VINODKUMAR BHUPENDRAKUMAR, MUMBAI V. ITO 14(3)(3), MUMBAI

ITA 1059/MUM/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 100825 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-08-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2006-2007
• Appeal Filed On: 14-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PAWAN KU MAR BEERLA
• Assessee Lawyers: DHIRENDRA M SHAH
• Keywords: Tangible material; Difference of opinion; Assessment record; Change of opinion; Reassessment proceedings
• Section: 143(3); 194C; 147; 148

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI , , BEFORE MS. SUSHMA CH O WLA , JUDICIAL MEMBER AND SHRI N.K . BILLAIYA, A CCOUNTANT M EMBER / I .T.A. NO . 1059/MUM/2014 ( / ASSESSMENT YEAR : 2006 - 07 M/S. VINODKUMAR BHUPENDRAKUMAR, C/O MANGALDAS D SHAH & CO., 506, LOTUS HOUSE, 5 TH FLOOR, 33 - A, NEW MARINE LINES, MUMBAI 400 020 / VS. THE ITO, 14(3)(3), 6 TH FLOOR, EARNEST HOUSE, MUMBAI - 400 021 ./ ./ PAN/GIR NO. : AAAFV 2489A ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY: SHRI DHIRENDRA M. SHAH / RESPONDENT BY : SHRI PAWAN KUMAR BEERLA / DATE OF HEARING : 30 . 0 7 .2015 / DATE OF PRONOUNCEMENT : 14 .0 8 .2015 / O R D E R PER N.K. BILLAIYA, AM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A) - 25 , MUMBAI DT. 28.1.2014 PERTAINING TO ASSESSMENT YEAR 200 6 - 0 7 . 2. THE ASSESSEE HAS RAISED TWO SUBSTANTIAL GROUNDS OF APPEAL. WITH GROUND NO. 1 THE ASSESSEE HAS CHALLENGED THE JURISDICTION OF THE OFFICER IN ITA. NO . 1059/MUM/2014 2 REOPENING THE COMPLETED ASSESSMENT U/S. 147 OF THE ACT. IT IS THE SAY OF THE LD. COUNSEL THAT THE LD. CIT(A) ERRED IN UPHOLDING THE REASSESSMENT PROCEEDINGS U/S. 147 AS VALID. 2.1. THE ORIGINAL ASSESSMENT WAS MADE U/S. 143(3) OF THE ACT ON 8.12.2008 IN WHICH THE TOTAL INCOME WAS ASSESSED AT RS/. 7,12,010/ - . THE ADDITION MADE IN THE ASSESSMENT ORDER WERE CARRIED BEFORE THE LD. CIT(A) WHICH WERE CONFIRMED BY THE LD. CIT(A) BY ORDER DATED 12.2.2010. THE MATTER THEN WAS TAKEN UP TO THE TRIBUNAL AND THE ASSESSEE GOT PART RELIEF. HOWEVER, SUBSEQUENTLY, THE ASSESSMENT WAS REOPENED AFTER RECORDING THE REASONS AND OBTAINED THE NECESSARY SATISFACTION OF THE JCIT, MUMBAI. ACCORDINGLY, NOTICE U/S. 148 WAS ISSUED AND SERVED UPON THE ASSESSEE. THE REASONS FOR REOPENING THE ASSESSMENT WERE ALSO COMMUNICATED TO THE ASSESSEE. 2.2. PURSUANT TO THE NOTICE, THE ASSESSEE FILED RETURN OF INCOME ON 31.12.2008 DECLARING THE TOTAL INCOME AT RS. 7,12,010/ - WHICH WAS ASSESSED INCOME OF THE ORIGINAL RETURN OF INCOME. 2.3. DURING THE COURSE OF THE REASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER SOUGHT EXPLANATION FROM THE ASSESSEE WHY TAX HAS NOT BEEN DEDUCTED AT SOURCE ON THE PAYMENT OF FREIGHT CHARGES OF RS. 5,65,921/ - AND CLEARING AND F ORWARDING CHARGES OF RS. 5,38,258/ - . THE ASSESSEE STRONGLY OBJECTED TO THE REASSESSMENT PROCEEDINGS AND CLAIMED THAT THE PROCEEDINGS ARE BAD IN LAW AND CONTRARY TO THE FACTS AND EVIDENCE ON RECORD. IT WAS EXPLAINED THAT THE PARTICULARS OF PAYMENT MADE TO THE C&F AGENT WITH EXPLANATION AS TO WHY TDS WAS NOT REQUIRED TO BE MADE WAS GIVEN DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND HAVING BEEN SATISFIED AFTER SCRUTINY, ACCEPTING THE E XPLANATION NO ADDITION WAS MADE. ITA. NO . 1059/MUM/2014 3 WITHOUT PREJUDICE TO THIS SUBMISSION, THE ASSESSEE FILED THE NECESSARY DETAILS AND CLAIMED THAT THE PAYMENT OF C&F CHARGES ARE NOTHING BUT REIMBURSEMENT AND THEREFORE PROVISIONS OF SEC. 194C R.W. SEC. 40(A)(IA) OF THE ACT ARE NOT ATTRACTED. THE SUBMISSIONS MADE BY THE ASSESSEE DID NOT FIND A NY FAVOUR WITH THE AO WHO WAS OF THE STRONG BELIEF THAT THE ASSESSEE HAS FAILED TO COMPLY WITH THE PROVISIONS OF SEC. 194C OF THE ACT AND ACCORDINGLY DISALLOWED A SUM OF RS. 11,04,179/ - U/S. 40(A)(IA) OF THE ACT. 3. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) AND REITERATED WHAT HAS BEEN SUBMITTED BEFORE THE AO. AFTER CONSIDERING THE FACTS AND THE SUBMISSIONS, THE LD. CIT(A) CONFIRMED THE ASSESSMENT ORDER. 4. AGGRIEVED BY THIS, THE ASSESSEE IS BEFORE US. 5. ON THE REOPENING OF THE ASSESSMEN T, THE LD. COUNSEL VEHEMENTLY SUBMITTED THAT THE REASSESSMENT PROCEEDINGS ARE BED IN LAW INASMUCH AS DURING THE COURSE OF THE ORIGINAL ASSESSMENT PROCEEDINGS , T HE AO HAS VERIFIED AND EXAMINED THE PAYMENTS IN THE LIGHT OF THE PROVISIONS APPLICABLE FOR TDS A ND NO ADDITIONS HAVE BEEN MADE, THEREFORE, REOPENING THE ASSESSMENT FOR MAKING THE ADDITIONS ON THE SAME ISSUE IS NOTHING BUT CHANGE OF OPINION. RELIANCE WAS PLACED ON THE DECISION OF THE HONBLE HIGH COURT OF BOMBAY IN THE CAS E OF GKN SINTER METALS LTD. VS ACIT & OTHERS 371 ITR 225. 6. THE LD. DEPARTMENTAL REPRESENTATIVE STRONGLY SUPPORTED THE ORDERS OF THE REVENUE AUTHORITIES. 7. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE AUTHORITIES BELOW AND THE RELEVANT DOCUMENTARY EVIDENCES BROUGHT ON RECORD. WE HAVE ALSO ITA. NO . 1059/MUM/2014 4 GONE THROUGH THE DECISION OF THE HONBLE HIGH COURT OF BOMBAY (SUPRA). THE UNDISPUTED FACT IS THAT DURING THE COURSE OF TH E ORIGINAL ASSESSMENT PROCEEDINGS, A SPECIFIC QUERY WAS RAISED REGARDING THE APPLICABILITY OF TDS PROVISIONS ON PAYMENT S ON ACCOUNT OF TRANSPORT CHARGES. THE ASSESSEE IN ITS REPLY DATED 15.9.2008 AT POINT NO. 14(A) HAS SPECIFICALLY ANSWERED TO THE QUERY ABOUT THE APPLICABILITY OF THE TDS PROVISION, THE SAME IS EXHIBITED AT PAGE - 52 OF THE PAPER BOOK AND AT PARA - 14(B) THE ASSESSEE HAS EXPLAINED THE PAYMENT MADE TO CLEARING AND FORWARDING AGENT. IN THE LIGHT OF THE AFOREMENTIONED REPLY GIVEN BY THE AS SESSEE DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, LET US NOW SEE THE REASONS RECORDED FOR THE REOPENING OF THE ASSESSMENT. THE ASSESSEE HAS FILED RETURNED INCOME OF RS. 5,80,344/ - ON 31.10.2006 AND THE CASE HAS BEEN SELECTED FOR SCRUTINY UNDER CAS S AND THE ASSESSMENT WAS COMPLETED U/S. 143(3) ON 8.12.2008, DETERMINING THE TOTAL INCOME AT RS. 7,12,010/ - . ON SCRUTINY OF ASSESSMENT RECORDS IT IS SEEN THAT TDS AMOUNT OF RS. 11,545/ - ON FREIGHT CHARGES AND TDS OF RS. 12,079/ - ON CLEARING & FORWARDING C HARGES HAS NOT BEEN DEDUCTED AT ALL. SINCE THE ASSESSEE HAS VIOLATED SEC. 194C, THE ASSESSMENT NEEDS TO BE RECTIFIED BY DISALLOWING THE FREIGHT CHARGES OF RS. 5,65,921/ - AND CLEARING & FORWARDING CHARGES OF RS. 5,38,258/ - BY INVOKING SECTION 40(A)(IA) AND ADDED BACK TO THE TOTAL INCOME. IN ORDER TO TAX THE AFORESAID ESCAPED INCOME BY DISALLOWING AS PER PROVISION OF SEC. 40(A)(IA), THE ASSESSMENT IS REOPENED. 7.1. A PERUSAL OF THE REASONS FOR THE REOPENING OF THE ASSESSMENT SHOWS THAT THERE IS NO NEW M ATERIAL EVIDENCE ON RECORD BROUGHT BY THE AO TO JUSTIFY THE REASSESSMENT PROCEEDINGS. A SPECIFIC QUERY WAS RAISED DURING THE COURSE OF THE ORIGINAL ASSESSMENT PROCEEDINGS WHICH WAS REPLIED SPECIFICALLY BY THE ASSESSEE AS MENTIONED ELSEWHERE. IN OUR CONSI DERED ITA. NO . 1059/MUM/2014 5 OPINION, THE REASONS RECORDED BY THE AO REFERRED TO IN THE FACTS ALREADY ON RECORD WITHOUT ANY SUFFICIENT OR ADEQUATE MATERIAL AVAILABLE , THE REASSESSMENT HAS BEEN DONE. WE FIND THAT THERE IS NO RATIONAL AND TANGIBLE NEXUS BETWEEN THE REASONS AND BE LIEF. THE OBSERVATIONS OF THE HONBLE HIGH COURT OF ALLAHABAD IN THE CASE OF ARUN GUPTA VS UNION OF INDIA AND OTHERS 371 ITR 394 IS WORTH MENTIONING. THE PROVISIONS OF SECTIONS 147 AND 148 OF THE INCOME - TAX ACT, 1961, INDICATE THAT THE ASSESSING OFFIC ER HAS WIDE POWERS TO REOPEN THE ASSESSMENT, IF HE HAS REASONS TO BELIEVE THAT THE INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. HOWEVER, THIS WIDE POWER IS CIRCUMSCRIBED AND DOES NOT GIVE JURISDICTION TO THE ASSESSING OFFICER TO REOPEN A COMPLETED ASSE SSMENT ON A MERE CHANGE OF OPINION. THE REASONS TO BELIEVE CANNOT BE BASED OR BE AN OUTCOME OF A CHANGE OF OPINION. FURTHER, THE PROVISO TO SECTION 147 INDICATES THAT IF MORE THAN FOUR YEARS HAVE ELAPSED FROM THE END OF THE RELEVANT ASSESSMENT YEAR, IN ADD ITION TO THE SATISFACTION OF THE ASSESSING OFFICER THAT HE HAS REASONS TO BELIEVE, HE MUST ALSO INDICATE THAT THE ASSESSEE HAD FAILED TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT FOR THAT ASSESSMENT YEAR. IF A NOTICE UNDER SE CTION 148 HAS BEEN ISSUED WITHOUT THE JURISDICTIONAL FOUNDATION UNDER SECTION 147 BEING AVAILABLE TO THE ASSESSING OFFICER, THE NOTICE AND THE SUBSEQUENT PROCEEDINGS WOULD BE WITHOUT JURISDICTION AND WOULD BE LIABLE TO BE QUASHED IN A WRIT JURISDICTION . 7.2. AS NO TANGIBLE MATERIAL EVIDENCE WAS BROUGHT ON RECORD BY THE AO, THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF CIT VS KELVINATOR OF INDIA LTD. 320 ITR 561 SQUARELY APPLY ON THE FACTS OF THE CASE. ALLOWING GROUND NO. 1, WE HOLD TH AT THE AO HAS NO JURISDICTION TO INITIATE REASSESSMENT PROCEEDINGS , A CCORDINGLY THE ORDER IS QUASHED. ITA. NO . 1059/MUM/2014 6 8. SINCE WE HAVE QUASHED THE REASSESSMENT ORDER, WE DO NOT FIND IT NECESSARY TO ADJUDICATE ON THE DISALLOWANCE MADE ON THE MERITS OF THE CASE. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. OR DER PRONOUNCED IN THE OPEN COURT ON 14 TH AUGUST , 2015 SD/ - SD/ - ( SUSHMA CH O WLA ) (N.K. BILLAIYA) /JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED 14 TH AUGUST, 2015 . . ./ RJ , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI