Case Law Details
Jumbo Electronics Corporation Pvt. Ltd. Vs PCIT (ITAT Mumbai)
ITAT Mumbai held that invocation of section 263 alleging difference in the receipt as per service tax return and ITR filed unsustainable as AO after making an enquiry on this issue has taken one of the plausible view and has not made addition on the difference amount.
Facts- Post completion of scrutiny assessment, PCIT invoked the provisions of section 263 of the Act for the reason that the assessment order passed by the AO was erroneous in so for as it is prejudicial to the interest of the revenue for the reason that the AO has failed to make enquiry/verification as to whether the assessee’s business was of the nature to accept Specified Business Notes (SBN) as per the Gazette Notification No. 2652 dated 08.11.2016 where the assessee has deposited ₹1,27,03,805/- by way of cash deposits during the demonetization period. The Ld. PCIT has also invoked the provisions of section 263 of the Act for the reasons that the Ld. AO has failed to enquire/verify that difference in the receipt as per service tax return and ITR filed by the assessee to the extent of ₹96,34,242/- has been reconciled by the assessee. The Ld. PCIT vide order dated 31.03.2022 has set aside the assessment order passed by the Ld. AO and directed the Ld. AO to frame de-novo assessment after conducting the requisite enquiries on the issue specified in the order of the Ld. PCIT.
Conclusion- Held that PCIT(A) has rightly invoked provisions of section 263 in holding that the assessment order is erroneous and prejudicial to the interest of the revenue, for the reason that the Ld. AO has failed to verify the issue of cash deposits made during the demonetization period by the assessee. Apart from the reply given by the assessee to the Ld. AO. ,we do not find any evidence such as bills, vouchers, invoices, etc furnished by the assessee to substantiate that the source of cash deposits were from the sales made by the assessee company. We do not find any infirmity in the order of the Ld. PCIT on this ground.
Held that PCIT has held that the assessee should have offered the turnover declared in the service tax return as income in P&L account which according to us is not sufficient reason to invoke section 263 of the Act where the AO after making an enquiry on this issue has taken one of the plausible view and has not made addition on the difference amount. It is also pertinent to point out that since the assessee has offered a higher income than what was reported in 26AS, there is no revenue leakage in this case. The twin conditions of section 263 of the Act as per the statute emphasizes that that the order passed by the Ld. AO should erroneous be and the same has to be prejudicial to the interest of the revenue, meaning thereby, there should have been loss of revenue.
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