Hanuman Sahakari Ddh Utpadak Sanshta Maryadit, Pune V. Income-tax Officer,

CO 62/PUN/2014

• Counselvise Citation: [2015] 123 COUNSELVISE.COM (IT) 0445 (ITAT-PUNE)
• Duration Of Justice: 10 month(s) 19 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 18-03-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 29-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Recovery proceedings; Business income; Opportunity of being heard; Audit objection; Wrong claim; Difference of opinion; Assessment record; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 143(3); 234B; 194C; 201(1); 147; 148; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE MS. SUSHMA CHOWLA, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NOS. 2436 TO 2438/PN/2012 (ASSESSMENT YEARS : 2005-06, 2006-07 & 2008-09) ITO, WARD-9(2), PUNE .. APPELLANT VS. HANUMAN DUDH UTPADAK SANSTHA MARYADIT, CHIKHALGAON, AT YENIYE (BK), TALUK : KHED, DIST : PUNE .. RESPONDENT PAN NO.AAAAH0798M CO NOS. 62 TO 64/PN/2014 (ASSESSMENT YEARS 2005-06, 2006-07 & 2008-09) HANUMAN DUDH UTPADAK SANSTHA MARYADIT, CHIKHALIGAON, AT YENIYE (BK), TALUK : KHED, DIST : PUNE-410505 .. CROSS OBJECTOR PAN NO.AAAAH0798M VS. ITO, WARD-9(2), PUNE .. APPELLANT IN THE APPEAL ITA NO.2135/PN/2013 (ASSESSMENT YEAR 2007-08) HANUMAN DUDH UTPADAK SANSTHA MARYADIT, CHIKHALIGAON, AT YENIYE (BK), TALUK : KHED, DIST : PUNE-410505 .. APPELLANT PAN NO.AAAAH0798M VS. ITO, WARD-9(2), PUNE .. RESPONDENT 2 ASSESSEE BY : SHRI PRAMOD SHINGTE REVENUE BY : SHRI RAJESH DAMOR DATE OF HEARING : 06-01-2015 DATE OF PRONOUNCEMENT : 18-03-2015 ORDER PER R.K. PANDA, AM: ITA NOS. 2436 TO 2438/PN/ 2012 FILED BY THE REVENUE AND AND CO NOS. 62 TO 64/PN/2014 FILED BY THE ASSESSEE ARE DIRECTED AGAINST THE SEPARATE ORDERS DATED 29-09-2012 OF THE CIT(A)-V, PUNE RELATING TO ASSESSMENT YEARS 2005-06, 2006-07 AND 2 008-09 RESPECTIVELY. ITA NO. 2135/PN/2013 FILED BY THE AS SESSEE IS DIRECTED AGAINST THE ORDER DATED 30-11-2013 OF THE CIT(A)-V, PUNE RELATING TO ASSESSMENT YEAR 2007-08. FOR THE SAKE OF CONVENIENCE, ALL THESE WERE HEARD TOGETHER AND ARE BEING DISPOSE D OF BY THIS COMMON ORDER. ITA NO.2438/PN/2012 (BY REVENUE) AND CO NO.64/PN/20 14 (BY ASSESSEE) (A.Y. 2008-09) : 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS A COOPERATIVE SOCIETY ENGAGED IN THE ACTIVITIES OF SA LE OF MILK TO KATRAJ DAIRY (FEDERAL SOCIETY). IT ALSO CARRIES ON TRANSPORT BUSINESS. IT FILED ITS RETURN OF INCOME ON 24-12-2009 DECLARI NG TOTAL INCOME OF RS.9,330/-. SUBSEQUENTLY, THE THEN AO ISSUED NOTIC E U/S.148 ON 15- 09-2010 BY OBSERVING AS UNDER : 3 AS PER ITS DATA FOR F.Y. 2007-08 FOR THE PAN WHERE NO IT RETURNS EXISTS AS PER AST LIST RECEIVED FROM CCIT, PUNE VIDE LE TTER DATED 08- 07-2010, IT APPEARS THAT THE ASSESSEE SOCIETY HAS RECEIVED PAYMENT OF RS.87,25,173/- ON WHICH TDS HAS BEEN DEDUCTED BY T AX DEDUCTOR FOR RS.1,96,918/-. HOWEVER, ASSESSEE HAS DISCLOSED RECEIPT S OF RS.18,07,195/- IN THE RETURN OF INCOME FILED ON 24-1 2-2009 FOR A.Y. 2008-09. THEREFORE, ASSESSEE HAS NOT DISCLOSED THE RECEI PTS OF RS.69,17,978/- (87,25,173 18,07,195). THE AO FURT HER OBSERVED THAT THE INCOME CHARGEABLE TO TAX TO THE EXTENT OF RS.69,17,978/- HAS ESCAPED ASSESSMENT. 2.1 DURING THE COURSE OF ASSESSMENT PROCEEDINGS, TH E AO ASKED THE ASSESSEE TO EXPLAIN AS TO WHY THIS DIFFERENCE I N RECEIPT OF RS.69,17,978/- SHOULD NOT BE ADDED TO THE TOTAL INC OME OF THE ASSESSEE. IN RESPONSE TO THE SAME, THE ASSESSEE VI DE LETTER DATED NIL REPLIED AS UNDER WHICH HAS BEEN INCORPORATED BY THE AO IN THE BODY OF THE ASSESSMENT ORDER AND WHICH READS AS UND ER : .OUR SOCIETY IS PRIMARILY A MILK PRODUCERS SOCIETY & ACTING AS AN AGENT OF KATRAJ DAIRY FOR COORDINATING & MANAGING M ILK TRANSPORT FROM VILLAGE AREAS NEARBY CHIKHALGAON TO KATRAJ DAIR Y AND DISTRIBUTION OF TRANSPORT CHARGES ON BEHALF OF KATRAJ DAIRY, I.E. FEDERAL SOCIETY. OUR SOCIETY IS NOT DOING/PROVIDING TRANSPORT ACTIVITY . SOCIETY COORDINATE THE TRANSPORT WORK OF KATRAJ DAIRY FRO WHICH OUR SOCIETY GETS 1% COMMISSION. THERE IS NO TR ANSPORT CHARGES DEBITED TO P & L A/C OR NO TRANSPORT INCOME CREDITED TO P & L A/C . THE AMOUNT RECEIVED FROM KATRAJ DAIRY IS CRE DITED TO RECEIPT SIDE OF RECEIPTS & PAYMENT A/C AND AMOUNT DISTRIBUTED IS DEBITED TO PAYMENT SIDE OF RECEIPTS & PAYMENT A/C ( I.E. TRI AL BALANCE ) ........SO THE QUESTION OF APPLICATION OF SECTION 19 4C , SECTION 40(A) DOES NOT ARISES IN THIS CASE. ALSO AMOUNT OF REFUND RE CEIVED IS DISTRIBUTED TO THAT TRANSPORTERS AFTER THE RECEIPTS OF REFUND AMOUNT FROM I T DEPARTMENT.' 2.2 SUBSEQUENTLY, THE ASSESSEE VIDE ANOTHER LETTER DATED 09-02- 2011 SUBMITTED AS UNDER : 'THE SOCIETY IS A PRIMARY MILK PRODUCER'S SOCIETY I.E . PURCHASING OF MILK FROM MEMBERS AND SELLING IT TO KATRAJ DAIRY AND ALSO DOING COMMISSION AGENCY WORK OF KATRAJ DAIRY OF MILK TRANSP ORTING ACTIVITY I.E COLLECTING OF MILK OF OTHER SMALL DAIR IES IN VILLAGE-VASTI AREA & TRANSPORTING THE COLLECTED MILK THROUGH TRAN SPORTERS TO KATRAJ DAIRY AT THEIR CHILLING CENTRE. SOCIETY MANA GE & COORDINATE 4 THE TRANSPORT WORK OF KATRAJ DAIRY . TRANSPORT CHARG ES PAYABLE TO VARIOUS TRANSPORTERS ON BEHALF OF KATRAJ DAIRY IS DIST RIBUTED TO TRANSPORTERS AFTER RECEIPT FROM KATRAJ DAIRY. SO WH ATEVER TURNOVER OF TRANSPORT CHARGES IS SHOWN IN RECEIPT & PAYMENT A/ C OF SOCIETY . THE EXPENSES HAVE BEEN CLAIMED BY KATRAJ DAIRY HENCE THEY ARE MAKING TDS . BUT THERE ARE NUMBER OF TRANSPORTERS AN D ALL ARE SITUATED IN HILLY AREA & VILLAGES , IT IS NOT POSSIB LE TO KEEP CONTROL FOR KATRAJ DAIRY, HENCE THEY CANNOT INDIVIDUALLY KEEP R ECORD & CONTROL OVER THE TRANSPORTERS, SO FOR THE TRANSPORT PAYMENT KAT RAJ DAIRY DO TDS . WHEN SOCIETY GET REFUND FROM INCOME-TAX TH E SOCIETY IN TURN REFUND IT TO TRANSPORTERS AS PER THEIR AMOUNT STAN DING TO ANAMAT A/C. AS PER CALAUSE 4 IN YOUR LETTER TRANSPORT CHARGES AMOUNT OF RS. 87,25,1737-IS RECEIVED FROM KATRAJ DAIR Y WHICH IS IN TURN HAVE TO DISTRIBUTE TO THE TRANSPORTERS, AS WE ARE MANAGING THE TRANSPORTER WORK OF KATRAJ DAIRY AS A COMMISSION AGENT. THE RECEIVED AMOUNT OF TRANSPORT CHARGES IS NOT OUR INCOME AT ALL. SO IT IS NOT CREDITED TO OUR INCOME SIDE AND WHATEVER TRANSP ORT CHARGES RECEIVED ARE DISTRIBUTED TO THE TRANSPORTERS WHICH ARE NOT OUR EXPENSES. THE TRANSPORT EXPENSES HAVE BEEN DEBITED IN KA TRAJ DAIRY'S A/C . FOR MANAGING THE TRANSPORT ACTIVITY SOCI ETY GETS 1% COMMISSION ON TRANSPORT CHARGES PAID BY KATRAJ DAIRY. D URING THE YEAR ONLY MILK SALE AMOUNT OF RS.18,07,195/- IS CREDIT ED TO P&L A/C AND COMMISSION ON TRANSPORT ACTIVITY AT RS.91,074/- IS CREDITED TO P&L A/C . SO DIFFERENCE AMOUNT IS TAKEN FROM TRAIL BALANCE I.E RECEIPT & PAYMENT A/C WHICH IS CORRELATE D AS INCOME, BUT WHICH IS NOR OUR RECEIPT OR INCOME . THAT WORK I S DONE ON BEHALF OF KATRAJ DAIRY. SO THERE IS NO CONCEALMENT O R WRONG WORK AS PER PRINCIPLES OF ACCOUNTANCY.' 3. HOWEVER, THE AO WAS NOT SATISFIED WITH THE ABOVE EXPLANATION GIVEN BY THE ASSESSEE. ACCORDING TO HI M, SINCE THE ASSESSEE HAS RECEIVED AN AMOUNT OF RS.87,25,173/- T OWARDS TRANSPORTATION CHARGES AND RS.18,07,195/- ON ACCOUN T OF SUPPLY OF MILK, COMMISSION ETC., THEREFORE, THE ASSESSEE SHOU LD HAVE CREDITED AN AMOUNT OF RS.1,05,32,368/- TO THE PROFIT AND LOS S ACCOUNT. HOWEVER, THE ASSESSEE HAS CREDITED ONLY AN AMOUNT O F RS.18,07,195/-. HE OBSERVED THAT EVEN IF THE CONTE NTION OF THE ASSESSEE THAT WHATEVER AMOUNT RECEIVED ON ACCOUNT O F TRANSPORTATION CHARGES FROM KATRAJ DAIRY HAVE BEEN PAID TO THE TANKER OWNERS AND ONLY THE NET INCOME, I.E. 1% COMM ISSION 5 RECEIVED ON THE AMOUNT OF TRANSPORTATION CHARGES HA S BEEN CREDITED TO THE PROFIT AND LOSS ACCOUNT IS ACCEPTED, EVEN TH EN ALSO SINCE THE ASSESSEE HAS NOT DEDUCTED TAX AT SOURCE IN RESPECT OF THE TRANSPORTATION CHARGES MADE, THEREFORE, THE AMOUNT OF RS.87,25,173/- DEBITED IN THE ASSESSEES BOOKS OF A CCOUNT IS LIABLE TO BE DISALLOWED UNDER THE PROVISIONS OF SECTION 40 (A)(IA). THE AO, THEREFORE, ISSUED ANOTHER SHOW CAUSE NOTICE ASKING THE ASSESSEE TO EXPLAIN AS TO WHY AN AMOUNT OF RS.87,25,173/- SHOU LD NOT BE DISALLOWED U/S.40(A)(IA). IN RESPONSE TO THE SAME THE ASSESSEE VIDE LETTER DATED 15-12-2011 SUBMITTED AS UNDER : '...... OUR SOCIETY HAVE NOT DONE ANY WORK FOR ITSELF I.E TRANSPORT CHARGES PAID TO THE TRANSPORTERS HAVE BEEN FOR WORK DO NE FOR THE KATRAJ DAIRY AND KATRAJ DAIRY HAVE DEDUCTED TAX ON TRANSPORT CHARGES AT PRESCRIBED RATE THROUGH OUR SOCIETY AS IT IS NOT PRACTICABLE FOR KATRAJ DAIRY TO CONTRACT AND KEEP R ECORD OF TRANSPORTERS SITUATED IN VILLAGES WHICH ARE NEARBY CHIK HALGAON. TRANSPORT CHARGES HAVE ONCE DEBITED IN KATRAJ DAIRY'S A/C AS AN COMMISSION AGENT HOW WE COULD ACCOUNT IN OUR BOOKS AS E XPENSES WHICH HAVE NOT INCURRED FOR ANY WORK DONE OF OUR SO CIETY , WHATEVER AMOUNT RECEIVED FOR TRANSPORTERS AS PER THEIR BILL FROM KATRAJ DAIRY THE SAME AMOUNT RECEIVED HAS DISTRIBUTED TO THEM . IF YOU DISALLOW THE THIRD PARTY'S EXPENSES IN OUR SOCIETY'S INCOME WHICH WOULD BE BIAS AND AGAINST THE PRINCIPLE OF ACCO UNTANCY BECAUSE THERE ARE NO INCOME & EXPENSES EXISTING FROM TRANSPORT CHARGES IN OUR BOOKS OF A/C. THERE IS DIRECT CONTRACT OF KATRAJ DAIRY WITH TRANSPORTERS. WE HAVE NOT AT ALL SUB-CONTRACTOR C APACITY......' 3.1 REJECTING THE EXPLANATION GIVEN BY THE ASSESSEE AND DISTINGUISHING THE VARIOUS DECISIONS CITED BEFORE H IM THE AO MADE ADDITION OF RS.87,25,173/- TO THE TOTAL INCOME OF T HE ASSESSEE AS PER THE PROVISIONS OF SECTION 40(A)(IA). 6 4. BEFORE CIT(A) THE ASSESSEE CHALLENGED THE VALIDI TY OF THE REOPENING AS WELL AS THE DISALLOWANCE MADE U/S.40(A )(IA) OF THE I.T. ACT. SO FAR AS THE ISSUE RELATING TO VALIDITY OF R EOPENING OF THE ASSESSMENT IS CONCERNED THE LD.CIT(A) DECIDED THE I SSUE AGAINST THE ASSESSEE BY OBSERVING AS UNDER : 6. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE AS WELL AS REPLY OF THE APPELLANT. THE REASONS FOR REOPENING HAVE BEEN INCORPORATED IN THE BODY OF REASSESSMENT ORDER. FOR THE SAKE OF CLAR ITY THE SAME IS REPRODUCED AS UNDER: 'AS PER ITS DATA FOR F. Y.2007-08 FOR THE PAN WHERE NO RETURNS EXISTS AS PER AST LIST RECEIVED FROM CCIT, PUNE VIDE LETTER DATED 08.07.2010, IT APPEARS THAT THE ASSESSES S OCIETY HAS RECEIVED PAYMENT OF RS. 87,25,173/- ON WHICH TDS HAS BEEN DEDUCTED BY TAX DEDUCTOR FOR RS.1,96,918/-. HO WEVER, ASSESSES HAS DISCLOSED RECEIPTS OF RS.18,07,195/- IN THE RETURN OF INCOME FILED ON 21.12.2009 FOR A.Y.2008-0 9. THEREFORE, THE ASSESSES HAS NOT DISCLOSED THE RECEIPTS OF RS.69,17,978/- (*7,25,173-18,07,195). THE A.O FURTHE R OBSERVED THAT THE INCOME CHARGEABLE TO TAX TO THE EX TENT OF RS.69,17,978/- HAS ESCAPED ASSESSMENT' 7. APPARENTLY THE REASONS RECORDED AS ABOVE APPEARS TO BE ON ACCOUNT OF SUPPRESSION OF TURNOVER, HOWEVER CAREFUL RE ADING OF THE SAME SHOWS THAT THERE WAS ISSUE OF NON DEDUCTION OF TDS I N RESPECT OF THE ABOVE AMOUNT WHICH HAS BEEN HIGHLIGHTE D BY THE ASSESSING OFFICER. THEREFORE, SUPPRESSION OF TURNOVER AND NON DEDUCTION OF TAX AT SOURCE IN RESPECT OF THE AMOUNT M ENTIONED ABOVE ARE CLEARLY INTERTWINED AND THE APPELLANTS CLA IM THAT REASONS RECORDED WAS ONLY IN RESPECT OF SUPPRESSION OF TURNOVER AND NOT ON ACCOUNT OF NON DEDUCTION AT SOURCE CANNOT BE ACCEPTE D. IT IS NOW WELL ESTABLISHED THAT AT THE TIME OF REOPENING WHAT I S REQUIRED IS REASONABLE SATISFACTION ON THE PART OF ASSESSING OFFICER, WHICH NEED NOT BE CONCLUSIVE FINDING WHICH MAY BE ARRIVED AT AF TER NECESSARY INVESTIGATION. THUS IT IS HELD THAT ISSUE OF NON DEDUCTI ON OF TAX AT SOURCE WAS VERY MUCH EMBEDDED IN THE REASONS RECORDED A ND THE ASSESSING OFFICER AND AT THAT STAGE WAS NOT REQUIRED TO G IVE CONCLUSIVE FINDING REGARDING APPLICATION OF SECTION 4 0(A)(IA) OF THE INCOME-TAX ACT. 8. THEREFORE, ON THE FACTS AND CIRCUMSTANCES OF THE CA SE AND IN LAW, NO INFIRMITY IS NOTICED IN REOPENING OF THE ASSESSM ENT ORDER. THEREFORE, REOPENING OF THE ASSESSMENT U/S.147 OF THE IN COME-TAX ACT IS UPHELD AND THE GROUND IS DISMISSED. 7 4.1 SO FAR AS THE DISALLOWANCE OF RS.87,25,173/- U/ S.40(A)(IA) IS CONCERNED THE LD.CIT(A) FOLLOWING THE DECISION OF T HE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF MERILYN SHIPPI NG AND TRANSPORTERS VS. ADDL.CIT REPORTED IN (2012) 20 TAX MANN.COM 244 DELETED THE ADDITION ON THE GROUND THAT NO AMOUNT W AS OUTSTANDING AT THE END OF THE YEAR. HOWEVER, THE ALTERNATE CON TENTION OF THE ASSESSEE THAT PROVISIONS OF SECTION 194C OF THE I.T . ACT IS NOT APPLICABLE TO THE ASSESSEE SOCIETY, SECTION 40(A)(I A) OF THE I.T. ACT IS NOT APPLICABLE AS THE AMOUNT IS NOT CLAIMED AS EXPE NDITURE AND SECTION 40(A)(IA) IS NOT APPLICABLE TO THE TRANSPOR T CONTRACTORS WERE REJECTED BY HIM. 5. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) DELETING THE DISALLOWANCE THE REVENUE IS IN APPEAL BEFORE US WIT H THE FOLLOWING GROUND : 1. WHETHER ON FACTS AND CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) WAS JUSTIFIED IN DELETING THE DISALLOWANCE U /S.40(A)(IA) BY HOLDING THAT TDS DISALLOWANCE APPLIED ONLY TO AM OUNTS PAYABLE AS ON 31 ST MARCH AND NOT TO AMOUNTS ALREADY PAID DURING THE YE AR ? 5.1 THE ASSESSEE HAS ALSO FILED THE CROSS OBJECTION VIDE CO NO.64/PN/2014 BY TAKING THE FOLLOWING GROUNDS : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LOWER AUTHORITIES HAVE ERRED IN REOPENING THE ASSESSMENT U/S 147 OF THE INCOME TAX ACT, 1961 AND SUBSEQUENTLY COMPLETI NG THE ASSESSMENT ON THE POINTS OTHER THAN THE REASONS FOR ESCAPE MENT. SUCH ACTION ON THE REASON FOR ESCAPEMENT. SUCH ACTIO N ON THE PART OF LEARNED ASSESSING OFFICER IS BAD IN LAW AND THEREFORE ENTIRE REASSESSMENT PROCEEDINGS NEEDS TO BE QUASHED. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LEARNED CIT (APPEALS) HAS ERRED IN CONFIRMING THE ADD ITION OF RS.87,25,173/- BY INVOKING THE PROVISIONS OF SECTION 4 0A(IA) OF THE 8 INCOME TAX ACT, 1961 BY DISREGARDING THE APPELLANT' S FOLLOWING CONTENTIONS, A. SECTION 194 C OF THE INCOME TAX ACT, 1961 IS N OT APPLICABLE TO THE APPELLANT SOCIETY. B. SECTION 40A(IA) OF THE INCOME TAX ACT, 1961 IS NOT APPLICABLE AS THE AMOUNT IS NOT CLAIMED AS EXPENDITURE . C. SECTION 40A(IA) OF THE INCOME TAX ACT, 1961 IS NOT APPLICABLE TO THE TRANSPORT CONTRACTORS. 6. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE IS A PRIMARY MILK SOCIETY OPERATING AT TALUKA LEVEL S. IT COLLECTS THE MILK AT ONE CENTER FROM FARMER MEMBERS AND SALE IT THROUGH FEDERAL COOPERATIVE SOCIETIES. THE MAIN ACTIVITY OF THE SO CIETY IS SALE AND PURCHASE OF MILK. IT IS A VERY SMALL SOCIETY WITH A CAPITAL OF HARDLY RS.15 TO RS.20 LAKHS. HE SUBMITTED THAT KATRAJ DAI RY COLLECTS THE MILK FROM DIFFERENT CENTERS AND THE ENTIRE TRANSPOR TATION OPERATION IS CARRIED OUT THROUGH THE SOCIETY. HE SUBMITTED THAT KATRAJ DAIRY GIVES THE ASSESSEE A LUMPSUM PAYMENT FOR ALL TANKER OWNERS WHICH IS DISTRIBUTED BY THE ASSESSEE. KATRAJ DAIRY IN RE TURN GIVES 1% COMMISSION TO THE ASSESSEE. KATRAJ DAIRY CLAIMS TH E ENTIRE TRANSPORTATION EXPENSES. WHILE DISBURSING PAYMENT KATRAJ DAIRY DEDUCTS TDS. THE ASSESSEE SHOWS THE ENTIRE AMOUNT AS RECEIVABLE AND DISTRIBUTES THE PAYMENTS AND SHOWS ONLY THE CO MMISSION INCOME IN THE PROFIT AND LOSS ACCOUNT. HE SUBMITTE D THAT THE ASSESSEE IS JUST LIKE A COLLECTING AGENT. IT IS NO T A NEW ACTIVITY AND IT IS HAPPENING SINCE INCEPTION. HE SUBMITTED THAT A TDS SURVEY WAS CONDUCTED IN THE PREMISES OF KATRAJ DAIRY DURING A. Y. 2001-02. THE ASSESSMENTS OF THE ASSESSEE WERE COMPLETED U/S. 143(3) FOR THE 9 A.Y. 2001-02, 2003-04 AND 2004-05 AND THIS POSITION WAS ALREADY ACCEPTED. FOR THE FIRST TIME THE ASSESSEE RECEIVED A NOTICE U/S.147 ON 15-09-2010 FOR A.Y. 2008-09. THE ASSESSEE ASKED THE REASONS FOR REOPENING OF THE ASSESSMENT WHICH WERE SUPPLIED BY THE AO. AFTER RECEIVING THE REASONS THE ASSESSEE EXPLAINED TO THE AO THAT THERE IS NO TDS ON MILK SALES AND IT RECEIVES ONLY COMMISSION ON TRANSPORTATION CHARGES. WHILE THE AO DID NOT MAKE ANY ADDITION ON ACCOUNT OF TURNOVER, HE HOWEVER DIRECTLY JUMPED TO THE CONCLUSION THAT THE TRANSPORTATION CHARGES ARE DEBITED TO THE PROFIT AND LOSS ACCOUNT AND SINCE THE ASSESSEE HAS NOT DEDUCTED TDS , THEREFORE, PROVISIONS OF SECTION 40(A)(IA) ARE APPLICABLE. 6.1 REFERRING TO PARA 5 IN PAGE 2 OF THE ORDER, THE LD. COUNSEL FOR THE ASSESSEE DREW THE ATTENTION OF THE BENCH TO THE FINDING GIVEN BY THE AO ACCORDING TO WHICH THE AO ASKED THE ASSESSEE TO EXPLAIN WHY THE DIFFERENCE OF RS.69,17,978/- BEING THE DIFF ERENCE BETWEEN THE AMOUNT OF RS.87,25,73/- AS PER THE TDS CERTIFIC ATE AND THE DISCLOSED RECEIPT OF RS.18,07,195/- IN THE RETURN O F INCOME FILED SHOULD NOT BE ADDED TO THE TOTAL INCOME OF THE ASSE SSEE. THAT WAS ALSO THE PRECISE REASON FOR THE ISSUE OF NOTICE U/S .147. HE SUBMITTED THAT THE AO WHILE COMPLETING THE ASSESSMENT HAS NOT MADE ANY ADDITION ON ACCOUNT OF THE SAID DIFFERENCE BUT HAS MADE THE ADDITION BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA). R EFERRING TO THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE O F CIT VS. JET AIRWAYS (INDIA) LTD. REPORTED IN 331 ITR 236 HE SUB MITTED THAT THE 10 HONBLE HIGH COURT IN THE SAID DECISION HAS HELD TH AT IF AFTER ISSUING A NOTICE U/S.148 THE AO ACCEPTS THE CONTENTION OF T HE ASSESSEE AND HOLDS THAT THE INCOME WHICH HE HAS INITIALLY FORMED THE REASON TO BELIEVE HAD ESCAPED ASSESSMENT, HAS AS A MATTER OF FACT NOT ESCAPED ASSESSMENT, IT IS NOT OPEN TO HIM TO INDEPENDENTLY ASSESS SUCH OTHER INCOME . IF HE INTENDS TO DO SO, A NOTICE U/S.148 WOULD BE NECESSARY IN THE EVENT OF CHALLENGE BY THE ASSESSEE. HE SUBM ITTED THAT SINCE IN THE INSTANT CASE NO ADDITION HAS BEEN MADE ON THE I SSUE OF NOTICE U/S.147 AND THE AO HAS MADE ALTOGETHER A NEW ADDITI ON WHILE COMPLETING THE ASSESSMENT, THEREFORE, IN VIEW OF TH E DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT THE ENTIRE REASSE SSMENT PROCEEDING BECOMES NULL AND VOID. AS REGARDS DELET ION OF ADDITION MADE U/S.40(A)(IA) OF THE I.T. ACT, THE LD. COUNSEL FOR THE ASSESSEE RELIED ON THE ORDER OF THE CIT(A). 7. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND HEAVILY RELIED ON THE ORDER OF THE CIT(A) ON THE IS SUE OF REOPENINIG OF THE ASSESSMENT. SO FAR AS DISALLOWANCE U/S.40(A )(IA) IS CONCERNED, HE SUBMITTED THAT THE LD.CIT(A) FOLLOWIN G THE DECISIONS OF HONBLE CALCUTTA HIGH COURT AND GUJARAT HIGH COU RT HAS DECIDED THE ISSUE AGAINST THE ASSESSEE IN SUBSEQUEN T YEARS. THE PUNE BENCHES OF THE TRIBUNAL ARE ALSO FOLLOWING THE DECISIONS OF GUJARAT HIGH COURT AND CALCUTTA HIGH COURT. HE ACCO RDINGLY SUBMITTED THAT THE APPEAL FILED BY THE REVENUE HAS TO BE ALLOWED AND THE CO FILED BY THE ASSESSEE SHOULD BE DISMISSE D. 11 8. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE US. THE REASONS FOR REOPENING HAVE ALREADY BEEN EXTRACTED AT PARA 2 OF THE IMPUGNED ORDER. HOWEVER, WE FIND THE AO WHILE MAKING THE ASS ESSMENT HAS MADE ADDITION OF RS.87,25,173/- UNDER THE PROVISION S OF SECTION 40(A)(IA) OF THE I.T. ACT. FROM THE ABOVE, IT IS C LEAR THAT NO ADDITION HAS BEEN MADE ON THE ISSUE OF SUPPRESSED TURNOVER O N WHICH THE ASSESSMENT WAS REOPENED. THE AO HAS MADE ADDITION ALTOGETHER ON A NEW ISSUE. 8.1 THE HONBLE BOMBAY HIGH COURT IN THE CASE OF JE T AIRWAYS (INDIA) LTD., (SUPRA) HAS OBSERVED AS UNDER : EXPLANATION 3 LIFTS THE EMBARGO, WHICH WAS INSERTED BY JUDICIAL INTERPRETATION, ON THE MAKING OF AN ASSESSMENT OF REASSESSM ENT ON GROUNDS OTHER THAN THOSE ON THE BASIS OF WHICH A NOTIC E WAS ISSUED UNDER SECTION 148. SETTING OUT THE REASONS, FOR THE B ELIEF THAT INCOME HAD ESCAPED ASSESSMENT. THOSE JUDICIAL DECISIONS H AD HELD THAT WHEN THE ASSESSMENT WAS SOUGHT TO BE REOPENED ON TH E GROUND THAT INCOME HAD ESCAPED ASSESSMENT ON A CERTAIN I SSUE, THE ASSESSING OFFICER COULD NOT MAKE AN ASSESSMENT OR REASSESSMEN T ON ANOTHER ISSUE WHICH CAME TO HIS NOTICE DURING THE P ROCEEDINGS. THIS INTERPRETATION WILL NO LONGER HOLD THE FIELD AF TER THE INSERTION OF EXPLANATION 3 BY THE FINANCE (NO. 2) ACT OF 2009 . HOWEVER, EXPLANATION 3 DOES NOT AND CANNOT OVERRIDE THE NECESS ITY OF FULFILLING THE CONDITIONS SET OUT IN THE SUBSTANTIVE PA RT OF SECTION 147. AN EXPLANATION TO A STATUTORY PROVISION IS INTEN DED TO EXPLAIN ITS CONTENTS AND CANNOT BE CONSTRUED TO OVERRIDE IT O R RENDER THE SUBSTANCE AND CORE NUGATORY. SECTION 147 HAS THIS EFFEC T THAT THE ASSESSING OFFICER HAS TO ASSESS OR REASSESS THE INCOME ('SUCH INCOME') WHICH ESCAPED ASSESSMENT AND WHICH WAS THE BASIS OF THE FORMATION OF BELIEF AND IF HE DOES SO, HE CAN ALSO ASSE SS OR REASSESS ANY OTHER INCOME WHICH HAS ESCAPED ASSESSMENT AND WHICH C OMES TO HIS NOTICE DURING THE COURSE OF THE PROCEEDINGS. HO WEVER, IF AFTER ISSUING A NOTICE UNDER SECTION 148, HE ACCEPTED THE CO NTENTION OF THE ASSESSEE AND HOLDS THAT THE INCOME WHICH HE HAS INITI ALLY 12 FORMED A REASON TO BELIEVE HAD ESCAPED ASSESSMENT, HAS AS A MATTER OF FACT NOT ESCAPED ASSESSMENT, IT IS NOT OPEN TO HIM IND EPENDENTLY TO ASSESS SOME OTHER INCOME. IF HE INTENDS TO DO SO, A FR ESH NOTICE UNDER SECTION 148 WOULD BE NECESSARY, THE LEGALITY OF WHICH WOULD BE TESTED IN THE EVENT OF A CHALLENGE BY THE ASSESSEE. 8.2 IN VIEW OF THE DECISION OF THE JURISDICTIONAL H IGH COURT CITED (SUPRA) AND IN ABSENCE OF ANY CONTRARY MATERIAL BRO UGHT TO OUR NOTICE BY THE LD. DEPARTMENTAL REPRESENTATIVE AGAIN ST THE SAID DECISION OF THE JURISDICTIONAL HIGH COURT, WE HOLD THAT THE ASSESSMENT MADE BY THE AO BY MAKING ADDITION ON ACC OUNT OF A NEW ISSUE WITHOUT MAKING ANY ADDITION ON THE ISSUE ON WHICH THE REASSESSMENT NOTICE WAS ISSUED BECOMES VOID AB-INIT IO. GROUND OF CO NO.1 BY THE ASSESSEE IS ACCORDINGLY ALLOWED. 9. SINCE THE ASSESSEE SUCCEEDS ON THIS PRELIMINARY ISSUE, THEREFORE, THE GROUNDS RAISED BY THE REVENUE AND TH E OTHER GROUNDS RAISED BY THE ASSESSEE IN THE CO BECOME ACADEMIC IN NATURE AND THEREFORE ARE NOT BEING ADJUDICATED. 10. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED AND THE CO FILED BY THE ASSESSEE IS ALLOWED. ITA NO.2436/PN/2012 (BY REVENUE) AND CO NO.62/PN/20 14 (BY ASSESSEE) (A.Y. 2005-06) : 11. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSES SEE FILED THE RETURN OF INCOME ON 25-08-2006 DECLARING TOTAL INCOME OF R S.71,190/-. THE AO COMPLETED THE ASSESSMENT U/S.143(3) ON 19-09 -2007. SUBSEQUENTLY, IT WAS OBSERVED THAT THE ASSESSEE WAS IN RECEIPT OF 13 TRANSPORTATION CHARGES FROM KATRAJ DAIRY AND AN AMO UNT OF RS.89,49,031/- WAS CREDITED IN ITS BOOKS OF ACCOUNT . THE ASSESSEE HAS ALSO DEBITED THE SAME AMOUNT, I.E. RS.89,44,031 /- BEING TRANSPORTATION CHARGES PAID. KATRAJ DAIRY HAD MADE TDS ON THE TRANSPORTATION CHARGES PAID TO THE ASSESSEE AND THE ASSESSEE HAS ALSO CLAIMED CREDIT FOR THE TDS SO PAID. HOWEVER, THE A SSESSEE HAS NOT DEDUCTED TAX AT SOURCE ON THE AMOUNT OF TRANSPORTAT ION CHARGES PAID/DEBITED IN ITS BOOKS OF ACCOUNT. ACCORDINGLY, THE AO HELD THAT THE AMOUNT OF RS.89,44,031/- BEING TRANSPORTATION C HARGES PAID SHOULD HAVE BEEN DISALLOWED AS PER THE PROVISIONS O F SECTION 40(A)(IA) OF THE I.T. ACT WHICH REMAINED TO BE DONE WHILE PASSING THE ORDER U/S.143(3) DATED 13-09-2007. THEREFORE, THE AO ISSUED NOTICE U/S.148 DATED 31-03-2011 WHICH WAS DULY SERV ED ON THE ASSESSEE. IN RESPONSE TO THE NOTICE ISSUED U/S.148 THE ASSESSEE VIDE LETTER DATED 27-04-2011 STATED THAT THE RETURN FILE D ON 25-08-2006 MAY BE TREATED AS RETURN FILED IN RESPONSE TO NOTIC E U/S.148. 12. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO CONFRONTED THE ASSESSEE AS TO WHY THE AMOUNT OF TRA NSPORTATION CHARGES PAID/DEBITED IN ITS BOOKS OF ACCOUNT SHOULD NOT BE DISALLOWED U/S.40(A)(IA) OF THE I.T. ACT AS THE ASS ESSEE HAS FAILED TO DEDUCT TAX ON THE SAME. IN RESPONSE TO THE SAME, T HE ASSESSEE VIDE LETTER DATED 09-12-2011 REPLIED AS UNDER : '.......OUR SOCIETY IS PRIMARILY A MILK PRODUCER'S SOC IETY & ACTING AS AN AGENT OF KATRAJ DAIRY FOR COORDINATING & MANAGING M ILK TRANSPORT FROM VILLAGE AREAS NEARBY CHIKHALGAON TO KATRAJ DAIR Y AND DISTRIBUTION OF TRANSPORT CHARGES ON BEHALF OF KATRAJ DAIRY I.E. 14 FEDERAL SOCIETY .OUR SOCIETY IS NOT DOING /PROVIDING TRANSPORT ACTIVITY. SOCIETY COORDINATE THE TRANSPORT WORK OF K ATRAJ DAIRY FRO WHICH OUR SOCIETY GETS 1% COMMISSION. THERE IS NO TRANSP ORT CHARGES DEBITED TO P & L A/C OR NO TRANSPORT INCOME C REDITED TO P & L A/C . THE AMOUNT RECEIVED FROM KATRAJ DAIRY IS CRE DITED TO RECEIPT SIDE OF RECEIPTS & PAYMENT A/C AND AMOUNT DISTRIBUTED IS DEBITED TO PAYMENT SIDE OF RECEIPTS & PAYMENT A/C ( I.E. TRA IL BALANCE ) ........SO THE QUESTION OF APPLICATION OF SECTION 19 4C , SECTION 40(A) DOES NOT ARISES IN THIS CASE. ALSO AMOUNT OF REFUND RECEI VED IS DISTRIBUTED TO THE TRANSPORTERS AS PER THEIR TRANSPORT CHARGES. THE SOCIETY IS ACTING AS AGENT. ' 12.1 SUBSEQUENTLY, THE ASSESSEE VIDE LETTER DATED 1 5-12-2011 SUBMITTED AS UNDER : '...... OUR SOCIETY HAVE NOT DONE ANY WORK FOR ITSELF I.E. TRANSPORT CHARGES PAID TO THE TRANSPORTERS HAVE BEEN FOR WORK DO NE FOR THE KATRAJ DAIRY AND KATRAJ DAIRY HAVE DEDUCTED TAX ON TRANSPORT CHARGES AT PRESCRIBED RATE THROUGH OUR SOCIETY AS IT IS NOT PRACTICABLE FOR KATRAJ DAIRY TO CONTRACT AND KEEP R ECORD OF TRANSPORTERS SITUATED IN VILLAGES WHICH ARE NEARBY CHIK HALGAON. TRANSPORT CHARGES HAVE ONCE DEBITED IN KATRAJ DAIRY'S A/C AS AN COMMISSION AGENT HOW WE COULD ACCOUNT IN OUR BOOKS AS EXPENSES WHICH HAVE NOT INCURRED FOR ANY WORK DONE OF OUR SO CIETY . WHATEVER AMOUNT RECEIVED FOR TRANSPORTERS AS PER THEIR BILL FROM KATRAJ DAIRY THE SAME AMOUNT RECEIVED HAS DISTRIBUTED TO THEM. IF YOU DISALLOW THE THIRD PARTYS EXPENSES IN OUR SOCIETY S INCOME WHICH WOULD BE BIAS AND AGAINST THE PRINCIPLE OF ACCO UNTANCY BECAUSE THERE ARE NO INCOME & EXPENSES EXISTING FROM TRANSPORT CHARGES IN OUR BOOKS OF A/C. THERE IS DIRECT CONTRAC T OF KATRAJ DAIRY WITH TRANSPORTERS. WE HAVE NOT AT ALL SUB-CONTRACTOR CAPACITY . . . . . HOWEVER, THE AO WAS NOT SATISFIED WITH THE EXPLANAT ION GIVEN BY THE ASSESSEE AND MADE ADDITION OF RS.89,44,031/- U/ S.40(A)(IA) OF THE I.T. ACT. 13. IN APPEAL THE ASSESSEE CHALLENGED THE VALIDITY OF THE REOPENING OF ASSESSMENT ON THE GROUND THAT THE REAS SESSMENT HAS BEEN MADE AFTER 4 YEARS AND THERE WAS NO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL F ACTS NECESSARY FOR THE ASSESSMENT. IT WAS ARGUED THAT THE REASSESSMEN T WAS BASED ON 15 AUDIT OBJECTION AND REASSESSMENT BASED ON AUDIT OBJ ECTION WAS BAD IN LAW AS HELD BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF ICICI HOME FINANCE LTD. VS. ACIT VIDE WRIT PETITIO N NO.430/2012 ORDER DATED 20-07-2012. 