ACIT, Cuttack V. M/s Shree Builders, Jagatsinghpur

ITA 355/CTK/2012

• Counselvise Citation: 35522114 RSA 2012
• Duration Of Justice: 4 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-11-2012
• Appeal Filed By: Department
• Bench Allotted: DB
• Next Hearing Date: 30-10-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 04-06-2012
• Court: TRIBUNAL
• Department Lawyers: J M PATTNAIKA P MISHRAARS
• Assessee Lawyers: N K NEB
• Keywords: Reopening of assessment; Non-deduction of tax; Difference of opinion; Assessment record; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 40A(3); 143(3); 244A; 194C

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK ( ) BEFORE . . , , HONBLE SHRI K.K.GUPTA, ACCOUNTANT MEMBER. /AND . . . , S HRI K.S.S.PRASAD RAO, JUDICIAL MEMBER / I.T.A.NO. 355/CTK/2012 C.O.NO.35/CTK/2012 / ASSESSMENT YEAR 2005 - 06 ASST.COMMISSIONER OF INCOME - TAX, CIRCLE 1(2), CUT4TACK. - - - VERSUS - M/S.SHREE BUILDERS, QR.NO.NB/237, NUABAZAR , PARADEEP, DIST. JAGATSINGHPUR PAN: AABCB 6149 H ( /APPELLANT ) ( / RESPONDENT ) / FOR THE APPELLANT : / SHRI J.M.PATTNAIK /A.P.MISHRA, ARS / FOR THE RESPONDENT: / SHRI N.K.NEB, DR / DATE OF HEARING: 30.10.2012 / DATE OF PRONOUNCEMENT: 02.11.2012 / ORDER . . , , SHRI K.K.GUPTA, ACCOUNTANT MEMBER. THE APPEAL BY THE REVENUE ARISES FROM THE ORDER OF THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS ) DT.27.3.2012 RAISING THE FOLLOWING GROUNDS. 01. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. FIRST APPELLATE AUTHORITY WAS JUSTIFIED TO HOLD THAT THE INITIATION OF PROCEEDING U/S.147 OF THE I.T.ACT IS T OTALLY BAD IN LAW - WHERE THE AO HAS SUFFICIENT REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. 02. IN THE ORIGINAL ASSESSMENT MADE U/S.143(3) DATED 26.02.2007, IN ABSENCE OF DETAILS OF BILLS AND VOUCHERS THE AC HAS MADE AD HOC DISALLOWANCE @ 2.5% OF TOTAL LABOUR CH ARGES OF 35,89,467 AMOUNTING TO 89,737 AND 20,900 UNDER THE HEAD TRANSPORTATION CHARGES OUT OF TOTAL PAYMENT OF 27,48,670. IT IS CLEARLY EVIDENT FROM THE RECORD THAT AO HAD NOT EXAMINED THE APPLICABILITY OF THE STATUTORY PROVISIONS OF SECTION 40(A)(IA ) READ WITH SECTION 194C OF THE I.T.ACT IN RESPECT OF CLAIM OF HIRE CHARGES OF MACHINERIES OF 10,52,728 UNEXPLAINED IN TRODUCTION OF CAPITAL OF 4,00 ,L00, SINCE THE ASSESSEE FAILED TO DEDUCT TAX ON LABOUR CHARGES, TRANSPORTATION CHARGES, MACHINERIES HIRE C HARGE AND ALSO FAILED I.T.A.NO. 355/CTK/2012 C.O.NO.35/CTK/2012 2 TO FURNISH ALL THE INFORMATION FULLY AND TRULY BEFORE THE AC THE LD.CIT(A) WAS ERRONEOUS NOT TO EXAMINE THE RELEVANCE OF REOPENING OF THE CASE. 03. WHETHER THE LD.FIRST APPELLATE AUTHORITY WAS JUSTIFIED NOT TO ACCEPT ASSESSMENT ON THE MERIT OF THE CASE WHERE ASSESSEE FAILED TO ESTABLISH HIS BOOKS RESULTS AS CORRECT AND RELIAB LE. 2. A CROSS OBJECTION HAS BEEN PREFERRED BY THE ASSESSEE - RESPONDENT IN SUPPORT OF THE ORDER OF THE LEARNED CIT(A) BY POINTING OUT AS UNDER : 1. FOR THAT, AS THE ORDER PASSED BY THE LD. CIT(A), CUTTACK IS JUSTIFIED AS PER THE FACTS AND CIRCUMSTANCES OF THE CASE FOR WHICH THE SAME SHOULD NOT BE INTERFERED BY THIS HONBLE TRIBUNAL. 2. FOR THAT, THE RE - OPENING OF THE ASSESSMENT U/S. 147 OF THE IT ACT BY THE LD . AO IS CONTRARY TO LA W AND FACTS AS ALL THE ISSUES (8 NOS.) IN THE ORDER OF RE - ASSESSMENT HAVE BEEN VIVID LY EXAMINED A - BY THE SAME AO AS PER THE ORDER U/S. 143(3) OF THE IT ACT FOR THE SAME ASSESSMENT YEAR. 3. FOR THAT, NO AD - HOC DISALLOWANCE COULD BE MADE WITHOUT GONE THROUGH THE BOOKS OF ACCOUNTS WHICH ITSELF LEADS TO INFERENCE OF PRODUCTION OF THE BOOKS OF ACCOUNTS AND ITS DUE EXAMINATION. 4. FOR THAT, THE LD. CIT(A) HAS BEEN JUSTIFIED IN ACCEPTING THE ASSESSED INCOME BY THE LD. AO U/S. 143(3) OF T HE IT ACT AFTER PERUSING THE ASSESSMENT RECORDS BOTH U/S. 143(3) AND U/S. 147 OF THE IT ACT. 3. THE BRIEF FACTS AS HAVE BEEN BROUGHT ON RECORD ARE THAT THE ASSESSEE - FIRM FILED ITS RETURN OF INCOME FOR THE AY 2005 - 06 ON 31.10.2005 SHOWING INCOME OF 4,97,150. THE ASSESSEE IS A CONSTRUCTION CONTRACTOR. THE RETURN OF INCOME WAS PROCESSED U/S.143(1) BY THE AO . THEN IT WAS ASSESSED BY THE AO U/S.143(3) ON 26.02.2007 ON A TOTAL INCOME OF 7,21,180. THEN THE AO FOUND THAT THE ASSESSEE HAD NOT DEDUCTED TAX FROM PAYMENTS MADE UNDER THE HEAD TRANSPORTATION CHARGES FOR AMOUNTS EXCEEDING 50,000 IN AGGREGATE AS REQUIRED U/S.194C OF THE ACT. THE AO THEREFORE ISSUED NOTICE U/S.148 TO THE ASSESSEE ON 25.8.2009. THERE WAS NO COMPLIANCE BY THE ASSESSEE TO THE ABOVE NOTICE. THEN THE AO MADE THE FOLLOWING ADDITIONS AND MADE ASSESSMENT U/S.144 OF THE ACT. I.T.A.NO. 355/CTK/2012 C.O.NO.35/CTK/2012 3 I) 22,04,096 DISALLOWED U/S.40(A)(IA) UNDER THE HEAD TRANSPORTATION CHARGES. II) 10,52,728 DISALLOWED U/S.40(A)(IA) UNDER THE HEAD HIRE CHARGES FOR MACHINERIES. III) 35,89,466 DISALLOWED U/S.40(A)(IA) UNDER THE HEAD LABOUR CHARGES. IV) 4,00,000 ADDED U/S.68 AS UNEXPLAINED INTRODUCTION OF CAPITAL. V) 4,740 ADDED AS INTEREST U/S.244A. VI) RS 99,623 ADDED U/S.40 A(3) VII) 1,39,596 DISALLOWED U/S.184(5) AS INTER EST ON CAPITAL VIII) 4,80,000 DISALLOWED U/S.184(5) AS REMUNERATION PAID TO PARTNE 4. AGGRIEVED THE ASSESSEE FILED APPEAL BEFORE THE FIRST APPELLATE AUTHORITY RAISING SEVERAL GROUND ON THE MERIT ADDITIONS INTER ALIA OBJECTING TO THE ASSESSING OFFICER AS SUMING JURISDICTION FOR REASSESSMENT U/S.147/148. THE LEARNED CIT(A) AFTER HEARING THE ASSESSEE APPELLANT, ALLOWED THE APPEAL OF THE ASSESSEE BY HOLDING THE REASSESSMENT PROCEEDINGS INVALID BY OBSERVING IN PARAGRAPHS 6 TO 6.3 IN HIS ORDER, WHICH IS REPRODU CED AS UNDER : 6. AFTER PROCESSING THE RETURN U/S.143(1), THE AO MADE ASSESSMENT U/S.143(3) ON 26.02.2007. THE REASSESSMENT HAS BEEN MADE BY HIM U/S.144 R.W.S. 147 ON 28.12.2010. THE ADDITIONS MADE BY HIM IN THE ABOVE ASSESSMENT ORDERS ARE TABULATED BELOW : 6.1 THE PROVISIONS OF SECTION 194C AND 40(A)(IA) WERE VERY MUCH THERE WHEN THE AO MADE THE ASSESSMENT U/S.143(3) ON I.T.A.NO. 355/CTK/2012 C.O.NO.35/CTK/2012 4 26.02.2007. ALSO AS CAN BE SEEN FROM THE TABLE ABOVE, THE AO HAD DISALLOWED CERTAIN EXPENDITURES IN ASSESSMENT U/S.143(3) ON 26.02.2007 WHICH SURFACE AGAIN IN HIS ASSESSMENT MADE U/S.144 R.W.S. 147 ON 28.12.2010. 6.2 IN CIT V. MOKUL FINANCE LTD. [2008] 306 ITR 47 (DEL) IT WAS HELD THAT WHERE ALL THE RELEVANT INFORMATION WAS AVAILABLE AT THE TIME OF ORIGINAL ASSESSMENT, THE REASSESSMENT N OTICE WAS HELD TO BE NOT JUSTIFIED. THE SAME VIEW WAS TAKEN IN CIT V. TAMIL NADU TRANSPORT DEVELOPMENT FINANCE CORPORATION LTD. [20081 306 ITR 136 (MAD). IN GLAXOSMITHKLINE PHARMACEUTICALS LTD. V. ITO (2009) 125 TTJ 764, IT HAS BEEN HELD THAT WHERE THE ASS ESSMENT HAD BEEN COMPLETED U/S.143(3) AND THE ASSESSEE CLAIMED TO HAVE DISCLOSED ALL THE MATERIAL FACTS DURING THE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS, NO ACTION CAN BE TAKEN AGAINST THE ASSESSEE. 6.3 IN VIEW OF THE LEGAL PRINCIPLES ENUMERATED HERE - IN - ABOVE, THE ASS ESS MENT MADE BY THE AO U/S.144 R.W.S. 147 OF THE ACT ON 2.12.2 010 IS BAD IN LAW. 5. THE LEARNED DR INITIATING HIS ARGUMENTS SUBMITTED THAT THE ASSESSING OFFICER ASSUMED REASSESSMENT PROCEEDINGS ON THE SPECIFIC FINDING THAT THE ASSESSEE H AD NOT DEDUCTED TAX AT SOURCE UNDER THE PROVISIONS OF CH. XVIIB INSOFAR AS UNDER THE DEEMING PROVISIONS OF SECTION 40(A)(IA) THE EXPENSES OUGHT TO HAVE BEEN DISALLOWED WAS THE INCOME HAVING ESCAPED ASSESSMENT WAS BROUGHT TO TAX BY THE ASSESSING OFFICER. IN SPITE OF OPPORTUNITIES GRANTED THE ASSESSEE DID NOT COME FORWARD TO EXPLAIN THE NON - DEDUCTION OF TAX AT SOURCE ON ACCOUNT OF TRANSPORTATION CHARGES ON FAILURE TO DEDUCT TAX AT SOURCE U/S.194C, HIRE CHARGES FOR MACHINERIES FOR FAILURE TO DEDUCTION TAX AT SO URCE U/S.194I, LABOUR CHARGES ON ACCOUNT OF FAILURE TO DEDUCT TAX U/S.194C. THE LEARNED DR ALSO SUBMITTED THAT THE PARTNER OF THE FIRM HAD INTRODUCED A SUM OF 4 LAKHS AS FRESH CAPITAL WHICH WAS NOT EXPLAINED THE INCOME AND SOURCE THEREOF DUE TO NON - COMPLIANCE WAS TAXED IN THE HANDS OF THE ASSESSEE I.T.A.NO. 355/CTK/2012 C.O.NO.35/CTK/2012 5 U/S.68 IN THE REASSESSMENT PROCEEDINGS. DISALLOWANCES WERE MADE U/S.40A(3) AND IN VIEW OF THE ASSESSMENT HAVING BEE N MADE U/S.144, THE ASSESSING OFFICER INVOKED THE PROVISIONS OF SECTION 184(5) TO DISALLOW THE SALARY AND INTEREST PAID TO PARTNERS, WERE THEREFORE IN ACCORDANCE WITH THE PROVISIONS OF THE I.T.ACT WHICH THE LEARNED CIT(A) WITHOUT ADJUDICATING THE MERIT ADD ITIONS SO MADE BY THE ASSESSING OFFICER HAS SET ASIDE THE ORDER OF THE ASSESSING OFFICER HOLDING THAT THE INFORMATION WAS AVAILABLE TO THE ASSESSING OFFICER ON ALL THESE ISSUES WHEN THE ASSESSMENT WAS COMPLETED U/S.143(3). THE LEARNED DR VEHEMENTLY ARGUED THAT INSPITE OF SEVERAL OPPORTUNITIES THE ASSESSEE HAS NOT FURNISHED ANY INFORMATION DURING THE COURSE OF REASSESSMENT PROCEEDINGS THEREFORE COULD NOT BE A GROUND TO ADJUDICATE ON THE VALIDITY OF THE REASSESSMENT PROCEEDINGS WHEN THE ORIGINAL ASSESSMENT W AS COMPLETED U/S.143(3) WHICH THE ASSESSEE SAYS WAS COMPLIED WITH GIVING NO ROOM FOR FINDING INCOME HAVING ESCAPED ASSESSMENT. HE ARGUED THAT THE ONUS WAS TO BE DISCHARGED BY THE ASSESSEE WHEN HE DECLINED TO COOPERATE WITH THE ASSESSING OFFICER IN THE REA SSESSMENT PROCEEDINGS WHEN THE MATERIAL FACT IS THAT THE DEEMING PROVISIONS OF SECTION 40(A)(IA) WAS NOT CONSIDERED BY THE ASSESSING OFFICER IN THE ORIGINAL ASSESSMENT U/S.143(3). THE LEARNED CIT(A) THEREFORE ERRED IN CITING JUDICIAL PRONOUNCEMENTS WHICH A RE DISTINGUISHABLE ON FACTS AS HAVE BEEN BROUGHT ON RECORD. HE PRAYED THAT THE ISSUE BE RESTORED TO THE FILE OF THE LEARNED CIT(A) FOR ADJUDICATION ON MERITS AS WELL. 6. THE LEARNED COUNSEL FOR THE ASSESSEE FURNISHED A PAPER BOOK CONTAINING VARIOUS DETAILS VIDE ANNEXURES , ANNEXED THEREIN AND CONTENDED THAT IT IS WELL SETTLED LAW IN A PLETHORA OF JUDICIAL PRONOUNCEMENTS AND SUFFICE TO QUOTE THE FULL BENCH DECISION OF THE HONBLE HIGH COURT OF DELHI IN THE CASE OF COMMISSIONER OF INCOME TAX VS USHA INTERNATIO NAL LTD, I.T.A.NO. 355/CTK/2012 C.O.NO.35/CTK/2012 6 (2012) 253 (ISSUE NO.40) CTR AT PAGE 113 THAT IN CASE AN ISSUE OR QUERY IS RAISED BY THE AO AND ANSWERED BY THE ASSESSEE IN THE ORIGINAL ASSESSMENT PROCEEDINGS AND THE AO DOES NOT MAKE ANY ADDITION, IT HAS TO BE ACCEPTED THAT THE ISSUE HAS BEEN E XAMINED BUT THE AO DID NOT FIND ANY GROUND OR REASON TO MAKE ANY ADDITION AND THUS, THE REASSESSMENT WOULD BE INVALID. FURTHER THE LAW LAID DOWN IN THE CASES OF CIT V MOKUL FINANCE LTD (2008) 306 ITR 47 (DEL), CIT V TAMIL NADU TRANSPORT DEVELOPMENT FINAN CE CORPORATION LTD., (2008) 306 ITR 136 (MAD) AND GLAXOSMITHKLINE PHARMACEUTICALS LTD V ITO (2009) 125 TTJ 764 STILL HOLDS GOOD IN THE FIELD IN WHICH IT HAS UNEQUIVOCALLY BEEN HELD THAT WHERE THE ASSESSMENT HAD BEEN COMPLETED U/S.143 (3) AND THE ASSESSEE C LAIMED TO HAVE DISCLOSED ALL THE MATERIALS FACTS DURING THE COURSE OF ORIGINAL ASSESSMENT PROCEEDING NO ACTION CAN BE TAKEN AGAINST THE ASSESSEE. RATHER, WITH GREAT RESPECT, IT IS SUBMITTED THAT THE LAW LAID DOWN IN THE AFORESAID CASES BY THE DIVISION BENC H HAVE BEEN FORTIFIED BY THE FULL BENCH OF THE HONBLE HIGH COURT OF DELHI. 6.1. THE LEARNED COUNSEL FOR THE ASSESSEE PERUSED THE VARIOUS ANNEXURES FURNISHED IN THE PAPER BOOK AND VEHEMENTLY CONTENDED THAT THE MATERIALS AVAILABLE ON RECORD WOULD CONCLUSIV ELY ESTABLISH THAT IT IS NOT A CASE OF CONCEALMENT OF MATERIALS BY THE RESPONDENTS BEFORE THE ASSESSING OFFICER AT THE TIME OF ORIGINAL ASSESSMENT. AS SUCH, IN VIEW OF THE PROVISIONS AND ENACTED LAWS DOCTRINE OF ESTOPPEL TO REOPEN THE ASSESSMENT HAS FULL EST APPLICATION AND WAS RIGHTLY APPLIED IN THE IMPUGNED ORDER BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS), CUTTACK WHICH NEEDS NO INTERFERENCE. 6.2. THE LEARNED COUNSEL FOR THE ASSESSEE FURTHER SUBMITTED THAT THE STAND OF THE ASSESSEE IN THE INS TANT APPEAL IS THAT THE ASSESSING OFFICER DID I.T.A.NO. 355/CTK/2012 C.O.NO.35/CTK/2012 7 NOT EXAMINE THE APPLICABILITY OF THE STATUTORY PROVISIONS OF SECTION 40(A)(IA) READ WITH SECTION 194C OF THE I.T.ACT IN RESPECT OF CLAIM OF HIRE CHARGES OF MACHINERIES ETC. IN THIS CONNECTION, HE SUBMITTED THAT NOWHERE IN THE PROVISIONS OF THE ACT OR INTERPRETATION RECEIVED IN VARIOUS DECISIONS, CITED ABOVE, EMPOWERS THE ASSESSMENT OFFICER TO REOPEN THE ASSESSMENT WHICH HAD SET AT REST, AFTER LAPSE OF CONSIDERABLE TIME THAT TOO BASED ON THE SAME MATERIALS. HE F URTHER SUBMITTED BY NO STRETCH OF IMAGINATION IT CAN BE BELIEVED THAT THE ASSESSMENT MADE BY THE AO IS/WAS WITHOUT EXAMINING THE APPLICABILITY OF THE STATUTORY PROVISIONS ENSHRINED IN SECTION 40(A)(IA) READ WITH SECTION 194C OF THE IT ACT. HENCE THE GROUND S BASED ON WHICH THE APPELLANT SEEKS TO SET ASIDE THE ORDER IS ON THEIR OWN INTERPRETATION . 6.3. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT AS PER THE QUESTIONNAIRE UNDER ANNEXURE - 1 OF THE PAPER BOOK THE RESPONDENT FIRM HAS SUBMITTED THE TAX AUD IT REPORT U/S. 44AB OF THE IT ACT. 1961 AS EVIDENT VIDE ANNEXURE - 5 OF PAPER BOOK AT PAGE - 21 ALONG WITH ALL THE LEDGER A/CS UNDER ANNEXURE - 6 OF THE PAPER BOOK COVERING THE EXPENDITURE CLAIMED IN THE RETURN ON DIFFERENT HEADS. AS PER THE SAID QUESTIONNAIRE U NDER ANNEXURE - 1 OF THE PAPER BOOK, THE RESPONDENT FIRM HAS FURNISHED THE DETAIL PARTICULARS OF EACH QUERIES AS PER THE QUESTIONNAIRES AS STATED BELOW IN A TABULAR FORMS. SL NO. PARTICULARS AMOUNT REFERENCE UNDER ANNEXURE - 6 OF PAPER BOOK 1. MATERIALS CONSU MED 2,48,65,170 PAGE - 143 - 148 2. LABOUR CHARGES 35,89,467 PAGE - 59 - 60 3. OTHER DEDUCTIONS 14,580 PAGE - 46 4. STAFF SALARY 5,14,700 PAGE - 122 I.T.A.NO. 355/CTK/2012 C.O.NO.35/CTK/2012 8 5. OFFICE RENT 48,000 PAGE - 48 6. TRAVELLING & CONVEYANCE 2,14,635 PAGE - 115 7. TRANSPORTATION EXPENSES 2 7,48,670 PAGE - 116 8. WORK SITE EXPENSES 7,34,160 PAGE - 109 9. CAMP EXPENSES 6,32,167 PAGE - 99 - 100 10. DEAD STOCK 3,12,400 PAGE - 86 - 87 11. SALES PROMOTION EXPENSES 67,400 PAGE - 165 12. HIRE CHARGES ON MACHINERY 14,25,600 PAGE - 66 13. REPAIR & MAI NTENANCE 1,45,630 PAGE - 103 14. POSTAGE & TELEPHONE EXP. 45,167 PAGE - 38 15. STAFF WELFARE 1,34,190 PAGE - 123 16. BANK INTEREST 1,65,070 PAGE 133 17. MISC. EXPENSES 33,000 PAGE 57 18. PRINTING & STATIONARY 35,940 PAGE - 39 19. GROSS BILL RECE IVED 3,65,50,662 PAGE 68 20. WORK IN PROGRESS 6,50,000 PAGE 110 21. LIABILITIES FOR EXPENSES 4,65,675 PAGE 153 22. CLOSING STOCK OF MATERIALS 25,15,785 PAGE 138 23. CLOSING WORK IN PROGRESS 6,50,000 PAGE 137 24. SECURITY DEPOSITS/ DEDUCTIONS 2,88,190 PAGE 160 25. SHUTTERING PLATES EXPENSES 1,65,425 PAGE - 159 26. DRAWINGS OF PARTNERS A . RATNAKAR NAYAK 1,80,000 PAGE 75 I.T.A.NO. 355/CTK/2012 C.O.NO.35/CTK/2012 9 B . RASHMI RANJAN PAL 1,80,000 PAGE 76 C . MANASI PAL 60,000 PAGE 77 D . BHANULATA NAIK 60,000 PAGE 78 27. CASH CREDIT LOANS 39,99,998 DETAILS FURNISHED NOT DISPUTED BY THE LD. A.O. 28. BILLS PAYABLE 10,15,290 DETAILS FURNISHED NOT DISPUTED BY THE LD. A.O. 29. BILLS WITHHELD 26,54,230 DETAILS FURNISHED NOT DISPUTED BY THE LD. A.O. 30. CASH IN HAND 76,413 NOT DISPUTE D BY THE LD. A.O. THE LD. A.O. HAS GONE THROUGH THE LEDGER A/CS AND RELEVANT DOCUMENTS SUBMITTED IN COURSE OF ASSESSMENT PROCEEDING IN PURSUANCE TO THE INCOME DECLARED AS PER THE COMPUTATION OF INCOME UNDER ANNEXURE - 4 OF THE PAPER BOOK ALONG WITH THE A UDITED ACCOUNT UNDER ANNEXURE - 5. THE LD. A.O. HAS COMPLETED THE ASSESSMENT U/S. 143(3) OF THE IT ACT. AFTER VERIFYING THE BOOKS OF ACCOUNT ALONG WITH THE LEDGER A/CS. SUPPORTED WITH THE DOCUMENTARY EVIDENCES TO THAT SUPPORT PRODUCED BEFORE HIM AS REVEALED FROM THE ORDER OF ASSESSMENT UNDER ANNEXURE - 4 OF THE PAPER BOOK. 6.4. THE LEARNED COUNSEL FOR THE ASSESSEE CONTINUED HIS SUBMISSIONS BY STATING T HAT, THE LD. A.O. HAS DISALLOWED CERTAIN EXPENSES AFTER GOING THROUGH THE BOOKS OF ACCOUNT PRODUCED BY THE A PPELLANT SUPPORTED BY THE EVIDENCES AS FOLLOWS: - A. INTEREST U/S. 244A - 4,740 B. MATERIAL CONSUMED 99,623 C. LABOUR CHARGES 89,737 I.T.A.NO. 355/CTK/2012 C.O.NO.35/CTK/2012 10 D. TRANSPORT ATION CHARGES 20,900 E. POSTAGE & TELEPHONE CHARGES 9,033 TOTAL 2,24,033 THE LD. A.O. HAS MADE AN ADDITION OF 2,24,033 WITH THE RETURNED INCOME DISCLOSED AT 4,97,150 AND NECESSARY DEMAND HAS BEEN RAISED AT 90,808 AS REVEALED FROM ANNEXURE - 2 OF THE PAPER BOOK AT PAGE - 8. THE RESPONDENT FIRM HAS NOT APPROACHED THE 1ST APPELLATE AUTHORITY AGAINST SUCH ADDITIONS AT 2,24, 033. 6.5. THE LEARNED COUNSEL FOR THE ASSESSEE FURTHER SUBMITTED THAT IT IS A MATTER ON RECORDS THAT EVEN THOUGH THE ASSESSMENT HAS BEEN MADE ITS FINALITY ON DT. 26/02/2007 BY DETERMINING THE TOTAL INCOME AT 7,21,180 , THE SAME HAS REOPENED BY THE SAME SAID A.O. ON THE VERY GROUND THAT THE ASSESSEE HAD NOT DEDUCTED TAX FROM PAYMENTS MADE UNDER THE HEAD OF TRANSPORTATION CHARGES EXCEEDING 50,000 IN AGGREGATE AS REQUIRED U/S. 194C OF THE IT ACT. 1961 AS WELL AS DECLARATIONS IN FORM 15 (SIC) 15H WERE N OT COLLECTED FROM THE PARTIES TO WHOM SUCH PAYMENTS WERE MADE WITHOUT DEDUCTING THE TAX. ACCORDING TO THE PROVISIONS OF SEC. 40(A) (IA) OF THE INCOME TAX ACT. 1961, IN THE EVENT OF SUCH FAILURE ON THE PART OF THE ASSESSEE, THE DEDUCTION CLAIMED BY IT FOR T HE CORRESPONDING EXPENSES (FOR WHICH TAX HAS NOT BEEN DEDUCTED), SHALL BE DISALLOWED AND THE SAME SHOULD BE ADDED BACK TO THE INCOME OF THE ASSESSEE. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT IT IS TRANSPARENT FROM THE REASONS SHOWN IN THE ORDER OF RE - ASSESSMENT U/S. 147 OF THE IT ACT., THAT THE A.O. HAS INITIATED RE - ASSESSMENT PROCEEDING SO FAR AS THE TRANSPORTATION CHARGES IS CONCERNED EXCLUSIVELY. THEREBY, THE LD. A.O. SHOULD HAVE CONFINED ONLY TO THE SAME SAID HEAD OF EXPENSES SO FAR AS SEC. 1 47 IS CONSIDERED, BUT THE FACT REMAINS, THE LD. A.O. ONCE AGAIN HAS MADE QUERIES OF THE DIFFERENT HEADS EXPENDITURE I.T.A.NO. 355/CTK/2012 C.O.NO.35/CTK/2012 11 WHICH HAVE ALREADY CONSIDERED BY THE SAME SAID A.O. IN THE ORDER OF ASSESSMENT U/S. 143(3) OF THE I.T ACT. 6.6. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE - RESPONDENT DID NOT APPEAR BEFORE THE LD. A.O. AS ALL THE BOOKS OF ACCOUNT HAD ALREADY BEEN SUBMITTED IN THE PROCEEDING U/S. 143(3) OF THE IT ACT. , WHICH WERE CALLED FOR BY THE LD. A.O. FOR REASSESSMENT. HE CONTENDED TH AT AS ALL THE EVIDENCES HA D ALREADY BEEN VERIFIED THEREBY THERE IS NO NECESSITY TO PRODUCE THE VERY SAME RECORD ONCE AGAIN. THE LD. A.O. SHOULD HAVE VERIFIED THE SAME AT HIS OWN HAND INSTEAD OF HOLDING IT AGAINST THE ASSESSEE DISALLOW ING THE ENTIRE EXPENSE S WHICH STOOD ALREADY ALLOWED BY THE LD. A.O. U/S. 143(3) OF THE IT ACT. HE FURNISHED THE DETAILS OF DISALLOWANCE OF EXPENSES ON DIFFERENT HEADS AS UNDER: SL NO. HEADS AMOUNTS ASST. MADE U/S. 143(3) OF THE IT ACT. 1. TRANSPORTATION CHARGES 22,04,096 DETA ILS SUBMITTED IN PAPER BOOK PAGE NO. 116 2. HIRE CHARGES 10,52,728 DETAILS SUBMITTED IN PAPER BOOK PAGE NO.66 3. LABOUR CHARGES 35,89,466 DETAILS SUBMITTED IN PAPER BOOK PAGE NO.59 - 60 4. UNEXPLAINED INTRODUCTION OF CAPITAL 4,00,000 DETAILS SUBMITTED IN PAPER BOOK PAGE NO. 95 TO 96 5. INTEREST U/S. 244A 4,740 NOT DISPUTED 6. ADDITION U/S. 40A(3) 99,623 DETAILS SUBMITTED IN PAPER BOOK PAGE NO.143 TO 148 7. INTEREST ON CAPITAL 1,39,596 DETAILS SUBMITTED IN PAPER BOOK PAGE NO.95 TO 98 8. REMUNERATION P AID TO THE PARTNERS 4,80,000 DETAILS SUBMITTED IN PAPER BOOK PAGE NO.75 TO 78 TOTAL 79,70,249 THE LD. A.O. HAS PASSED THE ORDER U/S. 144 / 147 ON DT. 28/12/2010 . I.T.A.NO. 355/CTK/2012 C.O.NO.35/CTK/2012 12 6.7. CONCLUDING HIS ARGUMENT S , HE SUBMITTED A COMPILATION OF THE DECISIONS WHICH CA SE - LAWS DIRECTLY DEAL WITH THE ISSUE WITH RESPECT TO WHETHER MERE CHANGE OF OPINION WHEN THE ASSESSING OFFICER INVOKED THE PROVISIONS OF SECTION 147/148 INSOFAR AS IT WAS NOT THE CIT ASSUMING JURISDICTION U/S.263 TO AN ERRONEOUS ORDER COUPLED WITH THE FACT THAT IT WAS PREJUDICIAL TO THE INTEREST OF REVENUE WAS TO BE VISITED UNDER THE PROVISIONS OF SECTION 147/148. HE ARGUED THAT THE VERY FACT THAT THE ASSESSING OFFICER HAS NOT EVEN TRIED TO CONSIDER THE INCOME ASSESSED U/S.143(3) REFLECTS THE BIAS IN THE MI ND OF THE ASSESSING OFFICER THAT HAVING MADE ADDITIONS OR DISALLOWANCES UNDER THE SAME VERY HEADS WHICH HE WAS TO CONSIDER BY INVOKING THE PROVISIONS OF CHAPTER XVIIB BY CONSIDERING THE DEEMING PROVISIONS OF SECTION 40(A)(IA) DILUTES THE FINDING THAT THE V ALIDITY OF REASSESSMENT U/S.147 IS NOT ON LEGAL FOOTING . THE LEARNED CIT(A) THEREFORE TELESCOPED THE MERIT ADDITIONS TO CONSIDER THE CASE OF THE ASSESSEE APPELLANT BEFORE HIM THAT THE ASSESSEE WAS NOT TO BE CONSIDERED FOR REASSESSMENT PURELY ON THE PREMISE THAT THE DISALLOWANCE OF EXPENSES CLAIMED HAVING BEEN VERIFIED BY THE AO IN THE ORIGINAL ASSESSMENT U/S.143(3) COULD BE CONSIDERED HERE AGAIN BY VISITING THE PROVISIONS OF CHAPTER XVIIB WAS THEREFORE RIGHTLY CONSIDERED BY THE LEARNED CIT(A) FIT FOR ANNULM ENT. FOR THIS PROPOSITION, HE HAS FILED A PAPER BOOK WHICH INTER ALIA CONTAIN THE LEDGER COPIES FOR ALL THE EXPENSES CLAIMED ALONG WITH THE EXPLANATION CALLED FOR BY THE ASSESSING OFFICER WHEN PART DISALLOWANCES WERE MADE WHICH ADDITIONS HAVE NOT BEEN APPE ALED AGAINST BEFORE THE FIRST APPELLATE AUTHORITY ON THE ORDER OF THE ASSESSING OFFICER U/S.143(3). HE SUBMITTED THAT THERE WAS NO REASON FOR PASSING THE ORDER U/S.144 IS RE - IMPOSED IN THE FACT THAT THE LEARNED DRS SUBMITTED FOR NON - COOPERATION BECOMES A MERE FORMALITIES WHEN ALL THE RELEVANT RECORDS ARE AVAILABLE TO THE ASSESSING OFFICER. I.T.A.NO. 355/CTK/2012 C.O.NO.35/CTK/2012 13 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL MADE AVAILABLE TO THE TRIBUNAL. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE INCLINED TO UPHOLD THE ORDER OF THE LEARNED CIT(A) AS WE DO NOT FIND ANY INFIRMITY THEREIN. THE GROUNDS RAISED BY THE ASSESSEE APPELLANT BEFORE HIM WAS WITH RESPECT TO THE DEEMING PROVISIONS FOR DISALLOWANCE U/S.40(A)(IA) WHICH WERE TO BE CONSIDERED DISALLOWABLE ONLY WHEN ON VISIT TO THE PROVISIONS OF CHAPTER XVIIB WAS NECESSITATED. THE VISIT OF THE PROVISIONS OF CHAPTER XVIIB CANNOT BE A GROUND FOR INITI ATI NG PROCEEDINGS U/S.147/148. ON GOING THROUGH THE IMPUGNED ASSESSMENT ORDER, WE FIND THAT THERE IS NOTHING NEW WHI CH CAME TO THE NOTICE OF THE REVENUE AND THE REASSESSMENT WAS PASSED ON MERE RELOOK WHICH IS NOT PERMISSIBLE UNDER THE LAW, AS SETTLED PRINCIPLES OF LAW . IN THE CASE OF CIT V. BHANJI LAVJI [1971] 79 ITR 582 (SC), HONBLE SUPREME COURT HELD THAT WHEN THE PRIMARY FACTS NECESSARY FOR ASSESSMENT ARE FULLY AND TRULY DISCLOSED, THE ITO WILL NOT BE ENTITLED ON CHANGE OF OPINION TO COMMENCE PROCEEDINGS FOR REASSESSMENT. SIMILARLY, IF HE HAS RAISED A WRONG LEGAL INFERENCE FROM THE FACTS DISCLOSED, HE WILL NOT, ON THAT ACCOUNT, BE COMPETENT TO COMMENCE REASSESSMENT PROCEEDINGS. IN THE CASE OF SITA WORLD TRAVEL (INDIA) LTD. V. CIT, [20 04] 140 TAXMAN 381 (DELHI), HONBLE DELHI HIGH HAS ALSO HELD - WHERE IT WAS CLEAR FROM THE ORIGINAL ASSESSMENT ORDERS AS WELL AS ORDER MADE BY THE APPELLATE AUTHORITY THAT THE ASSESSING OFFICER WAS WELL AWARE ABOUT THE PRIMARY FACTS, VIZ., THE CLAIM MADE BY THE ASSESSEE, THE CIRCUMSTANCES UNDER WHICH THE CLAIM WAS MADE, AND THE PROVISIONS OF LAW WHICH COULD BE APPLIED WHILE GRANTING THE BENEFITS, AND THE ASSESSING OFFICER CONSCIOUSLY CONSIDERED THE FACTS AND ARRIVED AT A DECISION, THE ASSES SMENT CANNOT BE REOPENED MERELY BECAUSE SUBSEQUENTLY THE ASSESSING OFFICER CHANGES HIS OPINION OR SOME OTHER OFFICER TAKES A DIFFERENT VIEW. A DECISION IS RIGHT OR WRONG IS NONE OF THE CONCERN OF I.T.A.NO. 355/CTK/2012 C.O.NO.35/CTK/2012 14 THE SUBSEQUENT OFFICER. IF THE PRIMARY FACTS WERE NOT AVAILA BLE OR THERE WAS CONCEALMENT OR THERE WAS NO APPLICATION OF MIND AT ALL, THEN A CASE FOR REOPENING THE ASSESSMENT COULD BE MADE OUT. FURTHER I N THE CASE OF CIT V. TRIMURTI BUILDERS [(2012 246 CTR (MP) 308], WHEREIN IT IS HELD THAT IN THE ABSENCE OF ANY FRE SH MATERIAL BEFORE THE A.O., REOPENING OF ASSESSMENT ON THE BASIS OF THE MATERIAL WHICH WAS ALREADY TAKEN INTO CONSIDERATION BY THE A.O. AT THE TIME OF A.O. ORIGINAL ASSESSMENT WAS NOT VALID. SIMILAR VIEW HAS ALSO BEEN EXPRESSED BY HONBLE DELHI HIGH COURT IN THE CASE OF CIT V. USHA INTERNATINAL LTD., [(2012) 251 CTR DEL) 28], THAT WHEN THE AO DOES NOT REFER TO A PARTICULAR ASPECT IN THE ASSESSMENT ORDER OR DID NOT RAISE ANY WRITTEN QUESTION OR QUERY IN SUCH CASES, DOCTRINE OF MERE CHANGE OF OPINION IS A PPLICABLE AND WILL BAR REASSESSMENT PROCEEDINGS WHEN ASSESSMENT IS COMPLETED/S.143(3) IS THE ISSUE RAISED. ALSO IN THE CASE OF CIT V. USHA INTERNATIONAL LTD., FULL BENCH OF HONBLE DELHI HIGH COURT HAS HELD . I N CASE AN ISSUE OR QUERY IS RAISED BY THE A. O. AND ANSWERED BY THE ASSESSEE IN THE ORIGINAL ASSESSMENT PROCEEDINGS, AND THE A.O. DOES NOT MAKE AN ADDITIONS IT HAS TO BE ACCEPTED THAT THE ISSUE HAS BEEN EXAMINED BUT THE A.O. DID NOT FIND ANY GROUND OR REASON TO MAKE ANY ADDITION, AND THUS, THE REASSE SSMENT WOULD BE INVALID .. QUESTION OF CONCEALMENT IS NOT RELEVANT AND IS NOT A PRE - CONDITION WHICH CONFERS JURISDICTION TO REOPEN THE ASSESSMENT IN SUCH CASES, REASSESSMENT PROCEEDINGS CAN BE DECLARED INVALID WHEN THERE IS A CHANGE OF OPINION . 8. IN VI EW OF THE ABOVE, WE HAVE NO HESITATION IN UPHOLDING THE IMPUGNED ORDER OF THE LEARNED CIT(A) , BY DISMISSING THE APPEAL FILED BY THE REVENUE AND ALLOW ING THE CROSS OBJECTION FILED BY THE ASSESSEE SUPPORTING THE IMPUGNED ORDER OF THE LEARNED CIT(A). I.T.A.NO. 355/CTK/2012 C.O.NO.35/CTK/2012 15 8. IN TH E RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. THE CROSS OBJECTION FILED BY THE ASSESSEE SUPPORTING THE IMPUGNED ORDER OF THE LEARNED CIT(A) IS ALLOWED. S D / - SD/ - ( . . . ) , (K.S.S.PRASAD RAO), JUDICIAL MEMBER ( . . ) , , (K.K.GUPTA), ACCOUNTANT MEMBER. ( ) DATE: - COPY OF THE ORDER FORWARDED TO: 1 . / THE APPELLANT : 2 / THE RESPONDENT: 3 . / THE CIT, 4 . ( )/ THE CIT(A), 5 . / DR, CUTTACK BENCH 6 . GUARD FILE . / TRUE COPY, / BY ORDER, APPENDIX XVII SEAL TO BE AFFIXED ON THE ORDER SHEET BY THE SR. P.S./P.S. AFTER DICTATION IS GIVEN 1. DATE OF DICTATION 30.10.2012 . 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 31.10.2012 OTHER MEMBER . 3. DATE ON WHICH THE APPROVED DRAFT COMES TO T HE SR. P.S./P.S. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT.... 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S . 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 02.11.2012 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 .. ( ), (H.K.PADHEE), SENIOR.PRIVATE SECRETARY.