ACIT, Cuttack V. M/s. Shree Builders, Jagatsinghpur

ITA 120/CTK/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 5342 (ITAT-CUTTACK)
• Duration Of Justice: 2 year(s) 7 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-11-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 28-06-2017
• Assessment Year: 2006-2007
• Appeal Filed On: 25-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K DASH CIT DR D K PRADHAN
• Assessee Lawyers: A P MISHRA
• Keywords: Reopening of assessment; Depreciation; Tangible material; Difference of opinion; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 143(3); 194C

Judgement Text

1 ITA NO.120/CTK/2015 C.O.NO.17/CTK/2915 ASSESSMENT YEAR : 2006 - 2007 IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE S/SHRI N.S SAINI, ACCOUNTANT MEMBER AND PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA NO. 120 /CTK/201 5 ASSESSMENT YEAR : 20 06 - 2007 ACIT, CIRCLE - 1(1), CUTTACK VS. M/S. SHREE BUILDERS, QR. NO.NB/237, NUA BAZAR, PARADEEP DIWT: JAGATSINGHPUR PAN/GIR NO. (APPELLANT ) .. ( RESPONDENT ) C.O.NO.17/CTK/.2015 (IN ITA NO.120/CTK/2015: A.Y. 2006 - 07) M/S. SHREE BUILDERS, QR.NO.NB/237, NUA BAZAR, PARADEEP DIWT: JAGATSINGHPUR VS. ACIT, CIRCLE - 1(1), CUTTACK PAN/GIR NO. (CROSS OBJECTOR) .. ( RESPONDENT ) ASSESSEE BY : SHRI A.P.MISHRA, AR REVENUE BY : SHRI S.K.DASH , CIT DR /D.K.PRADHAN, DR DATE OF HEARING : 21 /11 / 2017 DATE OF PRONOUNCEMENT : 23 /11 / 2017 O R D E R PER PAVAN KUMAR GADALE, JM TH E APPEAL FILED BY THE REVENUE AND CROSS OBJECTION FILED ASSESSEE ARE DIRECTED AGAINST THE ORDER OF THE CIT(A) - , CUTTACK DATED 29.12.2014 FOR THE ASSESSMENT YEAR 2006 - 07. 2 ITA NO.120/CTK/2015 C.O.NO.17/CTK/2915 ASSESSMENT YEAR : 2006 - 2007 2. ALTHOUGH AS MANY AS SIX GROUNDS OF APPEAL TAKEN BY THE REVENUE IN ITS APPEAL, BUT THE SOLE IS INVOLVED IN THOSE GROUNDS THAT AS TO WHETHER THE C IT(A) WAS JUSTIFIED IN HOLDING THE INITIATION O F PROCEEDINGS U/S.147 OF THE ACT IS BAD IN LAW, WHERE THE ASSESSING OFFICER HAS SUFFICIENT REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF WORKS CONTRACT. IT FILED THE RETURN OF INCOME ON 31.10.2006 SHOWING TOTAL INCOME OF RS.4,98,010/ - . SCRUTINY ASSESSMENT U/S.143(3) OF THE ACT WAS COMPLETED ON 28.4.2008 DETERMINING THE TOTAL INCOME AT RS.7,71,810/ - BY MAKING ESTIMATED DISALLOWANCES OF EXPENSES UNDER DIFFERENT HEADS. 4. THEREAFTER, THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS CLAIMED TRANSPORTATION CHARGES OF RS.10,26,400/ - . ON VERIFICATION OF RELEVANT LEDGER ACCOUNT, THE ASSESSING OFFICER NOTED THAT RS.2,20,000/ - , RS.2,50,000/ - AND RS.42,6 61/ - WERE CLAIMED AGAINST SHRI NARESH NAYAK, M/S. JAYA MATADI CO AND SRI S.P.ROUT, RESPECTIVELY BUT NO TAX HAVE BEEN DEDUCTED ALTHOUGH TRANSPORTATION CHARGES ARE SUBJECT TO TDS AS PER SECTION 194C. IT WAS ALSO OBSERVED THAT OUT OF HIRE CHARGES OF RS.12,63 ,400/ - , A SUM OF RS.1,60,443/ - HAS BEEN SHOWN AGAINST M/S. BISWAKARMA EARTH MOVERS BUT NO TAX HAS BEEN DEDUCTED AS PER SECTION 194I AND EXCESS DEPRECIATION OF RS.2,13,987/ - I.E. @ 30% WAS ALLOWED TO THE ASSESSEE. ON THE ABOVE BACKGROUND OF THE CASE, THE A SSESSING OFFICER WAS OF THE OPINION THAT INCOME TO THE EXTENT OF RS.8,87,091 / - HAS 3 ITA NO.120/CTK/2015 C.O.NO.17/CTK/2915 ASSESSMENT YEAR : 2006 - 2007 ESCAPED ASSESSMENT AND, THEREFORE, HE ISSUED NOTICE U/S.148 OF THE ACT TO REOPEN THE ASSESSMENT U/S.147 OF THE ACT. IN RESPONSE TO NOTICE U/S.148 OF THE ACT, THE A.R. OF T HE ASSESSEE SUBMITTED THAT THE RETURN FILED ON 31.10.2006 MAY BE TREATED AS RETURN OF INCOME FILED IN RESPONSE TO NOTICE U/S.148 OF THE ACT. THEREAFTER, THE ASSESSING OFFICER ISSUED NOTICES U/S.142(1) FIXING THE DATE OF HEARING ON 6/9/2011 AND REQUIRING T HE ASSESSEE TO FURNISH VARIOUS DETAILS IN RELATION TO TRANSPORTATION CHARGES PAID, LABOUR & WAGES PAID AND ALSO CLAIM OF DEPRECIATION @ 30% INSTEAD OF 15%. DESPITES VARIOUS OPPORTUNITIES TO FURNISH THE REQUIRED DETAILS, THERE WAS NO COMPLIANCE FROM THE SIDE OF THE ASSESSEE, THEREFORE, THE ASSESSING OFFICER COMPLETED THE ASSESSMENT U/S.144/147 OF THE ACT DISALLOWING TRANSPORTATION CHARGES, HIRE CHARGES AND LABOUR CHARGES AND REDUCING DEPRECIATION. 5. ON APPEAL, THE CIT(A) FOUND THAT DURING THE ORIGINAL A SSESSMENT U/S. 143(3) OF THE ACT, THE ASSESSING OFFICER HAD VERIFIED PARTICULARLY MATERIALS CONSUMED, LABOUR CHARGES, TRANSPORTATION CHARGES AND POSTAGE AND TELEPHONE CHARGES AND MADE SOME DISALLOWANCE OF EXPENDITURE CLAIMED ON SUCH EXPENSES, WHICH ARE MEN TIONED IN THE BODY OF ORDER. THEREFORE, THE CIT(A) OPINED THAT ALTHOUGH THE DETAILS WERE BEFORE THE ASSESSING OFFICER DURING THE ORIGINAL ASSESSMENT AND AFTER EXAMINING THE SAME AGAIN REOPENED THE ASSESSMENT U/S.147 OF THE ACT ON THE SAME ACCOUNTS. THE CIT(A) OBSERVED THAT IN THE CASE OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2005 - 06, IN SIMILAR SITUATION, THE ASSESSMENT COMPLETED 4 ITA NO.120/CTK/2015 C.O.NO.17/CTK/2915 ASSESSMENT YEAR : 2006 - 2007 U/S.143(3) OF THE ACT WAS REOPENED U/S.144/147 OF THE AC T AND THE CIT(A) TREATED THE REASSESSMENT ORDER AS BAD IN LAW. AGAINST THE DECISION OF THE CIT(A), THE REVENUE HAD PREFERRED APPEAL BEFORE THE ITAT, WHEREIN, THE CUTTACK BENCH OF THE TRIBUNAL HAS OBSE RVED THAT WE FIND THAT THERE IS NOTHING NEW WHICH CAM E TO THE NOTICE OF THE REVENUE AND THE REASSESSMENT WAS PASSED ON MERE RELOOK WHICH IS NOT PERMISSIBLE UNDER THE LAW. IN THE CASE OF CIT VS. BHANJI LAVJI(1971) 79ITR 582, HONBLE SUPREME COURT HELD THAT WHEN THE PRIMARY FACTS NECESSARY FOR ASSESSMENT ARE FULLY AND TRULY DISCLOSED, THE ITO WILL NOT BE ENTITLED ON CHANGE OF OPINION TO COMMENCE PROCEEDING FOR REASSESSMENT.. ACCORDINGLY, THE CIT(A) OBSERVED THAT THE REASSESSMENT U/S.147 IS BAD IN LAW. 6. BEING AGGRIEVED BY THE ORDER OF THE CITA), THE REVENU E IS IN APPEAL BEFORE US. 7. AT THE TIME OF HEARING, LD D.R. SUBMITTED THAT FROM THE ORIGINAL ASSESSMENT U/S.143(3), IT WAS CLEARLY EVIDENT THAT THE ASSESSING OFFICER HAD NOT EXAMINED THE APPLICABILITY OF STATUTORY PROVISIONS OF SECTION 40(A)(IA) READ WITH SECTION 194C OF THE ACT IN RESPECT OF CLAIM OF TRANSPORTATION CHARGES, LABOUR CHARGES, HIRE CHARGES AND ALSO DEPRECIATION ALLOWED TO TIPPERS. THEREFORE, THE ASSESSING OFFICER WAS JUSTIFIED IN REOPENING THE ASSESSMENT AND URGED TO RESTORE THE ORDER OF THE ASSESSING OFFICER. 5 ITA NO.120/CTK/2015 C.O.NO.17/CTK/2915 ASSESSMENT YEAR : 2006 - 2007 8. LD A.R. OF THE ASSESSEE SUPPORTED THE ORDER OF THE CIT(A). 9 WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE, IT IS NOT IN DISPUTE THAT AT THE TIME OF ORIGINAL ASSESSMENT, THE ASSESSING OFFICER VERIFIED THE MATERIALS CONSUMED, LABOUR CHARGES, TRANSPORTATION CHARGES & POSTAGE AND TELEPHONE CHARGES AND AFTER EXAMINING THE SAME MADE SOME DISALLOWANCE ON SUCH EXPENSES . THEREFORE, ON THE SAME SET OF FACTS , THE ASSESSING OFFICER HAS CHANGED HIS MIND TO REOPEN THE ASSESSMENT. IT IS ALSO OBSERVED THAT IN THE BODY OF THE ORDER U/S.143(3), THE ASSESSING OFFICER HAD PARTICULARLY MENTIONED THAT HE HAD EXAMINED THE DETAILS AND AFTER EXAMINING THE DETAILS ONLY, HE HAD DISALLOWED CERTAIN EXPENSES FROM TRANSPORTATION CHARGES, LABOUR CHARGES. WE ALSO FIND THAT IN THE ASSESSMENT YEAR 2005 - 06 IN THE CASE OF THE ASSESSEE ITSELF, ON SIMILAR SITUATION, THE REOPENING OF ASSESSMENT U/S.147 OF THE ACT WAS TREATED AS BAD IN L AW BY THIS BENCH OF THE TRIBUNAL AND FOLLOWING THE SAME, THE CIT(A) HAS QUASHED THE REASSESSMENT U/S.147 OF THE ACT FOR THIS YEAR. WE FIND THAT SIMILAR ISSUE HAS BEEN CONSIDERED BY THE FULL BENCH OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. KELVINATOR OF INDIA LTD, 256 ITR 1(DEL) , WHEREIN, IT HAS BEEN HELD THAT HELD THAT AN ORDER WHICH HAS BEEN PASSED PURPORTEDLY WITHOUT APPLICATION OF MIND WOULD ITSELF CONFER JURISDICTION UPON THE ASSESSING OFFICER TO REOPEN THE PROCEEDING WITHOUT ANYTHING FURTHER, THE SAME WOULD AMOUNT TO GIVING A PREMIUM TO AN AUTHORITY EXERCISING QUASI - JUDICIAL FUNCTION TO TAKE BENEFIT OF ITS OWN 6 ITA NO.120/CTK/2015 C.O.NO.17/CTK/2915 ASSESSMENT YEAR : 2006 - 2007 WRONG. THE DECISION IS APPRO VED BY HONBLE SUPREME COURT IN THE CASE REPORTED AS CIT VS. KELVINATOR OF INDIA LTD (320 ITR 561). IN THE CASE BEFORE US, THE ASSESSING OFFICER HAS INITIATED REASSESSMENT PROCEEDINGS ON THE SAME FACTS WHICH WERE AVAILABLE BEFORE HIM AT THE TIME OF MAKING ASSESSMENT U/S.143(3) OF THE ACT AND NO NEW TANGIBLE MATERIAL HAS COME ON THE BASIS OF WHICH IT COULD BE SAID THAT HE HAS REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT ON ACCOUNT OF FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE TRULY AND FULLY MATERIAL OF FACTS FOR THE ASSESSMENT. THEREFORE, WE FIND NO REASON TO INTERFERE WITH THE ORDER OF THE CIT(A) AND ACCORDINGLY, CONFIRM THE SAME AND DISMISS THE GROUNDS OF APPEAL FILED BY THE REVENUE. 10. THE CROSS OBJECTION FILED BY THE ASSESSEE IS IN SUPPORT OF THE ORDER OF THE CIT(A). AS WE HAVE CONFIRMED THE FINDINGS OF THE CIT(A) THE CROSS OBJECTION FILED BY THE ASSESSEE HAS BECOME INFRUCTUOUS. 11. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DISMISSED AND THAT OF CROSS OBJECTION FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUN CED ON 23 /11 /2017. SD/ - SD/ - ( N.S SAINI) ( PAVAN KUMAR GADALE) A CCOUNTANT MEMBER JUDICIALMEMBER CUTTACK; DATED 23 /11 /2017 B.K.PARIDA, SPS 7 ITA NO.120/CTK/2015 C.O.NO.17/CTK/2915 ASSESSMENT YEAR : 2006 - 2007 COPY OF THE ORDER FORWARDED TO : BY ORDER, SR.PRIVATE SECRETARY ITAT, CUTTACK 1. THE APPELLANT : ACIT, CIRCLE - 1(1), CUTTACK 2. THE RESPONDENT. M/S. SHREE BUILDERS, QR. NO.NB/237, NUA BAZAR, PARADEEP DIWT: JAGATSINGHPUR 3. THE CIT(A) - CUTTACK 4. PR.CIT - CUTTACK 5. DR, ITAT, CUTTACK 6. GUARD FILE. //TRUE COPY//