Shri Purshottam P.Patel, Ahmedabad V. The ACIT.,Circle-7, Ahmedabad

ITA 2009/AHD/2011

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 9869 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 5 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-01-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 28-10-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 11-08-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NARENDRA SINGH
• Assessee Lawyers: VIJAY RANJAN
• Keywords: Reopening of assessment; Capital asset; Business income; Depreciation; Difference of opinion; Corroborative evidences; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 143(3); 142(1); 234B; 194C; 148; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH AHMEDABAD BEFORE S/SHRI KUL BHARAT, JM, & MANISH BORAD, AM . ITA NO.2009/AHD/2011 ASST. YEAR: 2004-05 PURSHOTTAM P. PATEL,51, RACHNA SOCIETY SATELLITE ROAD, SATELLITE, AHMEDABAD. VS. ASSTT. CIT, CIRCLE-7, AHMEDABAD. APPELLANT RESPONDENT PAN AGXPP 1574B AND ITA NO.2014/AHD/2011 ASST. YEAR: 2004-05 ASST. CIT, CIRCLE-7, AHMEDABAD. VS. PURSHOTTAM P. PATEL,51, RACHNA SOCIETY SATELLITE ROAD, SATELLITE, AHMEDABAD. APPELLANT RESPONDENT ASSESSEE BY SHRI VIJAY RANJAN, AR REVENUE BY SHRI NARENDRA SINGH, SR.DR DATE OF HEARING: 28/10/2015 DATE OF PRONOUNCEMENT: 13/01/2016 O R D E R PER MANISH BORAD, ACCOUNTANT MEMBER. THESE TWO CROSS APPEALS ONE BY THE ASSESSEE AND T HE OTHER BY THE REVENUE ARE DIRECTED AGAINST THE ORDER OF CI T(A) VI, AHMEDABAD DATED 8/6/2011 IN APPEAL NO.CIT(A)-VI/CIR -7/10-11, FOR ASST. YEAR 2004-05. ASSESSMENT WAS FRAMED ON 13.12. 2010 U/S ITA NOS.2009 & 2014/AHD/2011 ASST. YEAR 2004-05 2 143(3) R.W.S. 147 OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT) BY ACIT, CIRCLE-7, AHMEDABAD. 2. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE IS AN INDIVIDUAL ENGAGED IN THE BUSINESS OF WORK OF EXCAVATION AND M OST OF THE RECEIPTS ARE FOR EXCAVATION FOR DIFFERENT GOVERNMEN T SITES. RETURN OF INCOME WAS FILED ON 29.10.2004 DECLARING TOTAL INCO ME OF RS.23,08,380/- ALONG WITH AUDITED FINANCIAL STATEME NTS AND AUDIT REPORT U/S 44AB OF THE ACT. ASSESSEES CASE WAS SEL ECTED FOR SCRUTINY ASSESSMENT AND NOTICE U/S 143(2) OF THE ACT DATED 2 6.7.2005 WAS SERVED ON THE ASSESSEE ON 4.8.2005. ALL NECESSARY D ETAILS AS REQUIRED BY ASSESSING OFFICER WERE SUBMITTED BY ASS ESSEE ON 15.9.2006 & 19.12.2006 AND AFTER VERIFICATION OF TH E BOOKS OF ACCOUNTS AND DETAILS FURNISHED ASSESSMENT WAS COMPL ETED U/S 143(3) OF THE ACT AND INCOME WAS ASSESSED AT RS.24,86,730/ -. THEREAFTER ASSESSEES CASE WAS REOPENED UNDER SECTION 147 AND NOTICE U/S 148 OF THE ACT WAS ISSUED ON 10.8.2009 AND INCOME OF TH E ASSESSE WAS RE-ASSESSED AT RS.63,67,320/-. 3. AGGRIEVED, ASSESSEE WENT IN APPEAL BEFORE LD. CI T(A) AND ALONG WITH RAISING GROUNDS OF APPEAL FOR THE ADDITI ONS MADE BY THE ASSESSING OFFICER ALSO RAISED GROUND AGAINST VALIDI TY OF REOPENING OF ASSESSMENT U/S 147 OF THE ACT BEING NOTICE U/S 148 SERVED BEYOND 4 YEARS FROM THE END OF RELEVANT ASSESSMENT YEAR, AS THE ASSESSEES CASE HAD ALREADY BEEN ASSESSED U/S 143(3) OF THE AC T AND ALL DETAILS/FACTS WERE FULLY DISCLOSED BEFORE THE ASSES SING OFFICER. HOWEVER, LD. CIT(A) REJECTED THE GROUND OF ASSESSEE RAISED ON THE ITA NOS.2009 & 2014/AHD/2011 ASST. YEAR 2004-05 3 VALIDITY OF RE-ASSESSMENT PROCEEDINGS U/S 147 OF TH E ACT BUT PARTLY ALLOWED THE OTHER GROUNDS. 4. AGGRIEVED, THE ASSESSEE AND REVENUE ARE NOW IN A PPEAL BEFORE THE TRIBUNAL. 5. FIRST WE TAKE UP ASSESSEES APPEAL IN ITA NO.200 9/AHD/2011 FOR ASST. YEAR 2004-05 WHEREIN GROUND NOS.1 & 2 ARE AS UNDER :- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE CIT(A) HAS ERRED IN UPHOLDING THE VALIDITY OF RE-OPENING O F ASSESSMENT EVEN BEYOND FOUR YEARS IN CASE OF THE APPELLANT, GI VEN THE FACT THAT ALL THE DETAILS/FACTS WERE FULLY DISCLOSED BEF ORE THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT I TSELF. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE CIT(A) HAS ERRED BY NOT APPRECIATING THE JUDICIAL PRONOUNC EMENTS ON WHICH THE ASSESSEE HAD RELIED DURING THE COURSE OF FIRST APPELLATE PROCEEDINGS NANELY KRISHNA METAL IND.225 ITR 853 THARAD JAIN YUVAK MANDAL 242 ITR 612 GARDEN SILK MILLS LTD.222 ITR 68 FORAMER 247 ITR 436 KELVINATOR OF INDIA 187 TAXMAN 321 6. THE LD. AR SUBMITTED THAT ASSESSMENT WAS COMPLET ED UNDER SEC.143(3) OF THE ACT ON 22.12.2006 AND ALL NECESSA RY DETAILS AS REQUIRED BY THE ASSESSING OFFICER WERE FULLY FURNIS HED. HOWEVER, AFTER THE LAPSE OF 4 YEARS FROM THE END OF ASST. YEAR (AS ST. YEAR 2004-05 ENDS ON 31.3.2005) NOTICE U/S 148 OF THE ACT WAS IS SUED ON ITA NOS.2009 & 2014/AHD/2011 ASST. YEAR 2004-05 4 10.8.2009 I.E. AFTER 4 YEARS 5 MONTHS AND 10 DAYS A ND THE REASONS RECORDED BY THE ASSESSING OFFICER FOR THE REOPENING ARE AS UNDER :- THE ASSESSEE IS ENGAGED IN THE BUSINESS OF WORK OF EXCAVATION. THE ASSESSEE FILED ITS RETURN OF INCOME ON 29/10/2006 D ECLARING TOTAL INCOME OF RS.23,08,380/-. THE CASE WAS SELECTED FOR SCRUTINY AND ASSESSMENT WAS COMPLETED ON 22/12/2006 WITH ASSESSED INCOME OF RS. 24,86,730/-. SUBSEQUENTLY, ON VERIFICATION OF CASE RECORD, IT NO TICED THAT THE ASSESSEE HAD CLAIMED AND ALLOWED TDS OF RS.7,96,214/- VIDE E IGHT CERTIFICATES ISSUED BY VARIOUS DEDUCTORS. AS PER THESE TDS CERTIFICATES, T HE ASSESSEE HAS RECEIVED TOTAL CONTRACT RECEIPTS OF RS.61259078/- U/S 194C OF THE ACT, WHERE AS THE ASSESSEE HAS SHOWN CONTRACT RECEIPTS (WORK RECEIPT) OF RS.57 751488 IN HIS P & L ACCOUNT. THUS, THE ASSESSEE HAS SHOWN LESS CONTRACT RECEIPT OF RS.37,47,590/- WHICH RESULTED IN UNDERASSESSMENT OF INCOME AMOUNTING TO RS.37,47,590/- RESULTING IN SHORT LEVY OF TAX AMOUNTING TO RS.11,24,277/- PLUS INTEREST U/S 234B RS.1,12,428/-. DURING THE COURSE OF ASSESSMENT PROC EEDINGS, THE ASSESSEE HAS NOT FURNISHED ANY AUTHENTIC EVIDENCES IN SUPPORT OF DIFFERENCE IN RECEIPT AS PER TDS CERTIFICATES AND P & L ACCOUNT. FURTHER THE ASS ESSEE HAS PAID INTEREST TO THE KCC BANK (FOD) FOR WITHDRAWAL OF RS.1,33,000/- MADE FOR HIS PERSONAL EXPENSES WHICH ARE ENUMERATED HEREUNDER :- (I) PAID AMOUNTS OF RS.5,000/- AND RS.7,000/- TO RA CHNA SOCIETY ON 31/05/2003 AND 3/11/2003 (II) PAID RS.10,000/- FOR SILVER SHOWPIECE FOR DEPU TY SACHIV (III) PAID RS.1,,11,000/- AS DONATION ON 9/9/2003. APPROPRIATE EXPENSES INCURRED FOR PAYMENT OF INTERE ST TO THE KCC BANK TO BE DISALLOWED. IT HAS ALSO BEEN NOTICED THAT ASSESSEE HAD CLAIMED DEPRECIATION OF RS.1,56,250/- ON TWO TATA HITACHI VALUED AT RS.6,25 ,000/- CLAIMED TO HAVE BEEN ADDED TO ASSETS CANNOT BE ALLOWED AS ON RECORDS THE RE IS NO EVIDENCE IN SUPPORT OF HIS CLAIM. HENCE THE ASSESSEES CLAIM FOR ADDITI ON IN CAPITAL ASSETS CANNOT BE EXAMINED IN ABSENCE OF ANY DOCUMENTARY EVIDENCES, I N SUPPORT OF NEW ADDITION OF THE ASSETS DURING THE PREVIOUS YEAR. THE LD. DCIT HAS OBSERVED THAT THE ASSESSEE HAD CLA IMED AND ALLOWED TDS OF RS.7,96,214/- VIDE ITS CERTIFICATE A ND AS PER THESE TDS CERTIFICATES THE ASSESSEE HAS RECEIVED TOTAL CO NTRACT RECEIPTS OF RS.6,12,59,078/- U/S 194C OF THE ACT WHEREAS ASSESS EE HAS SHOWN ITA NOS.2009 & 2014/AHD/2011 ASST. YEAR 2004-05 5 CONTRACT RECEIPTS (WORK RECEIPTS) AT RS.5,77,51,488 /- IN HIS PROFIT AND LOSS ACCOUNT. THE DCIT HAS ERRED IN HOLDING THAT TH E ASSESSEE HAS SHOWN LESS WORK RECEIPTS WHICH RESULTED IN UNDER AS SESSMENT OF INCOME OF RS.37,47,590/-. ASSESSEE HAS PAID INTERES T TO KALUPUR COMMERCIAL BANK (FOD) FOR WITHDRAWALS OF RS.1,33,0 00/- MADE FOR HIS PERSONAL EXPENSES. IT IS ALSO NOTICED THAT ASSE SSEE HAD CLAIMED DEPRECIATION OF RS.1,56,250/- ON TWO TATA HITACHI V ALUED AT RS.6,25,000/- CLAIMED TO HAVE BEEN ADDED TO ASSETS CANNOT BE ALLOWED AS ON RECORDS THERE IS NO EVIDENCE IN SUPPO RT OF HIS CLAIM. HENCE THE ASSESSEES CLAIM FOR CAPITAL ASSET CANNOT BE EXAMINED IN ABSENCE OF ANY DOCUMENTARY EVIDENCE IN SUPPORT OF N EW ADDITION OF THE ASSETS DURING PREVIOUS YEAR. 7. THE LD. AR SUBMITTED THAT ALL THE THREE REASONS MENTIONED ABOVE HAVE NOT EMANATED FROM ANY NEW SOURCE AND WHE N THE ASSESSMENT PROCEEDINGS U/S 143(3) OF THE ACT WAS CO MPLETED ALL THE RELEVANT DETAILS WERE THOROUGHLY EXAMINED BY THE AS SESSING OFFICER, AND THEREFORE, REASSESSMENT PROCEEDINGS ARE NOT VAL ID AS THE ASSESSING OFFICER IS MAKING OUT THE REASONS FOR REO PENING ON ACCOUNT OF LAPSE ON HIS OWN PART MADE DURING THE ASSESSMENT PROCEEDINGS U/S 143(3) EVEN WHEN ALL MATERIAL EVIDENCES WERE FU LLY AVAILABLE FOR EXAMINATION AND THERE WAS FULL CO-OPERATION FROM AS SESSEES SIDE DURING THE COURSE OF ASSESSMENT PROCEEDINGS. 8. THE LD. AR IN SUPPORT OF HIS ARGUMENT RELIED ON THE DECISIONS OF HONBLE GUJARAT HIGH COURT IN THE CASE OF GANESH VA LABHAI FAMILY ITA NOS.2009 & 2014/AHD/2011 ASST. YEAR 2004-05 6 TRUST VS. DCIT (2008) 306 ITR 221 (GUJ) AND GUJARAT POWER CORPORATION LTD. VS. ACIT (2012) 26 TAXMANN.COM 51 (GUJ). 9. ON THE OTHER HAND, THE LD. DR SUPPORTED THE ORDE RS OF LOWER AUTHORITIES. 10. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD AND ALSO GONE THROUGH THE JUDICIAL PRONOU NCEMENTS REFERRED BY THE LD. AR. IN THESE TWO GROUNDS THE AS SESSEE HAS CHALLENGED THE VALIDITY OF REOPENING OF ASSESSMENT U/S 147 OF THE ACT. FROM PERUSING THE RECORD, WE FIND THAT ASSESSMENT U /S 143(3) OF THE ACT FOR ASST. YEAR 2004-05 WAS COMPLETED ON 22.12.2 006 AND NOTICE U/S 148 WAS ISSUED ON 10.8.2009 TO INITIATE REASSES SMENT PROCEEDINGS U/S 147 OF THE ACT WHICH IS BEYOND 4 YE ARS FROM THE END OF ASST. YEAR 2004-05 AND THE ISSUE NOW TO BE EXAMI NED IS WHETHER THE PROCEEDINGS U/S 147 ARE VALID. 11. TO EXAMINE THE ISSUE LET US FIRST GO THROUGH TH E RELEVANT PROVISIONS OF SECTION 147 OF THE ACT WHICH READS AS BELOW :- 147. INCOME ESCAPING ASSESSMENT. - IF THE ASSESSING OFFICER HAS REASON TO BELIEVE THAT ANY INCOME CHA RGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY ASSES SMENT YEAR, HE MAY, SUBJECT TO THE PROVISIONS OF SECTIONS 148 TO 153, ASSESS OR REASSESS SUCH INCOME AND ALSO ANY OTHER INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSME NT AND WHICH COMES TO HIS NOTICE S UBSEQUENTLY IN THE COURSE OF THE PROCEEDINGS UNDER THIS SECTION, OR RECOMPUTE THE LOSS OR THE DEPRECIATION ALLOWANCE OR ANY OTHER ALLOWANCE, AS T HE CASE MAY BE, FOR THE ASSESSMENT YEAR CONCERNED (HEREAFTER IN THIS SECTION AND IN SECTION S 148 TO 153 REFERRE D TO AS THE RELEVANT ASSESSMENT YEAR) : PROVIDED THAT WHERE AN ASSESSMENT UNDER SUB- SECTION (3) OF SECTION 143 OR THIS SECTION HAS BEEN MADE FOR THE RELEVANT ASSESSMENT YEAR, NO ACTI ON SHALL BE TAKEN UNDER THIS SECTION AFTER THE EXPIRY OF FOUR YEARS FROM T HE END OF THE RELEVANT ASSESSMENT YEAR, UNLESS ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR SUCH A SSESSMENT YEAR BY REASON 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 DIS CLOSE FULLY AND TRULY ALL ITA NOS.2009 & 2014/AHD/2011 ASST. YEAR 2004-05 7 MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT, FOR TH AT ASSESSMENT YEAR: PROVIDED FURTHER THAT THE ASSESSING OFFICER MAY ASS ESS OR REASSESS SUCH INCOME, OTHER THAN THE INCOME INVOLV ING MATTERS WHICH ARE THE SUBJECT MATTERS OF ANY AP PEAL, REFERENCE OR REVISION, WHICH IS CHARGEABLE TO TAX AND HAS ESCAPE D ASSESSMENT. 12. APPLYING THE FACTS OF THE CASE WHICH FALLS WITH IN THE PROVISO TO SECTION 147 OF THE ACT WHEREIN ASSESSMENT HAS BEEN FRAMED U/S 143(3) OF THE ACT, THIS PROVISO SAYS THAT NO ACTION CAN BE TAKEN BY THE REVENUE AFTER THE EXPIRY OF 4 YEARS FROM THE END OF RELEVANT ASSESSMENT YEAR, UNLESS ANY INCOME CHARGEABLE TO TA X HAS ESCAPED ASSESSMENT FOR SUCH ASSESSMENT YEAR BY REASON OF TH E FAILURE ON THE PART OF THE ASSESSEE TO MAKE A RETURN U/S 139 OF TH E ACT OR IN RESPONSE TO A NOTICE ISSUED U/S 142(1) OR 148 OF TH E ACT OR TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR TH E ASSESSMENT. IN THE CASE OF ASSESSEE ASSESSMENT WAS FRAMED U/S 143(3) O N 22.12.2006 FOR ASST. YEAR 2004-05 AND NOTICE U/S 148 WAS ISSUE D ON 10.8.2009 AND THE THREE ISSUES WHICH HAVE LED THE ASSESSING O FFICER TO INITIATE RE-ASSESSMENT PROCEEDINGS ARE - (1) CONTRACT RECEIPTS SHOWN IN THE TDS CERTIFICATES ARE NOT MATCHING WITH THE CONTRACT RECEIPTS SHOWN IN THE PR OFIT AND LOSS ACCOUNT. (2) INTEREST ON PAYMENT OF RS.1,33,000/- BY THE ASS ESSEE TO KALUPUR COMMERCIAL BANK LTD. FOR WITHDRAWALS MADE F OR HIS PERSONAL EXPENSES. (3) CLAIM OF DEPRECIATION ON ASSETS FOR WHICH NO SU PPORTING EVIDENCE IS AVAILABLE. 13. ALL THE ABOVE THREE REASONS, WHICH COULD NOT BE EXAMINED BY THE ASSESSING OFFICER ARE EMANATING FROM THE ASSESS MENT RECORDS OF THE ASSESSEE AND THERE SEEMS TO BE NO NEW SOURCE WH ICH SHOWS THAT ITA NOS.2009 & 2014/AHD/2011 ASST. YEAR 2004-05 8 THERE WAS SOME FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE WHICH MAY HAVE LED THE ASSESSING OFFICER TO INITIATE THE REASSESSMENT PROCEEDINGS. FROM PERUSING THE PAPER BOOK ON PAGES 35 AND 36 WE FIND THE SUBMISSIONS MADE BY THE ASSESSEE BEFORE TH E ASSESSING OFFICER DURING ASSESSMENT PROCEEDINGS U/S 143(3) OF THE ACT FILED ON 15.9.2006 WHEREIN ASSESSEE HAS FILED DETAILS FOR 33 ITEMS WHICH WERE REQUESTED BY THE ASSESSING OFFICER TO COMPLETE THE ASSESSMENT PROCEEDINGS U/S 143(3) OF THE ACT. THEREAFTER THE A SSESSMENT WAS COMPLETED ON 22.12.2006 AND FOR NECESSARY REFERENCE WE MENTION THE RELEVANT PORTIONS OF THE SAME ASSESSMENT ORDER RETURN OF INCOME WAS FILED BY THE ASSESSEE FOR AY 2004-05 ON 29/10/2004 DECLARING TOTAL INCOME OF RS.23,08,380/- WITH THE I TO WD-7(2), AHMEDABAD. THE CASE WAS TRANSFERRED TO THE ACIT, CE.7, AHMEDABAD. THE RETURN OF INCOME IS ACCOMPANIED WITH AUDITED PROFIT AND LOSS ACCOUNT AN D BALANCE SHEET AND AUDIT REPORT IN FORM 3CB & 3CD AND ALSO OTHER SUPPORTING STATEMENT OF ACCOUNTS. THE RETURN OF INCOME WAS PROCESSED U/S 143(1) OF THE IT ACT ON 30/3/2006 ACCEPTED THE INCOME AS RETURNED. SINCE CASE WAS SELECTED FOR SCRUTINY A NOTICE U/S 143(2) OF THE IT ACT DATED 26/7/2005 WAS ISSUED AND DULY S ERVED ON THE ASSESSEE ON 4/8/2005. A NOTICE U/S 142(1) DATED 17/8/2006 ALONG WITH QUESTIONNAIRE WAS ALSO ISSUED AND SERVED UPON THE ASSESSEE ON 22/8/2006. 2. IN RESPONSE TO THE NOTICE U/S 142(1) OF THE ACT, SHRI M. R. CHOKSI, CA ATTENDED FROM TIME TO TIME AND FURNISHED DETAILS VI DE LETTERS DATED 15/9/2006 AND 19/12/2006. THE CASE WAS DISCUSSED WITH HIM. DETAIL S HAVE BEEN VERIFIED ALONG WITH BOOKS OF ACCOUNTS PRODUCED FOR VERIFICATION. P ARTICULARS OF INCOME DECLARED IN THE RETURN OF INCOME HAVE BEEN FOUND IN RECONCIL IATION WITH THE BOOKS OF ACCOUNT. 3. THE ASSESSEE IS GOVERNMENT CONTRACTOR FOR THE WO RK OF EXCAVATION. DURING THE YEAR IT HAS MAINLY WORKED ON NARMADA PROJECT CA NAL AT AHMEDABAD. LABRIYA (MP), THASRA AND HIMATNAGAR. THE WORK RECEIPT IS RS.5,75,11,488/- FROM WHICH TDS OF RS.8,00,000/- HAS BEEN DEDUCTED BY THE RESPECTIVE EXECUTIVE ENGINEERS OF THE PROJECTS. THE MAJOR EXPENSES ARE P ERTAINING TO WORK EXPENSES OF RS.3,24,45,186/-. DETAILS OF THESE EXPE NSES HAVE BEEN OBTAINED, CHECKED AND KEPT ON RECORD. THE ASSESSEE HAS ALSO EARNED INTEREST OF RS.15,60,852/- ON FDR WITH BANKS AND INTEREST OF RS.84,120/- FROM BOND. INVESTMENT IN THIS REGARD IS REFLECTED IN THE BALAN CE SHEET. ITA NOS.2009 & 2014/AHD/2011 ASST. YEAR 2004-05 9 3.1 EXPENSES DEBITED TO TRADING ACCOUNT AND P & L A CCOUNT HAVE BEEN VERIFIED. AFTER VERIFICATION AND DISCUSSION WITH TH E LD. AR, DISALLOWANCE AS PER FOLLOWING PARTICULARS ARE MADE AS COMPLETE CHECK OV ER CLAIM OF THESE EXPENSES IS DIFFICULT. 1. SITE MATERIAL EXPENSES OF RS.5186860 @15% RS.51, 870/- 2. CONVEYANCE EXPENSES OF RS.474571 @10% RS.47,460/ - 3. MISC. EXPENSES OF RS.45130 @10% RS.4,520/- 4. VEHICLE, PETROL AND DIESEL EXPENSES OF RS.440370 /- @ 10% RS.44,040/- 5. VEHCLE REPAIRING RS.304641 @ 10@ RS.30,460/- TOTAL RS.1,78,350/- 4. WITH THE ABOVE REMARKS, TOTAL TAXABLE INCOME OF THE ASSESSEE IS COMPUTED AS UNDER :- COMPUTATION OF INCOME BUSINESS INCOME AS PER STATEMENT OF INCOME RS.6,78 ,106/- ADD 1 DISALLOWANCE AS DISCUSSED IN PARA 3.1 RS .1,78,350/- 2. INCOME FROM OTHER SOURCES AS PER STATEMENT OF INCOME RS.16,49,772/ - RS.18,28,122/- GROSS TOTAL INCOME RS.25,06,228/- LESS DEDUCTION UNDER CHAPTER VIA RS.19,500/- AS PER STATEMENT OF INCOME - TOTAL INCOME RS.24,86,730/- ROUNDED OFF TO RS.24,86,730/- AGRICULTURAL INCOME FOR RATE PURPOSES RS.72,496/- 5. ASSESSED U/S 143(1)3 OF THE I.T. ACT. ISSUE DEMA ND NOTICE AND CHALLAN/RO AS THE CASE MAY BE, AFTER GIVING CREDIT FOR PREPAID TAXES, IF ANY. CHARGE INTEREST U/S 234A, 234B & 234C OF THE I.T. ACT, IF APPLICABL E. FROM GOING THROUGH THE ORIGINAL ASSESSMENT ORDER ME NTIONED ABOVE, WE FIND THAT ASSESSING OFFICER HAS VERIFIED ALL THE DETAILS GIVEN BY THE ASSESSEE ALONG WITH BOOKS OF ACCOUNT PRODUCED FOR V ERIFICATION AND INCOME DECLARED HAS BEEN FOUND IN RECONCILIATION WI TH THE BOOKS. THE ASSESSING OFFICER HAS CLEARLY MADE A FINDING ABOUT THE CONTRACT/WORK RECEIPTS SHOWN IN THE PROFIT AND LOSS ACCOUNT AS WE LL AS AMOUNT OF ITA NOS.2009 & 2014/AHD/2011 ASST. YEAR 2004-05 10 TDS CLAIMED BY THE ASSESSEE AND HAS PASSED THE ASSE SSMENT ORDER AFTER EXAMINING ALL NECESSARY DETAILS IN RELATION T O EXPENSES CLAIMED BY THE ASSESSEE. THE REASONS TAKEN UP BY THE ASSESS ING OFFICER FOR INITIATING OF RE-ASSESSMENT PROCEEDINGS U/S 147 OF THE ACT ARE EMANATING FROM THE RECORDS WHICH HAVE ALREADY BEEN THOROUGHLY EXAMINED BY THE ASSESSING OFFICER AND THESE REASONS DO NOT SHOW THAT THERE WAS ANY FAILURE ON THE PART OF ASSESSEE. 14. HONBLE JURISDICTIONAL HIGH COURT IN THE CASE O F GANESH VALABHAI FAMILY TRUST VS. DCIT (SUPRA) HAS HELD AS UNDER :- 6 HAVING HEARD THE LEARNED ADVOCATES APPEARING FOR THE RESPECTIVE PARTIES, IT IS APPARENT THAT THE IMPUGNED NOTICE SE EKING TO REOPEN COMPLETED ASSESSMENT FOR ASSESSMENT YEAR 1983-84 U/ S. 143(3) OF THE ACT CANNOT BE PERMITTED TO OPERATE. THE POSITION IS WELL SETTLED THAT IN THE EVENT AN ASSESSMENT IS SOUGHT TO BE REOPENED BEYOND A PERIOD OF FOUR YEARS FROM THE END OF THE ASSESSMENT YEAR IN QUESTI ON REVENUE HAS TO PRIMA FACIE ESTABLISH THAT INCOME HAS ESCAPED ASSES SMENT, AND SUCH ESCAPEMENT OF INCOME IS AS A RESULT OF OMISSION OR FAILURE ON PART OF THE ASSESSEE TO FULLY AND TRULY DISCLOSE ALL MATERIAL P ARTICULARS NECESSARY FOR ASSESSING SUCH INCOME. IF THE REASONS RECORDED ARE EXAMINED IT BECOMES CLEAR THAT THE BASIS IS THE CERTIFICATE OF TAX DEDU CTION AT SOURCE. AS ALREADY NOTICED HEREINBEFORE, COLUMN NO. 4 OF THE PRESCRIBE D FORM READS AMOUNT CREDITED OR PAID IN PURSUANCE OF THE CONTRACT. HOW EVER, IN THE REASONS RECORDED THE RESPONDENT HAS STATED THAT AS PER T.D. S. CERTIFICATE THE WORK DONE IS SHOWN AT RS.20,51,903/- WHILE IN THE RETURN OF INCOME THE WORK DONE IS SHOWN AT RS. 1,98,800/-. THE CERTIFICATE OF TAX DEDUCTION AT SOURCE DOES NOT SPEAK OF THE WORK DONE. IN FACT U/S. 194C OF THE ACT THE OBLIGATION TO DEDUCT TAX ARISES EITHER AT THE TIME OF PAYMENT OR AT THE TIME OF CREDITING THE ACCOUNT OF THE PAYEE. THE FORM I.E. FORM NO.26C DOES NOT REFLECT THAT THE PAYMENT OR THE CREDIT IS IN RELATION TO THE WOR K ACTUALLY DONE. IN BOTH THE SITUATIONS, VIZ. AT THE TIME OF CREDIT TO THE A CCOUNT OF THE PAYEE, OR IN CASE OF ACTUAL PAYMENT, IT IS BOUND TO BE IN PURSUA NCE OF THE CONTRACT AND HENCE, FROM THE SAME IT IS NOT POSSIBLE TO DRAW AN INFERENCE THAT THE CREDIT/PAYMENT IS FOR THE WORK ACTUALLY DONE. AS TH E FACTS OF THE PRESENT CASE SHOW, THE WORK DONE PURSUANT TO THE CONTRACT I N THE YEAR UNDER ITA NOS.2009 & 2014/AHD/2011 ASST. YEAR 2004-05 11 CONSIDERATION IS TO THE TUNE OF RS.1,98,800/- AND N OT SUM OF RS.20 LACS AND ODD AS SUGGESTED BY THE RESPONDENT AUTHORITY IN THE REASONS RECORDED. IN FACT, ON FACTS, THERE IS NO BASIS FOR RECORDING SUC H A DECISION THAT THE TOTAL AMOUNT OF RS.20,51,903/- IS PAYMENT FOR WORK DONE. 7 IN THE AFORESAID SET OF FACTS AND CIRCUMSTANCES O F THE CASE, THE REOPENING IS NOT PERMISSIBLE IN LAW CONSIDERING THE FACT THAT NOTICE U/S. 148 OF THE ACT HAS BEEN ISSUED AFTER A PERIOD OF FOUR Y EARS FROM THE END OF ASSESSMENT YEAR IN QUESTION IN ABSENCE OF ANY EVIDE NCE TO SHOW ANY FAILURE OR OMISSION ON THE PART OF THE ASSESSEE TO DISCLOSE TRULY AND FULLY ALL RELEVANT PARTICULARS OF INCOME IN THE RETURN OF INC OME. ACCORDINGLY IMPUGNED NOTICE DATED 31.03.1994 (ANNEXURE 'A') IS HEREBY QUASHED AND SET ASIDE. THE PETITION IS ALLOWED ACCORDINGLY. RUL E MADE ABSOLUTE. THERE SHALL BE NO ORDER AS TO COSTS. 15. FURTHER IN THE CASE OF `GUJARAT POWER CORPORATI ON LTD. VS. ACIT (SUPRA) HAS HELD AS UNDER:- IT IS HELD THAT ANY SUCH REOPENING WOULD BE BASED ON A MERE CHANGE OF OPINION. IN THE REASONS, THE ASSESSING OFFICER STAR TED WITH THE WORDS, FROM THE RECORDS, IT CAN BE SEEN THAT ...... ENTIRE INF ORMATION AND THE MATERIAL THAT THE ASSESSING OFFICER, THEREFORE, HAD AT HIS C OMMAND WAS REFLECTED FROM THE RECORD ITSELF. THIS COUPLED WITH THE FACT THAT IN THE ORIGINAL ASSESSMENT, THE ASSESSING OFFICER EXAMINED SUCH CLA IMS IN DETAIL, WOULD CONVINCE US THAT ANY REOPENING OF THE ASSESSMENT OF SAME CLAIMS ON THE BASIS OF SAME MATERIAL, AMOUNTS TO A MERE CHANGE OF OPINION. THE FACT THAT THE ASSESSING OFFICER DID NOT RECORD REASONS FOR MA KING NO DISALLOWANCE ON SUCH CLAIM OF EXEMPTION, WOULD BE OF NO CONSEQUE NCE. IN THE RESULT, IT IS HELD THAT THE NOTICE WAS ISSUE D WITHOUT JURISDICTION. THE SAME, THEREFORE, REQUIRES TO BE QUASHED. 16. APPLYING THE FACTS OF THE CASE TO THE DECISIONS REFERRED ABOVE, WE FIND THAT MISMATCH CONTRACT/WORK RECEIPTS MENTIO NED IN TDS CERTIFICATES AND THE CONTRACT/ WORK RECEIPTS SHOWN IN THE AUDITED PROFIT AND LOSS ACCOUNT CANNOT BE A REASON FOR INITIATING OF REASSESSMENT PROCEEDINGS AS THE NECESSARY RECORDS WERE ALREADY E XAMINED BY THE ITA NOS.2009 & 2014/AHD/2011 ASST. YEAR 2004-05 12 ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS U/S 143(3) OF THE ACT. 17. SIMILARLY, AS REGARDS PAYMENT OF INTEREST TO KA LUPUR COMMERCIAL BANK LTD. WE FIND THAT THE PERSONAL EXPE NDITURE OF RS.1,33,000/- WERE NOT DEBITED TO PROFIT AND LOSS A CCOUNT THEY WERE FORMING PART OF THE CAPITAL ACCOUNT AND THE DETAILS OF THE CAPITAL ACCOUNT WERE DULY FURNISHED DURING ASSESSMENT PROCE EDINGS U/S 143(3) OF THE ACT AND AS REGARDS CLAIM OF DEPRECIAT ION, WE FIND THAT ASSESSEE HAS SUBMITTED