DINESH KUMAR GUPTA, AGRA V. ITO, AGRA

ITA 283/AGR/2017

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 0417 (ITAT-AGRA)
• Duration Of Justice: 2 year(s) 2 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-09-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 30-06-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: R C TOMAR I T P
• Keywords: Reopening of assessment; Difference of opinion; Assessment record; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 44AD; 40A(3); 143(3); 147; 148

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL, AGRA BENCH, AGRA BEFORE : SHRI LALIET KUMAR, JUDICIAL MEMBER AND DR. MITHA LAL MEENA, ACCOUNTANT MEMBER ITA NO. 283/AGR./2017 ASSESSMENT YEAR: 2008-09 SHRI DINESH KUMAR GUPTA, PROP. S.D. BUILDRS, B-69, TRANS YAMUNA COLONY, AGRA (UP) PAN: AFMPG 5248P (APPELLANT) VS. INCOME - TAX OFFICER, 5(3), FIROZABAD. (RESPONDENT) APPELLANT BY SH. R.C. TOMAR, I.T.P. RESPONDENT BY SH. WASEEM ARSHAD, SR. DR ORDER PER LALIET KUMAR, J.M.: THIS APPEAL IS FILED BY THE ASSESSEE FEELING AGGR IEVED FROM THE ORDER OF LD. CIT(A)-2, AGRA DATED 30.11.2017 ON THE FOLLOWING GR OUNDS : 1. BECAUSE THE PRE-CONDITION FOR INVOKING T HE PROVISIONS OF SEC. 147 THAT THE ESCAPEMENT OF THE INCOME HAD BEEN OCCASIONED BY REASON OF FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRUL Y ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT HAD NOT BEEN SATISFIED, TH E REOPENING OF ASSESSMENT U/S 147, THE ISSUANCE OF NOTICE U/S 148 AND SUBSEQUENT ORDER ARE ALL WITHOUT JURISDICTION. 2. THAT REOPENING OF CLOSED ASSESSMENT U/S 14 3(3) BEYOND FOUR YEARS FROM THE END OF RELEVANT ASSESSMENT YEAR BY INVOKIN G PROVISIONS OF SEC. 147 ON THE SAME SET OF FACTS CONSIDERED UNDER SCRUTINY ASSESSMENT MADE IS ILLEGAL. DATE OF HEARING 03.09.2019 DATE OF PRONOUNCEMENT 11 .09.2019 ITA NO. 283/AGR/2017 2 3. THAT THE A.O. CANNOT TAKE ADVANTAGE OF HIS OWN WRONG AND REOPENING OF ASSESSMENT AFTER A LAPSE OF FOUR YEARS ON MERE C HANGE OF OPINION BY TAKING RECOURSE TO THE PROVISION OF SEC. 147 TWICE AND LD. C.I.T. (A) DECISION IN SUSTAINING THE REOPENING OF ASSESSMENT BY THE A. O. IS ILLEGAL. 4. THAT THE LEGISLATURE HAS NOT CONFERRED THE POWERS TO THE A.O. TO REVIEW HIS OWN ORDER IN THE GARB OF REOPENING AND REOPENIN G OF ASSESSMENT U/S 147 IS ILLEGAL. 5. THAT BELIEF FORMED TO REOPEN THE ASSESSMEN T ON MERE OPINION AND AT THE BEHEST OF THE AUDIT PARTY U/S 147 AFTER A LAPSE OF FOUR YEARS IS INVALID AND ILLEGAL. 