S.Balamurali, CHENNAI V. ACIT, Coimbatore

CO 173/CHNY/2012

• Counselvise Citation: [2013] 122 COUNSELVISE.COM (IT) 8668 (ITAT-CHENNAI)
• Duration Of Justice: 7 month(s) 1 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 03-06-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 03-06-2013
• Assessment Year: 2005-2006
• Appeal Filed On: 01-11-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Difference of opinion; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 143(3); 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ITA NO. 1815 /MDS/201 2 & C.O.NO.17 3/MDS/2012 ( IN ITA NO.1815/MDS/2012) (ASSESSMENT YEAR : 2005-06) ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-III, 63, RACE COURSE ROAD, COIMBATORE-641 018. VS. MR. S.BALAMURALI, 7/53, NADAR COLONY, PODANUR, COIMBATORE-641 023. PAN:AENPB9209F (APPELLANT) (RESPONDENT/CROSS OBJECTOR) APPELLANT BY : MRS. RUBY GEORGE, CIT RESPONDENT BY : MR. T.N.SEETHARAMAN, ADVOCATE DATE OF HEARING : 3 RD JUNE, 2013 DATE OF PRONOUNCEMENT : 3 RD JUNE, 2013 O R D E R PER CHALLA NAGENDRA PRASAD, JM : THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-I, COIM BATORE DATED 19.07.2012 FOR THE ASSESSMENT YEAR 2005-06. 2. THE REVENUE HAS RAISED THE FOLLOWING TWO EFFECTI VE GROUNDS:- 1. THE CIT(A) OUGHT TO HAVE CONSIDERED THAT THE ADDITION OF ` 99,640/- WAS MADE FOR NON-PRODUCTION OF VOUCHERS BEFORE THE ASSESSING OFFICER AT THE TIME OF ASSESSMENT PROCEEDINGS. ITA NO.1815/MDS/2012 & C.O. NO.173/MDS/2012 2 2. THE CIT(A) ERRED IN IGNORING THE SUBMISSIONS MADE BY THE ASSESSING OFFICER THAT THE ISSUE OF NON-DEDUCTION OF TDS ON LORRY FREIGHT CAME TO HIS NOTICE ONLY SUBSEQUENTLY AND HENCE THE ASSESSMENT WAS REOPENED AND ASSESSMENT COMPLETED. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL FILED RETURN OF INCOME ON 28.12.2006 ADM ITTING TOTAL INCOME OF ` 5,05,780/-. THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) ON 30.11.2007 DETERMINING INC OME AT ` 6,05,420/-. WHILE COMPLETING THE ORIGINAL ASSESSMEN T, THE ASSESSING OFFICER DISALLOWED ` 99,640/- REPRESENTING LORRY FREIGHT INCURRED BY THE ASSESSEE ON THE GROUND THA T THE ASSESSEE DID NOT PRODUCE VOUCHERS FOR SUCH PAYMENTS . SUBSEQUENTLY, ASSESSMENT WAS REOPENED UNDER SECTION 147 AND THE REASSESSMENT WAS COMPLETED UNDER SECTION 14 3(3) READ WITH SECTION 147 ON 20.09.2011. WHILE COMPLET ING THE REASSESSMENT, THE ASSESSING OFFICER DISALLOWED ` 1,17,85,285/- REPRESENTING LORRY FREIGHT INCURRED BY THE ASSESSEE ON THE GROUND THAT THE ASSESSEE DID NOT DE DUCT TDS ON SUCH LORRY FREIGHT INCURRED BY HIM, THUS T HE ITA NO.1815/MDS/2012 & C.O. NO.173/MDS/2012 3 ASSESSING OFFICER DISALLOWED THE SAID EXPENDITURE U NDER SECTION 40(A)(IA) OF THE ACT. ON APPEAL, THE COMMI SSIONER OF INCOME TAX (APPEALS) HELD THAT THE REASSESSMENT MAD E BY THE ASSESSING OFFICER UNDER SECTION 147 IS VOID, AB INITIO AND HENCE THE ASSESSMENT ORDER IS QUASHED BY HIM. AGAIN ST THIS ORDER, THE REVENUE IS IN APPEAL BEFORE US. 4. THE DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT T HE DISALLOWANCE MADE BY THE ASSESSING OFFICER IN THE O RIGINAL ASSESSMENT TOWARDS FREIGHT CHARGES IS ENTIRELY DIFF ERENT ISSUE AND THE ISSUE BEFORE THE ASSESSING OFFICER IN THE REASSESSMENT PROCEEDINGS WAS NON-DEDUCTION OF TDS O N FREIGHT CHARGES. THE DEPARTMENTAL REPRESENTATIVE SU BMITS THAT THE REOPENING OF ASSESSMENT BY THE ASSESSING O FFICER IS JUSTIFIED. THE DEPARTMENTAL REPRESENTATIVE SUPPORTS THE ORDER OF THE ASSESSING OFFICER. 5. THE COUNSEL FOR THE ASSESSEE RELIED ON THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS). THE COUNSEL F OR THE ASSESSEE SUBMITS THAT THE ASSESSMENT WAS REOPENED ITA NO.1815/MDS/2012 & C.O. NO.173/MDS/2012 4 BEYOND FOUR YEARS AND THERE IS NO FAILURE ON THE P ART OF THE ASSESSEE TO FURNISH THE INFORMATION REQUIRED FOR C OMPLETION OF ASSESSMENT AND IN THE ABSENCE OF ANY FAILURE ON THE PART OF THE ASSESSEE IN PROVIDING NECESSARY INFORMATION FO R COMPLETION OF ASSESSMENT, REOPENING OF ASSESSMENT U NDER SECTION 147 IS BAD IN LAW, IN VIEW OF THE PROVISO T O SECTION 147 OF THE ACT. 6. HEARD BOTH SIDES. PERUSED THE ORDERS OF LOWER AUTHORITIES. ADMITTEDLY THE ASSESSMENT WAS REOPENE D BEYOND FOUR YEARS FROM THE END OF THE RELEVANT ASSE SSMENT YEAR. THE REVENUE HAS NOT BROUGHT ON RECORD TO SHOW THAT THERE WAS ANY FAILURE ON THE PART OF THE ASSESSEE I N FURNISHING NECESSARY INFORMATION FOR COMPLETION OF ASSESSMENT WITH REGARD TO THE DISALLOWANCE MADE UNDER SECTION 40(A) (IA) OF THE ACT. THE ISSUE HAS BEEN ELABORATELY CONSIDERED BY THE COMMISSIONER OF INCOME TAX (APPEALS) IN HIS ORDER AND CAME TO THE CONCLUSION THAT THERE IS NO FAILURE ON THE PART OF THE ASSESSEE IN FURNISHING NECESSARY INFORMATION F OR COMPLETION OF ASSESSMENT. IT WAS THE FINDING OF THE ITA NO.1815/MDS/2012 & C.O. NO.173/MDS/2012 5 COMMISSIONER OF INCOME TAX (APPEALS) THAT IT IS ONL Y MERE CHANGE OF OPINION OF THE ASSESSING OFFICER IN REOPE NING THE ASSESSMENT. BY HOLDING SO, THE COMMISSIONER OF IN COME TAX (APPEALS) HAS HELD AS UNDER:- 5 . I HAVE GONE THROUGH THE SUBMISSIONS MADE BY THE APPELLANT AND THE ORDER OF THE ASSESSING OFFICER . THE ORIGINAL ASSESSMENT FOR THE ASSESSMENT YEAR 2005-06 IN THE CASE OF THE APPELLANT WAS COMPLETED U/S 143(3) OF THE INCOME TAX ACT ON 30.11 . 2007. AS SEEN F R OM THE ASSESSMENT ORDER, THE ASSESSING OFF I CER EXAMINED THE BOOKS OF ACCOUNT AND VOUCHERS AND FOUND THAT VOUCHERS ON LORRY FREIGHT PAID AMOUNTING TO RS.99,640/- BEING N OT PRODUCED , MADE AN ADDITION U/S 143(3) OF THE INCOME TAX ACT. IN THE ASSESSMENT ORDER , IT WAS ALSO STATED THAT SINCE THE AUDIT REPORT WAS FILED LATE, PENALTY U/S 271B WAS INITIATED UNDER THE INSTRUCTIONS OF THE ADDITIONAL COMMISSIONER OF INCOME TAX . W H ILE REOPENING THE ASSESSMENT U/S 148, THE ASSESSING OFF I CER IN THE ORDER SHEET MENTIONED THAT 'IN THE 44AB REPORT, IT IS SEEN VIDE COLUMN 27(B) THAT THE ASSESSEE WAS LIABLE T O DEDUCT TAX AT SOURCE AMOUNTING TO ` 1,17,852/- WH I CH HAS NOT BEEN DONE . IN TERMS OF PROVISIONS CONTAINED IN SECTION 40(A)(IA), ANY PAYMENT TO S UB- CONTRACTOR ON WHICH TDS IS DEDUCTIBLE AND WHICH HAS NOT BEEN DEDUCTED SHALL NOT BE DEDUCTIBLE IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE FOR THE RELEVANT ASSESSMENT YEAR. AS SO FAR AS THE PROVISION CONTAINED IN 147 OF THE INCOME- TAX ACT, I HAVE REASON TO BELIEVE THAT INCOME ASSESSABLE TO TAX HAD ESCAPED ASSESSMENT AND AS ASSESSMENT WAS ALREADY COMPLETED U/S 143(3) THE ASSESSMENT NEEDS TO BE REOPENED FOR REASSESSMENT' . ITA NO.1815/MDS/2012 & C.O. NO.173/MDS/2012 6 6 . DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AR OF THE ASSESSEE FILED THE DETAILED WRITTEN SUBMISSION STATING THAT HE HAS NOT ENTERED I NTO ANY AGREEMENT / CONTRACT BY HIRING TRUCKS ON A REGULAR BAS I S . AS AND WHEN REQUIRED THE APPELLANT USED TO HIRE TRUCKS FROM THE OPEN MARKET AND DIRECTLY PAY THE CHARGES TO THE TRUCK DRIVERS FOR THE RESPECTIVE TRIPS . HENCE , THERE WAS NO REQUIREMENT TO DEDUCT TAX AT SOURCE AS SUCH PAYMENTS WERE LESS THAN RS . 2,500/- . THE ID.AR RELIED ON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS KELVINATOR OF INDIA L I M I TED (2010) 320 ITR 561 . THE ASSESSMENT WAS REOPENED U/S 147 AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR 2005 - 06 EVEN THOUGH THE ASSESSMENT U/S 143(3) WAS COMPLETED FOR THE ASSESSMENT YEAR 2005-06 ON 30 . 11.2007 . FROM THE REASONS RECORDED BY THE ASSESSING OFFICER, IT IS VERY CLEAR THAT THERE WAS NO FAILURE ON THE PART OF THE ASSESSEE IN FURNISHING ALL THE RELEVANT DETAILS INCLUDING THE TAX AUDIT REPORT U/S 44AB OF THE INCOME TAX ACT . IN MY OPINION, THE REOPENING OF THE ASSESSMENT CLEARLY IS A CHANGE OF OPINION BY THE ASSESSING OFFICER . 7. IN THE ORIGINAL ASSESSMENT ORDER DATED 30 . 11 . 2007 , THE ASSESSING OFFICER HAS VERIFIED THE BOOKS AND VOUCHERS OF LORRY FREIGHT. THE ASSESSING OFF I CER HAS NO POWER TO REVIEW. THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS KELVINATOR OF INDIA LIMITED HAS CLEARLY HELD THAT THE ASSESS I NG OFFICER HAS NO POWER TO REOPEN THE ASSESSMENT ON THE BASIS OF MERE CHANGE OF OPINION. RESPECTFULLY FOLLOWING THE DECISION OF THE APEX COURT , THE I N I TIATION OF PROCEEDINGS U/S 147 ARE HELD AS VOID AB I NITIO AND HENCE THE ASSESSMENT ORDER IS QUASHED. THESE GROUNDS OF APPEAL ARE ALLOWED . ITA NO.1815/MDS/2012 & C.O. NO.173/MDS/2012 7 7. ON GOING THROUGH THE ORDER OF THE COMMISSIONER O F INCOME TAX (APPEALS), WE FIND THAT THERE IS NO GOOD REASON TO INTERFERE WITH THE ORDER OF THE COMMISSIONER OF INC OME TAX (APPEALS) IN QUASHING THE REASSESSMENT ORDER PASSED UNDER SECTION 147 IN THE ABSENCE OF ANY FAILURE ON THE PA RT OF THE ASSESSEE IN FURNISHING NECESSARY INFORMATION IN COM PLETING THE ORIGINAL ASSESSMENT. THE REVENUE ALSO DID NOT R EBUT THE FINDINGS OF THE COMMISSIONER OF INCOME TAX (APPEALS ). THERE IS NO MATERIAL PLACED ON RECORD TO SUGGEST THAT THE ASSESSEE FAILED TO FURNISH NECESSARY INFORMATION FOR COMPLET ION OF ASSESSMENT. IN THE CIRCUMSTANCES, WE UPHOLD THE ORD ER OF THE COMMISSIONER OF INCOME TAX (APPEALS). THE GROUNDS R AISED BY THE REVENUE ARE REJECTED. 8. AS WE ARE UPHOLDING THE ORDER OF THE COMMISSIONE R OF INCOME TAX (APPEALS), THE CROSS OBJECTION FILED BY THE ASSESSEE IN SUPPORT OF THE ORDER OF THE COMMISSIONE R OF INCOME TAX (APPEALS) BECOMES INFRUCTUOUS AND THE S AME IS DISMISSED ACCORDINGLY. ITA NO.1815/MDS/2012 & C.O. NO.173/MDS/2012 8 9. IN THE RESULT, THE APPEAL OF THE REVENUE AND THE CROSS OBJECTION OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON MONDAY, THE 3 RD DAY OF JUNE, 2013, CHENNAI. SD/- SD/- (ABRAHAM P.GEORGE ) (CHALLA NAG ENDRA PRASAD) ACCOUNTANT MEMBER J UDICIAL MEMBER CHENNAI, DATED THE 3 RD JUNE, 2013. SOMU COPY TO: (1) ASSESSEE (4) CIT (A) (2) A.O. (5) D.R. (3) CIT (6) G.F.