ACIT, Coimbatore V. G. Narasimhan, Coimbatore

CO 195/CHNY/2013

• Counselvise Citation: [2014] 122 COUNSELVISE.COM (IT) 9353 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 10 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 05-03-2014
• Appeal Filed By: Assessee
• Bench Allotted: C
• Assessment Year: 2006-2007
• Appeal Filed On: 26-12-2013
• Court: TRIBUNAL
• Department Lawyers: T S V RAJAGOPAL
• Assessee Lawyers: T N BETGERI
• Keywords: Reopening of assessment; Non-deduction of tax
• Section: 147; 148

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI . . . , ! , ' # $ BEFORE DR. O.K. NARAYANAN, VICE PRESIDENT & SHRI VIKAS AWASTHY, JUDICIAL MEMBER I.T.A. NO. 2121/MDS/2013 & C.O. NO. 195/MDS/2013 ( IN ITA NO. 2121/MDS/2013 ) ASSESSMENT YEAR : 2006-07 ASST. COMMISSIONER OF INCOME TAX, CIRCLE-II, COIMBATORE VS SHRI G.NARASIMHAN, A-4, ANNA NAGAR HOUSING UNIT, EDAYARPALAYAM, COIMBATORE 641 025 [PAN: ABPPN 6573 R] (APPELLANT) (RESPONDENT/CROSS OBJECTOR) / APPELLANT BY : SHRI T.N.BETGERI, JCIT / RESPONDENT BY : SHRI T.S.V.RAJAGOPAL, CA / DATE OF HEARING : 05-03-2014 / DATE OF PRONOUNCEMENT : 05-03-2014 #% / O R D E R PER VIKAS AWASTHY, JUDICIAL MEMBER: THE APPEAL HAS BEEN FILED BY THE REVENUE AGAINST TH E ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-I, COIMBATO RE DATED 25-09-2013 RELEVANT TO THE ASSESSMENT YEAR (AY) 200 6-07. I.T.A. NO.2121/MDS/13 & C.O. NO. 195/MDS/13 :- 2 -: THE ASSESSEE HAS FILED CROSS-OBJECTIONS AGAINST THE ORDER OF THE CIT(APPEALS) UPHOLDING THE VALIDITY OF RE-AS SESSMENT PROCEEDINGS U/S.147 OF THE INCOME TAX ACT, 1961 (HE REIN AFTER REFERRED TO AS THE ACT). 2. THE ASSESSEE IS A CONTRACTOR. THE ASSESSEE FILE D HIS ORIGINAL RETURN OF INCOME FOR THE AY.2006-07 ON 31- 10-2006 DECLARING HIS INCOME AS ` 13,00,519/-. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND ASSESSMENT U/S.143(3) WAS COMPLETED ON 23-12-2008. DURING THE COURSE OF SCRU TINY ASSESSMENT, THE ASSESSEE HAD NOT SUBMITTED THE DETA ILED BREAK-UP OF LABOUR CHARGES AMOUNTING TO ` 1,16,55,297/-. SUBSEQUENTLY, ON 29-03-2010, I.E., MUCH AFTER THE C OMPLETION OF ASSESSMENT U/S.143(3), THE ASSESSEE GAVE A DETAILED BREAK-UP OF LABOUR CHARGES AMOUNTING TO ` 17,00,958/- FOR THE AY.2006-07. CONSEQUENTLY, NOTICE U/S.148 WAS ISSUED TO THE ASSE SSEE ON 30-03-2012. IN RESPONSE TO THE NOTICE, THE ASSESSE E VIDE LETTER DATED 06-04-2012, REQUESTED THE ASSESSING OFFICER T O TREAT THE ORIGINAL RETURN OF INCOME FILED BY THE ASSESSEE ON 31-10-2006 AS RETURN IN RESPONSE TO THE NOTICE U/S.148. THE ASSE