13.1 SO FAR AS ADDITION MADE U/S.40(A)(IA) IS CONCE RNED IT WAS SUBMITTED THAT THE PROVISIONS OF SECTION 194C OF TH E ACT ARE NOT APPLICABLE TO THE ASSESSEE SOCIETY. IT WAS ARGUED THAT THE PROVISIONS OF SECTION 40(A)(IA) ARE ALSO NOT APPLICABLE SINCE THE ASSESSEE HAS NOT CLAIMED THE AMOUNT AS EXPENDITURE. FURTHER SUC H PROVISIONS ARE NOT APPLICABLE TO THE TRANSPORT CONTRACTORS. ALTER NATIVELY, IT WAS ARGUED THAT SINCE NO AMOUNT WAS OUTSTANDING AS AT T HE END OF THE YEAR, THEREFORE, IN VIEW OF THE DECISION OF THE SPE CIAL BENCH OF THE TRIBUNAL IN THE CASE OF MERILYN SHIPPING AND TRANSP ORTERS (SUPRA) NO ADDITION U/S.40(A)(IA) IS PERMISSIBLE. 14. BASED ON THE ARGUMENTS ADVANCED BY THE ASSESSEE THE LD.CIT(A) DELETED THE DISALLOWANCE MADE U/S.40(A)(I A) ON THE GROUND THAT PROVISIONS OF SECTION 40(A)(IA) ARE NOT APPLICABLE SINCE THE ENTIRE AMOUNT WAS PAID AND NOTHING REMAINED TO BE PAID AT THE END OF THE YEAR. FOR THE ABOVE PROPOSITION, HE RE LIED ON THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL IN TH E CASE OF MERILYN SHIPPING AND TRANSPORTERS (SUPRA). 14.1 SO FAR AS THE VALIDITY OF THE REASSESSMENT PRO CEEDING IS CONCERNED HE DECIDED THE ISSUE AGAINST THE ASSESSEE BY HOLDING THAT 16 THE AMOUNT OF TRANSPORTATION CHARGES RECEIVED FROM KATRAJ DAIRY AND PAID TO THE TRANSPORT CONTRACTORS WERE NOT ROUT ED THROUGH PROFIT AND LOSS ACCOUNT BUT ONLY THROUGH THE TRIAL BALANCE . ACCORDING TO HIM, PRODUCTION OF ACCOUNT BOOKS BEFORE THE AO WILL NOT NECESSARILY AMOUNT TO DISCLOSURE WITHIN THE MEANING OF EXPLANATION 1 TO PROVISIONS OF SECTION 147. SO FAR AS THE ARGU MENT OF THE ASSESSEE THAT THE REOPENING WAS DONE ON THE BASIS O F AUDIT OBJECTION IS CONCERNED HE HELD THAT THE ASSESSEE WAS UNABLE T O SUBSTANTIATE THAT THE REOPENING WAS DONE ON THE BASIS OF AUDIT O BJECTION. THEREFORE, THE DECISION OF THE HONBLE BOMBAY HIGH COURT RELIED ON BY THE ASSESSEE WAS HELD TO BE MISPLACED. HE AC CORDINGLY UPHELD THE REASSESSMENT PROCEEDINGS. 15. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) DELETIN G THE ADDITION MADE U/S.40(A)(IA) THE REVENUE IS IN APPEA L BEFORE US WITH THE FOLLOWING GROUND : WHETHER ON FACTS AND CIRCUMSTANCES OF THE CASE, THE L D.CIT(A) WAS JUSTIFIED IN DELETING THE DISALLOWANCE U/S.40(A)(IA) B Y HOLDING THAT TDS DISALLOWANCE APPLIES ONLY TO AMOUNTS PAYABLE AS ON 31 ST MARCH AND NOT TO AMOUNTS ALREADY PAID DURING THE YEAR. 15.1 THE ASSESSEE HAS ALSO FILED THE CROSS OBJECTIO N BY TAKING THE FOLLOWING GROUNDS : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LOWER AUTHORITIES HAVE ERRED IN REOPENING THE COMPLE TED ASSESSMENT SPECIALLY IN THE CIRCUMSTANCES THAT ALL THE EXPLANATIO N AND MATERIAL FACTS WERE DISCLOSED DURING THE COURSE OF REGULAR ASSESSMEN T AND THEREFORE PROCEEDINGS U/S 147 OF THE INCOME TAX ACT, 1961 BEYOND 4 YEARS CANNOT BE REOPENED. 17 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT (APPEALS) HAS ERRED IN CONFIRMING THE AD DITION OF RS.89,44,031/- BY INVOKING THE PROVISIONS OF SECTION 40 A(IA) OF THE INCOME TAX ACT, 1961 BY DISREGARDING THE APPELLANT'S FOLLOWING CONTENTIONS, A. SECTION 194 C OF THE INCOME TAX ACT, 1961 IS NO T APPLICABLE TO THE APPELLANT SOCIETY. B. SECTION 40A(IA) OF THE INCOME TAX ACT, 1961 IS N OT APPLICABLE AS THE AMOUNT IS NOT CLAIMED AS EXPENDITURE. C. SECTION 40A(IA) OF THE INCOME TAX ACT, 1961 IS NOT APPLICABLE TO THE TRANSPORT CONTRACTORS. 16. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE NOTICE U/S.147 FOR THE IMPUGNED ASSESSMENT YEAR, I.E. A.Y. 2005-06 WAS RECEIVED ON 31-03-2011 WHICH IS BEYOND 4 YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. HE SUBMITTED THAT TH E ORDER U/S.143(3) WAS PASSED ON 13-09-2007. THEREFORE, THE DUE DATE OF RECEIPT OF NOTICE U/S.147 IN THE INSTANT CASE IS 31 -03-2010. REFERRING TO THE DECISION OF THE HONBLE BOMBAY HIG H COURT IN THE CASE OF TITANOR COMPONENTS LTD. VS. ACIT REPORTED I N 343 ITR 183 (BOMBAY) HE SUBMITTED THAT THE HONBLE HIGH COU RT IN THE SAID DECISION HAS HELD THAT THE AO HAVING ISSUED NOTICE U/S.148 STATING THAT THE ASSESSEE HAS WRONGLY CLAIMED CERTAIN DEDUC TIONS WHICH IT WAS NOT ENTITLED TO WITHOUT RECORDING THAT THERE W AS FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY AL L MATERIAL FACTS NECESSARY FOR THE ASSESSMENT OF THE RELEVANT ASSESS MENT YEAR, THE IMPUGNED NOTICE ISSUED AFTER 4 YEARS WAS NOT SUSTAI NABLE. HE SUBMITTED THAT IN THE INSTANT CASE EVERY DETAIL WAS THERE BEFORE THE AO AND NO NEW TANGIBLE INFORMATION HAS COME TO THE NOTICE OF THE AO. REFERRING TO THE COPY OF THE REASONS RECORDED BY THE AO, A 18 COPY OF WHICH IS PLACED AT PAGE 20 OF THE PAPER BOO K HE SUBMITTED THAT THE AO IN THE REASONS HAS RECORDED THAT ASSESS EE HAS DEBITED AN AMOUNT OF RS.98,44,031/- RECEIVED FROM THE KATRAJ D AIRY, PUNE IN THE PROFIT AND LOSS ACCOUNT AS PAYMENT MADE TO THE TRANSPORTERS OF MILK AS OTHER ACTIVITIES BUT IT FAILED AS A CONTRAC TOR TO COLLECT TDS FROM THE TRANSPORTERS AND CREDIT THE SAME IN THE GO VERNMENT ACCOUNT. HE SUBMITTED THAT THE ASSESSEE HOWEVER HA S NEVER DEBITED ANY AMOUNT ON ACCOUNT OF THE TRANSPORTATION CHARGES TO THE PROFIT AND LOSS ACCOUNT. THEREFORE, THE VERY REASON FOR W HICH THE ASSESSMENT HAS BEEN REOPENED DOES NOT EXIST. HE SU BMITTED THAT WHEN THERE IS NO CLAIM OF ANY EXPENDITURE NO DISALL OWANCE U/S.40(A)(IA) IS PERMISSIBLE. HE SUBMITTED THAT AL L ASPECTS WERE VERIFIED BY THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND THE NOTICE ISSUED BY THE AO IS DUE TO CHANGE OF OPI NION. SO FAR AS THE DISALLOWANCE U/S.40(A)(IA) IS CONCERNED HE SUPP ORTED THE ORDER OF THE CIT(A). 17. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHE R HAND SUPPORTED THE ORDER OF THE AO. SO FAR AS THE ARGUM ENT OF THE LD. COUNSEL FOR THE ASSESSEE THAT THERE WAS NO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE ALL MATERIAL FACTS NECESSARY F OR ASSESSMENT, THE LD. DEPARTMENTAL REPRESENTATIVE DREW THE ATTENTION OF THE BENCH TO PARA 8 AND 9 OF THE ORDER OF THE CIT(A) AND SUBMITT ED THAT IN RESPECT OF ROUTING THE AMOUNT PAID TO THE TRANSPORT ERS RECEIVED FROM KATRAJ DAIRY THROUGH PROFIT AND LOSS ACCOUNT THE AS SESSEE HAS ROUTED 19 THE SAME ONLY IN THE TRIAL BALANCE. THEREFORE, THE AO HAD NO OCCASION TO APPLY HIS MIND. THEREFORE WHEN NO OPIN ION WAS FORMED BY THE AO, THERE IS NO QUESTION OF CHANGE OF OPINIO N. FURTHER, BY NOT ROUTING SUCH RECEIPTS THROUGH THE PROFIT AND LO SS ACCOUNT, THE ASSESSEE HAS NOT DISCLOSED THE MATERIAL FACTS NECES SARY FOR COMPLETION OF THE ASSESSMENT. SO FAR AS THE ORDER OF THE CIT(A) DELETING THE ADDITION U/S.40(A)(IA) IS CONCERNED HE SUBMITTED THAT DURING A.Y. 2007-08 THE LD.CIT(A) FOLLOWING THE DEC ISIONS OF HONBLE GUJARAT HIGH COURT AND HONBLE CALCUTTA HIG H COURT HAS UPHELD THE DISALLOWANCE MADE BY THE AO. REFERRING TO THE DECISION OF THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF VI NAY ASHWINIKUMAR JONEJA VIDE ITA NO.1514/PN/2012 ORDER DATED 22- 10-2013 HE SUBMITTED THAT THE TRIBUNAL FOLLOWING TH E ABOVE DECISIONS HAS HELD THAT PROVISIONS OF SECTION 40(A) (IA) ARE ATTRACTED EVEN IF NO AMOUNT IF OUTSTANDING AT THE END OF THE YEAR. THEREFORE, FOR THE IMPUGNED ASSESSMENT YEAR THE LD.CIT(A) IS N OT JUSTIFIED IN DELETING THE DISALLOWANCE. HE ACCORDINGLY SUBMITTE D THAT THE REASSESSMENT PROCEEDINGS BE HELD AS PROPER AND THE ADDITION MADE BY THE AO U/S.40(A)(IA) HAS TO BE UPHELD. 18. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE US. WE FIND THE ASSESSING OFFICER HAS RECORDED THE FOLLOWING REASON S FOR REOPENING 20 OF THE ASSESSMENT FOR THE A.Y. 2005-06, COPY OF WHI CH IS PLACED AT PAGE 20 OF THE PAPER BOOK : TO, THE CHAIRMAN HANUMAN SAHAKRI DUDH UTPADAK SANSTHA LTD. CHIKHALGAON, POST. YENIVE, DIST. PUNE. SUB: PROVIDING REASON OF REOPENING THE ASSESSMENT FOR A .Y. 2005-06 U/S.147 PLEASE REFER TO YOU LETTER DATED 01-08-2012. THE REASONS RECORDED FOR REOPENING THE ASSESSMENT FOR TH E YEAR CONSIDERATION WHICH IS, IS AS UNDER: 'AS PER SECTION 40(A) (IA) OF THE INCOME-TAX ACT, 19 61, AMOUNT PAID BY THE CONTRACTOR TO SUB-CONTRACTOR SHALL NOT BE DEDUCTED IN COMPUTING THE INCOME CHARGEABLE UNDE R THE HEAD PROFIT AND GAIN OF BUSINESS OR PROFESSION; IF TDS DEDUCTIBLE AT SOURCE UNDER CHAPTER XVII B HAS NOT BEE N DEDUCTED AND CREDITED INTO THE GOVT. A/C BY THE CON TRACTOR DURING THE PREVIOUS OR SUBSEQUENT YEAR. SCRUTINY OF THE ASSESSMENT RECORDS OF THE ABOVE MENTION ED ASSESSEE REVEALED THAT THE ASSESSEE IS A CO-OPERATIVE SOCIET Y ENGAGED IN THE BUSINESS OF SUPPLYING MILK, ACCORDINGLY THE SOCIETY HAS BEEN ALLOWED DEDUCTION OF BUSINESS INCOME OF RS.27,348/- UNDER SECTION 80P(2)(B). IT ALSO OPTED FOR DEDUCTION OF INCOME OF RS. 24,656/- UNDER SECTION 80P(2)(C)(II) OF THE I.T. ACT, 1961 (AS STATED IN TH E COMPUTATION OF INCOME), FOR DEALING IN ACTIVITIES OT HER THAN THOSE SPECIFIED IN CLAUSE (A) & (B) OF SECTION 80P OF THE I.T. ACT, 1961. IT IS NOTICED THAT, WHILE COMPUTING THE I NCOME FROM THE OTHER ACTIVITIES, THE SOCIETY DEBITED AN AMO UNT OF RS.89,44,031/- (RECEIVED FROM THE KATRAJ DIARY PUNE, ) IN THE P&L ACCOUNT; AS PAYMENT MADE TO THE TRANSPORTERS OF MI LK AS OTHER ACTIVITIES, BUT IT FAILED AS A CONTRACTOR TO CO LLECT TDS FROM THE TRANSPORTERS (SUB CONTRACTORS) AND CREDIT THE SAME IN TO GOVT. ACCOUNT. AS SUCH, THE EXPENDITURE TOWARDS PAYMENTS TO THE VARIOUS TRANSPORTERS OF MILK SHOULD NOT HAVE BEEN ALLOWED IN COMPUTING THE INCOME OF THE SOC IETY. THIS RESULTED IN TO UNDER ASSESSMENT OF NET INCOME OF RS . 88,28,247/- ( RS. 89,44,031- RS.25,344/-): FURTHER DE DUCTION U/S.80P(2)(C) WITH CONSEQUENT SHORT RECOVERY OF TAX OF RS.29,91,924/- AND INTEREST OF RS.17,83,154/- UNDER SE CTION 234B OF THE I.T. ACT, 1961. ALSO THE AMOUNT OF RS.89, 44,031/, RECEIVED FRONT KATRAJ DAIRY IS NOT ACCOUNTED FOR IN GROSS INCOME IN THE RETURN OF INCOME OF THE ASSESSEE. 21 YOURS FAITHFULLY, SD/- (SMT. ST. CHERIAN) INCOME-TAX OFFICER, WARD-9(2), PUNE. 18.1 FROM THE ABOVE, WE FIND THERE IS NO ALLEGATION BY THE ASSESSING OFFICER ANYWHERE THAT THERE WAS FAILURE O N THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL F ACTS NECESSARY FOR ASSESSMENT. THE HONBLE BOMBAY HIGH COURT IN THE C ASE OF TITANOR COMPONENTS LTD. (SUPRA) HAS HELD THAT WHERE THE ASSESSING OFFICER DOES NOT RECORD THE FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSA RY FOR ASSESSMENT, HE WOULD NOT BE ENTITLED TO PROCEED U/S.147 OF THE I.T .ACT. THE RELEVANT OBSERVATION OF THE HONBLE HIGH COURT READ S AS UNDER : 4. ACCORDING TO THE LEARNED COUNSEL, THE REVENUE IS ENTITLED TO ISSUE SUCH A NOTICE IF THE ASSESSING OFFICER HAS REASON TO B ELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT BY R EASON OF THE FAILURE ON THE PART OF THE ASSESSEE (A) TO MAKE A R ETURN UNDER S. 139 OR (B) IN RESPONSE TO A NOTICE ISSUED UNDER SUB-S. (1 ) OF S. 142 OR S. 148 OR (C) TO DISCLOSE FULLY AND TRULY ALL MATER IAL FACTS NECESSARY FOR THAT ASSESSMENT YEAR. SINCE THE FIRST TWO CO NDITIONS ARE NOT PLEADED BY THE RESPONDENTS, IT IS THE SUBMISSION OF THE PETITIONER THAT THE NOTICE IS WHOLLY UNWARRANTED AND INVALID SINCE THERE IS NO ALLEGATION WHATSOEVER THAT THE PETITIONER HAS FAILED TO DISCLOSE ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT. THIS SUBMISSION CAN BE CONSIDERED ONLY WITH REFERENCE TO THE REASONS PUT FORTH BY THE RESPONDENTS FOR ISSUING THE NOTICE. TH E LETTER DT. 27TH JAN., 2005, INTER ALIA, STATES THAT THE AO HAS RE ASONS TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT BECAUSE THE PETITIONER HAS WRONGLY CLAIMED DEDUCTION UNDER S. 80-IA IN RESPECT O F INCOME WHICH WAS NOT DERIVED FROM THE INCOME OF THE PETITIO NER'S UNIT OF KUNDAIM. FURTHER, THAT LONG-TERM CAPITAL GAINS HAVE BEEN WRONGLY CLAIMED BY THE ASSESSEE WHICH HAVE BEEN WRONGLY CONSIDE RED FOR THE SET OFF OF THE UNIT OF KUNDAIM WHICH HAS RESULTED IN ESCAPEMENT OF INCOME. NOWHERE HAS THE AO STATED THAT THERE IS ANY FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT. HAVING REGARD TO THE PURPOSE OF THE SECTION, WE ARE OF THE VIEW THAT THE POWER CONFERRED BY S. 147 DOES NOT PROVIDE A FRESH OPPORTUNITY TO THE AO TO CORRECT AN INCORRECT ASSESSMENT MADE EARLIER UNLESS THE MISTAKE IN THE ASSESSMENT SO MADE IS THE RESULT OF A FAILURE OF THE ASSESSEE TO FULLY AND TRULY 22 DISCLOSE ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT. INDEED , WHERE THE ASSESSEE HAS FULLY DISCLOSED ALL THE MATERIAL FACTS, IT IS NOT OPEN FOR THE AO TO REOPEN THE ASSESSMENT ON THE GROUND THAT THERE IS A MISTAKE IN ASSESSMENT. MOREOVER, IT IS NECESSARY FOR THE AO TO FIRST OBSERVE WHETHER THERE IS A FAILURE TO DISCLOSE FULLY AN D TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT AND HAVING OBSERVED THAT THERE IS SUCH A FAILURE TO PROCEED UNDER S. 147. IT MU ST FOLLOW THAT WHERE THE AO DOES NOT RECORD SUCH A FAILURE HE WOULD RIOT BE ENTITLED TO PROCEED UNDER S. 147. AS OBSERVED EARLIER, THE AO HAS NOT RECORDED THE FAILURE ON THE PART OF THE PETITIO NER TO FULLY AND TRULY DISCLOSE ALL MATERIAL FACTS NECESSARY FOR THE ASST. YR. 1997-98. WHAT IS RECORDED IS THAT THE PETITIONER HAS WRONGLY CL AIMED CERTAIN DEDUCTIONS WHICH HE WAS NOT ENTITLED TO. THERE IS A WE LL KNOWN DIFFERENCE BETWEEN A WRONG CLAIM MADE BY AN ASSESSEE AF TER DISCLOSING ALL THE TRUE AND MATERIAL FACTS AND A WRONG CLAIM MADE BY THE ASSESSEE BY WITHHOLDING THE MATERIAL FACTS FULLY AN D TRULY. IT IS ONLY IN THE LATTER CASE THAT THE AO WOULD BE ENTITL ED TO PROCEED UNDER S. 147. WE ARE SUPPORTED IN THIS VIEW BY A DECISI ON OF A DIVISION BENCH OF THIS COURT IN HINDUSTAN LEVER LTD. V S. R.B. WADKAR, ASSTT. CIT (2004) 190 CTR (BOM) 166 : (2004) 268 ITR 332 (BOM) WHERE IN A SIMILAR CASE THE DIVISION BENCH HELD THAT REASON THAT THERE WAS A FAILURE TO DISCLOSE FULLY AND T RULY THAT ALL MATERIAL FACTS MUST BE READ AS RECORDED BY THE AO AND IT WOULD NOT BE PERMISSIBLE TO DELETE OR ADD TO THOSE REASONS AND THA T THE AO MUST BE ABLE TO JUSTIFY THE SAME BASED ON MATERIAL RECO RD. THE DIVISION BENCH OBSERVED AS FOLLOWS : 'HE MUST DISCLOSE IN THE REASONS AS TO WHICH FACT OR MATE RIAL WAS NOT DISCLOSED BY THE ASSESSEE FULLY AND TRULY NECESSARY FOR ASSESSMENT OF THAT ASSESSMENT YEAR, SO AS TO ESTABLISH THE VITA L LINK BETWEEN THE REASONS AND EVIDENCE.' 5. WE FIND IN THE CIRCUMSTANCES THAT THE IMPUGNED NOT ICE IS NOT SUSTAINABLE AND IS LIABLE TO BE QUASHED AND SET ASIDE. AC CORDINGLY, THE WRIT PETITION IS ALLOWED IN TERMS OF PRAYER CLS. ( A) AND (C). 18.2 SINCE IN THE INSTANT CASE ADMITTEDLY, THERE IS NO SATISFACTION RECORDED BY THE ASSESSING OFFICER IN THE REASONS FO R REOPENING OF THE ASSESSMENT THAT THERE WAS ANY FAILURE ON THE PA RT OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECE SSARY FOR ASSESSMENT AND SINCE THE NOTICE WAS ISSUED AFTER EX PIRY OF 4 YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, THERE FORE, IN VIEW OF THE DECISION OF THE JURISDICTIONAL HIGH COURT IN TH E CASE OF TITANOR COMPONENTS LTD., (SUPRA) THE NOTICE ISSUED U/S.147 BECOMES VOID 23 AB-INITIO. ACCORDINGLY, THE REASSESSMENT PROCEEDIN GS HAVE TO BE QUASHED. SINCE THE ASSESSEE SUCCEEDS ON THIS PRELI MINARY ISSUE, THEREFORE, THE OTHER GROUNDS RAISED BY THE ASSESSEE AS WELL AS THE GROUNDS RAISED BY THE REVENUE BECOMES ACADEMIC IN N ATURE AND THEREFORE ARE NOT BEING ADJUDICATED. THE GROUND RA ISED BY THE REVENUE IS DISMISSED AND CO FILED BY THE ASSESSEE I S ALLOWED. ITA NO.2437/PN/2012 (BY REVENUE) AND CO NO.63/PN/20 14 (BY ASSESSEE) (A.Y. 2006-07) : 19. THE FACTS FOR THE IMPUGNED ASSESSMENT YEAR ARE THAT THE ASSESSEE FILED THE RETURN OF INCOME ON 10-10-2007 D ECLARING TOTAL INCOME OF RS.5,710/-. THE ABOVE RETURN WAS PROCESS ED U/S.143(1) ON 03-07-2008. THEREAFTER, IT WAS OBSERVED THAT TH E ASSESSEE WAS IN RECEIPT OF TRANSPORTATION CHARGES FROM KATRAJ DAIRY AND AN AMOUNT OF RS.91,01,394/- WAS CREDITED IN ITS BOOKS OF ACCO UNT AND THE ASSESSEE ALSO DEBITED THE SAME AMOUNT, I.E. RS.91,0 1,394/- BEING TRANSPORTATION CHARGES PAID. THE KATRAJ DAIRY HAS MADE TDS ON THE TRANSPORTATION CHARGES PAID TO THE ASSESSEE AND THE ASSESSEE HAS ALSO CLAIMED CREDIT FOR THE TDS SO PAID. HOWEVER, THE A SSESSEE HAS NOT DEDUCTED TAX AT SOURCE ON THE AMOUNT OF TRANSPORTAT ION CHARGES PAID/DEBITED IN ITS BOOKS. ACCORDINGLY, THE AO OBS ERVED THAT THE AMOUNT OF RS.91,01,394/-, BEING TRANSPORTATION CHAR GES PAID, IS NOT ALLOWABLE AS DEDUCTION WHILE COMPUTING THE INCOME A S PER PROVISIONS OF SECTION 40(A)(IA) OF THE I.T. ACT. T HE ASSESSING OFFICER THEREFORE REOPENED THE ASSESSMENT BY ISSUIN G A NOTICE 24 U/S.148 ON 31-03-2011. IN RESPONSE TO THE ISSUE, T HE ASSESSEE VIDE LETTER DATED 27-04-2011 REQUESTED THE ASSESSING OFF ICER TO TREAT THE RETURN FILED ON 10-10-2007 AS THE RETURN FILED IN R ESPONSE TO SUCH NOTICE U/S.148. 20. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER ASKED THE ASSESSEE TO EXPLAIN AS TO WHY DIS ALLOWANCE U/S.40(A)(IA) SHOULD NOT BE MADE AS THE ASSESSEE FA ILED TO MAKE TDS ON THE SAME. IN RESPONSE TO THE SAME, THE ASSESSEE VIDE LETTER DATED 09-12-2011 REPLIED AS UNDER : '.......OUR SOCIETY IS PRIMARILY A MILK PRODUCER'S SOC IETY & ACTING AS AN AGENT OF KATRAJ DAIRY FOR COORDINATING & MANAG ING MILK TRANSPORT FROM VILLAGE AREAS NEARBY CHIKHALGAON TO KA TRAJ DAIRY AND DISTRIBUTION OF TRANSPORT CHARGES ON BEHALF OF KAT RAJ DAIRY I.E. FEDERAL SOCIETY. OUR SOCIETY IS NOT DOING /PROV IDING TRANSPORT ACTIVITY. SOCIETY COORDINATE THE TRANSPORT WORK OF KATRAJ DAIRY FRO WHICH OUR SOCIETY GETS 1% COMMISSION. THERE IS NO TRANSPORT CHARGES DEBITED TO P & L A/C OR NO TRA NSPORT INCOME CREDITED TO P & L A/C . THE AMOUNT RECEIVED FROM KATRAJ DAIRY IS CREDITED TO RECEIPT SIDE OF RECEIPTS & PAYMEN T A/C AND AMOUNT DISTRIBUTED IS DEBITED TO PAYMENT SIDE OF RECEI PTS & PAYMENT A/C (I.E. TRAIL BALANCE) ........SO THE QUEST ION OF APPLICATION OF SECTION 194C , SECTION 40(A) DOES NOT ARISES IN THIS CASE. ALSO AMOUNT OF REFUND RECEIVED IS DISTRIBUTED TO THE TRANSPORTERS AS PER THEIR TRANSPORT CHARGES. THE SOCIET Y IS ACTING AS AGENT.' 20.1 SUBSEQUENTLY, VIDE ANOTHER LETTER DATED 15-12- 2011 THE ASSESSEE SUBMITTED AS UNDER : '...... OUR SOCIETY HAVE NOT DONE ANY WORK FOR ITSELF I.E TRANSPORT CHARGES PAID TO THE TRANSPORTERS HAVE BEEN FOR WORK DONE FOR THE KATRAJ DAIRY AND KATRAJ DAIRY HAVE DEDUCTED TAX ON TRANSPO RT CHARGES AT PRESCRIBED RATE THROUGH OUR SOCIETY AS IT IS NOT PRAC TICABLE FOR KATRAJ DAIRY TO CONTRACT AND KEEP RECORD OF TRANSPORTERS S ITUATED IN VILLAGES WHICH ARE NEARBY CHIKHALGAON. TRANSPORT CHARGES HAVE ONCE DEBITED IN KATRAJ DAIRY'S A/C AS AN COMMISSION AGENT HOW WE COULD ACCOUNT IN OUR BOOKS AS EXPENSES 25 WHICH HAVE NOT INCURRED FOR ANY WORK DONE OF OUR SO CIETY. WHATEVER AMOUNT RECEIVED FOR TRANSPORTERS AS PER THEIR BILL FROM KATRAJ DAIRY THE SAME AMOUNT RECEIVED HAS DISTRIBUTED TO THEM . IF YOU DISALLOW THE THIRD PARTY'S EXPENSES IN OUR SOCIETY'S INCOME WHICH WOULD BE BIAS AND AGAINST THE PRINCIPLE OF ACCOUNTANCY BECAU SE THERE ARE NO INCOME & EXPENSES EXISTING FROM TRANSPORT CHARGES I N OUR BOOKS OF A/C. THERE IS DIRECT CONTRACT OF KATRAJ DAIRY WITH TRANS PORTERS. WE HAVE NOT AT ALL SUB-CONTRACTOR CAPACITY,.....' 20.2 VARIOUS DECISIONS WERE ALSO BROUGHT TO THE NOT ICE OF THE ASSESSING OFFICER THAT ASSESSEE IS NOT LIABLE TO DE DUCT TAX ON SUCH TRANSPORTATION CHARGES PAID. FURTHER, NO ADDITION CAN BE MADE U/S.40(A)(IA) SINCE NO AMOUNT WAS OUTSTANDING AT TH E END OF THE YEAR. HOWEVER, THE ASSESSING OFFICER REJECTED THE CONTENTIONS OF THE ASSESSEE AND MADE ADDITION OF RS.91,01,394/- U/ S.40(A)(IA) OF THE I.T. ACT. 21. BEFORE CIT(A) THE ASSESSEE CHALLENGED THE VALID ITY OF THE REASSESSMENT PROCEEDINGS AS WELL AS THE ADDITION U/ S.40(A)(IA). WHILE THE LD.CIT(A) UPHELD THE VALIDITY OF THE REAS SESSMENT PROCEEDINGS, HE HOWEVER DELETED THE ADDITION U/S.40 (A)(IA) BY FOLLOWING THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF MERILYN SHIPPING & TRANSPORTERS VS. ADDL.CI T REPORTED IN 20 TAXMANN.COM 244. 22. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE REV ENUE IS IN APPEAL BEFORE US WITH THE FOLLOWING GROUND : 1. WHETHER ON FACTS AND CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) WAS JUSTIFIED IN DELETING THE DISALLOWANCE U /S.40(A)(IA) BY HOLDING THAT TDS DISALLOWANCE APPLIES ONLY TO AMO UNTS PAYABLE AS ON 31 ST MARCH AND NOT TO AMOUNTS ALREADY PAID DURING THE YE AR? 26 22.1 THE ASSESSEE HAS ALSO FILED CO NO.63/PN/2014 B Y TAKING THE FOLLOWING GROUNDS : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LOWER AUTHORITIES HAVE ERRED IN REOPENING THE COMPLE TED ASSESSMENT SPECIALLY IN THE CIRCUMSTANCES THAT ALL THE EXP LANATION AND MATERIAL FACTS WERE DISCLOSED DURING THE COURSE OF REGULAR ASSESSMENT AND THEREFORE PROCEEDINGS U/S 147 OF THE INCOM E TAX ACT, 1961 BEYOND 4 YEARS CANNOT BE REOPENED. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LEARNED CIT (APPEALS) HAS ERRED IN CONFIRMING THE ADD ITION OF RS.91,01,394/- BY INVOKING THE PROVISIONS OF SECTION 4 0A(IA) OF THE INCOME TAX ACT, 1961 BY DISREGARDING THE APPELLANT'S FOLLOWING CONTENTIONS, A. SECTION 194 C OF THE INCOME TAX ACT, 1961 IS NO T APPLICABLE TO THE APPELLANT SOCIETY. B. SECTION 40A(IA) OF THE INCOME TAX ACT, 1961 IS NO T APPLICABLE AS THE AMOUNT IS NOT CLAIMED AS EXPENDITURE. C. SECTION 40A(IA) OF THE INCOME TAX ACT, 1961 IS N OT APPLICABLE TO THE TRANSPORT CONTRACTORS. 23. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SAME ARGUMENTS AS MADE BEFORE US WHILE ARGUING THE APPEA L FOR A.Y. 2008-09 AND 2005-06. HE SUBMITTED THAT THE ASSESSE E HAS NEVER DEBITED ANY TRANSPORTATION CHARGES TO THE PROFIT AN D LOSS ACCOUNT AND THEREFORE THE REASONS RECORDED BY THE ASSESSING OFF ICER ARE ERRONEOUS. HE SUBMITTED THAT WHEN THERE IS NO CLAI M OF ANY EXPENDITURE, THERE CANNOT BE ANY DISALLOWANCE U/S.4 0(A)(IA). HE SUBMITTED THAT ALTHOUGH THE NOTICE ISSUED BY THE AS SESSING OFFICER U/S.147 IS WITHIN 4 YEARS FROM THE END OF THE RELEV ANT YEAR, HOWEVER, THE ASSESSEE HAS NOT WITHHELD ANY INFORMATION. THE ENTIRE TRANSPORTATION CHARGES RECEIVED BY THE ASSESSEE HAS BEEN REIMBURSED TO THE RESPECTIVE TRUCK OWNERS AND THE ASSESSEE HAS MERELY RECEIVED 27 1% COMMISSION. THERE IS NO CONTRACTOR AND SUB-CONT RACTOR RELATIONSHIP. THE ASSESSEE IS ONLY WORKING AS AN A GENT. THEREFORE, THE ASSESSEE HAS GOT NO LIABILITY FOR TDS FROM THE PAYMENTS MADE TO THE TANKER OWNERS. HE SUBMITTED THAT THE AUTHORISE D CAPITAL OF THE ASSESSEE SOCIETY IS RS.25,000/- WHICH IS VERY SMALL . 23.1 IN HIS ALTERNATE CONTENTION, THE LD. COUNSEL F OR THE ASSESSEE SUBMITTED THAT THE FINANCE ACT, 2010 HAS AMENDED TH E FIRST PROVISO TO SECTION 40(A)(IA) W.E.F. 01-04-2010. REFERRING TO THE DECISION OF THE AHMEDABAD BENCH OF THE TRIBUNAL IN THE CASE OF KANHUBHAI RAMJI BHAI REPORTED IN 135 TTJ 364 AND THE DECISIO N OF HONBLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS. VIRGIN CREATIONS VIDE ITA NO.302/2011 HE SUBMITTED THAT IT HAS BEEN HELD IN THE SAID DECISIONS THAT THE SAID AMENDMENT IS RETROSPECTIVE IN NATURE ON THE REASONING THAT IT IS CLARIFICATORY IN NATURE. IT W AS INTRODUCED TO ELIMINATE UNINTENDED CONSEQUENCES. HE SUBMITTED TH AT THE SECOND PROVISO IN SECTION 40(A)(IA) WAS INSERTED BY THE FI NANCE ACT, 2012 W.E.F. 01-04-2013 WHEREIN IT IS STATED THAT THE DIS ALLOWANCE U/S.40(A)(IA) OF THE ACT NEED NOT BE MADE IF THE AS SESSEE IS NOT DEEMED TO BE AN ASSESSEE IN DEFAULT UNDER THE FIRST PROVISO TO SECTION 201(1) OF THE I.T. ACT. HE SUBMITTED THAT THE AFORESAID PROVISO WHICH WAS MADE EFFECTIVE FROM 01-04-2013 SH OULD BE APPLIED RETROSPECTIVELY SINCE IT HAS BEEN INTRODUCE D TO ELIMINATE UNINTENDED CONSEQUENCES WHICH MAY CAUSE UNDUE HARDS HIP TO TAX PAYERS. HE ALSO RELIED ON VARIOUS DECISIONS OF PUNE BENCHES OF THE 28 TRIBUNAL. HE ACCORDINGLY SUBMITTED THAT THE ORDER OF THE CIT(A) BE UPHELD AND THE GROUNDS RAISED BY THE REVENUE BE DIS MISSED AND THE CO FILED BY THE ASSESSEE BE ALLOWED. 24. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHE R HAND HEAVILY RELIED ON THE ORDER OF THE ASSESSING OFFICE R. HE SUBMITTED THAT THE ASSESSEE HAS RECEIVED TRANSPORTATION CHARG ES FROM KATRAJ DAIRY FOR TRANSPORTATION OF THE MILK. WHILE KATRAJ DAIRY HAS DEDUCTED TDS FROM THE TRANSPORTATION CHARGES PAID T O THE ASSESSEE, THE ASSESSEE HAS NOT DEDUCTED TDS FROM THE PAYMENT MADE TO THE TRUCK OWNERS. FURTHER, BY NOT ROUTING THROUGH THE TRANSPORTATION CHARGES THROUGH THE PROFIT AND LOSS ACCOUNT THE ASS ESSEE HAS NOT FURNISHED CORRECT INFORMATION. THEREFORE, THE REAS SESSMENT PROCEEDINGS ARE JUSTIFIED. SO FAR AS THE APPLICABI LITY OF THE PROVISIONS OF SECTION 40(A)(IA) IS CONCERNED, HE SU BMITTED THAT THE COORDINATE BENCHES OF THE TRIBUNAL ARE CONSISTENTLY TAKING THE VIEW THAT FAILURE ON THE PART OF THE ASSESSEE TO DEDUCT TAX U/S.194C ATTRACTS DISALLOWANCE U/S.40(A)(IA) EVEN THOUGH NO AMOUNT IS PAYABLE AT THE END OF THE YEAR. HE ACCORDINGLY SUB MITTED THAT THE ORDER OF THE CIT(A) BE REVERSED AND THAT OF THE ORD ER OF THE ASSESSING OFFICER BE RESTORED. 25. THE LD. COUNSEL FOR THE ASSESSEE IN HIS REJOIND ER SUBMITTED THAT NOW NO TDS IS REQUIRED U/S.194C IF THE PAYMENT AT ANY TIME DOES NOT EXCEED RS.30,000/- AND THE AGGREGATE AMOUN T DOES NOT 29 EXCEED RS.75,000/- PER ANNUM PER PERSON. FURTHER, NO TDS IS REQUIRED IF THE PAN OF THE TRANSPORTER IS PROVIDED. 26. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE FIND IN THE INSTANT CASE THE ASSESSING OFFICER REOPENED THE ASS ESSMENT ON THE GROUND THAT ASSESSEE HAS NOT DEDUCTED TDS FROM THE PAYMENT OF RS.91,01,394/- TO THE TRANSPORTERS FOR WHICH PROVIS IONS OF SECTION 40(A)(IA) ARE ATTRACTED. ACCORDINGLY, THE ASSESSIN G OFFICER, IN THE ASSESSMENT, HAS MADE ADDITION OF RS.91,01,394/- U/S .40(A)(IA). WE FIND THE LD.CIT(A) WHILE UPHOLDING THE VALIDITY OF THE REASSESSMENT PROCEEDINGS DELETED THE ADDITION BY FOLLOWING THE D ECISION OF THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF MERILY N SHIPPING AND TRANSPORTERS (SUPRA) SINCE NO AMOUNT WAS PAYABLE AT THE END OF THE YEAR. 26.1 SO FAR AS THE GROUND OF CO BY THE ASSESSEE CHA LLENGING THE VALIDITY OF REASSESSMENT PROCEEDINGS ARE CONCERNED, ADMITTEDLY, THE NOTICE HAS BEEN ISSUED WITHIN A PERIOD OF 4 YEARS F ROM THE END OF THE RELEVANT ASSESSMENT YEAR AND THE ASSESSMENT WAS ALS O COMPLETED U/S.143(1). THERE WAS NO APPLICATION OF MIND AT AL L BY THE ASSESSING OFFICER, THEREFORE, IT CANNOT BE CONSIDER ED AS CHANGE OF OPINION. FURTHER, THE TRANSPORTATION CHARGES HAVE NOT BEEN ROUTED THROUGH THE PROFIT AND LOSS ACCOUNT BUT ONLY THROUG H THE TRIAL BALANCE. THEREFORE, WHEN THE ASSESSING OFFICER HAS NOT EXAMINED 30 THE BOOKS OF ACCOUNT AND ORDER HAS BEEN PASSED U/S. 143(1), IT CANNOT BE SAID THAT ANY VIEW WAS TAKEN BY THE ASSESSING OF FICER. UNDER THESE FACTS AND CIRCUMSTANCES AND IN VIEW OF THE DE TAILED REASONING GIVEN BY THE CIT(A) WHILE UPHOLDING THE VALIDITY OF REASSESSMENT PROCEEDINGS, WE DO NOT FIND ANY INFIRMITY IN THE SA ME. ACCORDINGLY, THE GROUND CHALLENGING THE VALIDITY OF THE REASSESSMENT PROCEEDINGS IS DISMISSED. 26.2 SO FAR AS THE ORDER OF THE CIT(A) HOLDING THAT PROVISIONS OF SECTION 40(A)(IA) ARE NOT APPLICABLE SINCE NO AMOUN T IS OUTSTANDING AT THE END OF THE YEAR, WE FIND THE CIT(A) HAS FOLL OWED THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF MERYLIN SHIPPING TRANSPORTS (SUPRA). HOWEVER, THE PUNE BEN CHES OF THE TRIBUNAL ARE CONSISTENTLY TAKING THE VIEW THAT EVEN THOUGH NO AMOUNT IS OUTSTANDING AT THE END OF THE YEAR, STILL PROVISIONS OF SECTION 40(A)(IA) ARE ATTRACTED IF THERE IS FAILURE ON THE PART OF THE ASSESSEE TO DEDUCT TAX AS PER THE PROVISIONS OF SEC TION 194C. THIS VIEW HAS BEEN TAKEN BY THE TRIBUNAL IN THE CASE OF VINAY ASHWINIKUMAR JONEJA VIDE ITA NO.1514/PN/2012 ORDER DATED 22- 10-2013 WHICH HAS BEEN FOLLOWED IN VARIOUS OTHER DE CISIONS. WE THEREFORE SET ASIDE THE ORDER OF THE CIT(A) ON THIS ISSUE AND THE GROUND RAISED BY THE REVENUE IS ALLOWED. 26.3 IT IS THE ALTERNATE CONTENTION OF THE LD. COUN SEL FOR THE ASSESSEE THAT ASSESSEE RECEIVED ONLY 1% COMMISSION AND WAS WORKING AS AN AGENT AND WHATEVER AMOUNT WAS RECEIVE D HAS BEEN 31 PASSED ON TO THE TRANSPORTERS. SINCE ACCORDING TO THE LD. AUTHORISED REPRESENTATIVE THE CONTRACTOR AND SUB-CO NTRACTOR RELATIONSHIP DOES NOT EXIST AND THE ASSESSEE WAS WO RKING ONLY AS AN AGENT FOR WHICH PROVISIONS OF SECTION 194C ARE NOT APPLICABLE, THEREFORE, IN OUR OPINION, THE MATTER REQUIRES FRES H ADJUDICATION AT THE LEVEL OF THE ASSESSING OFFICER BY CONSIDERING T HE NATURE OF AGREEMENT AND OTHER RELEVANT DETAILS. FURTHER, AS REGARDS THE ARGUMENT OF THE LD. COUNSEL FOR THE ASSESSEE THAT A MENDMENT TO FIRST PROVISO TO SECTION 40(A)(IA) W.E.F. 01-04-201 0 IS RETROSPECTIVE IN NATURE AND NO DISALLOWANCE IS CALLED FOR IF ASSE SSEE IS NOT DEEMED TO BE AN ASSESSEE IN DEFAULT UNDER THE FIRST PROVIS O TO SECTION 201(1) OF THE I.T. ACT, WE FIND UNDER SOMEWHAT SIMILAR CIR CUMSTANCES THE PUNE BENCHES OF THE TRIBUNAL IN THE CASE OF ITO VS. GAURIMAL MAHAJAN AND SONS VIDE ITA NO.1852/PN/2012 ORDER DAT ED 06-01- 2014 FOR A.Y. 2008-09 (WHERE ONE OF US (AM)) IS A P ARTY HAS HELD AS UNDER : 8. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BO TH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECISIONS BROUGHT TO OUR NOTICE BY BOTH THE SIDES. THERE IS NO DISPUTE TO THE FACT THAT THE ASSESSEE HAS NOT DEDUCTED TDS ON AN AMOUNT OF RS.58,81,847/- FOR WHIC H THE ASSESSING OFFICER APPLYING THE PROVISIONS OF SECTION 40(A) (IA) MADE ADDITION OF THE ABOVE AMOUNT. WE FIND THE LD.CIT(A ) DELETED THE ADDITION MADE BY THE ASSESSING OFFICER ON THE GROUND TH AT PROVISIONS OF SECTION 40(A)(IA) ARE NOT APPLICABLE SINC E NO AMOUNT IS PAYABLE AT THE END OF THE YEAR. WHILE DOING SO, HE RELIED UPON THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF MERILYN SHIPPING AND TRANSPORT (SUPRA). THE COORDINATE BENC H IN THE CASE OF VINAY ASHWINIKUMAR JONEJA (SUPRA) HAS ALREADY TAKE N A VIEW THAT PROVISIONS OF SECTION 40(A)(IA) ARE APPLICABLE EV EN IF NO AMOUNT IS PAYABLE AT THE END OF THE YEAR. THEREFORE , THE ORDER OF THE CIT(A) HAS TO BE REVERSED. 32 8.1 HOWEVER, THE ASSESSEE HAS MADE A NEW LEGAL ARGUMENT THAT THE FINANCE ACT, 2010 HAS AMENDED THE FIRST PROVISO T O SECTION 40(A)(IA) W.E.F. 01-04-2010 AND IT HAS BEEN HELD BY VARIOUS JUDICIAL AUTHORITIES THAT SUCH AMENDMENT IS RETROSPECTIVE IN NAT URE. IT IS THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE SECOND PROVISO TO SECTION 40(A)(IA) WAS INSERTED BY THE FINANC E ACT, 2012 W.E.F. 01-04-2013 WHEREIN IT IS STATED THAT DISALLOWAN CE U/S.40(A)(IA) OF THE ACT NEED NOT BE MADE IF THE ASSESSE E IS NOT DEEMED TO BE AN ASSESSEE IN DEFAULT UNDER THE FIRST PROV ISO TO SECTION 201(1) OF THE I.T. ACT., THEREFORE, THIS SHOU LD ALSO BE HELD AS RETROSPECTIVE SINCE IT HAS BEEN INTRODUCED TO ELIMINAT E UNINTENDED CONSEQUENCES WHICH MAY CAUSE UNDUE HARDSHIP TO THE TAX PAYERS. 8.2 WE FIND SOME FORCE IN THE ABOVE ARGUMENT OF THE LD. COUNSEL FOR THE ASSESSEE. WE FIND THE COCHIN BENCH OF THE TRIB UNAL IN THE CASE OF ANTONY D. MUNDACKAL (SUPRA) RELIED ON BY LD. COUNSEL FOR THE ASSESSEE, HAD AN OCCASION TO DECIDE AN ISSUE IN THE LI GHT OF THE ABOVE ARGUMENT AND HAS RESTORED THE ISSUE TO THE FILE O F THE ASSESSING OFFICER WITH CERTAIN DIRECTIONS. THE RELEVANT OBSERVATION OF THE TRIBUNAL AT PARA 7 OF THE ORDER READ AS UNDER : 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND CAREFUL LY PERUSED THE RECORD. ACCORDING TO THE ASSESSEE, THERE IS NO WRIT TEN CONTRACT BETWEEN HIM AND THE PERSONS DOING POLISHING WORKS. ACCO RDINGLY, THE ASSESSEE HAS CONTENDED BEFORE US THAT THE PROVISIONS OF SEC. 194C SHALL NOT APPLY TO THE POLISHING CHARGES. HOWEVER , WE NOTICE THAT THE ASSESSING OFFICER HAS GIVEN A CLEAR FINDING THA T ESSENTIAL INGREDIENTS OF A CONTRACT ARE VERY MUCH AVAILABLE IN THE POLISHING WORKS ENTRUSTED BY THE ASSESSEE. FURTHER WE NOTICE THAT THE CBDT, VIDE CIRCULAR NO.433 DATED 25-09-1985 (1986)(157 IT R ST. 27) HAS CLARIFIED THAT THE PROVISIONS OF SEC. 194C ARE WIDE EN OUGH TO COVER ORAL CONTRACTS ALSO. A CONTRACT IS NORMALLY REDUCED IN WRITING IN ORDER TO MAKE CLEAR THE TERMS AND CONDITIONS, OBLIGAT IONS OF THE PARTIES TO THE CONTRACT ETC. IF THE CONDITIONS OF CON TRACT ARE OTHERWISE UNDERSTOOD BY THE PARTIES, IN VIEW OF THE R EPEATED TRANSACTIONS, IN OUR VIEW, THE ABSENCE OF A WRITTEN CO NTRACT WOULD NOT MAKE ANY DIFFERENCE. IN THE INSTANT CASE, THE ASSES SEE IS REPEATEDLY GIVEN WORKS TO THE POLISHING PEOPLE AND H ENCE THE TERMS AND CONDITIONS OF THE WORK WOULD BE CLEARLY UNDERSTOO D BY BOTH THE PARTIES. ACCORDINGLY, WE REJECT THIS CONTENTION OF THE ASSESSEE AND HOLD THAT THE PROVISIONS OF SEC. 194C SHALL APPLY T O THE POLISHING WORKS GIVEN BY THE ASSESSEE. 7.1 ACCORDING TO LD A.R, THE ASSESSEE HAS ACTED AS A CON DUIT PIPE IN CONNECTION WITH THE POLISHING WORKS BETWEEN THE CU STOMERS AND THE PERSON DOING POLISHING JOB. ACCORDINGLY, IT WAS SU BMITTED THAT THERE IS NO PROFIT ELEMENT IN THE SAID TRANSACTIONS. TH E LD A.R FURTHER SUBMITTED THAT THE ASSESSEE HAS INCLUDED THE COST OF POLISHING WORKS IN THE SALE VALUE OF ALUMINIUM EXTRUSIO NS, WITHOUT KNOWING TAX IMPLICATIONS. HOWEVER, WE NOTICE THAT TH E ASSESSEE DID NOT FURNISH ANY PROOF TO SUBSTANTIATE THE ABOVE SAID CL AIMS. THE ASSESSEE, BEING A DEALER IN ALUMINIUM EXTRUSIONS, HAS ONLY SUPPLIED THE PRODUCTS AFTER CARRYING OUT THE POLISHING WORKS A CCORDING TO THE TASTE AND REQUIREMENT OF CUSTOMERS. IT IS ONLY ONE OF THE MANY 33 BUSINESS TECHNIQUES NORMALLY ADOPTED BY A BUSINESS MAN TO IMPROVE HIS SALES, SINCE IT WILL BE VERY DIFFICULT FOR CUSTOMERS TO IDENTIFY THE POLISHING PEOPLE AND GET THE WORK DONE BY THEMSELVES. HENCE, WE ARE OF THE VIEW THAT IT MAY NOT BE CORREC T TO ARGUE THAT THE CONTRACT EXISTED BETWEEN THE CUSTOMERS AND THE POL ISHING PEOPLE. IN FACT, THE CUSTOMER MAY NOT HAVE ANY CONT ACT WITH THE POLISHING PEOPLE IN THIS TYPE OF TRANSACTIONS. HENCE, I T IS HARD TO BELIEVE THE CLAIM OF THE ASSESSEE THAT HE HAS ACTED AS ME RE CONDUIT PIPE BETWEEN THE CUSTOMERS AND POLISHING PEOPLE, ACCOR DINGLY, THE CLAIM THAT THE ASSESSEE STANDS IN A FIDUCIARY CAPACITY IS ALSO LIABLE TO BE REJECTED. IN THIS KIND OF FACTUAL SITUATION, IN OU R VIEW, THE EXISTENCE OR ABSENCE OF PROFIT ELEMENT IN THE POLISHIN G WORKS DOES NOT MAKE ANY DIFFERENCE. 7.2 THE LD COUNSEL, BY PLACING RELIANCE ON THE DECI SION OF SPECIAL BENCH IN THE CASE OF MERYLINE SHIPPING AND TR ANSPORTS (SUPRA) CONTENDED THAT THE PROVISIONS OF SEC. 40(A)(IA) SHALL APPLY ONLY TO AMOUNT PAYABLE AND NOT TO THE AMOUNT PAID. HOWEVER, THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. SIK ANDAR KHAN N TUNVAR (357 ITR 312) AND THE HON'BLE CALCUTTA HIGH COURT IN THE CASE OF CIT VS. CRESCENT EXPORT SYNDICATE (ITAT 20 OF 2013) HAVE HELD THAT THE DECISION RENDERED BY THE SPECIAL BENCH IN THE CASE OF MERYLINE SHIPPING & TRANSPORTS IS NOT A GOOD LAW. THE LD A.R, HOWEVER, PLACED RELIANCE ON THE DECISION OF HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF VECTOR SHIPPING SERVICES (357 IT R 642). ON A CAREFUL PERUSAL OF THE DECISION GIVEN BY HON'BLE ALLA HABAD HIGH COURT, WE NOTICE THAT THE HIGH COURT HAS DECIDED THE ISSUE REFERRED TO IT ON A DIFFERENT FOOTING AND HAS MADE A PASSING C OMMENT ABOUT THE DECISION RENDERED BY THE SPECIAL BENCH. THUS, THE RATIO OF THE SAID DECISION IS DIFFERENT FROM THAT RENDERED IN THE C ASE OF MERYLINE SHIPPING AND TRANSPORTS BY THE SPECIAL BENCH. HENCE, WE ARE INCLINED TO REJECT THE CONTENTIONS OF THE ASSESSEE ON T HIS POINT ALSO. 7.3 THE ASSESSEE PLACED RELIANCE ON THE DECISION OF HON 'BLE SUPREME COURT IN THE CASE OF HINDUSTAN COCO-COLA BEVE RAGES LTD (SUPRA) IN ORDER TO CONTEND THAT THE REVENUE IS NOT E NTITLED TO RECOVER TAXES, IF THE RECIPIENT HAS DECLARED THE PAYM ENTS IN HIS RETURN OF INCOME. WE NOTICE THAT THE ABOVE SAID DECI SION WAS RENDERED IN THE CONTEXT OF THE PROVISIONS OF SEC. 201 (1) AND HENCE, WE ARE OF THE VIEW THAT THE RATIO OF THE SAID DECISIO N CANNOT BE APPLIED TO THE DISALLOWANCE MADE U/S 40(A)(IA) OF THE ACT, 7.4 THE LAST CONTENTION OF THE ASSESSEE IS THAT THE SECO ND PROVISO TO SEC, 40(A)(IA) OF THE ACT, INSERTED BY THE FINANCE ACT, 2012 WITH EFFECT FROM 1.4.2013 IS CLARIFICATORY IN N ATURE AND HENCE THE BENEFIT OF THE SAME SHOULD BE APPLIED RETROSPECTIV ELY. HOWEVER, THE CORRECTNESS OF THIS CONTENTION HAS NOT BEEN EXAMINE D BY THE TAX AUTHORITIES. HENCE, IN THE INTEREST OF NATURAL JUSTIC E, WE ARE OF THE VIEW THAT THIS CONTENTION OF THE ASSESSEE REQUIRES EXAMIN ATION AT THE END OF THE ASSESSING OFFICER. ACCORDINGLY, WE MODI FY THE ORDER OF THE LD.CIT(A) AND SET ASIDE THIS GROUND TO THE FIL E OF THE ASSESSING OFFICER WITH THE DIRECTION TO EXAMINE THE ABO VE SAID CONTENTION OF THE ASSESSEE AND DECIDE THE SAME IN ACCOR DANCE WITH LAW, AFTER AFFORDING NECESSARY OPPORTUNITY OF BEING H EARD. WE 34 MAKE IT CLEAR THAT WE HAVE, IN EFFECT, REJECTED ALL THE CONTENTIONS OF THE ASSESSEE EXCEPT THE GROUND RELATING TO APPLICABILIT Y OF THE SECOND PROVISO TO SEC.40(A)(IA) OF THE ACT TO THE YEAR UNDER CONSIDERATION. 8.3 SINCE THE ABOVE ARGUMENTS ARE BEING ADVANCED BEF ORE THE TRIBUNAL FOR THE FIRST TIME AND THE CORRECTNESS OF THE CONTENTION HAS NOT BEEN EXAMINED BY THE TAX AUTHORITIES, THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF THE COCHIN BENCH OF THE TR IBUNAL CITED (SUPRA) AND IN THE INTEREST OF JUSTICE, WE RESTORE THI S ISSUE TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO EXAMINE TH E ABOVE CONTENTION OF THE ASSESSEE AND DECIDE THE ISSUE AFRESH AND IN ACCORDANCE WITH LAW. NEEDLESS TO SAY, THE ASSESSING OFFIC ER SHALL GIVE DUE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. WE HOLD AND DIRECT ACCORDINGLY. 26.4 SIMILAR VIEW HAS BEEN TAKEN IN THE CASE OF DC IT VS. M/S. BHANDARI ASSOCIATES AND VICE-VERSA VIDE ITA NO.1129 /PN/2012 AND CO NO.36/PN/2013 ORDER DATED 19-05-2014 FOR A.Y . 2008-09. RESPECTFULLY FOLLOWING THE DECISION OF THE COORDINA TE BENCHES OF THE TRIBUNAL CITED (SUPRA) WE SET ASIDE THE ISSUE T O THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO DECIDE THE IS SUE AFRESH AND IN ACCORDANCE WITH LAW AND AFTER GIVING DUE OPPORTUNIT Y OF BEING HEARD TO THE ASSESSEE. WE HOLD AND DIRECT ACCORDIN GLY. 27. IN THE RESULT, THE APPEAL FILED BY THE REVENUE FOR THE IMPUGNED ASSESSMENT YEAR IS ALLOWED AND THE CO FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ITA NO.2135/PN/2013 (BY ASSESSEE) (A.Y. 2007-08) : 28. GROUND OF APPEAL NO.1 BY THE ASSESSEE READS AS UNDER : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LOWER AUTHORITIES ERRED IN REOPENING THE COMPLET ED ASSESSMENT ESPECIALLY IN THE CIRCUMSTANCES THAT ALL THE MATERIAL FACTS WERE DISCLOSED BY THE APPELLANT IN THE RETURN FILED. 35 28.1 AFTER HEARING BOTH THE SIDES, WE FIND THIS GRO UND IS IDENTICAL TO THE GROUND OF APPEAL NO.1 BY THE ASSESSEE IN THE CO NO.63/PN/2014. WE HAVE ALREADY DECIDED THE ISSUE A ND THE GROUND RAISED BY THE REVENUE HAS BEEN DISMISSED. SINCE IN THE INSTANT CASE, THE ASSESSMENT WAS COMPLETED U/S.143(1) AND N OTICE WAS ISSUED WITHIN A PERIOD OF 4 YEARS FROM THE END OF T HE RELEVANT ASSESSMENT YEAR, THEREFORE, FOLLOWING THE REASONS G IVEN THEREIN WHILE DECIDING CO NO.63/PN/2014 THE GROUND RAISED B Y THE ASSESSEE IS DISMISSED. 29. GROUND OF APPEAL NO.2 BY THE ASSESSEE READS AS UNDER : 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LOWER AUTHORITIES ERRED IN INVOKING THE PROVISION S OF SECTION 40(A)(IA) AND THEREBY DISALLOWING A SUM OF RS.95,02,45 5/- BEING TRANSPORT CHARGES PAID ON BEHALF OF KATRAJ DAIRY BY D ISREGARDING THE SUBMISSION MADE BY THE ASSESSEE IN THIS REGARD. 29.1 AFTER HEARING BOTH THE SIDES, WE FIND THE AO M ADE ADDITION OF RS.95,02,455/- U/S.40(A)(IA) OF THE I.T. ACT FOR NON DEDUCTION OF TAX AT SOURCE FROM THE PAYMENTS MADE TO THE TRANSPO RTERS BY THE ASSESSEE. WE FIND IDENTICAL ISSUE HAD COME UP IN T HE CO FILED BY THE ASSESSEE FOR A.Y. 2006-07 VIDE CO NO.63/PN/2014 . IN THE PRECEDING PARAGRAPHS WE HAVE RESTORED THE ISSUE TO THE FILE OF THE AO WITH A DIRECTION TO DECIDE THE MATTER AFRESH IN THE LIGHT OF OUR REASONING GIVEN THEREIN. FOLLOWING THE SAME REASON ING, THIS GROUND BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES . 36 30. THE APPEAL FILED BY THE ASSESSEE FOR THE IMPUGN ED ASSESSMENT YEAR IS ACCORDINGLY PARTLY ALLOWED FOR STATISTICAL PURPOSES. 31. IN THE RESULT, ALL THE APPEALS AND CROSS OBJECT IONS ARE DECIDED AS UNDER : APPEAL NO(S). ASST. YEAR RESULT ITA NO.2438/PN/2012 2008-09 DISMISSED CO NO.64/PN/2014 2008-09 ALLOWED ITA NO.2436/PN/2012 2005-06 DISMISSED CO NO.62/PN/2014 2005-06 ALLOWED ITA NO.2437/PN/2012 2006-07 ALLOWED CO NO.63/PN/2014 2006-07 PARTLY ALLOWED FOR STATISTICAL PURPOSES ITA NO.2135/PN/2013 2007-08 PARTLY ALLOWED FOR STATISTICAL PURPOSES PRONOUNCED IN THE OPEN COURT ON 18-03-2015. SD/- SD/- (SUSHMA CHOWLA) (R.K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBE R PUNE DATED: 18 TH MARCH, 2015 SATISH COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. DEPARTMENT 3. THE CIT(A)-V, PUNE 4. THE CIT-V, PUNE 5. THE D.R, A PUNE BENCH 6. GUARD FILE BY ORDER // TRUE COPY // ASSISTANT REGISTRAR ITAT, PUNE BENCHES, PUNE