as

Page 9 of 14

AL A S Real Estate and Developers P. Ltd., Ratlam vs. Pr. CIT-1, Indore ITA No. 181/Ind/2023 – AY 2018-19

narrated in foregoing paragraph, clearly demonstrate that the AO has aptly

considered the item of scrutiny and after due consideration, did not make

any addition and accepted the returned income of assessee.

passed by PCIT is very much invalid in this case and the same must be

quashed.

submitted that the PCIT has noted certain vital aspects in revision-order,

namely (i) Smt. Nilima proprietor of M/s AD Enterprises has not filed any

income-tax return of AY 2018-19, (ii) The AO issued notice u/s 133(6) to

Smt. Nilima but no response was received. Therefore, the expenses made by

M/s AD Enterprises for job work remained unverified, and (iii) The AO could

have referred matter to the Verification Unit for physical verification but it

was not done. Ld. DR emphasized that the AO could have made further

enquiries for ascertaining genuineness of the claim made by assessee. Since

the AO has not stepped further, the PCIT was very much correct in holding

that the assessment-order is erroneous-cum-prejudicial to the interest of

revenue.

for assessee submitted that the AO was very much concerned with the

genuineness of payments made to M/s AD Enterprises and that is why

made repeat enquiries from assessee through series of notices u/s 142(1)

Page 10 of 14

AL A S Real Estate and Developers P. Ltd., Ratlam vs. Pr. CIT-1, Indore ITA No. 181/Ind/2023 – AY 2018-19

and the assessee also filed complete point-wise replies to AO; that all

payments to M/s AD Enterprises were made through banking channel and

the bank statements were duly filed; that the assessee deducted TDS and

filed copies of TDS returns/challans; that the assessee filed PAN, current

address and phone number of Smt. Nilima, proprietor of M/s AD

Enterprises enabling the AO to issue notice u/s 133(6). Ld. AR raised a

question that how the non-filing of income-tax return and non-response of

notice u/s 133(6) by Smt. Nilima, proprietor of M/s AD Enterprises is within

the control of assessee and how can assessee be punished for such failures

by Smt. Nilima? Ld. AR submitted that how the PCIT’s observation that due

to non-response to notice u/s 133(6), the “expenses made by M/s AD

Enterprises for job works remained unverified”, was relevant to assessee? Ld.

AR went on submitting that the assessee is engaged in the business of real

estate and the services in the nature of various job works like moram filling,

chambers, road, boundary wall, drainage line, etc. were very much required

by assessee and therefore taken from M/s AD Enterprises. Ld. AR raised

another question that without such services, how can one expect that the

assessee would be able to develop the required structures for real estate

business?

impugned order as well as the material held on record to which our

attention has been drawn. On a careful consideration, we find that the AO

has made a clear-cut finding in assessment-order Para No. 1 and 2 that the

Page 11 of 14

AL A S Real Estate and Developers P. Ltd., Ratlam vs. Pr. CIT-1, Indore ITA No. 181/Ind/2023 – AY 2018-19

issue of scrutiny namely “Verification of Genuineness of Expenses” has been

examined and no addition is made and the returned income is accepted.

This finding by AO is fully supported from various documents placed in the

Paper-Book as discussed in foregoing paras of this order, which clearly show

that the AO has issued multiple questionnaires u/s 142(1) and made repeat

enquiries to examine the expenses claimed by assessee in general and

payments made to M/s AD Enterprises in particular. The assessee also filed

complete replies to those questionnaires. To this extent, there cannot be any

dispute or rebuttal by revenue. Clearly, therefore, it is discernible that the

AO has considered those replies/submissions and thereafter taken a

plausible view. Further, the action of AO in accepting the replies/

submissions of assessee cannot not lack bona fides and cannot be said to be

faulty specially when the assessment of assessee has been made by National

e-assessment Centre, Delhi. With regard to various objections raised by

PCIT in revision-order and also contended by Ld. DR qua M/s AD

Enterprises, we find that the Ld. AR for assessee is very much correct in

arguing that the assessee filed complete point-wise replies to AO; that all

payments were made through banking channel and bank statements were

duly filed; that the assessee deducted TDS and filed copies of TDS returns/

challans; that the assessee filed PAN, current address and phone number of

Smt. Nilima, proprietor of M/s AD Enterprises. In fact, the assessee has also

filed details of payments made to M/s AD Enterprises not only in current

year but also the payments made in preceding year and subsequent year.

Page 12 of 14

AL A S Real Estate and Developers P. Ltd., Ratlam vs. Pr. CIT-1, Indore ITA No. 181/Ind/2023 – AY 2018-19

Ld. AR is also justified in submitting that non-filing of income-tax return

and no response of the notice u/s 133(6) by Smt. Nilima is not under the

control of assessee and the assessee cannot be punished for this. The

submission of Ld. AR that the assessee is engaged in the business of real

estate and the services taken from M/s AD Enterprises in the nature of

various job works like moram filling, chambers, road, boundary wall,

drainage line, etc. were very much required by assessee to build the

structures, is also meritorious. We may mention here that the assessee has

deducted substantial amount of TDS from payments made to M/s AD

Enterprises, remitted the proceeds of TDS to income-tax department and

also filed statutory returns of TDS giving each item of payment, TDS etc.

against the payee M/s AD Enterprises. The TDS returns also contain PAN of

Smt. Nilima proprietor of M/s AD Enterprises. The PAN so mentioned is

verified and accepted as valid and correct by TDS Wing of Income-tax

Department and that is why they have not created demand of higher

amount of TDS u/s 206AA of the Act. Therefore, just by saying that the

payee has not filed income-tax return, the authorities cannot punish the

assessee. So far as non-response of notice u/s 133(6) is concerned, the

assessee has very much discharged his duty by providing current address

and current phone number of M/s AD Enterprises which has enabled the

AO to issue notice u/s 133(6). But thereafter, non-response by the payee to

the statutory notice directly issued by AO, is not within the reach and

control of assessee. Hence, we are unable to understand as to how the

Page 13 of 14

AL A S Real Estate and Developers P. Ltd., Ratlam vs. Pr. CIT-1, Indore ITA No. 181/Ind/2023 – AY 2018-19

assessment-order of assessee can be considered as erroneous for no fault of

assessee.

persuaded to hold that the facts of the present case do not warrant

application of section 263. Therefore, the revision-order passed by Ld. PCIT

is not a valid order. We, thus, quash the revision-order and restore the

original assessment-order passed by AO. The assessee succeeds in this

appeal.

Order pronounced in open court on 08.02.2024.

Sd/- sd/- (VIJAY PAL RAO) (B.M. BIYANI) JUDICIAL MEMBER ACCOUNTANT MEMBER Indore िदनांक /Dated : 08.02.2024 CPU/Sr. PS Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPYAssistant Registrar Income Tax Appellate Tribunal Indore Bench, Indore

Page 14 of 14