ACIT, Circle-9(1), Hyderabad V. Sri Sankineni Krishna Rao, Hyderabad

ITA 1054/HYD/2013

• Counselvise Citation: 105422514 RSA 2013
• Duration Of Justice: 7 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-02-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 04-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S RAMA RAO
• Keywords: Reopening of assessment
• Section: 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A', HYDERABAD BEFORE SHRI B.RAMAKOTAIAH, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO.1054/HYD/2013 : ASSTT. YEAR 2005 - 06 ASSTT. COMMISSIONER OF INCOME - TAX, CIRCLE 9(1), HYDERABAD V/S. SHRI SANKINENI KRISHNA RAO, SUYAPET ( PAN - AFBPS 7516 P ) (APPELLANT) (RESPONDENT) APPELLANT BY : S HRI JEEVAN LAL LAVIDIYA DR RESPONDENT BY : SHRI S.RAMA RAO DATE OF HEARING 13 . 2 .201 4 DATE OF PRONOUNCEMENT 13.2.2014 O R D E R PER ASHA VIJAYARAGHAAN, JUDICIAL MEMBER: THIS IS A N APPEAL BY THE REVENUE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME - TAX (APPEALS) V, HYDERABAD DATED 28.3.2013 FOR THE ASSESSMENT YEAR 2005 - 06. 2. EFFECTIVE GROUNDS OF THE REVENUE IN THIS APPEAL ARE AS FOLLOWS - 1. .. 2. W H ETH E R THE LD. CIT(A) HYDERABAD IS CORRECT IN LAW IN HOLDING THA T THE FDSD AMOUNT IS TAXABLE ONLY IN THE Y E AR OF RELE A SE BY THE R E SPEC T IVE DEP A RTMENT, AS FSD I S A P ART OF THE GROSS BILLS PAID TO THE ASSESSEE BUT RETAINED BY THE R E SP E CTIVE DEPARTMENT AS A MINIMUM GUARANTEE AMOUNT FOR COMPEN S ATING THE SAME AGAINST THE FAILURES OF THE CONTRACTOR, IF AT ALL, IN COPING UP WITH TH E STANDARDS LAID DOWN BY THE RESPECTIVE DEPARTM E NT. 3. WH E TH E R THE LD. CIT(A) IS CORRECT IN HOLDING THAT THE RE - ASSESSMENT IS NO T LEGALLY CORRECT AS THE NOTICE U/S. 148 REOPENIN G O F TH E ASSESSMENT WAS ISSUED AFTER 4 YEARS FROM THE END O F THE ASSESSMENT YEAR, AS THE PROVISO TO S E C T ION 147 CLEARLY SAYS THAT THE ASSESSING OFFICER CAN ISSUE THE NO T ICE BEYON D THE PERIO D OF 4 YEARS IF THE INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR SUCH ASST. YEAR BY R E ASON OF TH E FAI L URE ON THE P A RT O F THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS N E CESSARY FOR HI S ASSESSMENT FOR THAT ASST. YEAR. 04. . ITA NO. 1 054 / HYD/201 3 SHRI S. KRISHNA RAO, SURYAPET 2 3. FACTS OF THE CASE, IN BRIEF , ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND CARRIED ON CIVIL CONTRACT WORKS DURING THE YEAR UNDER APPEAL . IN TH E RETURN OF INCOME FILED ON 1.1.2005, ASSESSEE ADMITTED AN INCOME OF RS.58,93,415. THE ASSESSING OFFICER INITIALLY COMPLETED THE ASSESSMENT ON A TOTAL INCOME OF RS .66,93,420, VIDE ORDER OF ASSESSMENT DATED 24.12.2007 PASSED UNDER S.14 3(3) OF THE ACT. SUB S EQUENTLY, THE ASSESSING OFFICER ISSUED A NOTICE UNDER S.148 OF THE ACT ON 22.4.2010, ON THE GROUND THAT AN AMOUNT OF R S .46,14,257 DEDUCT E D TOWARDS FSD WAS NO T ADMITTED AS INCOME FOR THE ASSESSMENT YEAR UNDER CON S ID E RATION. THE ASSES SING OFFICER, BRINGING TO TAX THE SAID AMOUNT OF RS.46,14,257, COMPLETED THE RE - ASSESSMENT UNDER S.143(3) READ WITH S.147 OF THE ACT, ON A TOTAL INCOME OF RS.1,13,67,670. 4. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A). THE CIT(A) OBSERVING TH AT AT THE TIME OF COMPLETION OF THE ASSESSMENT , TWO JUDGMENTS OF VARIOUS COURTS SUPPORT THE PROPOSITION THAT FSD CANNO T B E BROUGHT T O TAX UNLESS THE SECURITY PERIOD EXPIRES. TAKING NOTE OF THE DECISIONS OF THE KERALA HIGH COU R T IN TH E CASE OF JANATHA CON T RACT CO. V/S. CIT(105 ITR 627); AND OF THE MARAS HIGH COU R T IN THE CA S E OF CIT V/S. P&C CON S TRUCTION S (P) LTD.(318 ITR 113), WHEREIN IT WAS HELD THAT THE FSD NEED NOT B E OFFERED AS INCOME UNLESS THE SAID AMOUN T WAS PAID AFTER TH E GUARANTEE PERIOD IS COMPLE TED, DECIDED TH IS ISSUE IN FAVOUR OF THE ASSESSEE. 5. THE CIT(A) FURTHER NOTED THE DETAILS OF FSD WERE AVAILABLE IN THE COMPUTATION SHEET ITSELF AND THE AMOUNT OF FSD WAS REDUCED BY THE ASSESSEE FROM THE TOTAL RECEIPTS, AND AS SUCH ALL THE FACTS WE RE MADE AVAILABLE TO THE ASSESSING OFFICER, AT THE TIME OF COMPLETION OF THE REGULAR ASSESSMENT UNDER S.143(3) IN THE FIRST INSTANCE. SINCE REOPENING OF ASSESSMENT WAS MADE IN THE PRESENT CASE BY ISSUANCE OF NOTICE UNDER S.148 ON 22.4.2010, I.E. AFTER A PERIOD OF FOUR YEARS FORM THE END OF THE ASSESSMENT YEAR, THE CIT(A) HELD THAT IN THE ABSENCE OF ANY NEW MATERIAL BROUGHT ON RECORD TO SHOW THAT ANY FRESH INFORMATION IS AVAILABLE BEFORE THE ASSESSING OFFICER TO INDICATE ESCAPEMENT OF ITA NO. 1 054 / HYD/201 3 SHRI S. KRISHNA RAO, SURYAPET 3 INCOME FROM TAX, RE OPENING OF ASSESSMENT IS NOT VALID. HENCE, RELYING ON THE DECISION OF THE APEX COURT IN THE CASE OF CIT V/S. KELVINATOR OF INDIA LTD. (320 ITR 561), THE CIT(A) HELD THAT THE REOPENING OF THE ASSESSMENT ITSELF IS NOT VALID. 6. AGGRIEVED BY THE ORDER O F THE CIT(A) AS ABOVE, RE VENU E PREFERRED THE PRESENT APPEAL. 7. WE HEARD BOTH PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. AS FOR THE ASSESSABILITY OF THE AMOUNT OF FSD, AS NOTED BY THE CIT(A) THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISIONS OF VARIOUS COURTS, INCLUDING THE ONES, SPECIFICALLY NOTED BY THE CIT(A) IN THE IMPUGNED ORDER. IN THE RECENT DECISION OF THE HONBBLE GUJARAT HIGH COURT IN THE CASE OF DIRECTOR OF INCOME - TAX(INTERNATIONAL TAXATION) V.S. BALLAST NEDAM INT ERNATIONAL (355 ITR 300), DEALING WITH THE ASSESSABILIY OF AMOUNT RETAINED TO ENSURE SATISFACTORY PERFORMANCE OF CONTRACT, WHICH IS AKIN TO FSD IN THE PRESENT CASE, IT HAS BEEN HELD THAT UNLESS AND UNTIL A DEBT IS CREATED IN FAVOUR OF THE ASSESSEE, WHICH IS DUE BY SOMEBODY, IT CANNOT BE SAID THAT THE ASSESSEE HAS ACQUIRED A RIGHT TO RECEIVE THE INCOME OR THAT THE INCOME HAS ACCRUED TO HIM. IN THIS VIEW OF THE MATTER, RESPECTFULLY FOLLOWING THE RATIO OF VARIOUS HIGH COURTS ON THE POINT AT ISSUE, WE DO NOT FIND ANY INFIRMITY IN THE IMPUGNED ORDER OF THE CIT(A), ON THIS ASPECT. CONSEQUENTLY, GROUND NO.1 OF THE REVENUE IN THIS APPEAL IS REJECTED. 8. EVEN WITH REGARD TO GROUND NO.2, RELATING TO LEGALITY AND VALIDITY OF REOP E NIN G OF THE ASSESSMENT, IT I S EVI DENT F R OM THE IMPUGNED ORDERS OF THE REVENUE AUTHO R ITI E S THAT THE DETAILS OF FSD ARE AVAILABLE IN THE COMPUTATION STATEMENT ITSELF, FURNISHED BY THE ASSESSEE ALONGWITH THE RETURN OF INCOME, WHEREIN THE AMOUNT OF FSD HAS BEEN REDUCED FROM THE GROSS CONTRACT RECEIPTS. FROM THIS, IT IS EVIDENT THAT REOPENING OF ASSESSMENT HAS BEEN DONE IN THIS CASE BASED ON THE VERY SAME MATERIAL WHICH WAS ALREADY AVAILABLE AT THE TIME OF MAKING THE ORIGINAL ASSESSMENT. SINCE IN THE PRESENT CASE, REOPENING OF ITA NO. 1 054 / HYD/201 3 SHRI S. KRISHNA RAO, SURYAPET 4 ASSESSMENT IS D ONE AFTER A PERIOD OF FOUR YEARS, THE SAME IS NOT PERMISSIBLE UNLESS THE ASSESSING OFFICER COMES TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT ON ACCOUNT OF FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE TRULY AND COMPLETELY ALL THE MATERIAL RELEVANT FOR COMPLETION OF THE ASSESSMENT. SINCE THAT IS NOT THE POSITION IN THE PRESENT CASE, THE REOPENING OF ASSESSMENT BEYOND FOUR YEARS, IS BAD IN LAW, AS HELD BY THE CIT(A). FOLLOWING THE RATIO LAID DOWN BY THE APEX COURT IN THE ABOVE CASE, IT HAS BEEN CONSIST ENTLY HELD BY VARIOUS HIGH COURTS, INCLUDING THE JURISDICTIONAL HIGH COURT IN THE CASE OF MAHALAKSHMI MOTORS LTD. V/S. DCIT (265 ITR 53) AND THE COORDINATE BENCHES OF THE TRIBUNAL IN SIMILAR MATTERS , THAT WHEN ALL THE FACTS HAVE BEEN FULLY DISCLOSED BY THE ASSESSEE, THE NOTICE OF RE - OPENING OF ASSESSMENT AFTER FOUR YEARS FROM THE END OF THE ASSESSMENT YEAR, IS NOT VALID. 9. IN THE LIGHT OF THE ABOVE DISCUSSION, WE FIND NO INFIRMITY IN THE IMPUGNED ORDER OF THE CIT(A), EVEN ON THE ASPECT OF REOPENING OF ASSESSMENT UNDER S.147 OF THE ACT. WE ACCORDINGLY UPHOLD THE SAME, REJECTING THE GROUND OF THE REVENUE ON THIS ASPECT. 10. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE COURT ON 1 3 TH FEBRUARY, 2014 SD/ - SD/ - (B.RAMAKOTAIAH ) (ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER DT/ - 13 TH FEBRUARY, 2014 COPY FORWARDED TO: 1. SHRI SANKINENI KRISHNA RAO (SUYAPET) C/O. SHRI S.RAMA RAO, FLAT NO.102, SHIRYA'S ELEGANCE, NO.3 - 6 - 643, STREET NO.9, HIMAYATNAGAR, HYDERABAD 500029 2. ASSTT. COMMISSIONER OF INCOME - TAX CIRCLE 9(1), HYDERABAD 3. COMMISSIONER OF INCOME - TAX(APPEALS) V , HYDERABAD 4. COMMISSIONER OF INCOME - TAX I V HYDERABAD 5. DEPARTMENTAL REPRESENTATIVE, ITAT, HYDERABAD. B.V.S