ACIT, CHENNAI V. M/s. Tristar Oceanic Services Private Limited, Mumbai

ITA 2195/CHNY/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 1199 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-03-2013
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 06-03-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 03-12-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: PRAGATI KUMAR
• Assessee Lawyers: N R AGRAWAL
• Keywords: Charitable institution; Audit objection; Tangible material; Bad and doubtful debts; Difference of opinion; Reason to believe; Change of opinion
• Section: 143(3); 80G; 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER AND SHRI V. DURGA RAO, JUDICIAL MEMBER I.T.A. NO. 1805/MDS/2012 (ASSESSMENT YEAR : 2006-07) M/S TRISTAR OCEANIC SERVICES PVT. LTD., 333, NAV VYAPAR BHAVAN, 49, P D MELLOW ROAD, MUMBAI 400 009. PAN : AAACT 2922 P (APPELLANT) V. THE CIT CITY III, / THE ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE III(2), CHENNAI - 600 034. (RESPONDENT) I.T.A. NO. 2195/MDS/2012 (ASSESSMENT YEAR : 2006-07) THE ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE III(2), CHENNAI - 600 034. (APPELLANT) V. M/S TRISTAR OCEANIC SERVICES PVT. LTD., 333, NAV VYAPAR BHAVAN, 49, P D MELLOW ROAD, MUMBAI 400 009. (RESPONDENT) ASSESSEE BY : SHRI N.R. AGRAWAL, CA REVENUE BY : SHRI PRAGATI KUMAR, CIT-DR DATE OF HEARING : 06.03.2013 DATE OF PRONOUNCEMENT : 06.03.2013 O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER : THESE ARE APPEALS OF THE ASSESSEE AND REVENUE, DIR ECTED AGAINST AN ORDER DATED 29.8.2012 OF COMMISSIONER OF INCOME TAX I.T.A. NO. 1805/MDS/12 I.T.A. NO. 2195/MDS/12 2 (APPEALS)-III, CHENNAI. SINCE ONE OF THE GROUNDS R AISED BY THE ASSESSEE QUESTIONS THE VALIDITY OF REOPENING, THIS ISSUE IS DEALT WITH FIRST. 2. AS PER THE ASSESSEE, REOPENING FOR THE IMPUGNED ASSESSMENT YEAR WAS DONE ON A CHANGE OF OPINION AND THE REVENU E BASED ON MATERIALS, WHICH WERE WITH IT AT THE TIME OF ORIGIN AL ASSESSMENT. ARGUMENT OF THE ASSESSEE IS THAT THE ORIGINAL ASSES SMENT HAVING BEEN COMPLETED UNDER SECTION 143(3) OF INCOME-TAX A CT, 1961 (IN SHORT 'THE ACT'), REOPENING WITHIN FOUR YEARS WAS B AD IN LAW. IT WAS SIMPLY BASED ON CHANGE OF OPINION, EVEN IF SUCH OPI NION WAS CAUSED DUE TO AUDIT OBJECTIONS. 