6. THAT IN THE CASE OF ESTIMATE OF INCOME PRO VISION OF SEC. 40A(3) HAD NO APPLICATION AND THE ADDITION OF RS. 1821313 SUSTAIN ED U/S 40A(3) IS ILLEGAL. 7. THAT THE EXPENDITURE IN CASH ON PURCHASE O F GITTI, SAND ETC. WAS INCURRED AT THE SPOT WHERE BANKING FACILITIES WERE NOT AVAILABLE AND PAYMENT WAS MADE UNDER COMPELLING CIRCUMSTANCES AND INEXPEDIENCY OF BUSINESS AND ADDITION SUSTAINED AT RS. 1821313/- IS ILLEGAL AND ARBITRARY. 2. THE LD. AR HAD SUBMITTED THAT IN THE PRESENT CA SE, THE ASSESSMENT U/S. 143(3) WAS COMPLETED BY THE ASSESSING OFFICER ON 01.12.201 0, ASSESSING THE INCOME OF THE ASSESSEE AT RS.5,39,690/-. HOWEVER, SUBSEQUENTLY, T HE ASSESSING OFFICER HAD REOPENED THE ASSESSMENT FOR THE FOLLOWING REASONS : 'IN THIS CASE THE ASSESSEE HAS FILED ORIGINAL RETUR N ON 30.09.2008 DECLARING TOTAL INCOME OF RS.5,81,790/-. THE RETURN WAS LATER REVISE D ON 5.11.2009 SHOWING TOTAL INCOME OF RS. 4,81,790/-. THE CASE WAS PROCESSED U/S 143(1). THE CASE WAS FURTHER SELECTED FOR SCRUTINY UNDER CASS AND ASSESSMENT WAS COMPLETED U/S 143(3) ON TOTAL INCOME OF RS. 5,39,690/- VIDE ORDER DATED 01. 12.2010. FROM PERUSAL OF ASSESSMENT RECORDS IT IS FOUND THAT THE ASSESSEE HAS DEBITED RS. 27,47,003/- AGAINST MATERIAL COST IN THE PROFIT LOS S ACCOUNT. THE LEDGER ACCOUNT OF ITA NO. 283/AGR/2017 3 MATERIAL EXPENSES SHOWS VARIOUS PAYMENTS INCURRED I N CASH ON DIFFERENT DATES IN EXCESS OF RS. 20,000/-EACH, TOTALING TO RS. 18,21,3 13/- WHICH ARE TO BE DISALLOWED UNDER THE PROVISION OF SECTION 40A(3) OF THE IT ACT 1961 BUT THE EXPENSES HAVE BEEN ALLOWED BY THE AO. HENCE THE AMOUNT OF RS. 18, 21,313/- IS LIABLE TO BE DISALLOWED AND ADDED BACK TO THE INCOME OF THE ASSE SSEE. I THEREFORE, HAVE REASON TO BELIEVE THAT THE INCOME CHARGEABLE TO TAX OF RS, 18,21,313/-HAS ESCAPED ASSESSMENT WITHIN THE MEANIN G OF SECTION 147 OF THE IT ACT 1961 IN THE CASE OF SHRI DINESH CHAND GUPTA, B- 69 TRANS YAMUNA COLONY, AGRA IN THE ASSESSMENT YEAR 2008-09 AND THE ESCAPEM ENT OCCURRED DUE TO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND T RULY ALL MATERIAL FACTS RELATING TO PAYMENTS EXCEEDING RS. 20,000/- AND EVEN THE TAX AU DIT IS SILENT ON THIS STATUTORY REQUIREMENT.' 3. ON THE BASIS OF ABOVE, IT WAS SUBMITTED THAT THE RE WAS NO FRESH MATERIAL AVAILABLE WITH THE ASSESSING OFFICER WHICH COULD HA VE TRIGGERED THE REASSESSMENT PROCEEDINGS BY ISSUING NOTICE U/S. 148. IT WAS SUBM ITTED THAT THE ASSESSING OFFICER IN THE REASSESSMENT PROCEEDINGS, HAS NOT BEEN ABLE TO ESTABLISH OR BRING ON RECORD ANY EVIDENCE SUBSTANTIATING THE FAILURE ON THE PART OF THE ASSESSEE IN DISCLOSING FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT. IT WAS SUBMITTED THAT THE ASSESSING OFFICER IN PARAGRAPH NO. 3 OF THE ORIGINAL ASSESSME NT ORDER HAD GIVEN THE COMPARATIVE NET PROFIT AND NP RATE FOR THE ASSESSMENT YEAR 2006 -07, 2007-08 AND 2008-09. ON THE BASIS OF THIS COMPARISON, IT IS CLEAR THAT THE NP R ATE OF THE ASSESSEE WAS PROGRESSIVE AND IT WAS NOTED TO BE 11.48%. FURTHER, IN PARAGRAP H 3 OF THE ORIGINAL ASSESSMENT ORDER, IT WAS MENTIONED BY THE ASSESSING OFFICER TH AT DURING THE VERIFICATION OF PURCHASE VOUCHERS, IT WAS FOUND THAT BILLS OF PURCH ASE WERE EITHER FROM UNREGISTERED ITA NO. 283/AGR/2017 4 CONCERNS OR WERE OF SELF MADE VOUCHERS. FURTHER PAY MENTS TOWARDS PURCHASE OF MATERIAL AND LABOUR & WAGES HAVE BEEN MADE IN CASH. THEREFORE, TO COVER UP ANY POSSIBLE LEAKAGES BY WAY OF INFLATING THESE EXPENSES, DISALL OWANCE OF RS.50,000/- WAS MADE. IT WAS THE SUBMISSION OF THE LD. AR THAT IN THE REASSE SSMENT PROCEEDINGS, SAME MATERIAL WAS USED BY THE AI WHICH WAS DULY MENTIONED IN THE ORIGINAL ASSESSMENT ORDER AS WELL AS IN THE AUDIT REPORT. IT WAS SUBMITTED THAT ONCE THE ISSUE HAS BEEN EXAMINED BY THE ASSESSING OFFICER IN THE ORIGINAL ASSESSMENT PR OCEEDINGS, THEN IT IS NOT OPEN FOR THE ASSESSING OFFICER TO CHANGE HIS VIEW. FOR THIS PROPOSITION, THE LD. AR HAS RELIED ON THE DECISION OF HONBLE SUPREME COURT IN THE MATTER OF CIT VS. KELVINATOR OF INDIA, 320 ITR 561 (SC) , ICICI BANK LTD. VS. DCIT, 268 ITR 20 3, CIT VS. GEORGE WILLIAMSON (ASSAM) LTD., 258 ITR 126 (GAU), SIRPUR PAPER MILLS LTD. VS. ITO, 114 ITR 404 (AP), CIT VS. SIMON CARVES LTD., 105 ITR 212 (SC) AND SEV ERAL OTHER LEGAL PRONOUNCEMENTS. 4. ON THE OTHER HAND, THE LD. DR HAD SUBMITTED THAT THE PRESENT CASE IS NOT OF CHANGE OF OPINION AND WAS NOT BASED ONLY ON AUDIT R EPORT AND THERE WAS INDEPENDENT APPLICATION OF MIND BY THE ASSESSING OFFICER. FOR T HIS PURPOSE HE RELIED UPON VARIOUS DECISIONS AS MENTIONED IN THE PAPER BOOK, MORE PART ICULARLY, THE DECISION IN THE MATTER OF LARSON & TUBRO LTD. IN CIVIL APPEAL NO. 5390 OF 2007. ITA NO. 283/AGR/2017 5 5. WE HAVE HEARD THE RIVAL CONTENTIONS OF THE PARTI ES AND PERUSED THE RECORD. THE ORIGINAL ASSESSMENT ORDER WAS FINALIZED ON 01.12.20 10 AND IN PARAGRAPH NO. 3, IT WAS NOTED BY THE ASSESSING OFFICER AS UNDER : A.Y GROSS RECEIPTS (RS) NET PROFIT (RS) N.P. RATE N.P. @ 8% IS 2006-07 52,88,022 5,88,746 08.00% 4,23,042 2007-08 37,81,491 4,10,549 10.86% 3,15,942 2008-09 51,56,179 5,91,788 11.48% 4,23,177 AS IS APPARENT FROM ABOVE, THE TURNOVER, NET PROFIT AS WELL AS NP RATE ARE PROGRESSIVE IN COMPARISON TO LAST YEAR AND IS ABOVE 8% AS PRESCRIBED UNDER PRESUMPTIVE RATE OF PROFIT U/S. 44AD OF THE IT ACT, 1961. THEREFO RE, NO ADVERSE INFERENCE IS DRAWN. HOWEVER, DURING THE VERIFICATION OF PURCHASE VOUCHE RS, IT WAS FOUND THAT BILLS OF PURCHASE WERE EITHER FROM UNREGISTERED CONCERNS OR WERE OF SELF MADE VOUCHERS. FURTHER PAYMENTS TOWARDS PURCHASE OF MATERIAL AND LABOUR & WAGES HAVE BEEN MADE IN CASH. THEREFORE, TO COVER UP ANY POSSIBLE LEAKAGES BY WAY OF INFLATING THESE EXPENSES, AN ADH- HOC ADDITION OF RS.50,000/- IS MADE TO THE TOTAL IN COME TO WHICH THE ASSESSEE HAS AGREED UPON. 6. AS MENTIONED HEREIN ABOVE, THE REASONING FOR REO PENING AS MENTIONED IN THE ASSESSMENT ORDER CLEARLY SHOWS THAT THE SAME MATERI AL WHICH WAS CONSIDERED BY THE ASSESSING OFFICER IN THE ORIGINAL ASSESSMENT ORDER WAS AGAIN CONSIDERED BY THE ASSESSING OFFICER IN THE RE-ASSESSMENT ORDER AND BA SED ON THAT, THE REASSESSMENT PROCEEDINGS WERE FINALIZED AND INCOME OF THE ASSESS EE WAS COMPUTED AT RS.23,61,000/-. IN OUR CONSIDERED OPINION, ONCE THE MATERIAL/BASIS WAS CONSIDERED AND EXAMINED BY THE ASSESSING OFFICER IN THE ORIGIN AL ASSESSMENT PROCEEDINGS, WHICH IS APPARENT FROM THE FINDING RECORDED BY THE ASSESS ING OFFICER IN PARAGRAPH NO.3, IN ITA NO. 283/AGR/2017 6 OUR VIEW, IT IS NOT PERMISSIBLE FOR THE ASSESSING O FFICER FOR EXERCISING POWERS U/S. 148 TO REOPEN THE ASSESSMENT U/S. 147 OF THE ACT. EVEN IN THE ORIGINAL ASSESSMENT, THE ASSESSING OFFICER HAS ALSO MENTIONED THAT THE PURCH ASE VOUCHERS WERE FROM UNREGISTERED CONCERNS AND SELF MADE AND FURTHER MEN TIONED THAT THE PAYMENTS FOR PURCHASE OF MATERIAL AND LABOUR & WAGES WERE MADE I N CASH. ONCE, THE SAME MATERIAL WAS AVAILABLE, THEN IT WAS NOT OPEN FOR THE ASSESSI NG OFFICER TO REOPEN THE ASSESSMENT. WE MAY FRUITFULLY RELY UPON THE DECISIO N OF KELVINATOR OF INDIA (SUPRA) RELIED UPON BY THE ASSESSEE AND RESPECTFULLY FOLLOW ING THE DECISION OF HONBLE SUPREME COURT AND ALSO OTHER DECISIONS IN RESPECT O F REOPENING U/S. 147, THE APPEAL OF THE ASSESSEE IS ALLOWED. 7. IN THE RESULT, THE APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH SEPTEMBER, 2019 SD/- SD/- (DR. MITHA LAL MEENA) (LALIET KUMAR) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: SEPT., 2019 *AKS* COPY OF ORDER FORWARDED TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA