Shreeji Associates Vs PCIT (ITAT Ahmedabad)
ITAT Ahmedabad held that revisionary proceedings under section 263 of the Income Tax Act justified since PCIT correctly observed that the very basis of disallowance of depreciation was on an incorrect understanding of the facts by AO. Accordingly, revision order upheld.
Facts- The assessee is engaged in the business of real estate business and construction of residential bungalows. On perusal of Profit & Loss Account, the PCIT observed that the assessee had only one project namely Shree Hari Residency relating to construction of bungalows. PCIT observed that as against the revenue realized of Rs. 17,83,06,286/-, the assessee has offered revenue only of Rs. 15,52,60,818/- till 31.03.2017. Accordingly, the difference of Rs. 2,30,43,468/- should have been offered for taxation by the assessee as Revenue for the impugned assessment year.
On going through the case records, PCIT observed that the Assessing Officer neither made disallowance of depreciation with respect to the further portion let out by the assessee as per rent agreement nor any inquiry on this issue was made during the course of assessment proceedings.
Conclusion- Held that the assessee has specifically submitted that the balance revenue had been recognized by the assessee in subsequent years and hence no prejudice was caused to the Revenue. However, while passing the 263 order, the Ld. PCIT has not dealt with this aspect submitted by the assessee while holding the order to be erroneous and prejudicial to the interest of the Revenue. Further, we observe from the records placed before us that the Assessing Officer had made due enquiries with regards to the methodology of revenue recognition adopted by the assessee and there is apparently no lack of the enquiry on part of the Assessing Officer, on this aspect. Accordingly, looking into the facts of the instant case, we are of the considered view that so far as this issue is concerned, the assessment order cannot be held to be erroneous, in so far as prejudicial to the interest of the Revenue.
