The DCIT, Circle-6, Surat V. M/s. Sahyog Roadways, Surat

ITA 3233/AHD/2011

• Counselvise Citation: 323320514 RSA 2011
• Duration Of Justice: 8 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 12-07-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 22-12-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B L YADAVSR
• Assessee Lawyers: R N VEPARI
• Keywords: Reopening of assessment; Difference of opinion; Change of opinion; Reassessment proceedings
• Section: 143(3); 148; 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD D BENCH BEFORE: SHRI A.K. GARODIA, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER THE DY CIT CIRCLE-6, SURAT (APPELLANT) PAN NO. AAKFS0609R VS. M/SAHYOG ROADWAYS, SURAT, (RESPONDENT) DEPARTMENT BY : SHRI B.L.YADAV,SR. D.R. ASSESSEE BY : SHRI R.N.VEPARI, A.R. DATE OF HEARING : 12-07-2012 DATE OF PRONOUNCEMENT : 31-08-2012 / ORDER PER : KUL BHARAT, JUDICIAL MEMBER:- THE REVENUE HAS FILED APPEAL AND ASSESSEE CROSS OBJECTION AGAINST THE ORDER OF LD. CIT(A)-IV SURAT DATED 04- 08-2012. FIRST WE TAKE UP THE REVENUES APPEAL 2. THE REVENUE HAS RAISED FOLLOWING GROUNDS OF APPE AL:- 1.ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A)-IV, SURAT HAS ERRED IN DELETING T HE ADDITION ON I.T.A. NO.3233/AH/2011 A. Y. 2005-06 CROSS OBJECTION NO. 58/AHD/2012 IN I.T.A NO. 3233/AH/2011 ITA NO. 3233/A/2011 A.Y. :-2005-06 2 ACCOUNT OF OWN TRUCK OF RS. 10,14,450/- MADE BY THE ASSESSI NG OFFICER OF THE ACT. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND I N LAW, THE CIT(A)-IV, SURAT HAS ERRED IN DELETING THE ADDIT ION ON ACCOUNT OF OTHER INDIVIDUAL TRUCK OPERATORS OF RS. 18,70 ,406/- MADE BY THE ASSESSING OFFICER OF THE ACT. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, TH E CIT(A)-IV, SURAT OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. 4. IT IS THEREFORE, PRAYED THAT THE ORDER OF THE CIT (A)-IV, SURAT MAY BE SET-ASIDE AND THAT OF THE ASSESSING OFFICER RESTOR ED. 3. IN THIS CASE, ASSESSMENT U/S 143(3) R.W.S. 147 O F THE I.T. ACT WAS COMPLETED ON 29.10.2010 AFTER MAKING T HE ADDITION U/S 40(A)(IA) OF THE ACT OF RS.50,37.370/- ON VARIOUS GROUNDS WHICH ARE AS UNDER: SR. NO. PARTICULARS AMOUNT (RS.) 1) OWN TRUCKS (SAHYOG ROADWAYS) 10,14,450/- 2) OTHER INDIVIDUAL TRUCK OPERATORS 18,70,406/- 3) BANSILAL (A TRUCK OPERATOR) 5,54,050/- 4) SAHYOG TRANSPORT CO. 15,98,646/- TOTAL TOTAL 50,37,370/- AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A)-IV, SURAT. T HE LD. CIT(A) HAS DELETED THE ADDITIONS OF RS. 10,14,450/- OWN TRUCKS AND RS. 18,70,406/- OTHER INDIVIDUAL TRUCK O PERATORS OUT OF TOTAL ADDITION OF RS. 50,37,370/- AND CONFIR MED RS. 21,52,514/- FEELING AGGRIEVED BY THE ORDER OF LD. CI T(A) BOTH THE REVENUE AND THE ASSESSEE HAVE FILED APPEAL AND CROSS-OBJECTION RESPECTIVELY BEFORE US. 4. THE FIRST GROUND OF APPEAL IS AGAINST THE DELETI ON OF ADDITION OF RS. 10,14,450/- ON ACCOUNT OF OWN TRUCK . LD. SENIOR DEPARTMENTAL REPRESENTATIVE SH. B.L. YADAV H EAVILY ITA NO. 3233/A/2011 A.Y. :-2005-06 3 SUPPORTED THE ORDER OF THE ASSESSING OFFICER AND SU BMITTED THAT THE AO HAS RIGHTLY DISALLOWED THE EXPENSES SIN CE THE EXPENDITURE HAS BEEN CLAIMED AS DEDUCTION U/S 37 IN COMPUTING THE INCOME CHARGEABLE UNDER THE HEAD PR OFITS AND GAINS OF BUSINESS OR PROFESSION THE PROVISION OF SECTION 40(I)(IA) ARE SQUARELY APPLICABLE. ON THE CONTRARY , SR. R.N. VEPARI LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT, THERE IS NO DISPUTE SO FAR PAYMENT IS MADE TO SELF AND THERE FORE, THE PROVISION OF SECTION 194 C WOULD NOT APPLY. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS PERUSED THE AVAILABLE MATERIAL ON RECORD. LD. CIT(A) HAD DELETE D THE DISALLOWANCE OF RS. 10,14,450/- ON THE GROUND THAT THE EXPENSES ARE DEBITED JUST FOR THE PURPOSE OF THE ME THOD OF ACCOUNTING ADOPTED BY THE ASSESSEE. HE HAS GIVEN A FINDING THAT THE EXPENSES ARE ONLY NOTIONAL AND ARISE BECAU SE OF THE SIMILAR AMOUNT COLLETED AT DELIVERY CENTRE IS GENER ALLY ON THE CREDIT SIDE. WE DO NOT FIND INFIRMITY INTO THE ORD ER OF LD. CIT(A) SINCE THERE CAN BE NO TDS ON THE PAYMENTS M ADE TO THE SELF. THE CONTENTION OF THE LD. DEPARTMENTAL REPRESENTATIVE THAT THE EXPENDITURE HAS BEEN CLAIME D UNDER SECTION 37 WOULD NOT ALTER THE SITUATION. THEREFOR E, THE FINDING OF THE LD. CIT(A) ON THIS ISSUE IS AFFIRMED AND THE GROUND OF THE REVENUE IS DISMISSED. 6. THE NEXT GROUND IS AGAINST THE DELETION OF ADDIT ION ON ACCOUNT OF OTHER INDIVIDUAL TRUCK OPERATORS TO THE EXTENT OF RS. 18,70,406/-. LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE FINDING OF THE LD. CIT(A) IS ERRO NEOUS AS THE ASSESSEE HAS NOT PRODUCED ANY SUPPORTING EVIDEN CE THAT THE AMOUNT OF EXPENDITURE SO MADE DID NOT EXCEED TH E LIMIT AS PRESCRIBED UNDER SECTION 194C(5) OF THE ACT. ON THE CONTRARY, LD. COUNSEL FOR THE ASSESSEE SUBMITTED TH AT THE ASSESSEE HAS GIVEN ALL THE INFORMATION AND DETAILS AND NO FAULT CAN BE FOUND WITH THE ORDER OF LD. CIT(A). 7. WE FIND THAT THE LD. CIT(A) HAD DELETED THE ADDIT ION ON THE GROUND THAT AS PROVISIONS OF SECTION 194 C(5) R EAD WITH ITA NO. 3233/A/2011 A.Y. :-2005-06 4 PROVISION NO TDS IS REQUIRED TO BE MADE FROM THE PA YMENTS NOT EXCEEDING TO RS. 50,000/- AND THE SINGLE PAYMEN T NOT EXCEEDING TO RS. 20,000/-. THEREFORE THERE WAS NO LIABILITY FOR DEDUCTION AT SOURCE FROM SUCH PAYMENTS. WE FIN D THAT LD. CIT(A) HAS GIVEN A FINDING THAT DETAILS OF PAYME NTS MADE TO TRUCK OPERATORS WHICH DID NOT EXCEED RS. 50 ,000/- IN A YEAR AND RS. 20,000/- FOR SINGLE TRIP WAS SUBM ITTED DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE T HE LD. CIT(A). THEREFORE, IN THIS VIEW OF THE MATTER WE D O NOT FIND ANY INFIRMITY INTO THE ORDER OF LD. CIT(A). THIS G ROUND OF REVENUES APPEAL IS DISMISSED. 8. THE OTHER GROUNDS ARE GENERAL IN NATURE, THEREF ORE, DO NOT REQUIRE ANY ADJUDICATION. NOW WE TAKE UP CROSS OBJECTION OF THE ASSESSEE 9. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF CRO SS OBJECTIONS:- I REOPENING OF ASSESSMENT: (I) REOPENING IS NOT VALID AS REASONS ARE NOT SINGED BY THE ASSESSING OFFICER WHO HAD REOPENED WERE FURNISHED. (II) THE APPELLANT SUBMITS THAT IT IS NECESSARY THAT THE ASSESSING OFFICER WHO REOPENED THE ASSESSMENT AND NOT THE ASSESSING OFFICER WHO FINALIZED THE REASSESSMENT PROCEEDINGS. II DISALLOWANCE U/S. 40(A)(IA) LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) OUGHT TO HAVE DELETED RS. 21,52,514/-. III THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR VARY ANY OF THE GROUNDS OF CROSS-OBJECTIONS. 10. THE FIRST GROUND IS WITH REGARD TO REOPENING OF THE ASSESSMENT PROCEEDINGS. THE SUBMISSION OF THE LD. A R IS THAT REASONS WERE RECORDED BY ONE ASSESSING OFFICER AND COMMUNICATED BY ANOTHER WHICH IS NOT PERMISSIBLE UN DER THE ITA NO. 3233/A/2011 A.Y. :-2005-06 5 LAW. ON THE CONTRARY, LD. DEPARTMENTAL REPRESENTATI VE SUBMITTED THE ORDER OF THE CIT(A) ON THIS GROUND. W E HAVE HEARD THE RIVAL SUBMISSIONS PERUSED MATERIAL AVAILA BLE ON RECORD. WE FIND THAT LD. CIT(A) HAD DECIDED THIS ISS UE AS UNDER:- 2. GROUND NO. 1 IS AGAINST REOPENING OF ASSESSMENT. THE APPELLANT HAS CHALLENGED THE VALIDITY OF REOPENING ON THE GROUNDS THAT REASONS FOR REOPENING DU LY SINGED BY THE CONCERNED A.O. WHO REOPENED THE ASSESSMENT WERE NO T GIVEN AND THAT THE APPELLANT WAS NOT GIVEN ANY OPPOR TUNITY TO FILE OBJECTIONS AND THEREFORE ACCORDING TO THE APPELLAN T THE PROCUREDURE LAID DOWN BY THE HON,BLE SUPREME COURT IN THE CASE GKN DRIVESHAFTS INDIA LTD., 259 ITR 19 AND GUJRAT HIGH COURT IN GARDEN FINANCE LTD., 268 ITR 48 WERE NOT FOLLOWED. IT IS ALSO THE CONTENTION OF THE APPELLANT THAT THE FACTS OF NON DEDUCTION OF TAX AT SOUCE FROM MOTOR RENT WAS AVAILABLE WITH THE A .O. IN ASSESSMENT PROCEEDINGS U/S. 143(3) AND THEREFORE THE REOP ENING WAS BASED ON CHANGE OF OPINION WHICH IS NOT PERMITTED. IT WAS URGED THAT THE REOPENING OF ASSESSMENT WAS BAD IN LAW AN D THEREFORE REQUIRED TO BE CANCELLED. 2.1. I HAVE GONE THROUGH THE FACTS OF THE CASE. THE A.O SPECIFICALLY MENTIONED IN THE ASSESSMENT THAT REASONS FOR REOPENING HAD BEEN PROVED. THE APPELLANT DOES NOT DE NY THIS. IN FACT HE HAS PROVIDED THE COPY OF THE LETTER THROUGH WHICH THE REASONS FOR REOPENING OF THE CASE WAS PROVIDED TO HIM. IT IS SEEN FROM THE LETTER THAT THE REASON HAD BEEN GIVEN I N DETAIL TO THE APPELLANT. THE OBJECTION OF THE APPELLANT IS THA T THE REASON DULY SINGED BY THE PERSONS RECORDING THEM HAS NOT BEEN PROVIDED AND THAT IT IS THE SATISFACTION OF THE PERSON RECORDING THE REASON THAT IS NECESSARY AND NOT OF SUBSEQUENT OFFICER AS MENTIONED IN THE LETTER. THE OBJECTIONS TAKEN BY THE APPELLANT ARE NOT IN ORDER. THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF GKN DRIVESHAFTS INDIA LTD., 259 ITR 19 REQU IRES THE A.O. TO FURNISH REASONS WITHIN A REASONABLE TIME. IT D OES NOT LAY DOWN THAT THE REASONS DULY SINGED BY THE OFFICER RECORDI NG IT IS TO BE GIVEN TO THE ASSESSEE. THE PURPOSE BEHIND THE REASON S BEING PROVIDED TO THE ASSESSEE IS TO PUT HIM ON NOTICE AND TO M AKE HIM AWARE OF THE REASONS SO AS TO ENABLE HIM TO TAKE OB JECTION TO SUCH REOPENING, IF HE SO DESIRES. GOING THROUGH THE LETTER OF THE A.O. THROUGH WHICH REASONS FOR REOPENING HAD BEEN INFORMED TO THE ASSESSEE IT IS CLEAR THAT DETAILED REASONS HAD BEEN ITA NO. 3233/A/2011 A.Y. :-2005-06 6 PROVIDED TO THE ASSESSEE. IN FACT A CLOSE READING OF THE LETTER WOULD SHOW THAT PARA-3, 4 @ 5 OF THE LETTER GIVE THE REASONS RECORDED. THE FACT THAT THE CURRENT A.O. MENTIONED IN PARA-6 THAT HE WAS ALSO SATISFIED DOES NOT IN ANY WAY TAKE AWA Y FROM THE FACT THAT REASON RECORDED HAD BEEN COMMUNICATED AND THAT THE PROCEDURE LAID DOWN BY THE HONBLE SUPREME COUR T HAD BEEN FOLLOWED IN LETTER AND SPIRIT. THE OTHER OBJE CTION OF THE APPELLANT THAT HJE WAS NOT GIVEN OPPORTUNITY TO FILE OBJECTION IS ALSO WITHOUT BASIS. AS LAID DOWN IN THE DECISION OF THE HONBLE SUPREME COURT ANY OBJECTION TO THE REOPENING HAS TO CO ME FROM THE ASSESSEE HIMSELF AND HAVING NOT TAKEN ANY OBJECTION, EVEN AFTER BEING PROVIDED WITH THE REASONS, CANNOT NOW BE CLAIMED AS HAVING BEEN DENIED OPPORTUNITY TO OBJECT. ANOTHER O BJECTION TO THE REOPENING TAKEN BY THE APPELLANT IS THAT THERE H AS BEEN A CHANGE OF OPINION AND THEREFORE REOPENING IS BAD IS A LSO NOT ACCEPTABLE. THE POWERS OF REOPENING SUBSEQUENT TO AMEND MENT ARE WIDE ENOUGH TO COVER SUCH CIRCUMSTANCES. IN THE CASE OF THE APPELLANT THE NOTICE U/S. 148 WAS ISSUED ON 25.02.2010, WHICH IS WITHIN 4 YEAR FROM THE END OF THE ASSESSMENT YEAR UNDE R CONSIDERATION (A.Y. 2005-06) AND THE FIRST PROVISO BELO W SECTION 147 READ WITH EXPLANATION-1 @ 2 MAKE IT CLEAR THAT T HE REOPENING WAS WITHIN THE FOUR CORNERS OF THE LAW. IT WOULD BE PERTINENT TO MENTION HERE THAT THERE IS NOT EVEN A W HISPER IN THE ORIGINAL ASSESSMENT ORDER ABOUT THE ISSUE OF TDS BEING CONSIDERED AND AN OPINION BEING FORMED. THE APPELLAN T HAS ALSO NOT SHOWN THAT SPECIFIC DISCUSSION HAD TAKEN PLACE REGARDIN G THE ALLOWABILITY/DISALLOWABILITY OF THIS EXPENSE U/S 40(A)( IA). WHAT THE ASSESSEE IS RELYING IS ONLY THE COPY OF FORM 26 (TDS R ETRUN) WHICH WAS MADE AVAILABLE TO THE AO DURING ORIGINAL P ROCEEDINGS AND THEREBY IMPLYING THAT FROM THE MATERIAL BEFORE THE AO, HE COULD HAVE FOUND OUT THAT TDS WAS NOT DEDUCTED AND SINCE HE DID NOT MAKE ANY ADDITION, HE HAD FORMED AN OPINION THAT S. 40(A)(IA) WAS NOT APPLICABLE TO THE ASSESSEE AND THEREFO RE THERE IS A CHANGE OF OPINION. THE LEGISLATURE COULD FORSEE SU CH ARGUMENTS COMING FROM THE ASSESSEE AND THEREFORE INSERTED THE EXPLANTION 1 BELOW S. 147. THE FACTS SHOW THAT NO OPI NION HAD BEEN FORMED IN THE ORIGINAL ORDER AND THEREFORE THE RE CAN BE NO CHANGE OF OPINION. THE OBJECTIONS TAKEN BY THE APPELL ANT TO THE REOPENING IS WITHOUT ANY BASIS AND CANNOT BE UPHELD. THE REOPENING OF THE ASSESSMENT IS FOUND TO BE IN ORDER. THIS GROUND OF THE APPELLANT FAILS. ITA NO. 3233/A/2011 A.Y. :-2005-06 7 11. WE DO NOT FIND ANY INFIRMITY INTO THE ORDER OF THE LD. CIT(A). HE HAS GIVEN A REASONED ORDER. IN THIS VI EW OF THE MATTER THIS GROUND OF THE CROSS OBJECTION IS REJECT ED. 12. THE ASSESSEE HAS RAISED AN ADDITIONAL GROUND W HICH WAS ADMITTED. THE ADDITIONAL GROUND READS AS UNDER :- DISALLOWANCE U/S 40(A)(IA) IN RESPECT OF PAYMENT TO TRUCK OPERATORS CANNOT BE MADE AS THE DISALLOWANCE MADE IS IN RESPECT OF AMOUNT PAID AND NOT OF AMOUNT OF PAYAB LE WHEN IT IS HELD BY THE SPECIAL BENCH JUDGMENT OF VISAKHAPATNAM IN CASE OF MERILYN SHIPPING AND TRANSPORT 146-TTJ (VISAKHA)( SB)-1) THAT DISALLOWANCE U/S 40(A)(IA) CAN BE MADE ONLY IN RESPECT O F AMOUNT PAYABLE. 13. THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESS EE SUBMITTED THAT HIS CASE IS SQUARELY COVERED BY THE JUDGMENT OF THE HONBLE SPECIAL BENCH ITAT VISHAKHAPATNAM IN THE CASE OF MERILYN SHIPPING & TRANSPORTS. ON THE CONTR ARY, LD. DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 14. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD AND THE JUDGMENT CITED . LD. COUNSEL FOR THE ASSESSEE HAS RELIED UPON THE JUDGME NT OF HONBLE SPECIAL BENCH VISHAKHAPATNAM IN THE CASE OF MERILYN SHIPPING & TRANSPORTS VS. ADDITIONAL COMMISSIONER O F INCOME TAX WHEREAS IT HAS BEEN HELD THAT THE PROVIS IONS OF SECTION 40(A)(IA) OF THE ACT WOULD APPLY ONLY TO TH E EXPENDITURE WHICH REMAINED PAYABLE AT THE END OF RE LEVANT FINANCIAL YEAR AND CANNOT BE INVOKED TO DISALLOW AM OUNTS WHICH HAVE ALREADY PAID DURING THE FINANCIAL YEAR W ITHOUT TDS. IT IS CONTENDED BY THE LD. COUNSEL FOR THE AS SESSEE THAT THE PAYMENT WAS MADE WITHIN THE CURRENT FINANC IAL YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION , THEREFORE, NO AMOUNT WAS PAYABLE. IN THIS VIEW OF THE MATTER WE RESTORE BACK THIS ISSUE TO THE FILE OF TH E ASSESSING OFFICER TO VERIFY WHETHER PAYMENT MADE TO THE OTHER TRUCK OPERATORS WAS MADE WITHIN THE FINANCIAL YEAR RELEVA NT TO THE ASSESSMENT YEAR UNDER CONSIDERATION AND DECIDE IN T HE LIGHT ITA NO. 3233/A/2011 A.Y. :-2005-06 8 OF JUDGMENT OF HONBLE SPECIAL BENCH OF ITAT VISHAKHAPATNAM IN THE CASE OF MERILYN SHIPPING & TRANSPORTS IN ITA NO. 477/VIZ/2008. THIS GROUND OF THE ASSESSEES CROSS OBJECTION IS ALLOWED FOR STATISTIC AL PURPOSE. IN THE RESULT CROSS OBJECTION OF THE ASSESSEE IS AL LOWED FOR STATISTICAL PURPOSE. 15. IN THE RESULT APPEAL OF THE REVENUE IS DISMISS ED AND CROSS OBJECTION OF THE ASSESSEE IS PARTLY ALLOWED F OR STATISTICAL PURPOSE. SD/- SD/- (A.K. GARODIA) (KUL BHARAT) ACCOUNTANT MEMBER JUDIC IAL MEMBER AHMEDABAD : DATED 31 / 08 /2012 A.KUMAR, P.S. / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT 2. / RESPONDENT 3. / CONCERNED CIT 4. - / CIT (A) 5. , ! , '# / DR, ITAT, AHMEDABAD 6. $% &' / GUARD FILE. BY ORDER/ , ( / ' ) ! , ITA NO. 3233/A/2011 A.Y. :-2005-06 9 '# * STRENGTHENED PREPARATION & DELIVERY OF ORDERS IN TH E ITAT 1) DATE OF TAKING DICTATION 02-08-2012 2) DIRECT DICTATION BY MEMBER STRAIGHT ON COMPUTER/LAPTOP/DRAGON DICTATE N.A. 3) DATE OF TYPING & DRAFT ORDER PLACE BEFORE MEMBER 06-08-2012 4) DATE OF CORRECTION 23/08/2012 5) DATE OF FURTHER CORRECTION 24/08/2012 6) DATE OF INITIAL SIGN BY MEMBERS 7) ORDER UPLOADED ON 31-08-2012 8) ORIGINAL DICTATION PAD HAS BEEN ENCLOSED IN THIS FILE YES 9) FINAL ORDER AND 2 ND COPY SEND TO BENCH CLERK ON 31-08-2012