M/s Rajkamal Poultry & Cattle Feeds (P) Ltd., Visakhapatnam V. The ACIT, Circle-4(1), Visakhapatnam

ITA 493/VIZ/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 7064 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 4 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-03-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2005-2006
• Appeal Filed On: 15-10-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G S S GOPINATH
• Keywords: TDS; Set aside
• Section: 40(a)(ia); 143(1); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI BR BASKARAN, ACCOUNTANT MEMBER ITA NO.493/VIZAG/2009 ASSESSMENT YEAR : 2005-06 M/S. RAJKAMAL POULTRY & CATTLE FEEDS (P) LTD. ANAKAPALLE ACIT, CIRCLE-4(1) VISAKHAPATNAM (APPELLANT) VS. (RESPONDENT) PAN NO.AACCR 9511L APPELLANT BY: SHRI C. SUBRAHMANYAM, CA RESPONDENT BY: SHRI G.S.S. GOPINATH, DR ORDER PER SHRI S.K. YADAV, JUDICIAL MEMBER:- THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A) ON VARIOUS GROUNDS WHICH ARE AS UNDER:- 1. THAT UNDER THE FACTS AND CIRCUMSTANCES AND IN PROVI SIONS OF LAW THE NOTICE ISSUED U/S 148 OF THE I.T. ACT AND COMPLETIN G THE ASSESSMENT THERETO IS NOT CORRECT. 2. THE LD. ASSESSING OFFICER HAVING ISSUED NOTICE U/S 148 FOR THE ALLEGED VIOLATION OF PROVISIONS OF SECTION 40(A)(IA) OF THE I.T. ACT HAS NO JURISDICTION TO MAKE ADDITION BY DISALLOWING CERTAI N EXPENDITURE ON MERE ASSUMPTIONS AND PRESUMPTIONS, THIS IS ESPECIAL LY SO WHEN NO ADDITION WAS MADE FOR WHICH THE ASSESSMENT WAS REOP ENED. 3. THE LD. ASSESSING OFFICER HAVING REOPENED THE ASSES SMENT TO ASSESS A PARTICULAR INCOME IS NOT CORRECT IN BRINGING TO TAX SOME OTHER ISSUES WITHOUT ASSUMING JURISDICTION TO ASSESS SUCH INCOME . 4. THE OBSERVATIONS AND CONCLUSIONS REACHED BY THE AO AND CONFIRMED BY THE CIT(A) WHILE DISALLOWING THE EXPENDITURE TOWARDS RENTS ARE FACTUALLY INCORRECT AND PURELY ON MERE ASSUMPTIONS AND PRESUMPTIONS. 5. THE LD. CIT(A) AND AS WELL AS ASSESSING OFFICER FAI LED TO UNDERSTAND THAT THE EXPENDITURE TOWARDS RENTS IS NORMAL BUSINE SS EXPENDITURE WHICH THE ASSESSEE HAS BEEN INCURRING YEAR AFTER YE AR IS SUPPORTED BY EVIDENCES WHICH DOES NOT CALL FOR DISALLOWANCE. 6. FOR THESE AND OTHER REASONS THAT ARE TO BE URGED AT THE TIME OF HEARING, THE APPELLANT PRAYS THAT THE ADDITIONS MAD E BY THE AO AND SUSTAINED BY THE CIT(A) ARE AGAINST FACTS OF THE CA SE AND PROVISIONS OF LAW WHICH NEEDS TO BE DELETED IN THE INTEREST OF JU STICE. 2 2. THE ASSESSEE HAS CHALLENGED THE RE-OPENING OF TH E ASSESSMENT U/S 147 OF THE I.T. ACT ON THE GROUND THAT THE ASSESSME NT WAS RE-OPENED ON MERE SURMISE & SUSPICION AS THERE WAS NO REASONABLE BELIEF AT THE DISPOSAL OF THE A.O. THAT INCOME HAS ESCAPED THE ASSESSMENT. I T WAS ALSO CONTENDED THAT THE ASSESSMENT WAS RE-OPENED ONLY FOR THE REAS ONS THAT TDS WAS NOT MADE. IT WAS ALSO CONTENDED THAT WHILE FINALIZING THE ASSESSMENT, THE ADDITIONS WAS MADE FOR REASONS OTHER THAN