ACIT, Patiala V. M/s H.K. Associates, Patiala

ITA 500/CHANDI/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 68484 (ITAT-CHANDIGARH)
• Duration Of Justice: 4 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-09-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 03-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Assessee Lawyers: K P BAJAJ
• Keywords: Reopening of assessment; Difference of opinion; Change of opinion
• Section: 143(3); 37(1); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A, CHANDIGARH BEFORE SHRI T.R.SOOD, ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO.500 /CHD/2013 (ASSESSMENT YEAR : 2005-06) THE A.C.I.T., VS. M/S H.K.ASSOCIATES, CIRCLE I-KANDHARI VILLA, PATIALA. BHUPINDERA ROAD, PATIALA. PAN: AACHF3275N (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI MANJIT SINGH, DR RESPONDENT BY : SHRI K.P.BAJAJ DATE OF HEARING : 06.08.2013 DATE OF PRONOUNCEMENT : 20.092013 O R D E R PER SUSHMA CHOWLA, J.M. : THE APPEAL FILED BY THE REVENUE IS AGAINST THE ORDE R OF THE COMMISSIONER OF INCOME-TAX (APPEALS), PATIALA DATED 26.02.2013 RELATING TO ASSESSMENT YEAR 2005-06 AGAINST THE ORD ER PASSED UNDER SECTION 143(3) /147OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 2. THE GROUNDS OF APPEAL RAISED BY THE REVENUE REA D AS UNDER: (I) IN THE FACTS AND CIRCUMSTANCES OF THE CASE, LD . CIT(A) HAS ERRED IN FOLLOWING THE HON'BLE ITAT'S ORDER DATED 12.12.2 011 IN ITA NOS.265-266/CHD/2011 FOR A.YS.2003-04 & 2004-05 IN HOLDING 'THAT THIS IS A CASE OF CHANGE OF OPINION' LOSING S IGHT OF THE FACT THAT NO OPINION WHATSOEVER HAD BEEN FORMED BY THE AO ON THIS ISSUE DURING THE ORIGINAL ASSESSMENT PROCEE DINGS AND SO THE QUESTION OF CHANGE OF OPINION ON THIS IS SUE DOES NOT ARISE. (II) IN THE FACTS AND CIRCUMSTANCES OF THE CASE, L D. CIT(A) HAS ERRED IN FOLLOWING THE HON'BLE ITAT'S ORDER DATED 12.12.2011 IN ITA NOS.265-266/CHD/2011 FOR A.YS.200 3-04 & 2004-05 FOR QUASHING THE NOTICE ISSUED U/S 148 OF THE INCOME 2 TAX ACT PARTICULARLY WHEN THE DEPARTMENT IS ALREADY IN APPEAL ON THE ISSUE BEFORE HON'BLE HIGH COURT IN ASSESSEE'S O WN CASE FOR A.YS.2003-04 & 2004-05. (III) IN THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS ERRED IN NOT SUSTAINING THE DISALLOWANCE OF RS.21,01,305/- M ADE BY THE AO ON ACCOUNT OF EXPENSES, WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE HAD CLAIMED THE SAME IN CONTRAVENTION OF CLAUSE 6 OF THE AGREEMENT WITH KANDHARI BEVERAGES PVT. LTD. AND HAD, THUS, FAILED TO BOOK THE SAME IN ACCORDANCE WITH TH E MERCANTILE SYSTEM OF ACCOUNTING. (IV) IT IS PRAYED THAT THE ORDER OF LD. CIT(A) BE SET ASIDE AND THAT OF THE AO RESTORED. (V) THE APPELLANT CRAVES LEAVE TO ADD OR AMEND ANY GROUNDS OF APPEAL BEFORE THE APPEAL IS HEARD AND FINALLY DISPO SED OF. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ORIGINA L ASSESSMENT IN THE CASE WAS COMPLETED UNDER SECTION 143(3) OF THE ACT ON TOTAL INCOME OF RS.26,64,967/- AS AGAINST RETURNED LOSS OF RS.30,95 ,733/-. SUBSEQUENTLY, NOTICE UNDER SECTION 148 OF THE ACT WAS ISSUED TO T HE ASSESSEE FOR REOPENING ASSESSMENT ON THE GROUND THAT THE ASSESSE E HAD CLAIMED CERTAIN EXPENSES WHICH WERE TO BE BORNE BY THE PRINCIPAL M/ S KANDHARI BEVERAGES PVT. LTD. AND HENCE THE SAME WERE NOT ALL OWABLE IN THE HANDS OF THE ASSESSEE. DURING THE COURSE OF ASSESSMENT P ROCEEDINGS THE ASSESSEE FURNISHED DETAILS OF EXPENSES IN RESPECT O F SALARY, OFFICE RENT, ELECTRICITY AND ADVERTISEMENT EXPENSES. THE ASSESS ING OFFICER WAS OF THE VIEW THAT THE SAID EXPENSES WERE REIMBURSABLE A S PER THE AGREEMENT WITH THE PRINCIPAL I.E. M/S KANDHARI BEVERAGES PVT. LTD. AND CONSEQUENTLY THE SAME WERE DISALLOWED. 4. THE CIT (APPEALS) DELETED THE SAID ADDITION IN V IEW OF SIMILAR ISSUE BEING ADJUDICATED BY THE CHANDIGARH BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE RELATING TO ASSESSMENT YEARS 20 03-04 AND 2004-05 IN ITA NOS.265 & 266/CHD/2011 VIDE ORDER DATED 13.12.2 011. THE TRIBUNAL HAD QUASHED THE ASSESSMENT ON THE GROUND OF CHANGE OF OPINION WHILE RECORDING REASONS FOR REOPENING AND ISSUING NOTICE UNDER SECTION 148 OF 3 THE ACT. FURTHER THE TRIBUNAL HAD ALSO ALLOWED THE APPEAL OF THE ASSESSEE AND DISMISSED THE APPEAL OF THE REVENUE IN ITA NO.398/CHD/2011 AND C.O.NO.54/CHD/2011 RELATING TO ASSESSMENT YEAR 2006-07 VIDE ORDER DATED 29.11.2012. 5. THE LEARNED A.R. FOR THE ASSESSEE POINTED OUT TH AT THE ISSUE IS SQUARELY COVERED BY THE EARLIER ORDERS OF THE TRIBU NAL RELATING TO ASSESSMENT YEARS 2003-04, 2004-05 AND 2006-07. 6. THE LEARNED D.R. FOR THE REVENUE PLACED RELIANCE ON THE ORDER OF THE ASSESSING OFFICER. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE ARISING IN THE PRESENT APPEAL IS AGAINST THE REOPENING OF ASSESSMENT UNDER SECTION 147/148 OF THE ACT. THE ORIGINAL ASS ESSMENT IN THE CASE WAS COMPLETED UNDER SECTION 143(3) OF THE ACT UNDER WHICH THE INCOME OF THE ASSESSEE WAS ASSESSED AFTER MAKING THE FOLLO WING ADDITIONS: (I) ADDITION ON A/C OF ADVANCE INCOME RECEIVED DURING F.Y. 2004-05 RS.29,27,600/- (II) ADDITION ON A/C OF INADMISSIBLE EXPENSES U/S 37(1) RS.26,41,100/- (III) DISALLOWANCE ON A/C OF SALARY 40(2)(B) RS.1,92,000/- TOTAL ADDITION RS.57,60,700/- 8. AS AGAINST THE RETURN OF INCOME DECLARING LOSS O F RS.30,95,733/- FILED BY THE ASSESSEE, THE ASSESSMENT WAS COMPLETED ON TOTAL INCOME OF RS.26,64,967/-. AFTER THE COMPLETION OF THE ASSESS MENT THE ASSESSING OFFICER RECORDED REASONS FOR REOPENING THE ASSESSME NT IN VIEW OF CERTAIN EXPENSES BEING CLAIMED BY THE ASSESSEE, WHICH AS PE R THE ASSESSING OFFICER, WERE REIMBURSED BY THE PRINCIPAL IN VIEW O F THE AGREEMENT BETWEEN THE PARTIES. SIMILAR ADJUSTMENT WAS PROPO SED TO BE MADE IN THE 4 EARLIER YEARS BY OPENING OF ASSESSMENT UNDER SECTIO N 147/148 OF THE ACT BY RECORDING REASONS FOR REOPENING THE ASSESSMENT A LREADY MADE IN THE HANDS OF THE ASSESSEE UNDER SECTION 143(3) OF THE A CT. THE TRIBUNAL (SUPRA) IN ASSESSMENT YEARS 2003-04 AND 2004-05 HEL D THE REOPENING OF THE ASSESSMENT TO BE CASE OF CHANGE OF OPINION AND CONSEQUENTLY THE RE- ASSESSMENT WAS HELD TO BE VOID. FURTHER THE TRIBU NAL IN ASSESSMENT YEAR 2006-07 IN THE CROSS OBJECTION FILED BY THE ASSESSE E (SUPRA) DECIDED THE ISSUE OF ALLOWABILITY OF THE EXPENDITURE OF SALARY, OFFICE RENT AND ADVERTISEMENT EXPENSES AS ALLOWABLE IN THE HANDS OF THE ASSESSEE. IN THE TOTALITY OF THE ABOVE SAID FACTS AND CIRCUMSTANCES OF THE CASE, WE UPHOLD THE ORDER OF THE CIT (APPEALS) IN HOLDING THAT THE NOTICE ISSUED UNDER SECTION 148 OF THE ACT IS TO BE QUASHED AS THE REAS ONS RECORDED BY THE ASSESSING OFFICER WHILE ISSUING THE SAID NOTICE UND ER SECTION 148 OF THE ACT AMOUNTS TO CHANGE OF OPINION. IN VIEW THEREOF, THE ASSESSMENT FRAMED UNDER SECTION 143(3) R.W.S.148 OF THE ACT ME RITS TO BE QUASHED. WE ARE IN CONFORMITY WITH THE ORDER OF THE CIT (APP EALS) IN THIS REGARD AND UPHOLDING THE SAME WE DISMISS THE GROUNDS OF AP PEAL RAISED BY THE REVENUE. 9. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 20 TH DAY OF SEPTEMBER, 2013. SD/- SD/- (T.R.SOOD) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 20 TH SEPTEMBER, 2013 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH 5