M/S MOTHER MIRA INDUSTRIES LTD, CHENNAI V. ACIT CENTRAL CIRCLE 2 (2), CHENNAI

ITA 3104/CHNY/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 2162 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 6 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-06-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2013-2014
• Appeal Filed On: 18-12-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: C YAMUNA IRS JCIT
• Assessee Lawyers: R VIJAYARAGHAVAN
• Keywords: Reopening of assessment; Unexplained cash credit; Search and seizure; Audit objection; Difference of opinion; Corroborative evidences; Assessment record; Reason to believe; Change of opinion; Reassessment proceedings; TDS; Set aside
• Section: 143(3); 40(a)(ia); 194C; 147; 68

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, C BENCH : CHENNAI , . , [BEFORE SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER AND SHRI DUVVURU RL REDDY , JUDICIAL MEMBER ] !' ./I.T.A. NOS.3103 & 3104/CHNY/2017. #$% &$ / ASSESSMENT YEARS : 2012-13 & 2013-2014. M/S. MOTHER MIRA INDUSTRIES LTD, NO.1, COOKS ROAD, PERAMBUR, CHENNAI 600 012. VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 2(2) CHENNAI. !' ./I.T.A. NO.3138/CHNY/2017 #$% &$ / ASSESSMENT YEAR : 2009-2010 THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 2(2) CHENNAI VS. M/S. MOTHER MIRA INDUSTRIES LTD, NO.1, COOKS ROAD, PERAMBUR, CHENNAI 600 012. [PAN AACCM 2392L] ( / APPELLANT) ( /RESPONDENT) ASSESSEE BY : SHRI. R. VIJAYARAGHAVAN, ADV '()* + , /RESPONDENT BY : MS. C. YAMUNA, IRS, JCIT. # - + . /DATE OF HEARING : 30-04-2019 /0&% + . /DATE OF PRONOUNCEMENT : 25-06-2019 ITA NO.3103, 3104 & 3138 /17 :- 2 -: / O R D E R PER INTURI RAMA RAO, ACCOUNTANT MEMBER THE APPEALS IN ITA NOS. 3103 & 3014/CHNY/2017 ARE FILED BY THE ASSESSEE FOR THE ASSESSMENT YEARS 2012-13 & 2013-2014 RESPECTIVELY, WHEREAS ITA NO. 3138/CHNY/2017 FOR T HE ASSESSMENT YEAR 2009-2010 IS FILED BY THE REVENUE. 2. SINCE, THE IDENTICAL FACTS AND ISSUES ARE INVOLVED IN THESE APPEALS, WE PROCEED TO DISPOSE THE SAME VIDE THIS C OMMON ORDER. 3. FOR THE SAKE OF CONVENIENCE AND CLARITY, THE FACTS RELEVANT FOR THE AY 2012-13 IN ITA NO.3103/CHNY/2017 ARE STATED HEREIN. 4. THE ASSESSEE RAISED THE FOLLOWING GROUNDS OF APPEAL . 1. THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) IS CONTRARY TO LAW, FACTS AND CIRCUMSTANC ES OF THE CASE. 2. THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE DISALLOWANCE OF AN AMOUNT OF RS. 51,76,250/- UNDER THE HEAD RATES AND TAXES ON THE GROUND THAT ASSESSEE HAS CLAIMED THE SAME EXPENDITUR E UNDER THE HEAD RUNNING AND OPERATION OF VEHICLES - POWER AND FUELS. 3. THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE DISALLOWANCE OF RUNNING AND OPER ATION OF VEHICLES EXPENDITURE INCURRED BY THE ASSESSEE DURING THE RELEVANT ASSESSMENT YEAR UNDER SECTION 40(A)(IA)/194C OF THE ACT. ITA NO.3103, 3104 & 3138 /17 :- 3 -: 3.1. THE COMMISSIONER OF INCOME TAX (APPEALS) OUGHT T O HAVE APPRECIATED THAT NO CONTRACT EXIST BETWEEN ASSESSEE AND THE OPERATOR OF THE VEHICLE WHOSE SERV ICES HAVE BEEN UTILIZED BY THE ASSESSEE. 4. THE APPELLANT CRAVES LEAVE TO FILE ADDITIONAL GRO UNDS AT THE TIME OF HEARING. 5. IN ADDITION TO THE ABOVE GROUNDS, FOLLOWING ADDITIO NAL GROUNDS WERE ALSO RAISED. 1. THE CIT(A) ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN ADDING A SUM OF RS.7,32,18,000/-- AS UNEXPLAIN ED SHARE APPLICATION MONEY FOR THE Y 2012-13 WHEREAS TH E APPELLANT HAS RECEIVED ONLY A SUM OF RS.5,66,64,054/-- AS SHARE APPLICATION MONEY DURING THE YEAR. 2. THE CIT(A) OUGHT TO HAVE HELD THAT ADDITION ON ACCO UNT OF SHARE APPLICATION MONEY SHOULD BE ONLY RS.5,66,64,054/- WHICH HAS BEEN EXPLAINED BY OFFERING SIMILA R AMOUNT IN THIS ASSESSMENT FOR MR.ARAVIND NANDAGOPA L. 3.THE CIT(A) OUGHT TO HAVE HELD THE BALANCE OF ADDITION OF RS.2,53,36,000/- IN THE HANDS OF MR ARAVIND NANDAGOPAL, EVE N THOUGH WAS MADE FOR THE AY 2012-13 ACTUALLY REPRESENTS THE APPLICATION MONEY INVESTED BY HIM IN THE APPELLANT COMPANY FOR THE AY 2013-14. 4. THE APPELLANT CRAVES LEAVE TO ADDUCE EVIDENCE AT THE TIME OF HEARING. 6. THE BRIEF FACTS OF THE CASE ARE AS UNDER: THE APPELLANT, NAMELY, M/S. MOTHER MIRA INDUSTRIES LTD, IS A COMPANY INCORPORATED UNDER THE PROVISIONS OF THE CO MPANIES ACT, 1956. IT IS ENGAGED IN THE BUSINESS OF TRADING IN SHARES, COMMODITIES, ITA NO.3103, 3104 & 3138 /17 :- 4 -: SECURITIES, DEBENTURES AND OTHER INVESTMENTS. THE RETURN OF INCOME FOR THE AY 2012-13 WAS FILED ON 30.09.2012 DISCLOSI NG TOTAL INCOME OF RS. 95,99,090/-. AGAINST THE SAID RETURN OF INCOME, THE ASSESSMENT WAS COMPLETED BY THE DEPUTY COMMISSIONER OF INCOME, CENTRAL CIRCLE 2(2), CHENNAI (HEREINAFTER CALLED AO) VIDE ORDER DATED 25.03.2015 PASSED U/S. 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) AT TOTAL INCOME OF RS. 10,72,65,823/- AFTER MAKING SE VERAL DISALLOWANCES, WHICH INTER ALIA INCLUDES ADDITION ON ACCOUNT OF UNEXPLAINABLE CASH DEPOSIT MADE IN STATE BANK OF PATIALA OF F7,32,18, 000/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OF FICER FOUND THAT CASH OF F7,32,18,000/- WAS DEPOSITED IN THE STATE B ANK OF PATIALA DURING THE PERIOD 26.07.2011 TO 28.03.2012, WHICH I S RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION. WHEN THE ASSES SEE WAS ASKED TO EXPLAIN THE CASH DEPOSITS, THE APPELLANT OFFERED AN EXPLANATION STATING THAT THE SAID DEPOSIT WAS MADE OUT OF THE C ASH RECEIVED FROM ITS DIRECTOR NAMELY SHRI. ARAVIND NANDAGOPAL TOWARD S SHARE APPLICATION MONEY. IT IS FURTHER SUBMITTED THAT CONSEQUENT TO SEARCH AND SEIZURE OPERATION IN THE CASE OF M/S. MOHAN BREWERIES AND DISTILLERIES LIMITED, IN WHICH THE SAID SHRI. ARAVIND NANDAGOPAL IS ALS O A DIRECTOR, HE OFFERED A SUM OF F150 CRORES, OUT OF WHICH F100 CRO RES WAS OFFERED IN HIS INDIVIDUAL NAME AND THE BALANCE OF F 50 CRORES WAS OFFERED IN THE HANDS OF M/S. MOHAN BREWERIES AND DISTILLERIES LIMI TED. OUT OF F100 ITA NO.3103, 3104 & 3138 /17 :- 5 -: CRORES OFFERED IN HIS HAND, IT IS STATED THAT SHRI. ARAVIND NANDAGOPAL HAD INVESTED A TOTAL SUM OF F11,25,00,100/- IN THE FORM OF SHARE APPLICATION MONEY IN M/S.MOTHER MIRA INDUSTRIES, I. E. APPELLANT BEFORE US, THE DETAILS OF WHICH ARE AS UNDER:- F.Y. 2011-12 RS.5,66,64,054 F.Y. 2012-13 RS.1,78,36,000 F.Y. 2013-14 RS.3,80,00,046 ----------------- RS.11,25,00,100 HOWEVER, SHRI. ARAVIND NANDAGOPAL COULD NOT PRODUCE ANY EVIDENCE SHOWING THE AVAILABILITY OF THE CASH ON THE DATES O N WHICH THE DEPOSITS WERE MADE IN THE BANK. IN THE CIRCUMSTANCES, THE A SSESSING OFFICER MADE AN ADDITION OF F7,32,18,000/- ON PROTECTIVE BA SIS FOR THE ASSESSMENT YEAR 2012-2013 AND ALSO MADE THE FOLLOWI NG ADDITIONS. (I) DISALLOWANCE UNDER RATES AND TAXES 51,76,250 (II) ESTIMATED DISALLOWANCE OF RUNNING EXPENSES 34,25,727 (III) DISALLOWANCE U/S.40(A) (IA) /194C (MARKET VEHICLE) 88,58,208 (IV) DISALLOWANCE OF HIRE CHARGES U/S.40(A)(IA) 69,83,050 (V) DONATION 5,501 ITA NO.3103, 3104 & 3138 /17 :- 6 -: 7. BEING AGGRIEVED BY THE ABOVE ADDITIONS, AN APPEAL W AS PREFERRED BEFORE LD. CIT(A), WHO VIDE IMPUGNED ORDE R DELETED THE ADDITION MADE ON ACCOUNT OF UNEXPLAINED CASH DEPOSI TS ON PROTECTIVE BASIS CONSIDERING THE FACT THAT SAME AMOUNT WAS AD DED IN THE INDIVIDUAL ASSESSMENT OF SHRI. ARAVIND NANDAGOPAL. AS REGARDS TO THE DISALLOWANCE OF RENT AND TAXES OF F51,76,250/-, LD . COMMISSIONER OF INCOME TAX (APPEALS) CONFIRMED THE ADDITION BY HOL DING THAT APPELLANT MADE DOUBLE CLAIM ON ACCOUNT OF RATES AND TAXES OF F51,76,250/-. LD. COMMISSIONER OF INCOME TAX (APPE ALS) HAS ALSO CONFIRMED THE ADDITION OF F88,58,502/- ON ACCOUNT O F LORRY HIRE CHARGES ON THE GROUND THAT NO TDS WAS MADE. 8. BEING AGGRIEVED BY THAT PART ORDER OF THE LD. COMMI SSIONER OF INCOME TAX (APPEALS) ORDER, WHICH IS AGAINST ASS ESSEE-COMPANY, ASSESSEE IS IN APPEAL BEFORE US IN THE PRESENT APPE AL. 9. GROUND NO.1 & 4 ARE GENERAL IN NATURE, NEEDING N O SPECIFIC ADJUDICATION. 10. GROUND NO.2 CHALLENGES THE DISALLOWANCE OF F51,76,2 50/- ON RATES AND TAXES. THIS GROUND WAS WITHDRAWN BY THE A SSESSEE VIDE AFFIDAVIT FILED BEFORE US. HENCE, THIS GROUND IS D ISMISSED AS WITHDRAWN. ITA NO.3103, 3104 & 3138 /17 :- 7 -: 11. GROUND NO.3 CHALLENGES THE DISALLOWANCE OF F88,58,2 05/-. THE ASSESSING OFFICER DISALLOWED THE SAME FOR NON DEDUCTION OF TAX AT SOURCE AS HE WAS OF THE OPINION THAT THE PROVISIONS OF SEC. 194C OF THE ACT ARE APPLICABLE. IT IS CONTENDED THAT THERE WAS NO WRITTEN AGREEMENT BETWEEN LORRY OWNERS AND ASSESSEE AND TH EREFORE THE PROVISIONS OF SECTION 194C OF THE ACT ARE NOT APPLI CABLE. RELIANCE WAS ALSO PLACED ON THE DECISION OF HONBLE ALLAHABAD HI GH COURT IN THE CASE OF CIT VS. SHARK ROADWAYS PVT. LTD, 405 ITR 78 AND WITHOUT PREJUDICE, IT IS SUBMITTED THAT SECOND PROVISO TO SECTION 40(A ) (IA) OF THE ACT SHOULD BE APPLIED TO THE FACTS OF THE CASE. 12. WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATE RIAL ON RECORD. THE ASSESSING OFFICER CATEGORICALLY RECORD ED A FINDING THAT EACH PAYMENT HAD EXCEEDED F30,000/- AND THE AGGREG ATE SUM PAID TO LORRY OWNERS EXCEEDED F75,000/- AND THIS FINDIN G REMAINED UNCONTROVERTED BY THE ASSESSEE. THERE IS NO REQUI REMENT ON LAW THAT CONTRACT SHOULD BE IN WRITING AND EVEN ORAL AGREEM ENT ATTRACTS THE PROVISIONS OF SECTION 194C OF THE ACT. THEREFORE W E HOLD THE PROVISIONS OF SECTION 194C OF THE ACT ARE SQUAREL Y APPLICABLE. AS REGARDS, TO APPLICABILITY OF SECOND PROVISO TO SECT ION 40 (A) (IA) OF THE ACT. NO EVIDENCE IS FILED BEFORE US DEMONSTRATING THAT PAYEES HAVE DISCLOSED THIS INCOME IN THEIR HANDS AND PAID THE T AXES THEREON. ITA NO.3103, 3104 & 3138 /17 :- 8 -: THEREFORE WE DO NOT FIND ANY REASON TO INTERFERE WI TH THE ORDERS OF THE LOWER AUTHORITIES. THUS, GROUND NO.3 FILED BY THE ASSESSEE IS DISMISSED. 13. NOW WE SHALL DEAL WITH THE ADDITIONAL GROUNDS OF AP PEAL RAISED BY THE ASSESSEE. WE FIND THAT THE ADDITIONA L GROUNDS OF APPEAL DO NOT EMERGE FROM THE ORDER OF THE LD. CIT(A). FU RTHER WE NOTE THAT THE FINDINGS OF THE LD. CIT(A) IS BASED ON ASSESSE ES OWN SUBMISSIONS BEFORE THE LD. CIT(A). IN ANY EVENT, EVEN IF WE A RE TO ACCEPT THE CONTENTION THAT SHARE APPLICATION MONEY WAS RECEIV ED IN CASH ONLY TO THE EXTENT OF F5,66,64,054/- DURING THE PREVIOUS YE AR RELEVANT TO ASSESSMENT YEAR UNDER CONSIDERATION FROM ONE SHRI. ARAVIND NANDAGOPAL, AND THE BALANCE OF THE CASH DEPOSITS N EEDS TO BE EXPLAINED BY THE ASSESSEE. BUT NO EXPLANATION WAS FORTHCOMING FROM THE ASSESSEE. IN THE ABSENCE OF THE APPEAL BY THE REVENUE AGAINST THE FINDINGS OF THE LD. CIT(A), WE HAVE NO OCCASION TO DEAL WITH THIS ISSUE IN THE ASSESSMENT YEAR 2012-2013. IN ANY CAS E, THE ADDITIONAL GROUNDS OF APPEAL FILED BY THE ASSESSEE DO NOT EM ERGE OUT OF THE ORDERS OF THE LD. CIT(A) OR THE ASSESSING OFFICER. THE ADDITIONAL GROUNDS FILED BY THE ASSESSEE CANNOT BE ENTERTAINED . THUS, THE ADDITIONAL GROUNDS OF APPEAL FILED BY THE ASSESSEE ARE DISMISSED. ITA NO.3103, 3104 & 3138 /17 :- 9 -: 14. IN THE RESULT, APPEAL OF THE ASSESSEE IN ITA NO.310 3/CHNY/ 2017 FOR ASSESSMENT YEAR 2012-2013 IS DISMISSED. 15. NOW WE TAKE UP ITA NO. 3104/CHY/2017 FOR ASSESSMENT YEAR 2013-14. 16. . THE ASSESSEE RAISED THE FOLLOWING GROUNDS OF APPEAL : 1. THE ORDER OF THE COMMISSIONER OF INCOME TAX (A PPEALS) IS CONTRARY TO LAW, FACTS AND CIRCUMSTANCES OF THE CA SE. 2. THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE DISALLOWANCE OF AN AMOUNT OF RS.4,71,76,948/ - UNDER THE HEAD RUNNING AND OPERATION OF VEHICLES UNDER SECTION 40(A)(IA)/194C OF THE ACT. 2.1 THE COMMISSIONER OF INCOME TAX (APPEALS) OUGHT T O HAVE APPRECIATED THAT NO CONTRACT EXISTS BETWEEN THE ASSE SSEE AND THE OPERATORS OF THE VEHICLE WHOSE SERVICES HA VE BEEN UTILIZED BY THE ASSESSEE. 3. THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE DISALLOWANCE UNDER SECTION 68 OF SHAR E APPLICATION MONEY RS.2,53,36,000/- RECEIVED BY THE ASSESSEE AS UNEXPLAINED CREDIT 3.1 THE COMMISSIONER OF INCOME TAX (APPEALS) SHOULD HAVE FOUND THAT THE ASSESSEE HAD FURNISHED THE DETAILS O F THE NAME, ADDRESS AND PAN AND DETAILS OF BANK ACCOUNT O F THE APPLICANT AND HENCE THE DISALLOWANCE WAS NOT WARRAN TED. 3.2 THE COMMISSIONER OF INCOME TAX (APPEALS) SHOULD H AVE FOUND THAT SHARES HAD BEEN ALLOTTED AGAINST THE SH ARE APPLICATION MONEYS. 4. THE APPELLANT CRAVES LEAVE TO FILE ADDITIONAL GR OUNDS AT THE TIME OF HEARING. ITA NO.3103, 3104 & 3138 /17 :- 10 -: 17. GROUND NO.1 & 4 ARE GENERAL IN NATURE NEEDING NO SPECIFIC ADJUDICATION. 18. GROUND NO.2 CHALLENGES THE DISALLOWANCE OF F4,71,76 ,948/-, MADE UNDER THE HEAD RUNNING AN OPERATION OF VEHIC LES UNDER SECTION 40(A) (IA)/194C OF THE ACT. WE HAD ALREADY DECIDED THE ISSUE AGAINST THE ASSESSEE IN THIS ORDER IN ASSESSEES OWN CASE IN ITA NO.3103/CHNY/2017, FOR ASSESSMENT YEAR 2012-2013 AT PARA 12 FOR THE REASONS MENTIONED THEREIN. ACCORDINGLY, THI S GROUND OF APPEAL NO.2 FILED BY THE ASSESSEE IS DISMISSED. 19. GROUND NO.3 CHALLENGES ADDITION OF SHARE APPLICATI ON MONEY OF F2,53,36,000/-. THE ASSESSING OFFICER MADE AN AD DITION OF SHARE APPLICATION MONEY OF F2,53,36,000/- AS UNEXPLAINED MONEY REJECTING THE EXPLANATION OF THE ASSESSEE THAT THE SHARE APPL ICATION MONEY WAS RECEIVED IN CASH FROM SHRI. ARAVIND NANDAGOPAL, IN THE ABSENCE OF ANY SUPPORTING EVIDENCE OF AVAILABILITY OF CASH ON THE SAID DATE. ON APPEAL, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) CONF IRMED THE ADDITION BY HOLDING THAT THE ADDITION WAS NOT MADE IN THE IN DIVIDUAL NAME OF THE DIRECTOR AND THEREFORE THE EXPLANATION CANNOT BE ACCEPTED. 20. WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATE RIAL ON RECORD. THE LD. CIT(A) CONFIRMED THE ADDITION OF F 2,53,36,000/- AS UNEXPLAINED CASH DEPOSITS IN THE ABSENCE OF CORRESP ONDING ADDITION IN ITA NO.3103, 3104 & 3138 /17 :- 11 -: THE HANDS OF SHRI. ARAVIND NANDAGOPAL. IT IS A MAT TER OF RECORD THAT BENEFIT OF TELESCOPING THE ADDITION OF F7,32,18,00 0/- IN THE HANDS OF SHRI. ARAVIND NANDAGOPAL WAS ALREADY GIVEN FOR TH E ASSESSMENT YEAR 2012-2013 AND THEREFORE THE APPELLANT CANNOT AVAIL THE BENEFIT OF TELESCOPING TWICE IN RESPECT OF SAME AMOUNT. THE FINDING OF THE LD. CIT(A) IS BASED ON THE PROPER APPRECIATION OF MAT ERIAL ON RECORD. THEREFORE WE DO NOT FIND ANY REASON TO INTERFERE WI TH THE ORDER OF THE LD. CIT(A). GROUND NO. 3 FILED BY THE ASSESSEE IS D ISMISSED. 21. IN THE RESULT, APPEAL OF THE ASSESSEE IN ITA NO.3104/CHNY/2017 FOR ASSESSMENT YEAR 2013-14 IS DI SMISSED. 22. NOW WE TAKE UP DEPARTMENTAL APPEAL IN ITA NO. 3138/CHY/2017 FOR ASSESSMENT YEAR 2009-10. 23. THE REVENUE RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IS ERRONEOUS ON FACTS AND CIRCUMSTANCES O F THE CASE AND IN LAW. 2. THE LD CIT(A) ERRED IN ALLOWING THE GROUNDS OF TH E ASSESSEE RELATING TO RE-OPENING OF THE ASSESSMENT FOR THE AY 2009-10 AND IN HOLDING THAT THE ACTION OF THE ASSESSING OFFICER (A.O. ) IN RE- OPENING THE ASSESSMENT IS NOT LEGALLY CORRECT. 2.1. THE LD CIT(A) HAS ERRED IN QUASHING THE RE-OPEN ING OF ASSESSMENTS ON THE GROUND THAT THE AO HAS NOT PROVE D THAT THERE WAS A FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS TO ENABLE HIM TO COMPL ETE THE ASSESSMENT. THE LD CIT(A) HAS FAILED TO APPRECIATE THAT SUCH A ITA NO.3103, 3104 & 3138 /17 :- 12 -: PRECONDITION FOR INVOKING THE PROVISO TO SEC.147 AND ESTABLISHING THAT THERE WAS FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE TRULY AND FULLY ALL MATERIAL FACTS IS REQUIRED TO B E SATISFIED BY THE AO ONLY IF THE ASSESSMENT IS RE-OPENED BEYOND F OUR YEARS FROM THE END OF THE RELEVANT ASST. YEAR. 2.2. THE LD CIT(A) FAILED TO NOTE THAT THE ASSESSMENT FOR THE AY 2009-10 WAS RE-OPENED BY WAY OF ISSUE OF NOTICE U/S.148 O F THE IT ACT, 1961 ON 16/12/2013 WHICH IS WELL WITHIN THE PERIOD OF FOUR YEARS FROM THE END OF THE AY 2009-10. HENCE, THE D ECISION OF THE LD CIT(A) IN HOLDING THAT THE VERY CRITERIA ESSENTIAL FOR RE-OPENING OF ASSESSMENT BEING ABSENT, THE AOS ACT ION IS NOT LEGALLY CORRECT, IS INCORRECT BOTH ON FACTS AND IN LAW. 2.3. HAVING REGARD TO THE DECISION OF THE HONBLE DEL HI HIGH COURT IN THE CASE OF CONSOLIDATED PHOTO AND FINVEST LTD. V. ACIT (281 ITR 394), THE LEARNED CIT(A) OUGHT TO HAVE UPHELD THE RE- OPENING OF THE ASSESSMENT U/S. 147 OF THE IT ACT BY T HE AO FOR THE AY 2009-10. 2.4. THE LEARNED CIT(A) ERRED IN HOLDING THAT THE REO PENING OF ASSESSMENT WAS MADE PURELY ON THE BASIS OF CHANGE O F OPINION BY THE ASSESSING OFFICER THEREBY, INVALIDATING THE REO PENING OF THE ASSESSMENT. 2.5. THE LEARNED CIT(A) FAILED TO NOTE FROM THE ORIGI NAL ASSESSMENT ORDER THAT THE ASSESSING OFFICER DID NOT FORM ANY OPINION ON THE ISSUES DEALT WITH, IN THE REASSESSME NT ORDER AND HENCE, THERE IS NO QUESTION OF CHANGE OF OPINION IN THE REASSESSMENT ORDER VIS-A-VIS THE ORIGINAL ASSESSMEN T ORDER. 2.6. THE LD CIT(A) OUGHT TO HAVE APPRECIATED THE FACT THAT, FOR DETERMINING WHETHER OR NOT IT IS NOT A CASE OF CHAN GE OF OPINION, REFERENCE CAN AND SHOULD BE MADE ONLY TO THE ASSESS MENT ORDER AND THE DISCUSSION OR THE REASONS STATED THEREIN. R ELIANCE WAS PLACED ON THE DECISION OF THE HONBLE DELHI COURT I N THE CASE OF CIT VS H.P. SHARMA, 1980 122 ITR 675 (DEL). 2.7. THE LD. CIT(A) OUGHT TO HAVE NOTED THE FACT THAT , IT NEED HARDLY BE SAID THAT CHANGE OF OPINION PRESUPPOSES T HAT THERE WAS EARLIER A FORMATION OF AN OPINION. WHEN NO SUCH OPI NION WAS ITA NO.3103, 3104 & 3138 /17 :- 13 -: FORMED, IT WILL BE TOO FAR-FETCHED TO ASSUME THAT A CHANGE IN THAT OPINION WAS BEING EFFECTED. FURTHER, THE SAFES T AND SUREST GUIDE FOR ASCERTAINING WHETHER ANY SUCH OPINION WAS FORMED AT THE ORIGINAL ASSESSMENT STAGE IS TO LOOK TO THE ASS ESSMENT ORDER ITSELF. 2.8. THE LD CIT(A) OUGHT TO HAVE APPRECIATED THAT THE REASSESSMENT PROCEEDINGS WOULD BE JUSTIFIED IF THE ASSESSMENT ORDER IS SILENT OR DOES NOT RECORD REASONS OR ANALY SIS OF MATERIAL ON RECORD. 2.9. HAVING REGARD TO THE DECISION OF THE DIVISION BEN CH OF THE HONBLE DELHI HIGH COURT, IN THE CASE OF NEW LIGHT TRADING CO VS CIT (2002) 256 ITR 391(DEL) WHEREIN IT HAS REFERRED TO THE DECISION OF THE HONBLE SUPREME COURT IN CIT VS P.V .S. BEE DIES PVT LTD [1999] 237 ITR 13, THE APEX COURT HELD THAT THE AUD IT PARTY CAN POINT OUT A FACT, WHICH HAS BEEN OVERLOOK ED BY THE INCOME-TAX OFFICER IN THE ASSESSMENT. THOUGH THERE C ANNOT BE ANY INTERPRETATION OF LAW BY THE AUDIT PARTY, IT IS ENTITLED TO POINT OUT A FACTUAL ERROR OR OMISSION IN THE ASSESS MENT AND RE- OPENING OF A CASE ON THE BASIS OF FACTUAL ERROR POI NTED OUT BY THE AUDIT PARTY IS PERMISSIBLE UNDER LAW. AS THE TRIBUN AL HAS RIGHTLY NOTICED, THIS WAS NOT A CASE OF THE AO MERELY ACTIN G AT THE BEHEST OF THE AUDIT PARTY OR ON ITS REPORT. IT HAS INDEPENDENTLY EXAMINED THE MATERIALS COLLECTED BY THE AUDIT PARTY IN ITS REPORT AND HAS COME TO AN INDEPENDENT CONCLUSION THAT THER E WAS ESCAPEMENT OF INCOME. THE LD CIT(A) FAILED TO PERUS E THE ASSESSMENT RECORD AND THEREFORE DID NOT APPRECIATE THE PRESENCE OF AUDIT OBJECTION IN THIS CASE. THE LD CI T(A) HAS POWERS CO-TERMINUS WITH THE AO AND THEREFORE OUGHT TO HAVE EXAMINED THE RECORDS. 2.10. THE LD. CIT (A) HAS FAILED TO APPRECIATE THAT P RIMARY FACTS NECESSARY FOR ASSESSMENT WERE NOT FULLY DISCLOSED B Y THE ASSESSEE AS REGARDS THE NON-DEDUCTION OF TDS ON LEA SE PAYMENTS WHICH WAS ONE OF THE REASONS FOR REOPENING OF THE A SSESSMENT. 2.11. THE LD. CIT (A) OUGHT TO HAVE APPRECIATED THAT THE ASSESSEE WAS MERELY RELYING ON THE AMENDMENT MADE I N THE ACT VIZ., SECOND PROVISO TO SEC. 40(A)(IA) OF THE IT ACT AS THE REASON FOR NON DEDUCTION TDS ON LEASE PAYMENTS WHICH STA TES THAT ITA NO.3103, 3104 & 3138 /17 :- 14 -: TDS SHALL BE DEEMED TO BE DEDUCTED AND PAID BY A DE DUCTOR IF RESIDENT RECIPIENT HAS DISCLOSED THE AMOUNT IN HIS RETURN OF INCOME AND PAID TAX THEREON WITHOUT FURNISHING ANY O THER SUPPORTING EVIDENCES/ REASONS FOR ITS NON DEDUCTION . 2.12. THE LD. CIT (A) HAS FAILED TO APPRECIATE THE SA ID AMENDMENT WAS APPLICABLE W.E.F 01.07.2012 ONLY AND WAS NO T AVAILABLE AT THE TIME OF FILING OF RETURNS OF INCOM E BY THE ASSESSEE FOR THE AY 2009-10. THUS, PRIMA FACIE, THERE W AS BONAFIDE REASON TO BELIEVE BY THE AO THAT THERE WAS ESCAPEMENT OF INCOME TO INVOKE THE REOPENING OF ASSESSMENT AND THE SAME CANNOT BE HELD TO BE ON ACCOUNT OF A CHANGE OF OPIN ION. 3. FOR THESE GROUNDS AND ANY OTHER GROUND INCLUDING AMENDMENT OF GROUNDS THAT MAY BE RAISED DURING THE COURSE OF THE APPEAL PROCEEDINGS, THE ORDER OF LEARNED CIT(APPEALS) MAY BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 24. THE BRIEF FACTS OF THE CASE ARE AS UNDER:- THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2009-1 0 WAS FILED ON 30.09.2009 DISCLOSING TOTAL INCOME OF RS.33,19,9 00/-. AGAINST THE SAID RETURN OF INCOME, THE ASSESSMENT WAS COMPLETED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 2(2), CH ENNAI (HEREINAFTER CALLED AO) VIDE ORDER DATED 30.12.2011 PASSED U/S . 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) AT TOTAL INCOME OF RS. 3,34,28,267/-, WHICH WAS RECTIFIED U/S.154 OF THE A CT AT TOTAL INCOME OF F3,43,32,680/-. SUBSEQUENTLY, THE ASSESSMENT WAS RE OPENED BY ISSUING NOTICE U/S.147 OF THE ACT, WHEN THE ASSESS ING OFFICER HAD COME TO KNOW THAT HUGE EXPENSES WERE CLAIMED TOWAR DS RUNNING AND OPERATION OF VEHICLES COMPARED TO ITS TURNOVER. THE RE-ASSESSMENT WAS ITA NO.3103, 3104 & 3138 /17 :- 15 -: COMPLETED VIDE ORDER DATED 12.02.2015 PASSED U/S.14 3(3) R.W.S.147 OF THE ACT WITH TOTAL INCOME OF F6,42,31,755/- AFTER M AKING THE FOLLOWING DISALLOWANCES: (I) ESTIMATED DISALLOWANCE OF RUNNING & OPERATION OF VEHICLES FUEL & OTHERS : 36,05,836/- (II) DISALLOWANCE U/S40(A)(IA) /194 (MARKET VEHICLE) : 1,54,81,549/- (III) DISALLOWANCE U/S40(A)(IA) /194 (CHENNAI CASH) : 1,08,01,835/- (IV) DONATION : 9,855/- 25. BEING AGGRIEVED, AN APPEAL WAS PREFERRED BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEALS) CHALLENGING TH E RE-ASSESSMENT PROCEEDINGS. LD. COMMISSIONER OF INCOME TAX (APPEA LS) SQUASHED THE RE-ASSESSMENT PROCEEDINGS ON THE GROUND THAT THERE WAS NO ALLEGATION BY THE ASSESSING OFFICER THAT THE ASSESS EE HAD FAILED TO DISCLOSE FULLY AND TRULY MATERIAL FACTS NECESSARY TO MAKE ASSESSMENT. 26. BEING AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US IN THE PRESENT APPEAL CHALLENGING THE FINDING OF THE LD. C OMMISSIONER OF INCOME TAX (APPEALS). LD. DEPARTMENTAL REPRESENTAT IVE SUBMITTED THAT FINDING OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) IS NOT ITA NO.3103, 3104 & 3138 /17 :- 16 -: CORRECT IN AS MUCH AS ASSESSMENT WAS REOPENED WITHI N A PERIOD OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR AND THEREFORE THE PROVISION OF TO SECTION 147 OF THE ACT IS NOT APP LICABLE. 27. ON THE OTHER HAND, THE LD. COUNSEL PLACED RELIANCE ON THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEAL S). 28. WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATE RIAL AVAILABLE ON RECORD. THE ORIGINAL ASSESSMENT FOR AS SESSMENT YEAR 2009-10 WAS REOPENED BY ISSUING NOTICE U/S.148 OF T HE ACT ON 16.12.2013 AND THEREFORE THE PROVISO TO SECTION 147 OF THE ACT PROVIDES THAT WHERE AN ASSESSMENT WAS MADE UNDER SUB-SECTION (3) OF SECTION 143 OF THE ACT, NO NOTICE OF REASSESSMENT CAN BE IS SUED TO THE ASSESSEE AFTER EXPIRY OF PERIOD OF FOUR YEARS FROM THE END OF RELEVANT ASSESSMENT YEAR UNLESS INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR SUCH ASSESSMENT YEAR BY REASON OF TH E FAILURE OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY MATERIAL NEC ESSARY FOR ASSESSMENT. OBVIOUSLY, IN THE PRESENT CASE THE PR OVISO TO SECTION 147 OF THE ACT WAS NOT APPLICABLE AS THE PERIOD OF FOU R YEARS HAD NOT EXPIRED FROM THE END OF THE ASSESSMENT YEAR AS THE NOTICE WAS ISSUED U/S.148 OF THE ACT ON 16.12.2013. THUS, THE FINDIN G OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) IS ERRONEOUS A ND CONTRARY TO THE MATERIAL ON RECORD. THEREFORE THE ORDER OF THE LD. COMMISSIONER OF ITA NO.3103, 3104 & 3138 /17 :- 17 -: INCOME TAX (APPEALS) IS REVERSED ON THIS ISSUE AND WE RESTORE THE MATTER BACK TO THE FILE OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) FOR ADJUDICATING THE MATTER ON MERITS. 29. IN THE RESULT, THE APPEAL FILED BY THE DEPARTMENT I N ITA NO.3138/CHNY/2017 IS PARTLY ALLOWED FOR STATISTICAL PURPOSE . 30. TO SUMMARIZE THE RESULTS, THE APPEALS OF THE ASSES SEE IN ITA NOS.3103 & 3104/CHNY/2017 FOR ASSESSMENT YEARS 2012-2013 & 2013-14 ARE DISMISSED WHEREAS THE APPEAL OF THE REV ENUE IN ITA NO.3138/CHNY/2017 FOR ASSESSMENT YEAR 2009-2010 IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED ON 25TH DAY OF JUNE 2019, AT C HENNAI. SD/- SD/- ( . ! ) (DUVVURU RL REDDY) ' # /JUDICIAL MEMBER ( ) (INTURI RAMA RAO) /ACCOUNTANT MEMBER 1 #- / CHENNAI 2# / DATED:25TH JUNE, 2019. KV 3 + '.4 5' !6 5&. / COPY TO: 1 . !' )* / APPELLANT 3. 7. (!' ) / CIT(A) 5. 5 :; '.#< / DR 2. '()* / RESPONDENT 4. 7. / CIT 6. ;$ =- / GF