M H Sudharshan Reddy , Bangalore V. Deputy Commissioner of Income TAx Circle-6(2)(1), Bangalore

ITA 1169/BANG/2018

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 9217 (ITAT-BANGALORE)
• Duration Of Justice: 2 year(s) 4 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 09-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRIYADARSHI MISRA
• Assessee Lawyers: R CHANDRASHEKAR
• Keywords: Reopening of assessment; Depreciation; Difference of opinion; Reason to believe; Change of opinion; Reassessment proceedings; TDS
• Section: 143(3); 194C; 250; 143(2); 40a(ia); 13; 153; 148; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCHES B BENCH: BANGALORE BEFORE SHRI B.R. BASKARAN, ACCOUNTANT MEMBER AND SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA NO. 1169 /BANG/2018 (ASSESSMENT YEAR: 20 0 8 - 0 9) SHRI M H SUDHARSHAN REDDY, 20, 1 ST H CROSS, 8 TH MAIN, S S LAYOUT, SHARDHA COLONY, BASAVESHWARANAGAR, BANGALORE - 560 079 .APPELLANT . PAN ALIPS 3131M VS. DY. COMMISSIONER OF INCOME TAX, CIRCLE 6(2)(1), BANGA LORE. RESPONDENT. ASSESSEE BY: SHRI R. CHANDRASHEKAR, ADVOCATE. REVENUE BY: SHRI PRIYADARSHI MISRA, JCIT (D.R.) DATE OF HEARING : 10.06 .20 20. DATE OF PRONOUNCEMENT : 12 .08 .20 20. O R D E R PER SHRI PAVAN KUMAR GADALE, JM : THE ASSESSEE HAS FILED AN APPEAL AGAINST THE ORDER OF C OMMISSIONER OF INCOME TAX (APPEALS) - 14 , BANGALORE PASSED U/S . 143(3) R.W.S. 147 AND 250 OF THE INCOME TAX ACT, 1961. 2. THE ASSESSEE HAS RAISED THE F OLLOWING GROUNDS OF APPEAL : 2 ITA NO. 1169/BANG/2018 3 ITA NO. 1169/BANG/2018 3. THE BRIEF FACTS OF THE C ASE ARE THAT THE ASSESSEE IS A REAL ESTATE A GENT ENGAGED IN FORMATION AND SALE OF SITES , AND FILED THE RETURN OF INCOME FOR THE ASST YEAR 2008 - 09 ON 23.09.2008 WITH TOTAL INCOME OF RS.47,72, 140 / - . SUBSEQUENTLY, THE CASE WAS SELECTED FOR SCRUT INY AND NOTICE UNDER S ECTION 143(2) OF THE ACT WAS ISSUED. IN COMPLIANCE, THE LEARNED A UTHORIZED R EPRESENTATIVE APPEARED FORM TIME TO TIME AND THE CASE WAS DISCUSSED. IN THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HAS CALLED FOR DETAILS OF LAND DEVELOPMENT EXPENS ES, COMMISSION PAID AND HIRE CHARGES. THE ASSES SEE HAS PRODUCED THE DETAILS ALONG WITH VOUCHERS AND BILLS. SINCE MOST OF THE VOUCHERS ARE SELF - CERTIFIED AND DOES NOT CONTAIN FULL DETAILS , THE ASSESSING OFFICER MADE ADHOC ADDITION OF EXPENSES OF RS.6 LAKHS AND A SSESSED THE TOTAL INCOME OF RS.53,72,140 / - AND PASSED THE ORDER UNDER SECTION 143 (3) OF THE ACT DT.13.12.2010.SUBSEQUENTLY, THE ASSESSING OFFICER HAS REOPE NED THE ASSESSMENT BY ISSUE O F NOTICE/SEC148 OF THE ACT AND R EASONS REC ORDED LETTER DT.27.11.2014. IN THE REASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS DEBITED COMMISSION CHARGES, LAND DEVELOPMENT COST AND HIRE CHARGES WITHOUT DEDUCTION OF TAX AND THE P AYMENT S EXCEEDS THE SPECIFIED AMOUNTS UNDER SECTION 194C AND 194H OF THE ACT. THE ASSESSEE EXPLAINED THAT IN RESPECT OF COMMISSION 4 ITA NO. 1169/BANG/2018 CHARGES OF RS.10,71,264 / - THE PAYMENTS DOES NOT EXCEED THE STATUTORY LIMIT. FURTHER, THE CHARTERED ACCOUNTANT HAS QUALIFIED THAT THE ASSESSEE HAS NOT COMPLIED THE PROVISIONS OF CHAPTER XVIIB OF DEDU CTION OF TAX AT SOURCE IN FORM N O3CD CLAUSE 27(A). WHEREAS IN RESPECT OF H IRE CHARGES, THE CONTENTION S OF THE ASSES SEE ARE THAT THE PAYMENTS ARE TOWARDS JCB HIRE CHARGES PAID TO VARI OUS PER SONS ON DIFFERENT DATES AND THE PAYMENT S DOES NOT EXCEED THE LIMIT OF RS.20,000 / - UNDER THE PROVISIONS U NDER SECTION 194C OF THE ACT . BUT THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE EX PLANATION S OF THE ASSESSEE AND OBSERVED THAT THE COMMISSION CHARGES ARE SUBJECT TO TDS UNDER SECTION 194 H OF THE ACT AND THE H IRE CHARGES ARE SUBJECT TO TDS UNDER S ECTION 194C OF THE ACT. I N BOTH THE CASES, T HE ASSESSE E HAS FAILED TO DEDUCT TDS AND D ISALLOWED THE CLAIM AND A SSESSED T OTAL INCOME OF RS.70,71,404 / - A ND PASSED ORDER UNDER SECTION 143(3) R.W.S. 147 OF THE ACT DT.19.01.2015. AGGRIEVED BY THE ORDER, THE ASSESSEE HAS FILED AN APPEAL WITH THE CIT (APPEALS) , WHEREAS THE CIT (A) CONSIDERING THE GROUNDS OF APPE AL, SUBMISSIONS ON VALIDITY OF REASSESSMENT UNDER SECTION 147 OF THE ACT AND APPLICAB ILITY OF PROVISIONS OF TDS , HAS CONCURRED WITH THE ACTION OF THE ASSESSING OFFICER AND DI SMISSED THE ASSESSEE'S APPEAL. AGGRIEVED BY THE ORDER OF CIT (APPEALS), THE ASSESSEE HAS FILED AN APPEAL WITH THE TRIBUNAL. 4. AT THE TIME OF HEARING, THE LEARNED AUTHORIZED REPRE SENTATIVE HAS ARGUED ON THE LEGAL GROUND OF VALIDITY OF REOPENING OF ASSESSMENT UNDER SECTION 147 OF THE 5 ITA NO. 1169/BANG/2018 ACT, WHEREAS , THE ORIGINAL ASSESSMENT ORDER UN DER SECTION 143(3) WAS PASSED ON 13.10.2010 AND T HEREFO RE ISSUE OF REASSESSMENT N OTICE IS BEYOND THE TIME LIMIT UNDER THE ACT . THE LDAR ARGUED ON THE REASONS RECORDED F OR ISSUE OF NOTICE AND EXPLAINED THAT IT IS A MERE CHANGE OF OPINION OF THE ASSESSING OFFICER. THE ASSESSEE HAS COMPLIED WITH THE DIRECTI ONS OF ASSESSING OFFICER IN SUBMITTING THE INFORMATION ON E XPENSES SUPPORTED WITH FINANCIAL STATEMENTS AND TAX AUDIT REPORT IN THE ORIGINAL ASSESSMENT UNDER SECTION 143(3) OF THE ACT AND PRAYED FOR ALLOWING THE APPEAL. CONTRA, THE LEARNED DEPARTMENTAL REP RESENTATIVE SUPPORTED THE ORDERS OF CIT (APPEALS) AND SUBMITTED THAT IN THE ORIGINAL ASSESSMENT , THE ASSESSING OFFICER HAS OVERLOOKED THE FACT OF NON - DEDUCTION OF TDS ON EXPENSES AND HENCE INITIATING THE RE ASSESSMENT PROCEEDINGS IS VALID . 5. WE HEARD THE RIVAL SUBMISSIONS AND P ERUSED THE MATERIAL ON RECORD. PRIMA FACIE, THE LEARNED AUTHORIZED RE PRESENTATIVE MADE SUBMISSIONS ON THE VALIDIT Y OF REASSESSMENT PROCEEDINGS, INITIATED BEYOND A PERIOD OF FOUR YE ARS AND MERE CHANGE OF OPINION ON SAME SET OF FACTS, WHICH CANNOT BE SUSTAINED. THE ASSESSEE IN THE ORIGINAL ASSESSMENT PROCEEDINGS UNDER SECTION 143(3) OF THE ACT HAS F URNISHED THE DETAILS AND THE FACT OF NON - DEDUCTION OF TDS WAS MENTIONED IN THE FORM NO 3CD TAX AUDIT REPORT U/SEC44AB OF THE ACT . WE ON PERUSAL OF THE ASSESSMENT ORDER UNDER SECTION 143( 3) OF THE ACT DT.13.12 .2010 FIND THAT , THE ASSESSEE HAS SUBMITTED 6 ITA NO. 1169/BANG/2018 THE DETAILS AND THE ASSESSING OFFICER MADE A DHOC ADDITION REFERRED AT PAGE 2 PARA 2 OF THE ORDER WHICH IS READ AS UNDER : FURTHE R ON VERIFICATION OF FORM NO 3CD, PLACED AT PAGE 41 OF THE PAPER BOOK IN PARTICULAR CLAUSE 27(A), THE CHARTERED ACCOUNTANT HAS QUALIFIED THAT THE ASSESSEE HAS NOT COMPLIED WITH THE PROVISIONS OF CHAPTER XVIIB IN RESPECT OF DEDUCTION OF TAX AT SOURCE. T HE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS PRODUCED THE BILLS AND VOUCHERS AND ACCEPTED THE ASSESSEE CLAIM OF EXPENDITURE. SINCE THE EXPENSE ARE SELF - CERTIFIED AND DOES NOT CONTAIN FU LL DETAILS, THEREFORE AO MADE AN ADHOC ADDITION OF RS.6 LAKHS TOWAR DS EXPENSES AND WAS ACCEPTED BY THE ASSESSEE. FURTHER, ON PERUSAL OF THE REASONS FOR REOPE NING OF THE ASSESSMENT IN THE LETTER DT. 27.11.2014, THE ASSESSING OFFICER OBSERVED THAT SINCE THE ASSESSEE HAS NOT DEDUCTED TDS AS PER THE PROVISIONS OF SECTION 1 94 OF THE ACT ON EXPENSES HENCE CLAIM IS REQUIRED TO BE DISALLOWED AND BROUGHT TO TAX UNDE R SECTION 40A(IA) OF THE ACT. THE LEARNED AUTHORIZED REPRESENTATI VE EMPHASIZED THAT, THE R EASONS ARE ONLY A MERE CHANGE OF OP INION AND THE ASSESSEE HAS MADE TRUE AND FAIR DISCLOSURE OF 7 ITA NO. 1169/BANG/2018 FACTS AND FURNISHED THE DETAILS IN THE ORIGINAL ASSESSMENT PROCEEDINGS AND ALSO THERE IS NO LAPSE ON THE PART OF ASSESSEE . F URTHER THE FACT OF NON - DEDUCTION OF TDS WAS PLACED ON RECORD I N FORM NO 3CD. AT THIS STAGE, WE CONSIDER IT APPRO PRIATE TO REFER TO THE PROVISIONS OF SECTION 147 OF THE ACT R.W.EXPLANATION 1 WHICH IS READ AS UNDER : 147. IF THE ASSESSING OFFICER HAS REASON TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR, HE MAY, SUBJEC T TO THE PROVISIONS OF SECTIONS 148 TO 153 , ASSESS OR REASSESS SUCH INCO ME AND ALSO ANY OTHER INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURSE OF THE PROCEEDINGS UNDER THIS SECTION, OR RECOMPUTE THE LOSS OR THE DEPRECIATION ALLOWANCE OR ANY OTHER ALLOWANCE, AS THE C ASE MAY BE, FOR THE ASSESSMENT YEAR CONCERNED (HEREAFTER IN THIS SECTION AND IN SECTIONS 148 TO 153 REFERRED TO AS THE RELEVANT ASSESSMENT YEAR) : PROVIDED THAT WHERE AN ASSESSMENT UNDER SUB - SECTION (3) OF SECTION 143 OR THIS SECTION HA S BEEN MADE FOR THE RELEVANT ASSESSMENT YEAR, NO ACTION SHALL BE TAKEN UNDER THIS SECTION AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, UNLESS ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR SUCH ASSESSMENT YEAR BY RE ASON OF THE FAILURE ON THE PART OF THE ASSESSEE TO MAKE A RETURN UNDER SECTION 139 OR IN RESPONSE TO A NOTICE ISSUED UNDER SUB - SECTION (1) OF SECTION 142 OR SECTION 148 OR TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT, FOR THAT ASSESSMENT YEAR: PROVIDED FURTHER THAT NOTHING CONTAINED IN THE FIRST PROVISO SHALL APPLY IN A CASE WHERE ANY INCOME IN RELATION TO ANY ASSET (INCLUDING FINANCIAL INTEREST IN ANY ENTITY) LOCATED OUTSIDE INDIA, CHARGEABLE TO TAX, HAS E SCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR: PROVIDED ALSO THAT THE ASSESSING OFFICER MAY ASSESS OR REASSESS SUCH INCOME, OTHER THAN THE INCOME INVOLVING MATTERS WHICH ARE THE SUBJECT MATTERS OF ANY APPEAL, REFERENCE OR REVISION, WHICH IS CHARGEABLE TO TAX A ND HAS ESCAPED ASSESSMENT. EXPLANATION 1. PRODUCTION BEFORE THE ASSESSING OFFICER OF ACCOUNT BOOKS OR OTHER EVIDENCE FROM WHICH MATERIAL EVIDENCE COULD WITH DUE DILIGENCE HAVE BEEN DISCOVERED BY THE ASSESSING OFFICER WILL NOT NECESSARILY AMOUNT TO DISCLOSU RE WITHIN THE MEANING OF THE FOREGOING PROVISO. WE FIND THAT THE ASSESSEE HAS PRODUCED BILLS AND VOUCHERS FOR EXPENDITURE, PRIMA FACIE, THE ASSESSING OFFICER HAS NOT VERIFIED THE FACTS OF TDS /MATERIAL FILED ON RECORD, THEREFORE THE MISTAKE ON THE PA R T OF ASSESSING O FFICER IN THE ORIGINAL ASSESSMENT CANNOT BE A REASON FOR REOPENING OF ASSESSMENT . F URTHER THE ASSESSMENT 8 ITA NO. 1169/BANG/2018 IS REOPENED BEYOND THE TIME LIMIT PRESCRIBED UNDER SECTION 149(1)(A)OF THE ACT. WE FIND THAT THE ASSESSMENT ORDER U/SEC143(3) OF THE ACT WAS PASSEDON 13 - 12 - 2010 FOR THE ASST YEAR 2008 - 09 AND WHEREAS NOTICE U/SEC148 OF THE ACT DATED 21 - 01 - 2014, WAS ISSUED, WHICH IS BEYOND THE EXPIRY OF FOUR YEARS FROM THE END OF ASSESSMENT YEAR 2008 - 09 AND THE ASSESSEE HAS FILED THE DETAILS AND DIS CLOSED FULLY AND TRULY ALL MATERIAL FACTS RELEVANT TO THE ASSESSMENT YEAR IN CONSIDERATION. WE CONSIDERING THE FACTS AND PROVISIONS OF LAW, OBSERVE THAT THE ASSESSMENT WAS REOPENED BEYOND A PERIOD OF FOUR YEARS AND CANNOT BE SUSTAINED. ACCORDINGLY, WE QUA SH THE REASSESSMENT ORDER AND ALLOW THE APPEAL OF THE ASSESSEE. SINCE, WE HAVE DECIDED THE LEGAL ISSUE OF REOPENING OF ASSESSMENT, AGAIN ADJUDICATING ON MERITS BECOMES ACADEMIC . 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. PRONOUN CED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE. SD/ - SD/ - (B.R. BASKARAN) (PAVAN KUMAR GADALE) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 12 .08 .2020. *REDDY GP 9 ITA NO. 1169/BANG/2018 COPY TO 1. THE APPELLANT 2. THE RE SPONDENT 3. CIT (A) 4. PR. CIT 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME - TAX APPELLATE TRIBUNAL BANGALORE