SSEE VIDE LETTER I.T.A. NO.2121/MDS/13 & C.O. NO. 195/MDS/13 :- 3 -: DATED 06-04-2012 SOUGHT REASONS FOR RE-OPENING OF A SSESSMENT U/S.147. THE ASSESSING OFFICER VIDE COMMUNICATION DATED 24-08-2012, GAVE REASONS FOR RE-OPENING OF ASSESSME NT FOR THE AY.2006-07. ON 19-02-2012, THE ASSESSEE FILED OBJE CTIONS FOR RE-OPENING OF ASSESSMENT AFTER THE EXPIRY OF FOUR Y EARS. THE ASSESSING OFFICER WITHOUT DISPOSING OF THE OBJECTIO NS PROCEEDED ON TO PASS ASSESSMENT ORDER U/S.143(3) R.W.S.147 OF THE ACT. THE ASSESSING OFFICER VIDE ASSESSMENT ORDER DATED 14-12 -2012 HELD THAT THE ASSESSEE HAS NOT DEDUCTED TAX AT SOURCE ON THE PAYMENTS MADE TO THE JOB CONTRACTORS AMOUNTING TO ` 17,00,958/- AND THUS, MADE DIS-ALLOWANCE OF THE SAID AMOUNT U/S .40A(IA). AGGRIEVED AGAINST THE ASSESSMENT ORDER, THE ASSESSE E PREFERRED AN APPEAL BEFORE THE CIT(APPEALS). THE C IT(APPEALS) UPHELD THE RE-OPENING OF ASSESSMENT U/S.147 BUT ALL OWED THE APPEAL OF THE ASSESSEE ON MERITS BY FOLLOWING THE D ECISION OF THE HONBLE HYDERABAD BENCH OF THE TRIBUNAL IN THE CASE OF TEJA CONSTRUCTION VS. ACIT REPORTED AS 129 TTJ 57. I.T.A. NO.2121/MDS/13 & C.O. NO. 195/MDS/13 :- 4 -: AGGRIEVED AGAINST THE ORDER OF THE CIT(APPEALS), TH E REVENUE HAS COME IN APPEAL AGAINST DELETING OF THE ADDITION MADE U/S.40A(IA) FOR NON-DEDUCTION OF TAX AT SOURCE ON THE PAYMENTS MADE ON ACCOUNT OF LABOUR CHARGES. THE AS SESSEE HAS FILED CROSS-OBJECTIONS ASSAILING THE DECISION OF TH E CIT(APPEALS) UPHOLDING THE VALIDITY OF RE-ASSESSMENT PROCEEDINGS AFTER THE EXPIRY OF FOUR YEARS PERIOD. 3. SHRI T.N.BETGERI, APPEARING ON BEHALF OF THE REV ENUE SUBMITTED THAT DURING THE ORIGINAL ASSESSMENT PROCE EDINGS, THE ASSESSING OFFICER HAS REJECTED THE BOOKS OF ACCOUNT OF THE ASSESSEE. TWO YEARS THEREAFTER, THE ASSESSEE BROUG HT SOME EVIDENCES IN RESPECT OF LABOUR CHARGES AMOUNTING TO ` 17.00 LAKHS. THE PAYMENTS HAVE BEEN MADE TO SUB- CONTRACTORS. THE ASSESSEE WAS UNDER OBLIGATION TO DEDUCT TAX AT SOURCE ON THE PAYMENTS SO MADE. THE ASSESSING OFFI CER WAS WELL WITHIN HIS JURISDICTION TO INVOKE THE PROVISIO NS OF SECTION 148 AND MAKE DIS-ALLOWANCES OF THE EXPENDITURE ON WHICH TAX WAS NOT DEDUCTED BY THE ASSESSEE. I.T.A. NO.2121/MDS/13 & C.O. NO. 195/MDS/13 :- 5 -: 4. ON THE OTHER HAND, SHRI T.S.V.RAJAGOPAL, APPEARI NG ON BEHALF OF THE ASSESSEE SUBMITTED THAT THE CIT(APPEA LS) HAS ERRED IN REJECTING THE SUBMISSIONS OF THE ASSESSEE WITH R ESPECT TO THE JURISDICTION OF ASSESSING OFFICER IN INVOKING THE P ROVISIONS OF SECTION 147 AFTER THE EXPIRY OF FOUR YEARS. THE HO NBLE SUPREME COURT OF INDIA IN THE CASE OF GKN DRIVESHAFTS (INDIA) LTD. VS ITO REPORTED AS 259 ITR 19 (SC) HAS HELD THAT THE ASSESSING OFFICER IS DUTY BOUND TO DISPOSE OF THE OBJECTIONS, IF FILE D BY PASSING A SPEAKING ORDER BEFORE PROCEEDING WITH THE ASSESSMEN T. THE CIT(APPEALS) HAS BRUSHED ASIDE THE SUBMISSIONS OF T HE ASSESSEE BY STATING IT AS MERELY TECHNICAL. 5. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESENTATIVES OF BOTH THE SIDES. WE HAVE ALSO PE RUSED THE ORDERS OF THE AUTHORITIES BELOW AS WELL AS THE JUDG MENT OF THE HONBLE SUPREME COURT OF INDIA ON WHICH THE LD.AR H AS PLACED RELIANCE. IT IS A UN-DISPUTED FACT THAT RE-ASSESSM ENT PROCEEDINGS HAVE BEEN INITIATED AFTER THE EXPIRY OF FOUR YEARS. IT IS ALSO NOT DISPUTED THAT THE ASSESSEE HAD FILED OBJECTIONS AGA INST THE RE-OPENING OF ASSESSMENT U/S.147. HOWEVER, THE SAM E HAVE NOT I.T.A. NO.2121/MDS/13 & C.O. NO. 195/MDS/13 :- 6 -: BEEN DISPOSED OFF BY THE ASSESSING OFFICER BEFORE P ROCEEDING WITH THE ASSESSMENT. THUS, THERE IS A DEFECT IN TH E ASSESSMENT ORDER BUT THE SAME IS CURABLE. THE HONBLE APEX CO URT IN THE CASE OF GKN DRIVESHAFTS (INDIA) LTD. VS ITO (SUPRA) HAS HELD THAT AFTER THE RECEIPT OF THE REASONS FOR RE-OPENING, TH E ASSESSEE IS ENTITLED TO FILE OBJECTIONS TO THE ISSUANCE OF NOTI CE AND THE ASSESSING OFFICER IS DUTY BOUND TO DISPOSE-OFF THE SAME BY PASSING A SPEAKING ORDER. 6. IN THE INSTANT CASE, THE REASONS FOR RE-OPENING WERE COMMUNICATED TO THE ASSESSEE ON 24-08-2012. THE AS SESSEE FILED OBJECTIONS AGAINST RE-OPENING PROCEEDINGS ON 10-09-2012, BUT THE SAME WERE NOT DISPOSED BY THE ASSESSING OFF ICER. WE ARE OF THE CONSIDERED OPINION THAT THE ASSESSING OF FICER OUGHT TO HAVE DISPOSED OFF OBJECTIONS BEFORE PROCEEDING WITH THE ASSESSMENT. THERE HAS BEEN LAPSE ON THE PART OF TH E ASSESSING OFFICER IN NOT FOLLOWING THE PROPER PROCEDURE AS EN UNCIATED BY THE HONBLE SUPREME COURT OF INDIA. THE IMPUGNED ORDER IS SET ASIDE. THE MATTER IS REMITTED BACK TO THE FILE OF ASSESSING OFFICER TO FIRST DISPOSE-OFF THE OBJECTIONS OF THE ASSESSEE AGAINST I.T.A. NO.2121/MDS/13 & C.O. NO. 195/MDS/13 :- 7 -: RE-ASSESSMENT PROCEEDINGS IN ACCORDANCE WITH LAW BE FORE PROCEEDING FURTHER. THE APPEAL AS WELL AS THE CROS S-OBJECTIONS ARE ALLOWED FOR STATISTICAL PURPOSES IN THE AFORESA ID TERMS. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ON WEDNESDAY, THE 05 TH MARCH, 2014 AT CHENNAI. SD/- SD/- (DR. O.K. NARAYANAN) (VIK AS AWASTHY) VICE PRESIDENT JUDICIAL MEMBER DATED: 05 TH MARCH, 2014 TNMM COPY TO: ASSESSEE/AO/CIT(A)/CIT/DR