THOSE WHA T HAVE BEEN RECORDED WHILE ISSUING NOTICE U/S 148 OF THE I.T. ACT. AS S UCH, THE RE-OPENING IS BAD IN LAW. THESE CONTENTIONS OF THE ASSESSEE WERE EXAMIN ED BY THE CIT(A) IN THE LIGHT OF JUDGEMENT OF THE APEX COURT IN THE CASE OF CIT VS. SUN ENGINEERING WORKS PVT. LTD., 198 ITR 297 AND THE JUDGEMENT OF B OMBAY HIGH COURT IN THE CASE OF DR. AMINS PATHOLOGY LABORATORY VS. JCIT RE PORTED IN 252 ITR 673 AND FINALLY CONFIRMED THE VALIDITY OF RE-OPENING OF THE ASSESSMENT. SIMILAR ARGUMENTS WERE RAISED BEFORE US AND WE HAVE CAREFUL LY EXAMINED THE FACTS OF THE CASE AND WE FIND THAT ORIGINAL ASSESSMENT WAS C OMPLETED U/S 143(1) OF THE I.T. ACT AND THEREAFTER THE ASSESSING OFFICER H AS NOTICED THAT TDS WAS NOT DEDUCTED ON CERTAIN PAYMENTS. WE HAVE ALSO EXAMINE D THE JUDGEMENT OF THE APEX COURT IN THE CASE OF ACIT VS. RAJESH JHAVERI S TOCK BROKERS PVT. LTD. 291 ITR 500 (SC) AND WE ARE OF THE VIEW THAT IF ORIGINA L ASSESSMENT IS FRAMED U/S 143(1) OF THE ACT, THERE IS NO PROPER APPLICATION O F MIND OF THE ASSESSING OFFICER ON DIFFERENT ISSUES/CLAIMS RAISED IN THE BA LANCE SHEET FILED ALONG WITH THE RETURN OF INCOME. THEREFORE, IF ANY FACTS RELA TING TO THE ESCAPEMENT OF INCOME IS BROUGHT TO THE NOTICE OF THE ASSESSING OF FICER AND HE FORMS A BELIEF THAT INCOME HAS ESCAPED ASSESSMENT, THE RE-OPENING OF ASSESSMENT IS VALID. IN THE INSTANT CASE, THERE ARE SUFFICIENT MATERIAL WITH THE ASSESSING OFFICER TO FORM A BELIEF WITH REGARD TO THE ESCAPEMENT OF INCO ME. WE THEREFORE, FIND NO INFIRMITY IN THE RE-OPENING OF THE ASSESSMENT. ACCORDINGLY, WE CONFIRM THE SAME. 3. SO FAR AS ISSUE ON MERIT I.E. WITH REGARD TO THE DISALLOWANCE OF PARTICULAR CLAIM ON ACCOUNT OF NON-DEDUCTION OF TDS , WE ARE OF THE VIEW THAT BEFORE THE CIT(A), ASSESSEE HAS PLACED SOME ADDITIO NAL EVIDENCE WHICH WAS 3 NOT TAKEN INTO ACCOUNT BY THE CIT(A). SINCE THE IS SUES ON MERIT WERE NOT PROPERLY EXAMINED BY THE LOWER AUTHORITIES IN THE L IGHT OF RELEVANT EVIDENCE PLACED BEFORE THE CIT(A), WE ARE OF THE VIEW THAT T HIS ISSUE REQUIRES A FRESH ADJUDICATION BY THE ASSESSING OFFICER. WE THEREFOR E SET ASIDE THE ORDER OF THE CIT(A) AND RESTORE THE MATTER TO THE FILE OF THE A. O. WITH DIRECTION TO ADJUDICATE THE ISSUE AFRESH AND AFFORD AN OPPORTUNI TY OF BEING HEARD TO THE ASSESSEE IN THE LIGHT OF EVIDENCE FILED BY THE ASSE SSEES BEFORE THE CIT(A). 4. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 04.03.2010 SD/- SD/- (BR BASKARAN) (SUNIL KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER VG/SPS VISAKHAPATNAM, DATED 04 TH MARCH, 2010 COPY TO 1 THE ACIT, CIRCLE-4(1), VISAKHAPATNAM 2 M/S. RAJKAMAL POULTRY & CATTLE FEEDS (P) LTD., C/ O SRI C. SUBRAHMANYAM, CHARTERED ACCOUNTANT, 102, LAKSHMI APARTMENTS, FACO R LAYOUT, WALTAIR UPLANDS, VISAKHAPATNAM-530 003. 3 THE CIT-2, VISAKHAPATNAM 4 THE CIT(A), VISAKHAPATNAM 5 THE DR, ITAT, VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM