The Assistant Comissioner of Income Tax, Circle-1, JUNAGADH V. M/s. Yadav Carriers P. Ltd., Veraval

ITA 43/RJT/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 2411 (ITAT-RAJKOT)
• Duration Of Justice: 1 year(s) 11 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-01-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 22-12-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 13-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C S ANJARIA
• Assessee Lawyers: MJ RANPURA
• Keywords: Reopening of assessment; Difference of opinion; Change of opinion; Reassessment proceedings
• Section: 143(3); 194C; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT [CONDUCTED THROUGH E-COURT AT AH MEDABAD] (BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER & SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER) ITA NO: 43/RJT/2014 (ASSESSMENT YEAR: 2005-06) THE ACIT, CIRCLE-1, JUNAGADH V/S M/S. YADAV CARRIERS PVT. LTD. OPP. INDIAN RAYONS MILL JUNAGADH ROAD, VERAVAL (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI C.S. ANJARIA, D.R. RESPONDENT BY : SHRI M.J. RANPURA, C.A. ( )/ ORDER DATE OF HEARING : 22-12-2015 DATE OF PRONOUNCEMENT : 05-01-2016 PER ANIL CHATURVEDI, ACCOUNTANT MEMBER 1. THIS APPEAL FILED BY THE REVENUE IS AGAINST THE ORD ER OF CIT(A)-IV, RAJKOT DATED 25.10.2013 FOR A.Y. 2005-06. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON RECORD ARE AS UNDER. ITA NO. 43/R JT/2014 . A.Y. 2005-0 6 2 3. ASSESSEE IS A COMPANY STATED TO BE ENGAGED IN THE B USINESS OF TRANSPORTATION. ASSESSEE ORIGINALLY FILED ITS RETUR N OF INCOME FOR A.Y. 05-06 ON 18.03.2006 DECLARING TOTAL INCOME OF RS. 21,48,9 40/-. ORIGINALLY ASSESSMENT WAS FRAMED U/S. 143 (3) VIDE ORDER DATED 13.12.2007 AND THE TOTAL INCOME WAS DETERMINED AT RS. 24 LACS. SUBSEQUENTLY THE CASE WAS REOPENED BY ISSUING NOTICE U/S. 148 ON 30.03.2011 AND IN RES PONSE TO WHICH ASSESSEE VIDE LETTER DATED 15.11.2011 SUBMITTED THAT THE ORI GINAL RETURN FILED BE CONSIDERED TO BE IN RESPONSE TO NOTICE U/S. 148 OF THE ACT. THEREAFTER ASSESSMENT WAS FRAMED U/S. 143(3) R.W.S. 147 VIDE O RDER DATED 19.12.2011 AND THE TOTAL INCOME WAS REASSESSED AT RS. 63,26,63 0/-. AGGRIEVED BY THE ORDER OF A.O., ASSESSEE CARRIED THE MATTER BEFORE L D. CIT(A) WHO VIDE ORDER DATED 25.10.2013 ALLOWED THE APPEAL OF THE ASSESSEE . AGGRIEVED BY THE AFORESAID ORDER OF LD. CIT(A), REVENUE IS NOW IN A PPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUNDS:- 1. ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN TREATING THE REOPENING OF ASSESSMENT INITIATED U/S 147 AS BAD IN LAW AND HENCE INVALID. 2. ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. C1T(A) ERRED IN TREATING THE REOPENING OF ASSESSMENT AS ONLY MERE CHANGE OF OPINION. IN DOING SO, THE LD. CIT(A) HAS FAILED TO APPRECIATE THE FACT THAT THE A O HAD NOT EXAMINED THE ISSUE OF 40(A)(IA) IN HIS EARLIER ASSESSMENT ORDER DATED 13. 02.2007. 3. ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN HOLDING THAT NO DISALLOWANCE U/S 40(A)(IA) OF RS. 3 9,26,632/- CAN BE MADE WHERE THE INCOME HAS BEEN ESTIMATED. IN DOING SO, THE LD. CIT (A) HAS IGNORED THE FACT THAT REJECTION OF BOOKS OF ACCOUNT AND ESTIMATE OF INCOM E THEREOF IS DIFFERENT FROM INVOKING PROVISIONS OF SEC. 40(A)(IA) AND BOTH THE SECTIONS ARE MUTUALLY EXCLUSIVE. 4. ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE ID. CIT(A) HAS NOT APPRECIATED THE FACT THAT THE PROVISIONS OF SEC. 40(A)(IA) IS P UNITIVE IN NATURE WITH SOLE LEGISLATIVE ITA NO. 43/R JT/2014 . A.Y. 2005-0 6 3 INTENTION OF CREATING ENOUGH DETERRENCE IN RESPECT OF NON-COMPLIANCE OF T.D.S PROVISIONS. 4. BEFORE US, AT THE OUTSET BOTH THE PARTIES SUBMITTED THAT THE ISSUE IS WITH RESPECT TO REOPENING OF ASSESSMENT AND THE DISALLOW ANCE MADE U/S. 40(A)(IA) AND THE GROUNDS RAISED ARE INTERCONNECTED AND THERE FORE ALL THE GROUNDS CAN BE CONSIDERED TOGETHER. 5. DURING THE COURSE OF REASSESSMENT PROCEEDINGS, A.O ON PERUSING THE INCOME AND EXPENDITURE ACCOUNT NOTICED THAT ASSESSEE HAD S HOWN RS. 18,73,17,421/- UNDER THE HEAD TRUCK HIRE CHARGES PAID. HE WAS OF THE VIEW THAT ASSESSEE WAS REQUIRED TO DEDUCT TDS U/S. 194C ON THE PAYMENT OF TRUCK HIRE CHARGES PAID. ON PERUSING THE DETAILS HE NOTICED THAT ASSES SEE HAD MADE PAYMENT OF RS. 39,26,632/- (THE DETAILS OF WHICH ARE LISTED AT PAGE 3 TO 5 OF THE ASSESSMENT ORDER) ON WHICH THOUGH THE PAYMENTS WAS IN EXCESS OF RS. 50,000/- TO VARIOUS PARTIES BEING IN EXCESS OF THE LIMIT PRESCRIBED BY THE ACT FOR DEDUCTION OF TDS BUT ASSESSEE HAD NOT DEDUCTED TDS. HE ACCORDINGLY DISALLOWED THE AGGREGATE PAYMENT OF RS. 39,26,632/- U/S. 40(A)(IA) OF THE ACT. AGGRIEVED BY THE ORDER OF A.O., ASSESSEE CARRI ED THE MATTER BEFORE LD. CIT(A) WHO APART FROM HOLDING THAT THE PROCEEDINGS INITIATED U/S. 147 OF THE ACT TO BE BAD IN LAW ON MERITS HELD THAT NO DISALLO WANCE COULD BE MADE U/S. 40(A)(IA) OF THE ACT BY HOLDING AS UNDER:- 5. I HAVE PERUSED THE ASSESSMENT ORDER AND THE WRIT TEN SUBMISSION PUT FORTH BY THE A.R. I FIND THAT, THERE IS NO CHANGE OF FACTS FROM THE STA GE OF ORIGINAL ASSESSMENT TO THE STAGE OF REASSESSMENT. TE FACTS AND DETAILS OF TDS WERE BEFO RE THE A.O IN THE ORIGINAL STAGE AS WELL. IT IS TRUE THAT THE APPELLANT COULD NOT PRODU CE SUPPORTING DETAILS AS HIS BOOKS WERE DESTROYED DURING FLOOD. BUT THE THEN A.O HAD CONSID ERED THIS FACT WHILE FINALIZING THE ASSESSMENT AND ACCORDINGLY ESTIMATED THE INCOME OF THE APPELLANT AT RS. 24.00 LACS. ITA NO. 43/R JT/2014 . A.Y. 2005-0 6 4 THERE IS NO MATERIAL EVIDENCE