3. FACTS APROPOS ARE THAT ASSESSEE, A CUSTOM HOUSE CLEARING AGENT, HAD FILED ITS RETURN FOR THE IMPUGNED ASSESS MENT YEAR ON 25.11.2006, DECLARING AN INCOME OF ` 26,79,743/-, THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) ON 23.12.2008 DE TERMINING THE INCOME AT ` 26,84,165/-. THEREAFTER, NOTICE UNDER SECTION 148 WAS ISSUED TO THE ASSESSEE ON 31.3.2011 AND THE REASONS FOR REOPENING MENTIONED WERE AS FOLLOWS:- IT IS SEEN FROM THE DETAILS FILED BY THE ASSESSEE O N RECONCILIATION OF INCOME AS PER TDS CERTIFICATES AND THAT AS PER PROF IT & LOSS ACCOUNT, THERE I.T.A. NO. 1805/MDS/12 I.T.A. NO. 2195/MDS/12 3 ARE MAJOR SHORT RECOVERIES IN RESPECT OF CLAIM OF R E-IMBURSEMENT OF EXPENSES AS FOLLOWS: NATURE OF EXPENSES INCURRED BY THE ASSESSEE RECOVERED FROM CUSTOMERS SHORT RECOVERY / BAD DEBTS FREIGHT CHARGES 36763515 36550586 212926 MBPT CHARGES 1441202 1206747 84310 CUSTOM DUTY 12907160 12822850 84310 THC CHARGES 16022361 11507580 4514781 TRANSPORT CHARGES 41126144 18851548 22274596 TOTAL 27321068 I.E, THE ASSESSEE HAD SHORT RECOVERED [NO CUSTOMS E XPENSES] AN AMOUNT OF ` 2,73,21,068/- IN RESPECT OF THE ABOVE HEADS. IN T HE PROFIT AND LOSS ACCOUNT, THE ASSESSEE HAS OFFERED EXCESS RECOVERY OF REIMBURSEMENT ` 40,07,550/- AFTER NETTING OFF SHORT AND EXCESS RECOVERIES OUTSIDE THE PROFIT & LOSS ACCOUNT IN CASE OF EXPENSES INCURRED AND REIMBURSED . ALSO, THE SUNDRY DEBTORS BALANCE AS ON 31.03.2006 A MOUNTS TO ONLY ` 1,99,51,177/-. HENCE, THE SHORT RECOVERY NEEDS TO FULFILL THE TEST S STIPULATED U/S.36(2) OF THE INCOME-TAX ACT, 1961, AS THE ABOVE SHORT RECOVERIES WOULD AMOUNT TO WRITING OFF THE SAME AS BAD DEBTS. SINCE THE ASSESSEE HAS CONTINUED BUSINESS WITH THE ABOVE PARTIES, THE SHORT RECOVERIES TO THE TUNE OF ` 2,73,21,068/- ON ACCOUNT OF REIMBURSEMENT EXPENSES WARRANTS DISALLOW ANCE U/S.36(1)(VII) OF THE INCOME-TAX ACT, 1961 . ASSESSEE, IN RESPONSE TO SUCH NOTICE, FILED OBJECTI ONS AGAINST THE REOPENING. IN SUCH OBJECTION, IT WAS POINTED OUT B Y THE ASSESSEE THAT THERE WAS NO SHORT RECOVERY FROM ANY OF ITS CLIENTS . AS PER THE ASSESSEE, EXPENSES WERE CLUBBED IN DIFFERENT GROUPS , BUT, RECOVERIES WERE EFFECTED FROM EACH CUSTOMER. WHEN CUSTOMER EX PENSES I.T.A. NO. 1805/MDS/12 I.T.A. NO. 2195/MDS/12 4 INCURRED IN RELATION TO EACH CUSTOMER WAS SEEN ALON G WITH THE RECOVERIES EFFECTED, LATTER WAS ALWAYS IN EXCESS. SUCH EXCESS RECOVERY WAS SHOWN BY IT IN ITS PROFIT & LOSS ACCOU NT AS INCOME. HEAD-WISE COMPUTATION OF THE EXCESS RECOVERY WAS AL SO GIVEN AS SCHEDULE 20 TO THE PROFIT & LOSS ACCOUNT. SUCH NET RECOVERIES ACCOUNTED AS INCOME, AS PER ASSESSEE, CAME TO ` 40,07,549.70. 