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ITAT quashed proceedings u/s 263 (of Income Tax Act, 1961) as there was no escapement of income
ITAT quashed proceedings u/s 263 (of Income Tax Act, 1961) as there was no escapement of income
R. Narayana Reddy & Sons Constructions Pvt Ltd was into executing railways contracts. Income from other sources as admitted by assessee was added. CIT issued notice u/s 263 (of Income Tax Act, 1961) and excluded turnover of assessee’s two JVs. ITAT held that turnover relating to assessee and JV companies were reconciled and there was no escapement of income. It quashed the proceedings.-500653
1. R. Narayana Reddy & Sons Constructions Pvt. Ltd carried on business of railways contracts of South Central Railway
2. It filed its return of income admitting NIL income, which was processed u/s 143(1) (of Income Tax Act, 1961).
3. Its case was selected for scrutiny and notice u/s 143(2) (of Income Tax Act, 1961) issued.
4. It claimed loss of Rs.94,32,045 and had submitted self made vouchers which could not be verified.
5. AO rejected the books of account u/s 145 (of Income Tax Act, 1961) and net profit from contract works was estimated at 9% on the turnover.
6. The income from other sources as admitted by the assessee at Rs.2,51,323 was added to the income estimated as above.
7. Pr. CIT, on verification of the assessment records, noticed that issue of turnover and gross receipts were not examined by AO while completing assessment u/s 143(3) (of Income Tax Act, 1961).
8. It issued notice u/s 263 (of Income Tax Act, 1961).
9. ACIT allowed assessee’s claim while estimating the net profit on the turnover of assessee company alone and excluded the turnovers of the two Jvs.
10. CIT held that it was not correct on AO’s part to accept revised computation during the course of scrutiny proceeding without insisting on filing of revised return of income on the basis of the revised claim.
On appeal, the ITAT held as under:
11. In the given case, the turnover relating to assessee and JV companies were submitted before AO and also reconciled with the statutory form 16 filed by M/s FA CAO (Construction) and South Central Railway with books of the assessee and JV companies.
12. It demonstrates that there is no escapement of income or prejudicial to the interests of revenue. 13 Moreover, if we add the turnover of the JV companies to the assessee's gross turnover, it amounts to double taxation.
13. Accordingly, we hereby reject the observations of the Pr. CIT and quash the order passed by him u/s 263 (of Income Tax Act, 1961).
Case Reference - R. Narayana Reddy & Sons Constructions Pvt. Ltd vs Add. Commissioner of Income- Tax.
IN THE INCOME TAX APPELLATE TRIBUNAL
HYDERABAD BENCH "B", HYDERABAD
BEFORE SMT P.MADHAVI DEVI, ACCOUNTANT MEMBER
AND SHRI RIFAUR RAHAMAN, JUDICIAL MEMBER
ITA No. 796/Hyd/2015
(Assessment Year: 2011-12)
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