TO SHOW THAT THE APPE LLANT HAD NOT MADE FULL AND TRUE DISCLOSURE OF MATERIAL FACTS IN THE INITIAL STAGE. DESTRUCTION OF DOCUMENTS DUE TO FLOOD WERE ALREADY ON RECORD WHILE FINALIZING THE ORIGINA L ASSESSMENT. REOPENING WOULD HAVE BEEN JUSTIFIED IF THERE HAD NOT BEEN SCRUTINY ASSES SMENT IN THE FIRST INSTANCE AND PRIMA FACIE, THERE WAS AN ELEMENT OF NON-DEDUCTION OF TDS RESULTING INTO DISALLOWANCE OF THE ENTIRE EXPENDITURE. HOWEVER, SINCE SCRUTINY ASSESSM ENT HAS ALREADY BEEN PASSED AND THE THEN AO HAD ALREADY GONE THROUGH ALL THE DETAILS AN D AS THERE WAS NOTHING NEW IN THE SECOND INNINGS WHICH WAS NOT PRESENT IN THE FIRST I NNINGS, THIS REOPENING IS A MERE CHANGE OF OPINION AND THE SAME IS NOT JUSTIFIED. IN VIEW O F THE, ABOVE, THE PROCEEDINGS INITIATED U/S. 147 OF THE I T ACT IS BAD IN LAW, HENCE NOT VA LID. 6. ALTERNATIVELY, COMING TO THE MERITS OF THE CASE, IT IS SEEN THAT THE AO HAD MADE DISALLOWANCE U/S,40(A)(IA) IN THE REOPENED ASSESSME NT. HOWEVER, HE CARRIED FORWARD FROM THE PLACE WHERE THE PREVIOUS ASSESSMENT HAD BE EN LEFT. THAT IS, IN THE ORIGINAL ASSESSMENT, THE AO, AFTER TAKING INTO CONSIDERATION ALL THE MATERIAL FACTS AND CIRCUMSTANCES OF THE CASE AND AFTER CONSIDERING THE FACT THAT THE APPELLANT'S BOOKS WERE DESTROYED DUE TO FLOODS, HAD ESTIMATED THE INCOME O F THE APPELLANT AT RS 24.00 LACS. IN THE ASSESSMENT FINALIZED U/S. 147, THE INCOME HAS BEEN TAKEN AT RS 24.00 LACS AND FURTHER ADDITION HAS BEEN MADE. THUS, HERE IS A CASE, WHERE DISALLOWANCE U/S. 40(A)(IA) HAS BEEN MADE ON AN ASSESSMENT WHEREIN THE INCOME HAS BEEN E STIMATED. ESTIMATION IS MADE WHERE THE INCOME IS NOT DETERMINABLE DUE TO EXTRANE OUS FACTOR (HERE IN THE PRESENT CASE, THE BOOKS WERE DESTROYED DUE TO FLOOD). ONCE, WHEN THE BOOK RESULTS ARE REJECTED AND INCOME IS ESTIMATED, PROVISIONS OF SECTION 40(A)(IA ) IS NOT APPLICABLE. THIS FINDING IS BASED ON THE DECISION OF THE HON'BLE. ITAT HYDERABA D 'A' BENCH IN THE CASE OF TEJA CONSTRUCTIONS VS. ACIT 36 DTR 220. 1 ALSO FIND THAT THE HON'BLE ITAT, RAJKOT BENCH, RAJKOT IN THE CASE OF ITO WARD 1(1) RAJKOT VS. DIVY ESH BUILDERS, ITA NO.L304/RJT/2010 AND IN THE CASE OF ACIT VS. THE OMKAR ENGINEERING C O, ITA NO. 998/RJT/2010, HAS UPHELD THE SAME. IN THE CASE OF M/S. DIVYESH BUILDE RS, HON'BLE ITAT RAJKOL IN ITA NO.L304/RJT/2010 HAS HELD AS UNDER: '9. HAVING HEARD BOTH SIDES, WE HAVE CAREFULLY GONE THROUGH THE ORDERS OF AUTHORITIES BELOW IN RESPECT OF GROUND NO. 2. LOOKI NG TO THE FACTS NARRATED BY LD.CIT(A) IN PAR A- 10 OF THE IMPUGNED ORDER -WHICH ARE NOT DISPUTED BY LD. DR, ITA NO. 43/R JT/2014 . A.Y. 2005-0 6 5 WE ARE OF THE VIEW THAT ID. CIT(A) HAS GIVEN COGENT REASON FOR DELETING THE DISALLOWANCE MADE BY AO U/S.40(A)(IA). THE JUDGMENT OF HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CLT VS. SAI METAL WORKS (SUPRA) RELIED ON BY ID. DR, IN OUR CONSIDERED OPINION, IS NOT RELEVANT AS ID. CIT(A) DELETED THE DISALLOWING HOLDING THAT WHEN BOOKS OF ACCOUNTS ARE REJECTED AND AO ESTIMATED GROSS PROFIT, THEN ALL DIRECT EXPENDITURE IS TAKE C ARE OFF. ADMITTEDLY, THE NATURE OF EXPENSES IS FOR CENTERING WORK EXPENSES, CONCERT WO RK EXPENSES AND CENTERING RENT EXPENSES AND ASSESSEE IS A BUILDER. LOOKING TO THESE CONSPICUOUS FACTS, WE INCLINED TO UPHELD THE VIEW TAKEN BY LD. CIT(A). GR OUND NO. 2 IS REJECTED. IT IS ALSO SEEN THAT, THIS VIEW HAS BEEN UPHELD BY THE HONBLE ITAT, CUTTAK BENCH, IN THE CASE OF THE ITO VS. SAHADEV PRADHAN, 18 ITR (TRIB) 180 (CUTTAK). IN LIGHT OF THE ABOVE, IT IS HELD THAT, NO DISALLOWANCE U/S. 40(A)(IA) CAN BE MADE WHERE THE INCOME HAS BEEN ESTIMATED. 6. AGGRIEVED BY THE ORDER OF LD. CIT(A), REVENUE IS N OW IN APPEAL BEFORE US. 7. BEFORE US, LD. D.R SUPPORTED THE ORDER OF A.O. ON T HE OTHER HAND LD. A.R. REITERATED THE SUBMISSIONS MADE BEFORE A.O AND LD. CIT(A) AND SUPPORTED THE ORDER OF LD. CIT(A). 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ISSUE IN THE PRESENT CASE IS ABOUT REOP ENING OF ASSESSMENT U/S. 147 AND ADDITION MADE U/S. 40(A)(IA) OF THE ACT. WE FIND THAT LD. CIT(A) WHILE HOLDING THE PROCEEDINGS INITIATED U/S. 147 TO BE BAD IN LAW HAS GIVEN A FINDING THAT THERE IS NO MATERIAL EVIDENCE TO SHOW THAT ASSESSEE HAD NOT MADE FULL AND TRUE DISCLOSURE OF MATERIAL FACTS IN THE INITIAL STAGE AND WHILE FRAMING THE ASSESSMENT, A.O HAD ALREADY GONE THROUG H ALL THE DETAILS AND THERE WAS NOTHING NEW IN THE SECOND ROUND WHICH WAS NOT AVAILABLE BEFORE HIM IN THE FIRST ROUND AND THEREFORE THE REOPENING WAS THE MERE CHANGE OF ITA NO. 43/R JT/2014 . A.Y. 2005-0 6 6 OPINION. AS FAR AS MERITS OF DISALLOWANCE U/S. 40(A )(IA) IS CONCERNED, WE FIND THAT LD. CIT(A) HAS NOTED THAT IN THE FIRST ROUND W HILE FRAMING THE ASSESSMENT A.O HAD CONSIDERED THAT THE ASSESSEES BOOKS WERE D ESTROYED IN FLOOD AND HE ACCORDINGLY ESTIMATED THE INCOME AT RS. 24 LACS. HE HAS FURTHER OBSERVED THAT WHEN BOOK RESULTS ARE REJECTED AND INCOME IS E STIMATED, PROVISIONS OF SECTION 40(A)(IA) ARE NOT APPLICABLE AND FOR THE AF ORESAID PROPOSITION, HE RELIED ON THE VARIOUS DECISIONS OF TRIBUNAL CITED I N HIS ORDER. BEFORE US, REVENUE HAS NOT PLACED ANY MATERIAL ON RECORD TO DE MONSTRATE ANY FALLACY IN THE FINDINGS OF LD. CIT(A). IN VIEW OF THESE FACTS , WE FIND NO REASON TO INTERFERE WITH THE ORDER OF LD. CIT(A) AND THUS THE GROUND OF REVENUE IS DISMISSED. 9. IN THE RESULT, THE APPEAL OF REVENUE IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 05- 01 - 201 6. SD/- SD/- (RAJPAL YADAV) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,R AJKOT