Shri Babu Bhima Humbal, RAJKOT-GUJARAT V. The Dy.Commr. of Income Tax, Gandhidham Circle, GANDHIDHAM

ITA 446/RJT/2016

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 6828 (ITAT-RAJKOT)
• Duration Of Justice: 1 year(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-12-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 19-12-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Presumptive income; Assessment record; Reason to believe; Reassessment proceedings
• Section: 143(3); 147; 148; 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH , RAJKOT BEFORE: SHRI S.S. GODARA, JUDICIAL MEMBER AND S H RI AMARJIT SINGH , ACCOUNTANT MEMBER [CONDUCTED THROUGH E - COURT AT AHMEDABAD] SHRI BABU BHIMA HUMBAL, GANDHIDHAM, PAN: AAIPH3457L (APPELLANT) VS THE DCIT, GANDHIDHARM CIRCLE, GANDHIDHAM (RESPONDENT) REVENUE B Y : S H RI ARVIND N. SONTAKKE , SR. D . R. ASSESSEE BY: SHRI KALPESH DOSHI, A.R. DATE OF HEARING : 2 0 - 1 1 - 2 017 DATE OF PRONOUNCEMENT : 22 - 12 - 2 017 / O RDER P ER : AMARJIT SINGH, ACCOUNTANT MEMBER : - THI S ASSESSEE S APPEAL FOR A.Y. 2010 - 11 , AR ISES FR OM ORDER OF THE CIT(A) - 3, RAJKOT DATED 08 - 11 - 2016 , IN PROCEEDINGS UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: - 1. THAT, THE LEARNED CIT(A) HAS WRONGLY CONFIRMED THE REOPENING OF ASSESSMENT U/S 148 OF THE INCOME TAX ACT, 1961. I T A NO . 446 / RJT /20 16 A SSESSMENT YEAR 2010 - 11 I.T.A NO. 446 /RJT /20 16 A.Y. 2010 - 11 PAGE NO SHRI BABU BHIMA HUMB AL VS. DCIT 2 2. THAT, THE LEARNED CIT(A) HAS WRONGLY CONFIRMED THE ADDITION OF RS. 7,19,447/ - ON ACCOUNTS O F SUPPRESSED FREIGHT INCOME. 3. THAT, THE LEARNED CIT(A) HAS WRONGLY CONFIRMED THE INITIATION O F PENALTY PROCEEDINGS IT'S 271(1 )(C) OF THE I T. ACT. 4. THAT, THE LEARNED CIT(A) HAS WRONGLY CONFIRMED THE CHARGING O F THE INTEREST U/S. 234A, 234B, 234C A ND 234D OF THE I. T. ACT. 5. THAT, THE FINDINGS OF THE LEARNED AO AND CIT (A) ARE NOT JUSTIFIED AND ARE BAD - IN - LAW. 3 . IN THIS CASE, RETURN OF INCOME DECLARING INCOME OF RS. 21 , 17 , 5 40/ - WAS FILED ON 15 TH OCTOBER, 2010. SUBSEQUENTLY , THE CASE W A S REO PENED U/S. 147 OF THE ACT BY IS SUING NOTICE U/S. 148 ON 28 TH AUGUST, 2014. COPY OF REASON RECORDED WAS SUPPLIED TO THE ASSESSEE. IT WAS APPEARING IN FORM NO. 16A THAT THE ASSESSEE HAS RECEIVED HITACHI FREIGHT INCOME AMOUNTING TO RS. 11,16,697/ - ON WHICH TDS OF RS.21,470 WAS DEDUCTED HOWEVER, THE ASSESSEE HAD SHOWN HITACHI FREIGHT INCOME OF RS.3,56,050 BUT CLAIMED FULL TDS OF RS.21 , 470. THE REFORE, THE ASSESSING OFFICER OBSERVED THAT THE DIFFERENCE OF RS. 7 , 61 , 647/ - WAS ESCAPED INCOME WHICH WAS NOT DISCLOSED B Y THE ASSESSSEE. IN REPLY TO THE SHOW CAUSED T HE ASSESSEE EXPLAINED THAT HE WAS ENGAGED IN THE BUSINESS OF SALT MANUFACTURING UNDER THE PROPRIETARY M/S DURGESH SALT INDUSTRIES AND WAS ALSO HAVING TRANSPORTATION INCOME WHICH WAS SHOWN UNDER PRESUMPTIVE TAX ATION U/S 44AE OF THE ACT . T HE ASSESSEE FAILED TO SATISFACTORILY EXPLAIN WITH SUPPORTING MATERIAL THAT HOW A PART OF FREIGHT INCOME FROM HITACHI FREIGHT INCOME WAS SHOWN U/S.44AE AS IN THE COMPUTATION OF INCOME THE ASSESSEE HAS SHOWN INCOME U/S 44A OF RS.42000/ - ONLY. I.T.A NO. 446 /RJT /20 16 A.Y. 2010 - 11 PAGE NO SHRI BABU BHIMA HUMB AL VS. DCIT 3 CONSEQUENTLY , THE ASSESSING OFFICER HAS MADE AN ADDITION OF RS. 7 , 19 , 447/ - (RS.7,61,647 - RS.4,20,00/ - ) TO THE TOTAL INCOME OF THE ASSESSEE . 4 . AGGRIEVE D ASSESSEE FILED APPEAL BEFORE T H E LD. CIT(A). THE LD. CIT(A) HAS SUSTAINED THE ADDITION MADE BY THE ASSESSING OFFICER . THE RELEVANT PART OF THE DECISION OF THE LD. CIT(A) IS REPRODUCED AS UNDER: - 5.3 IN THE 2 ND GROUNDS OF APPEAL, THE APPELLANT HAS MADE OBJECTION TO THE ADDITION OF RS. 7,19,447/ - ON ACCOUNTS OF SUPPRESSED HITACHI FREIGHT IN COME MADE BY A.O. THE APPELLANT'S SUBMISSION IS THAT HE IS ENGAGED IN THE BUSINESS OF SALT MANUFACTURING UNDER A TRADE NAME M/S DURGESH SALT INDUSTRIES AND ALSO HAVING TRANSPORTATION INCOME SHOWN UNDER PRESUMPTIVE TAXATION U/S 44AE OF THE I.T. ACT. HE HAS CLARIFIED THAT HE OWNS TWO VEHICLES I) TATA HITACHI UNDER THE PROPRIETARY BUSINESS M/S DURGESH SALT INDUSTRIES AND II) TRUCK IN PERSONAL CAPACITY, INCOME (RS. 42000/ - ) DERIVED FROM WHICH HAS BEEN OFFERED U/S 44AE OF THE I.T. ACT. HE HAS ALSO STATED THAT TA TA HITACHI VEHICLE IS USED FOR FACTORY SITE FOR LOADING & HEAP MAKING OF RAW MATERIAL AND OFTEN IT IS GIVEN ON HIRE WHEN IT IS NOT IN USE AND HE EARNED FREIGHT INCOME FROM IT. 5.4 IT IS NOTED THAT AS PER THE FORM 26AS, A SUM OF RS. 21,470/ - HAS BEEN DEDU CTED BY 5 DIFFERENT DEDUCTORS AGAINST THE TOTAL FREIGHT INCOME OF RS. 11,16,697/ - OF THE APPELLANT. HOWEVER, HERE THE APPELLANT'S CONTENTION IS THAT OUT OF THIS AMOUNT RS. 2,89,000/ - IS FROM TATA HITACHI FREIGHT INCOME WHICH BELONGS TO HIS PROPRIETARY BUSI NESS I.E. M/S DURGESH SALT WORK AND THE REMAINING CHUNK OF MONEY I.E. RS. 8,27,697/ - HAS BEEN TRUCK FREIGHT INCOME UNDER HIS PERSONAL CAPACITY. THE SAID INCOME OF RS. 8,27,697/ - HAS BEEN OFFERED BY THE APPELLANT UNDER THE PRESUMPTIVE TAXATION U/S 44AE OF T HE ACT. THE APPELLANT HAS FURNISHED BILLS/VOUCHERS, CLAIMED TO BE AGAINST THE TRUCK FREIGHT INCOME AND THE SAME HAVE BEEN VERIFIED. HOWEVER, THE SAID BILLS ARE NOT BEARING ANY IDENTIFICATION OF VEHICLE USED. IN OTHER WORDS THERE IS NOTHING IN THESE BILLS TO VERIFY THE CLAIM OF THE APPELLANT THAT THESE BILLS ARE AGAINST THE USE OF PERSONAL TRUCK AND THAT THE SAID INCOME WAS NOT PART OF HITACHI FREIGHT INCOME ON WHICH ACTUAL TDS HAS BEEN DEDUCTED. 5.5 IT IS ALSO NOTEWORTHY HERE THAT AS PER FORM 26AS AN AMOUNT OF RS. 3, 33,876/ - (2,89, 000/ - + 44,876/ - ) WAS RECEIVED/EARNED FROM SHREE RA M SALT WORKS AS FREIGHT IN COME. HOWEVER, THE APPELLANT'S SUBMISSI ON THAT THE SUM OF RS. 2,89,000/ - WAS EARNED AS FREIGHT INCOME UNDER THE BUSINESS & PROFESSION AND T HE REST O F AMOUNT OF RS. 44,876/ - WAS EARNED USING PERSONAL TRUCK, IS NOT IN SYNC WITH THE TDS CERTIFICATE. THE APPELLANT HAS NOT BEEN ABLE TO CONTRADICT THE EVIDENT FACTS EMERGING FROM THE TDS CERTIFICATES THAT APPELLANT'S ENTIRE FREIGHT I.T.A NO. 446 /RJT /20 16 A.Y. 2010 - 11 PAGE NO SHRI BABU BHIMA HUMB AL VS. DCIT 4 INCOME OF RS. 11,16,697/ - IS INDISTINGUISHABLE SO FAR AS ORIGINATING VEHICLE IS CONCERNED. 5.6 ON THE WHOLE I FIND NO FAULT IN THE A.O.'S CONCLUSION THAT THE APPELLANT EARNED HITACHI FREIGHT INCO ME TO THE TUNE OF RS. 11,16,647/ - BUT HAD SHOWN ONLY RS. 3,55,050/ - IN HIS BOOKS OF ACC OUNT AND TRANSFERRED THE R EMAINING INCOME OF RS. 7,19,447/ - UNDER THE TRUCK FREIGHT INCOME IN ORDER TO TAKE BENEFIT OF L OW TAX REGIME OF SECTION 44AE. 5.7 IN VIEW OF THE ABOVE DISCUSSION, I HOLD THAT THE A.O. WAS RIGHT IN MAKING ADDITION OF RS. 7,19,447/ - AND THEREFORE, THE SAME IS HEREBY CONFIRMED. 5. DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE US, THE LD. COUNSEL HAS FURNISHED PAPER BOOK CONTAINING DETAIL OF SUBMISSION MADE, COPY OF AUDIT REPORT AND COPY OF JUDICIAL PRONOUNCEMENTS ETC . THE LD . COUNSEL CONTENDED THAT ASSESSEE HAS EARNED AN AMOUNT OF RS. 3 ,5 6 , 050/ - FROM HITACHI FREIGHT AND T HE BALANCE AMOUNT WAS EARNED FROM TRUCK TRANSPORTATION MAINLY U/S. 44AE OF THE ACT . T HERE WAS A GROSS INCOME WHICH WAS N OT TALLIED WITH THE FORM NO. 26AS. ON THE OTHER HAND, LD. DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDER OF THE LD. CIT(A). 6 . WE HAVE HEARD BOTH THE SIDES AND PERUSED THE MATERIAL ON RECORD CAREFULLY. WE HAVE NOTICED THAT T HE ASSESSEE HAS EARNED HITACHI FREIGHT INCOME OF RS. 11 , 16 , 697 / - ON WHICH TDS OF RS. 21470/ - WAS DEDUCTED AS REFLECTED IN THE FORM NO. 16A .HOWEVER, THE ASSESSEE HAS SHOWN FREIGHT INCOME OF RS . 3,5 6 ,050/ - AFTER CLAIM ING FULL AMOUNT OF TDS OF RS . 21470/ - . W E OBSERVE THE CLAIM OF THE ASSESSEE THAT OUT OF TOTAL FREI GHT INCOME OF RS. 11 , 16 ,6 9 7/ - AN AMOUNT OF RS. 2,89,000/ - PERTAIN TO HIS PROPRIETARY CONCERN M/S. DURGESH SAL T WORK A N D THE REMAINING AMOUNT OF RS. 8 , 27 , 697/ - PERTAIN TO TRUCK FREIGHT INCOME SHOWN UNDER THE PRESUMPTIVE TAXATION I.T.A NO. 446 /RJT /20 16 A.Y. 2010 - 11 PAGE NO SHRI BABU BHIMA HUMB AL VS. DCIT 5 U/S 44AE THE ACT WAS NOT SUBSTANTIATED WITH RELEVANT EVIDENCES AND MATERIAL . IN VIEW OF ABOVE FACTS AND CIRCUMSTANCES WE DO NOT FIND ANY ERROR IN THE DECISION OF LD. CIT(A) . THEREFORE, THE APPEAL OF THE ASSESSSE IS DISMISSED . 7. REGARDING THE GROUND OF APPEAL OF THE ASSESS EE FOR VALIDITY OF REOPENING O F ASSESSMENT U/S 148 OF THE ACT . THE LD.CIT(A) HAS REJECTED THE APPEAL OF THE ASSESSEE BY OBSERVING AS UNDER: - 5.0 DECISION 5.1 THE FACT OF THE MATTER IN THIS CASE IS THAT THE A.O. REOPENED THE CASE U/S 147 OF THE ACT S INCE HE WAS OF THE VIEW THAT THE APPELLANT HAD EARNED HITACHI FREIGHT INCOME OF RS. 11,16,697/ - (TDS OF RS. 21,470/ - AS PER FORM 16A). WHEREAS DURING ORIGINAL ASSESSMENT PROCEEDINGS AS PER PROFIT & LOSS ACCOUNT, THE APPELLANT HAD SHOWN HITACHI FREIGHT INCO ME OF RS. 3,56,050/ - ONLY (AND CLAIMED TDS OF RS. 21,470/ - ). IMPLICITLY THE TDS OF RS 21,470/ - WAS DEDUCTED AGAINST THE ENTIRE FREIGHT INCOME OF RS. 11,16,697/ - WHEREAS APPELLANT HAD DECLARED FREIGHT INCOMEX OF RS.3,56,050/ - . THUS THE DIFFERENCE OF RS. 7,6 1,647/ - WAS TREATED HAVING BEEN ESCAPED FROM THE ASSESSMENT. THE APPELLANT MADE A WRITTEN SUBMISSION DURING THE APPELLATE PROCEEDINGS IN WHICH HE DISPUTED THIS CONCLUSION OF THE A.O BY GIVING EXPLANATIONS REGARDING THIS. THE APPELLANT HAS ALSO CONTENDED TH AT REOPENING OF THE ASSESSMENT WAS BAD HI LAW AND RAISED HIS OBJECTIONS. 5.2 AS REGARDS THE APPELLANT'S OBJECTION TO REOPENING OF THE ASSESSMENT U/S 147 OF THE I.T. ACT, AS CONTENDED IN THE FIRST GROUND OF APPEAL, IT IS NOTED THAT THE ASSESSING OFFICER HAS RECORDED THE FOLLOWING REASONS FOR RE - OPENING OF THE CASE: 'ON GOING THROUGH THE ASSESSMENT RECORDS, IT WAS NOTICED THAT THE ASSESSEE HAS RECEIVED HITACHI FREIGHT INCOME AS PE R FORM NO - 16A AMOUNTING TO RS.11 ,16,697/ - AND TDS OF RS.21,470/ - THEREON, WHEREAS PER PROFIT AND LOSS, THE ASSESSEE HAS SHOWN HITACHI FREIGHT INCOME OFRS.3,56,050/ - AND CLAIMED TDS OF RS.21,470/ - . THUS THERE IS DIFFERENCE OF RS,1,61,647/ - IS BEING ESCAPED IN THE REGULAR SCRUTINY. T AS SUCH I HAVE REASON TO BELIEVE THAT INCOME CHARGEABL E TO TAX HAS ESCAPED ASSESSMENT FOR AY 2010 - 11 AND THIS IS FIT CASE FOR REOPENING OF THE ASSESSMENT WITHIN THE MEANING OF SECTION 147 OF THE ACT. ' AFTER EXAMINING THE REASONS RECORDED AS ABOVE, THE SUBMISSION/OBJECTION OF THE APPELLANT, THE DOCUMENTS AVAI LABLE AND THE CASE AS WELL, IT IS NOTED HERE THAT MAJORITY OF THE REASONS/OBJECTIONS SUBMITTED BY THE A.R. OF THE APPELLANT IN HIS SUBMISSION AGAINST THE REOPENING OF THE CASE ARE GENERAL IN NATURE. HOWEVER, THE FOLLOWING POINTS OUT OF ALL ARE RELEVANT: '1 0. THE LD. AO HAS NOT DISPOSED OF THE REASONS AND HAS NOT PASSED THE ORDER REJECTING OBJECTION RAISED AND THEREFORE THE REOPENING IS BAD - IN - LAW. I.T.A NO. 446 /RJT /20 16 A.Y. 2010 - 11 PAGE NO SHRI BABU BHIMA HUMB AL VS. DCIT 6 12. THE LD. AO HAS NOT FOLLOWED THE PROCEDURE OF REASSESSMENT LAID DOWN BY THE APEX COURT IN CASE OF GKN DRIVE SHAFT (INDIA) LTD. VS. ITO 259 ITR 19 THEREFORE, THE REOPENING IS BAD - IN - LAW. 13. IT IS RESPECTFULLY STATED THAT THE REOPENING OF ASSESSMENT WAS UNLAWFUL ACT, AS THERE WAS NO 'REASON TO BELIEVE' THAT THE INCOME HAS BEEN ESCAPED FROM ASSESSMENT BY THE APPEL LANT OR ON THE FAULT OF THE APPELLANT. 14. FOR A VALID NOTICE U/S. 148, THERE MUST BE AN ESCAPED INCOME. ALSO THE CONCLUSION THAT INCOME HAD ESCAPED ASSESSMENT SHOULD BE BASED ON SPECIFIC INFORMATION OR MATERIAL ON RECORD. IF THERE IS NO DEFINITE OR SPECIF IC MATERIAL, INITIATION OF REASSESSMENT PROCEEDINGS WOULD BE INVALID. 23. THUS FROM THE ABOVE IT CAN BE SEEN THAT THE ORIGINAL AS SESSMENT WAS COMPLETED AND THE LD. A O HAS INITIATED ASSESSMENT PROCEEDINGS U/S 148 WITHOUT ANY NEW MATERIAL OR EVIDENCES ON REC ORD. THE VERY BASE FOR INITIATING PROCEEDING U/S. 148 WAS MERELY A OF OPINION.' AS FAR AS OBJECTIONS/SUBMISSION IN POINT NO. 10 & 12 IS CONCERNED, IT IS NOTEWORTHY THAT THE A.O. AFTER RECORDING THE REASONS FOR REOPENING THE ASSESSMENT, ISSUED NOTICE U/S 14 8, PROVIDED THE REASONS RECORDED FOR REOPENING THE ASSESSMENT TO THE APPELLANT AS WELL AS GAVE A CAREFUL CONSIDERATION TO THE OBJECTION RAISED AND THEN DISPOSED OF THE OBJECTIONS RAISED FOR REOPENING THE ASSESSMENT VIDE HIS LETTER DATED 30.3.2015. THEREFOR E, THE A.O. HAS DULY FOLLOWED THE PROCEDURE LAID. AS REGARDS THE OBJECTION IN POINT NO. 13 THAT THERE WAS NO 'REASON TO BELIEVE' THAT THE INCOME HAS BEEN ESCAPED FROM ASSESSMENT, IT IS SEEN AND NOTED THAT THE AO HAD STRONG REASONS TO BELIEVE ABOUT THE ESCA PEMENT OF INCOME WHEN HE NOTED IN FORM 16A, MUCH HIGHER SHOWING FREIGHT INCOME OF RS. 11,16,697/ - (TDS OF RS. 21,470/ - ) AGAINST THE RETURNED INCOME OF RS. 3,56,050/ - AND CLAIM OF TDS OF RS. 21,470/ - . APPARENTLY, THE DIFFERENCE OF RS. 7,61,647/ - WAS BEING E SCAPED FROM THE I TAXATION FROM THE INFORMATION AVAILABLE TO THE AO. IN RESPECT OF THE OBJECTIONS IN POINT NO.14 & 23, IT IS CONCLUDED THAT THE REVELATION OF THE DIFFERENCE AMOUNT OR THE ESCAPED INCOME IN THE FORM 16A WAS [ENOUGH FOR THE A.O. TO RE - OPEN TH E ASSESSMENT. IN OTHER WORDS, HE HAD SUFFICIENT L AND SPECIFIC MATERIAL WITH HIM FOR THE REQUIRED A CTION. THIS CAN'T BE TERMED AS C HANGE OF OPINION AT ALL. SUMMARILY, IT CAN BE HELD THAT THE A.O. HAS RIGHTLY REOPENED THE CASE. HE WAS JUSTIFIED IN HIS ACTION AND HAD VALID REASONS FOR THE SAME. THE CONTENTIONS RAISED BY AGAINST THE REOPENING OF THE ASSESSMENT ARE, THEREFORE, HEREBY REJECTED. THE FIR ST GROUND OF APPEAL IS DISMISSED. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD . WE OBSERVED THAT AS REFLECTED IN THE F ORM NO.16A THE ASSESSEE HAD RECEIVED HITACHI FREIGHT INCOME OF RS.11,16,697 ON WHICH TDS OF RS,21470 WAS DEDUCTED .HOWEVER, THE ASSESSEE HAD SHOWN ONLY HITACHI FREIGHT INCOME OF RS.3,56,050/ - AND CLAIMED FULL TDS O F RS.21,470/ . THEREFORE, THE ASSESSING OFFICER OBSERVED THERE I.T.A NO. 446 /RJT /20 16 A.Y. 2010 - 11 PAGE NO SHRI BABU BHIMA HUMB AL VS. DCIT 7 WAS UNDER REPORTING OF INCOME TO THE EXTENT OF RS.7,61,647 FROM HITACHI FREIGHT . WE OBSERVED THERE WAS NO MATERIAL ON RECORD WHICH COULD HAVE CLARIFIED THE IMPUGNED DISCREPANCY OF INCORRECT R EPORTING OF HITACHI FREIGHT INCOME. THEREFORE, WE ARE OF THE VIEW THAT T HE ASSESSING OFFICER WAS HAVING REASONS TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR T HE YEAR UNDER CONSIDERATION. A FTER CONSIDERING THE FACTS AND CIRCUMSTANCE S AS ELABORATED SUPRA WE JUSTIFY THE FINDINGS OF THE LD.CIT(A) THAT THE ASSESSING OFFICER HAS REOPENED THE ASSESSMENT WITH VALID REASON. THEREFORE, THE APPEAL OF THE ASSESSEE ON THIS ISSUE IS DISMISSED. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMIS SED . ORDER PR ONOUNCED IN THE OPEN C OUR T ON 22 - 12 - 201 7 SD/ - SD/ - (S.S. GODARA ) ( AMARJIT SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD : DATED 22 /12 /201 7 / COPY OF ORD ER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, RAJKOT