PROOF OF PURCHASE OF ASSETS AND THE DEPRECIATION CLAIM WAS DULY CERTIFIED BY THE AUDITO RS AND BOOKS OF ACCOUNTS WITH SUPPORTING EVIDENCES WERE DULY EXAMIN ED BY THE ASSESSING OFFICER DURING ASSESSMENT U/S 143(3) OF T HE ACT AND, THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT THERE IS NO FAILURE ON THE PART OF THE ASSESSEE IN DISCLOSING FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT AND REOPENING WAS BASE D ONLY ON THE INFORMATION AND MATERIAL AVAILABLE ON RECORD COLLEC TED FROM THE ORIGINAL ASSESSMENT PROCEEDINGS. 18. IN VIEW OF ABOVE DISCUSSION, WE ARE OF THE VIEW THAT THE ISSUES WHICH HAVE BEEN TAKEN AS BASIS FOR INITIATING THE R E-ASSESSMENT ITA NOS.2009 & 2014/AHD/2011 ASST. YEAR 2004-05 13 PROCEEDINGS HAVE BEEN THOROUGHLY DEALT DURING THE A SSESSMENT PROCEEDINGS U/S 143(3) OF THE ACT AS ALL THE NECESS ARY DETAILS WERE CALLED FOR BY THE ASSESSING OFFICER AND THE SAME WE RE PRODUCED BY THE ASSESSEE AND THE SAME HAVE BEEN DISCUSSED IN TH E ASSESSMENT ORDER FRAMED U/S 143(3) OF THE ACT AND NO NEW MATER IAL EVIDENCE OR REASON HAVE BEEN POINTED BEFORE BEGINNING THE RE-AS SESSMENT PROCEEDINGS WHICH COULD PROVE THAT THE SAME ESCAPED THE ASSESSMENT PROCEEDINGS U/S 143(3) OF THE ACT AND, T HEREFORE, THE CASE OF THE ASSESSEE SQUARELY FALLS IN THE PROVISO TO SECTION 147 OF THE ACT AND THE NOTICE U/S 148 OF THE ACT IS TIME B ARRED AS THE SAME HAS BEEN ISSUED AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF RELEVANT ASST. YEAR AND, THEREFORE, WE ARE OF THE VIEW THAT THE ASSESSING OFFICER HAS WRONGLY PASSED THE ASSESSMENT ORDER UND ER SECTION 143(3) R.W.S. 147 OF THE ACT AND THE LD. CIT(A) IS NOT JUSTIFIED IN UPHOLDING THE ACTION OF ASSESSING OFFICER. THE ORDE RS PASSED BY THE LOWER AUTHORITIES ARE THEREFORE, QUASHED. THESE GRO UNDS OF ASSESSEE ARE ALLOWED. 19. NOW WE TAKE UP REVENUES APPEAL IN ITA NO.2014/ AHD/2011 FOR ASST. YEAR 2004-05. IN VIEW OF OUR DECISION IN ASSESSEES APPEAL ITA NOS.2009 & 2014/AHD/2011 ASST. YEAR 2004-05 14 IN ITA NO.2009/AHD/2011 FOR ASST. YEAR 2004-05, WE HAVE HELD THAT THE RE-ASSESSMENT PROCEEDINGS U/S 147 OF THE ACT WA S NOT VALID AND THE SAME HAS BEEN QUASHED AND ACCORDINGLY THE APPEA L FILED BY THE REVENUE HAS BECOME INFRACTUOUS AND THE SAME IS DISM ISSED AS INFACTUOUS. 20. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED AN D THAT OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 13 JANUARY, 2016 SD/- SD/- (KUL BHARAT) JUDICIAL MEMBER (MANISH BORAD) ACCOUNTANT MEMBER DATED 13/01/2016 MAHATA/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, AHMEDABAD ITA NOS.2009 & 2014/AHD/2011 ASST. YEAR 2004-05 15 1. DATE OF DICTATION: 18/12/2015/12/2015 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: 22/12/2015 OTHER MEMBER: 3. DATE ON WHICH APPROVED DRAFT COMES TO THE SR. P. S./P.S.: 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: __________ 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S./P.S.: 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK: 13/1/16 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK: 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER: 9. DATE OF DESPATCH OF THE ORDER: