Apurva International Vs PCIT (ITAT Surat)
Surat ITAT upheld the revisionary action u/s 263, holding that failure of the Assessing Officer to enquire into a glaring mismatch between turnover as per books and turnover as per TCS data renders the assessment order erroneous and prejudicial to the interest of Revenue.
The Assessee’s case was subject to search and centralized assessment. Although the Assessee disclosed turnover of ₹28.18 crore in its P&L account, TCS was collected on turnover of ₹35.12 crore, resulting in a difference of ₹9.45 crore, clearly reflected in the tax audit report (clause 34). Despite this, the AO completed assessment u/s 143(3) without raising any query on the discrepancy.
PCIT invoked Explanation 2 to Section 263, holding that absence of necessary enquiry itself deems the order erroneous. Before ITAT, Assessee argued that TCS was also collected on advances, but Tribunal held that such explanation ought to have been examined by AO during assessment, which was admittedly not done.
ITAT affirmed that 263 jurisdiction was validly assumed, upheld the PCIT’s direction to re-examine the turnover reconciliation, and clarified that AO shall confine enquiry only to the issues specified in the 263 order. Consequently, the assessee’s appeal was dismissed
FULL TEXT OF THE ORDER OF ITAT SURAT