4. HOWEVER, ASSESSING OFFICER CHOSE TO PROCEED WITH RE- ASSESSMENT DESPITE THE OBJECTIONS RAISED BY THE ASS ESSEE. DURING THE COURSE OF SUCH RE-ASSESSMENT PROCEEDINGS, ASSES SING OFFICER FOUND THAT THERE WERE INDEED EXCESS RECOVERIES UNDE R CERTAIN HEADS AND UNDER RECOVERIES IN CERTAIN OTHER HEADS, BUT IN OVERALL, THERE WAS A POSITIVE FIGURE, I.E. NET AMOUNT WAS AN EXCESS RE COVERY. AS PER THE A.O., THERE WAS UNDER RECOVERIES OF ` 4,11,21,241/- AND EXCESS RECOVERY OF ` 4,49,39,823/- FROM THE CLIENTS DURING THE RELEVANT PREVIOUS YEAR AND ASSESSEE WAS THEREFORE REQUIRED T O OFFER SUCH EXCESS AMOUNT OF ` 40,07,550/- AS INCOME. THEREAFTER, RE- ASSESSMENT WAS COMPLETED BY MAKING AN ADDITION OF ` 40,07,550/- TOWARDS EXCESS RECOVERIES FROM CUSTOMERS. IN ADDIT ION, THERE WERE DISALLOWANCES TOTALLING TO ` 8,44,29,762/- ON VARIOUS EXPENSES I.T.A. NO. 1805/MDS/12 I.T.A. NO. 2195/MDS/12 5 INCURRED BY THE ASSESSEE ON WHICH TAX WAS NOT DEDUC TED AT SOURCE, APPLYING SECTION 40(A)(IA) OF THE ACT. 5. ASSESSEE MOVED IN APPEAL BEFORE CIT(APPEALS) ARG UING THAT THE REOPENING WAS ONLY ON A CHANGE OF OPINION. ACC ORDING TO ASSESSEE, THE EXCESS RECOVERY FINALLY ADDED BY THE ASSESSING OFFICER WAS ALREADY A PART OF ITS INCOME SPECIFICALLY SHOWN IN PROFIT & LOSS ACCOUNT. THEREFORE, AS PER THE ASSESSEE, WHAT RESU LTED WAS A DOUBLE ADDITION. FURTHER, ACCORDING TO ASSESSEE, IT HAD F ILED A DETAILED CHART OF EXPENSES AND REIMBURSEMENTS DURING THE COURSE OF ORIGINAL ASSESSMENT. THERE WAS NO NEW INFORMATION WITH THE ASSESSING OFFICER WHICH WARRANTED REOPENING, OTHER THAN AN AU DIT OBJECTION. THERE WAS NO NEW TANGIBLE MATERIAL BEFORE ASSESSING OFFICER TO CONCLUDE THAT INCOME HAD ESCAPED ASSESSMENT. ASSES SEE RELIED ON THE DECISION OF HON'BLE APEX COURT IN THE CASE OF C IT V. KELVINATOR OF INDIA LTD. (320 ITR 561). 5. HOWEVER, CIT(APPEALS) WAS NOT IMPRESSED WITH REG ARD TO THE CHALLENGE ON REOPENING. AS PER CIT(APPEALS), JUST BECAUSE EXCESS RECOVERY WAS SHOWN BY THE ASSESSEE IN ITS PROFIT & LOSS ACCOUNT, IT COULD NOT BE INFERRED THAT SHORTAGE OF RECOVERIES U NDER SPECIFIC HEADS WAS VERIFIED BY THE ASSESSING OFFICER. AS PER LD. CIT(APPEALS), I.T.A. NO. 1805/MDS/12 I.T.A. NO. 2195/MDS/12 6 ASSESSEE COULD NOT SHOW HOW THE ISSUE REGARDING UND ER RECOVERIES WAS CONSIDERED BY THE ASSESSING OFFICER, IN THE COU RSE OF ORIGINAL ASSESSMENT PROCEEDINGS. AGAIN, AS PER LD. CIT(APPE ALS), SPECIFIC DETAILS ON RECOVERIES WERE NOT CALLED FROM THE ASSE SSEE BY THE ASSESSING OFFICER, DURING THE COURSE OF ORIGINAL AS SESSMENT PROCEEDINGS. JUST BECAUSE BOOKS OF ACCOUNTS WERE P RODUCED OR OTHER RECORDS WERE PRODUCED FROM WHICH MATERIAL EVI DENCE WITH DUE DILIGENCE COULD BE ADDUCED, WOULD NOT SATISFY THE R EQUIREMENT OF A DISCLOSURE CONTEMPLATED UNDER THE ACT. ACCORDING T O HIM, THERE WAS NO OPINION FORMED BY THE ASSESSING OFFICER AT THE F IRST INSTANCE. THERE WAS A FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULL AND TRUE PARTICULARS. EXPLANATION 1 TO SECTION 147 OF THE ACT WAS APPLICABLE. WHETHER THE OMISSION TO DISCLOSE WAS D ELIBERATE OR INADVERTENT WAS IRRELEVANT. AS PER LD. CIT(APPEALS ), ONCE THERE WAS OMISSION OR FAILURE ON THE PART OF THE ASSESSEE, JU RISDICTION STOOD CONFERRED ON THE ASSESSING OFFICER FOR INVOKING HIS POWER FOR REOPENING. RELIANCE WAS PLACED ON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF HONDA SIEL POWER PRODUCTS LTD. V. DCIT (340 ITR 53) BY THE LD. CIT(APPEALS) FOR TAKING THI S VIEW. NEVERTHELESS, CIT(APPEALS) WAS OF THE OPINION THAT ADDITION OF ` 40,07,750/- WAS NOT CALLED FOR, SINCE ASSESSEE HAD ALREADY ENTERED I.T.A. NO. 1805/MDS/12 I.T.A. NO. 2195/MDS/12 7 SUCH EXCESS RECOVERY IN ITS PROFIT & LOSS ACCOUNT. THUS, WHILE HOLDING THAT REOPENING WAS VALID, CIT(APPEALS) DELE TED THE ADDITION MADE BY THE ASSESSING OFFICER FOR THE EXCESS RECOVE RY OF EXPENSES. 6. NOW BEFORE US, LEARNED A.R., STRONGLY ASSAILING THE ORDERS OF AUTHORITIES BELOW, SUBMITTED THAT ASSESSING OFFICER SIMPLY MADE AN ADDITION WITH FULL KNOWLEDGE THAT THE ASSESSEE ITSE LF HAD INCLUDED SUCH AMOUNT AS A PART OF ITS INCOME. ACCORDING TO HIM, THE SUM OF ` 40,07,550/- FINALLY ADDED BY THE ASSESSING OFFICER, PURSUANT TO REOPENING, WAS THE SAME AMOUNT WHICH WAS A PART OF ITS INCOME SHOWN IN THE PROFIT & LOSS ACCOUNT FOR RELEVANT PRE VIOUS YEAR. DESPITE THIS BEING BROUGHT TO THE NOTICE OF THE ASS ESSING OFFICER, THE ADDITION WAS MADE. SUCH AN ADDITION WAS MADE BY TH E ASSESSING OFFICER ONLY TO CIRCUMWENT THE LAW LAID DOWN BY THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT V. JET AIRWAYS (I) LT D. (331 ITR 236). AS PER LEARNED A.R., HON'BLE BOMBAY HIGH COURT IN T HE SAID DECISION, HELD THAT IF AN ADDITION ON ANY OF THE ISSUES, WHIC H FORMED A REASON FOR REOPENING, WAS NOT MADE, THE POWER TO CONTINUE WITH A RE- ASSESSMENT WAS NO LONGER WITH THE ASSESSING OFFICER . ACCORDING TO HIM, THIS VIEW OF HON'BLE BOMBAY HIGH COURT WAS FOL LOWED BY HON'BLE DELHI HIGH COURT IN THE CASE OF RANBAXY LABORATORIE S LTD. V. CIT (336 I.T.A. NO. 1805/MDS/12 I.T.A. NO. 2195/MDS/12 8 ITR 136) AS ALSO HONBLE RAJASTHAN HIGH COURT IN TH E CASE OF CIT VS. SHRI RAM SINGH (306 ITR 343). IN ANY CASE, ACCORDING TO HIM, IT WAS CLEAR FROM THE REASONS RECORDED BY THE ASSESSING OF FICER THAT THE FIGURES TAKEN WERE ONLY FROM THE DETAILS GIVEN BY T HE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS. SUCH DETAILS AND RECONCILIATION WERE ALREADY WITH ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS. TO PRESUME THAT ASSESSI NG OFFICER HAD NOT APPLIED HIS MIND WILL NOT BE IN ACCORDANCE WITH LAW. ASSESSING OFFICER HAD ORIGINALLY APPLIED HIS MIND AND COMPLET ED THE ASSESSMENT UNDER SECTION 143(3) OF THE ACT. IT IS NOT AS THOU GH INCOME RETURNED BY THE ASSESSEE ACCEPTED AS SUCH. CERTAIN DISALLOW ANCES WERE MADE BY THE ASSESSING OFFICER AND THE INCOME FINALL Y ASSESSED WAS NOT WHAT WAS RETURNED BY THE ASSESSEE. THEREFORE, FINDING OF THE LD. CIT(APPEALS) THAT ASSESSING OFFICER HAD NOT APPLIED HIS MIND WAS INCORRECT. AS PER THE LEARNED A.R., RE-ASSESSMENT WAS NOT VALID HAVING BEEN INITIATED BASED ON CHANGE OF OPINION. 7. PER CONTRA, LEARNED D.R., SUPPORTING THE ORDER O F LD. CIT(APPEALS), SUBMITTED THAT ASSESSEE MIGHT HAVE PR ODUCED CERTAIN RECORDS BEFORE THE ASSESSING OFFICER DURING THE COU RSE OF ASSESSMENT PROCEEDINGS; BUT, JUST BY GIVING CERTAIN INFORMATION FROM WHICH WITH DUE DILIGENCE, SOME EVIDENCE COULD HAVE BEEN FOUND, I.T.A. NO. 1805/MDS/12 I.T.A. NO. 2195/MDS/12 9 WOULD NOT SATISFY THE REQUIREMENT OF FULL AND TRUE DISCLOSURE. ASSESSEE HAD TO MAKE FULL AND TRUE DISCLOSURE OF EX PENSES INCURRED BY IT AND REIMBURSED BY ITS CLIENTS. ACCORDING TO LEARNED D.R., RE- ASSESSMENT COULD BE DONE BASED ON AN AUDIT OBJECTIO N WHERE INTERNAL AUDIT PARTY HAD POINTED OUT A FACTUAL ERRO R. IN SUPPORT OF THIS, HE RELIED ON THE DECISION OF HON'BLE APEX COURT IN THE CASE OF CIT V. P.V.S. BEEDIES PVT. LTD. (237 ITR 13). AS FOR THE DECISION OF HON'BLE BOMBAY HIGH COURT IN THE CASE OF JET AIRWAYS (I) LT D. (SUPRA), LEARNED D.R. SUBMITTED THAT HERE, IT WAS NOT A CASE WHERE A SSESSING OFFICER HAD NOT MADE ANY ADDITION ON THE ISSUE ON WHICH REO PENING WAS RESORTED TO. THERE WAS INDEED AN ADDITION FOR EXCE SS RECOVERY MADE BY THE ASSESSING OFFICER. JUST BECAUSE CIT(APPEALS ) DELETED SUCH AN ADDITION ON ASSESSEES APPEAL, WOULD NOT MEAN TH AT ASSESSING OFFICER WAS DIVESTED OF HIS POWERS TO DO A RE-ASSES SMENT. IN THE CASES RELIED ON BY THE ASSESSEE, THERE WERE NO ADDI TION IN THE ORIGINAL ASSESSMENT ORDER ON THE ISSUES RAISED IN T HE REOPENING NOTICE. HOWEVER, THIS WAS NOT THE CASE HERE. ACCO RDING TO HIM, THE REOPENING WAS, THEREFORE, VALIDLY INITIATED. 8. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL SUBMISSIONS. REASONS GIVEN FOR REOPENING HAVE BEEN REPRODUCED BY US AT PARA 3 ABOVE. FIRST PART OF THIS ITSELF CLEARLY MENTIONS THAT THE FIGURES GIVEN I.T.A. NO. 1805/MDS/12 I.T.A. NO. 2195/MDS/12 10 IN THE TABLE WERE BASED ON THE DETAILS FURNISHED BY THE ASSESSEE ON RECONCILIATION OF ITS INCOME AS PER TDS CERTIFICATE AS PER PROFIT & LOSS ACCOUNT. DETAILS FILED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER, DURING THE COURSE OF ASSESSMENT PROCEEDINGS, HAVE B EEN PLACED BEFORE US AT PAPER-BOOK-I PAGES 31 AND 32 OF THE AS SESSEE. FREIGHT CHARGE OF ` 3,67,63,512/- MENTIONED IN THE TABLE AS INCURRED B Y THE ASSESSEE IS A FIGURE GIVEN BY THE ASSESSEE THEREIN AND RECOVERY OF ` 3,65,50,586/- FROM CUSTOMERS, IS ALSO APPEARING THE REIN. BOTH OF THEM WERE EXTRACTED AS SUCH FROM THE DETAILS FURNIS HED BY THE ASSESSEE. SIMILAR IS THE CASE OF CUSTOMS DUTY OF ` 1,29,07,160/- PAID BY THE ASSESSEE AND ` 1,28,22,850/- RECOVERED FROM THE CUSTOMERS. WHAT WE FIND IS THAT THE CHART FURNISHE D BY THE ASSESSEE BEFORE THE ASSESSING OFFICER, DURING THE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS, HAD CLEARLY GIVEN THE EXPEN SES INCURRED BY THE ASSESSEE WHICH IT COULD RECOVER FROM ITS CLIENT S AND THE AMOUNT IT HAD RECOVERED FROM THE CLIENTS UNDER VARIOUS HEADS. FINAL RESULT AS APPEARING IN PAPER-BOOK PAGE 32 WAS EXCESS RECOVERY OF ` 40,07,549.70. PAPER-BOOK PAGE 2 IS A COPY OF THE A UDITED PROFIT & LOSS ACCOUNT FILED BY THE ASSESSEE ALONG WITH ITS R ETURN. INCOME PART THEREOF IS REPRODUCED HEREUNDER:- I.T.A. NO. 1805/MDS/12 I.T.A. NO. 2195/MDS/12 11 (AMOUNT IN ` ) SCHEDULE 31.03.2006 31.03.2005 INCOME AGENCY CHARGES 12,179,411.00 12,679,313.30 OTHER INCOME 18 399, 082.70 517,486.49 EXCESS RECOVERY OF REIMBURSEMENT 20 EXPENSES 4,007,549.70 3,546,677.54 TOTAL INCOME 16,586,043.40 16,743,477.33 EXCESS RECOVERY REIMBURSED COMING TO ` 40,07,549.70 HAS BEEN CLEARLY SHOWN AS INCOME. A SCHEDULE HAS ALSO BEEN APPENDED TO ITS BALANCE SHEET, NUMBERED AS SCHEDULE 20, WHICH IS AL SO AVAILABLE AT PAPER-BOOK PAGES 16 & 17, WHICH ONCE AGAIN SHOWS IT EM-WISE EXPENSES INCURRED BY THE ASSESSEE FOR WHICH IT COUL D CLAIM REIMBURSEMENT AND THE EXPENSES WHICH IT HAD RECOVER ED FROM ITS CUSTOMERS. THE NET EFFECT IS THE SUM OF ` 40,07,549.70. 9. NOW WE HAVE A LOOK AT THE ASSESSMENT ORDER PASSE D UNDER SECTION 143(3) READ WITH SECTION 147 OF THE ACT, PU RSUANT TO THE REOPENING, SHOWS THE ONLY ADDITION SHOWN THEREIN FO R EXCESS RECOVERY OF REIMBURSEMENT IS ` 40,07,550/-. THIS AMOUNT IS ALREADY INCLUDED AS A PART OF ASSESSEES INCOME. THEREFORE, IN OUR OPINION, THERE IS MUCH STRENGTH IN THE ARGUMENT OF THE ASSESSEE THAT THE ADDITION ACTUALLY RESULTED IN DOUBLE TAXATION OF THE SAME IN COME. WE CANNOT PRESUME THAT ASSESSING OFFICER HAD NOT SEEN THE PRO FIT & LOSS I.T.A. NO. 1805/MDS/12 I.T.A. NO. 2195/MDS/12 12 ACCOUNT AND HAD NOT SEEN THE SUM OF ` 40,07,549.70 SHOWN BY THE ASSESSEE AS A PART OF INCOME. DESPITE A SPECIFIC E NTRY BEING THERE, THE ADDITION WAS MADE. VERY RELEVANT FACT IS THAT THIS ADDITION HAD BEEN DELETED BY THE CIT(APPEALS) FOR THE SIMPLE REA SON THAT IT RESULTED IN DUPLICATION. THEREFORE, WE ARE CONSTRA INED TO COME TO A CONCLUSION THAT ASSESSING OFFICER HAD MADE THIS ADD ITION ONLY TO SAVE HERSELF FROM THE POSITION THAT WOULD HAVE ARISEN IF NO ADDITION WERE MADE BASED ON THE REASON GIVEN FOR REOPENING. 10. FURTHER, WE FIND THAT THERE WAS NO NEW MATERIAL IN THE HAND OF THE ASSESSING OFFICER FOR COMING TO A CONCLUSION TH AT ASSESSEE HAD MADE ANY UNDER RECOVERIES. EVEN IF UNDER RECOVERIE S WERE THERE, IT WAS FOR THE ASSESSEE TO RECOVER FROM ITS CLIENTS. TO SAY THAT UNDER RECOVERIES WILL BE EQUIVALENT TO CLAIM OF BAD DEBT, IN OUR OPINION, IS ONLY A PRESUMPTION TAKEN BY THE ASSESSING OFFICER. THAT ASSESSEE HAD TAKEN THE CREDIT OF ` 40,07,550/- IN ITS PROFIT & LOSS ACCOUNT AFTER NETTING OFF SHORT AND EXCESS RECOVERIES, IS CLEARLY MENTIONED IN THE REASON FOR REOPENING ITSELF. THIS, IN OUR OPINION, CONSIDERABLY ONCE AGAIN STRENGTHENS THE ARGUMENT OF THE LEARNED A.R. THAT THE ADDITION WAS MADE ON THE SAME AMOUNT, ONLY TO GET OVER THE L AW LAID DOWN BY HON'BLE BOMBAY HIGH COURT IN THE CASE OF JET AIRWAY S (I) LTD. (SUPRA) I.T.A. NO. 1805/MDS/12 I.T.A. NO. 2195/MDS/12 13 AS ALSO THAT OF HON'BLE DELHI HIGH COURT IN THE CAS E OF RANBAXY LABORATORIES LTD. (SUPRA). THUS, WE FIND THAT NOT ONLY THE RE- ASSESSMENT PROCEEDINGS WERE INITIATED ON A MERE CHA NGE OF OPINION WITHOUT ANY NEW TANGIBLE MATERIAL, BUT ALSO THE ADD ITION MADE BASED ON THE REASONS FOR REOPENING WAS ONLY A CAMOUFLAGE, TO GET OVER THE POSITION OF LAW THAT JURISDICTION FOR RE-ASSESSMENT WAS DIVESTED, THE MOMENT A.O. FOUND THERE WAS NO ADDITION OR DISALLOW ANCE REQUIRED TO BE MADE VIS--VIS THE REASONS CITED FOR REOPENING. AS HELD BY FULL BENCH DECISION OF OF HON'BLE DELHI HIGH COURT IN TH E CASE OF CIT V. KELVINATOR OF INDIA LTD. (256 ITR 1), A.O. MUST HAV E REASON TO BELIEVE THAT THERE WAS ESCAPEMENT OF INCOME AND SUCH REASON TO BELIEVE SHOULD HAVE OCCURRED ON ACCOUNT OF OMISSION OR FAIL URE OF THE ASSESSEE TO MAKE A RETURN OF INCOME OR OMISSION OR FAILURE OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY MATERIAL FACTS NECESSARY FOR ASSESSMENT. COMPILING FIGURES FROM THE TABLE PRODU CED BY THE ASSESSEE DURING THE COURSE OF ORIGINAL ASSESSMENT P ROCEEDINGS, WOULD NOT SUFFICE THIS REQUIREMENT. THEIR LORDSHIP IN THE CASE OF KELVINATOR OF INDIA LTD. (SUPRA) ALSO HELD THAT AFT ER AN ASSESSMENT COMPLETED UNDER SECTION 143(3), A PRESUMPTION COULD BE RAISED THAT THERE WAS APPLICATION OF MIND BY THE ASSESSING OFFI CER IN TERMS OF CLAUSE (E) OF SECTION 114 OF INDIAN EVIDENCE ACT. AS FOR THE DECISION I.T.A. NO. 1805/MDS/12 I.T.A. NO. 2195/MDS/12 14 OF HON'BLE APEX COURT IN THE CASE OF P.V.S. BEEDIES PVT. LTD. (SUPRA) ON WHICH STRONG RELIANCE WAS PLACED BY THE LEARNED D.R., THERE THE ASSESSING OFFICER HAD IN THE ORIGINAL ASSESSMENT AL LOWED DEDUCTION UNDER SECTION 80G FOR DONATIONS GIVEN BY THE ASSESS EE TO A CHARITABLE TRUST, WHEN THE FACT WAS THAT THE RECOGN ITION GIVEN TO THE SAID TRUST HAD EXPIRED PRIOR TO THE RELEVANT YEAR. THE INFORMATION THAT THE TRUST TO WHICH DONATION WAS MADE, WAS NOT RECOG NIZED DURING THE RELEVANT YEAR, CAME TO THE KNOWLEDGE OF THE ASSESSI NG OFFICER ONLY WHEN POINTED OUT BY INTERNAL AUDIT PARTY. THIS INF ORMATION WAS NOT AVAILABLE TO THE ASSESSING OFFICER WHEN THE ORIGINA L ASSESSMENT WAS COMPLETED. HENCE, IT WAS A FRESH TANGIBLE MATERIAL COMING IN THE POSSESSION OF ASSESSING OFFICER. IT WAS DUE TO THI S REASON, HON'BLE APEX COURT HELD THE REOPENING TO BE VALID. ON THE OTHER HAND, HERE THE AUDIT PARTY HAD SIMPLY TAKEN FEW FIGURES FROM T HE DETAILS SUBMITTED BY THE ASSESSEE AND REACHED AN ERRONEOUS CONCLUSION THAT THERE WERE UNDER RECOVERIES. IN OUR OPINION, THE R EOPENING WAS NOT VALIDLY INITIATED. WE, THEREFORE, ALLOW GROUND NO. 3 TAKEN BY THE ASSESSEE AND HOLD THE RE-ASSESSMENT TO BE INVALID. 11. SINCE THE RE-ASSESSMENT IS HELD INVALID, OTHER GROUNDS TAKEN BY THE ASSESSEE HAVE BECOME ACADEMIC AND HAVE NOT BEEN I.T.A. NO. 1805/MDS/12 I.T.A. NO. 2195/MDS/12 15 ADJUDICATED. FOR THE SAME REASON, CROSS APPEAL OF THE REVENUE HAS ALSO BECOME INFRUCTUOUS. 12. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D, WHEREAS, THAT OF REVENUE IS DISMISSED. ORDER WAS PRONOUNCED IN THE COURT ON WEDNESDAY, THE 6 TH OF MARCH, 2013, AT CHENNAI. SD/- SD/- (V.DURGA RAO) (ABRAHAM P. GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 6 TH MARCH, 2013. KRI. COPY TO: (1) ASSESSEE (2) ASSESSING OFFICER (3) CIT(A)-III, CHENNAI (4) CIT, CHENNAI-I, CHENNAI (5) D.R. (6) GUARD FILE