Income Tax Officer-1(5), Lucknow V. M/s Azad Tobacco Factory Pvt. Ltd., Lucknow

ITA 551/LKW/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 100412 (ITAT-LUCKNOW)
• Duration Of Justice: 1 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-10-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 11-08-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B P YADAV COST ACCOUNTANT
• Keywords: Depreciation; Reason to believe
• Section: 194C; 147; 148

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.551/LKW/2015 ASSESSMENT YEAR 2007-08 M/S AZAD TOBACCO, FACTORY PVT. LTD. NADAN MAHAL ROAD, LUCKNOW PAN AACCA 0721 H VS INCOME TAX OFFICER-1(5), AYAKAR BHAWAN, 5- ASHOK MARG, LUCKNOW (RESPONDENT) (APPELLANT) S MT . SWATI RATNA, DR APPELLANT BY S HRI B.P. YADAV, COST ACCOUNTANT RESPONDENT BY 08/09/2015 DATE OF HEARING 07/10/2015 DATE OF PRONOUNCEMENT O R D E R PER A. K. GARODIA, A.M. THIS IS AN ASSESSEES APPEAL DIRECTED AGAINST THE O RDER OF LD. CIT (A)-I, LUCKNOW DATED 13.05.2015 FOR THE AY 2007-08. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER: 1.) THE LD CIT (A) HAS ERRED IN LAW AND ON THE FACTS BY ANNULLING THE ASSESSMENT ORDER. 2.) THE LD CIT (A) HAS ERRED IN LAW AND ON FACTS O F THE CASE BY SAYING THAT HE AO HAS NO JURISDICTION TO ASSESS ANY OTHER INCOME. 3.) THE LD. CIT (A) HAS ERRED IN LAW AND ON FACTS OF THE CASE BY NOT APPRECIATING THE SECTION 147 OF THE I.T. ACT WHICH CLEARLY STIPULATES THAT IF THE AO HAS REASON TO BELIEVE THA T ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY AS SESSMENT 2 YEAR, HE MAY, SUBJECT TO PROVISIONS OF SECTION 148 TO 153, ASSESS OR REASSESS SUCH INCOME AND ALSO ANY OTHER INCOME C HARGEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURSE OF THE PROCEEDING S UNDER THE SECTION OR RECOMPUTED THE LOSS OR THE DEPRECIATION ALLOWANCE OR ANY OTHER ALLOWANCE AS THE CASE MAY BE FOR THE ASSE SSMENT YEAR CONCERNED. 3.) THE LD CIT (A) HAS ERRED IN LAW AND ON FACTS O F THE CASE BY NOT APPRECIATING THE EXPLANATION 3 OF THE SECTION 147 T HAT 'FOR THE PURPOSE OF ASSESSMENT OR REASSESSMENT UNDER THIS SE CTION, THE AO MAY ASSES OR-REASSESS THE INCOME IN RESPECT OF A NY ISSUE, WHICH ESCAPED ASSESSMENT AND SUCH ISSUE COMES TO HI S NOTICE SUBSEQUENTLY IN THE COURSE OF PROCEEDINGS UNDER THI S SECTION, NOTWITHSTANDING THAT THE REASONS FOR SUCH ISSUE HAV E NOT BEEN INCLUDED IN THE REASONS RECORDED UNDER SUB SECTION 2 OF SECTION 148, 4.) THE LD CIT (A) HAS ERRED IN LAW AND ON FACT S BY NOT APPRECIATING THAT THE AO HAS REOPENED THE CASE ON THE ISSUE OF T DS AND SOUL OF THE ENTIRE ASSESSMENT & ADDITION WAS SECTION 40( A)(IA) OF THE I.T. ACT, 1961 & THE PART OF WHICH CAME IN THE POSS ESSION OF THE AO DURING THE ASSESSMENT PROCEEDINGS, WHEN THE ASSE SSEE HAS FILED THE DETAILS OF THE TDS WHICH WAS NOT IN THE P OSSESSION OF THE AO EARLIER. 5.) APPELLANT CRAVES LEAVE TO ADD OR AMEND THE GRO UND OF APPEAL, AS STATED ABOVE AS AND WHEN NEED OF DOING SO ARISES WI TH THE PRIOR PERMISSION OF THE HON'BLE BENCH. 3. LD. DR OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER WHEREAS IT IS SUBMITTED BY LD. AR OF THE ASSESSEE THAT THE REASON S RECORDED BY THE AO FOR REOPENING ARE AVAILABLE ON PAGE 4 OF THE PAPER BOOK AS PER WHICH, THE REOPENING WAS MADE FOR MAKING DISALLOWANCE OF RS.1.50 LAKH BE ING THE RENT PAID BY THE ASSESSEE WITHOUT DEDUCTING TDS U/S 194I OF THE ACT AS NOTED BY THE AO IN THE REASONS THAT UNDER THESE FACTS, SECTION 40(A)(IA) T O APPLICABLE FOR THIS EXPENDITURE. HE FURTHER SUBMITTED THAT IT CAN BE SEEN IN THE ASS ESSMENT ORDER FOR THE PRESENT YEAR THAT NO SUCH DISALLOWANCE U/S 40(A)(IA) IN RES PECT OF RENT EXPENSES IS MADE BY 3 THE AO AND IN THE ABSENCE OF THAT, REOPENING IS NOT VALID ALTHOUGH CERTAIN OTHER DISALLOWANCE WERE MADE BY THE AO BY INVOKING THE PR OVISIONS OF SECTION 40(A)(IA) OF THE ACT IN RESPECT OF PAYMENT TO CONTRACTORS WITHOUT DEDUCTING TDS U/S 194C OF TH E ACT. HE SUPPORTED THE ORDER OF THE LD. CIT(A). 4. WE HAVE CONSIDERED THE RIVAL SUBMISSION. THIS IS UNDISPUTED FACT THAT AS PER THE REASONS RECORDED BY THE AO FOR REOPENING AVAILA BLE ON PAGE 4 OF THE PAPER BOOK, REOPENING WAS MADE ON THIS ALLEGATION THAT PA YMENT OF RENT OF RS.1.50 LAKH WAS MADE BY THE ASSESSEE WITHOUT DEDUCTING TDS U/S 194I OF THE ACT AND THEREFORE, THIS AMOUNT WAS TO BE DISALLOWED U/S 40 (A)(IA) OF THE ACT. THIS IS ALSO TRUE THAT AS PER THE ASSESSMENT ORDER, NO SUCH DISALLOWANCE WAS MADE BY THE AO IN RESPECT OF RENT EXPENDITURE U/S 40(A)(IA) OF THE ACT AND ONLY DISALLOWANCE MADE BY THE AO OF RS.16,88,224/- U/S 40(A)(IA) OF THE ACT IN RESPECT OF PAYMENT TO CONTRACTOR WITHOUT DEDUCTING TDS U/S 194C OF THE ACT. IN THE LIGHT OF THESE FACTS, WE NOW EXAMINED THE APPLICABILITY THE JUDGMENT OF THE HONBLE RAJASTHAN HIGH COURT RENDERED IN THE CASE OF CIT VS. SHRI RAM SINGH REPORTED IN 217 CTR 345 ( RAJ) AND THE JUDGMENT OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. JE T AIRWAYS (I) LTD. REPORTED IN 195 TAXMAN 117 (BOM.). IN BOTH THESE JUDGMENTS, IT WAS HELD THAT IF AFTER ISSUING A NOTICE U/S 148, THE AO ACCEPTS THE CONTENTION OF TH E ASSESSEE AND HOLDS THAT INCOME, FOR WHICH HE HAD INITIALLY FORMED A REASON TO BELIEVE THAT INCOME HAD ESCAPED ASSESSMENT, HAS, AS A MATTER OF FACT, NOT E SCAPED ASSESSMENT, IT IS NOT OPEN TO HIM TO INDEPENDENTLY ASSESS SOME OTHER INCO ME AND IF HE INTENDS TO DO SO, A FRESH NOTICE U/S 148 WOULD BE NECESSARY, LEGALITY OF WHICH WOULD BE TESTED IN EVENT OF A CHALLENGE BY ASSESSEE. IN THE PRESENT CA SE, WE HAD SEEN THAT THE BASIS ON WHICH REOPENING WAS MADE BY THE AO DOES NOT SURV IVE BECAUSE NO SUCH ADDITION WAS MADE BY THE AO IN THE ASSESSMENT ORDER AND THER EFORE, REOPENING IN THE PRESENT CASE IS NOT VALID FOR MAKING ANY OTHER ADDI TION ALTHOUGH THE A.O. COULD HAVE ISSUED FRESH NOTICE U/S 148 AFTER COMPLYING WITH TH E REQUIREMENTS OF LAW IN THAT 4 RESPECT. RESPECTFULLY FOLLOWING THESE JUDGMENTS OF HONBLE RAJASTHAN HIGH COURT AND HONBLE HONBLE BOMBAY HIGH COURT, WE DECLINE T O INTERFERE IN THE ORDER OF LD. CIT(A) AS PER WHICH HE HAS ANNULLED THE ASSESSMENT ORDER PASSED BY THE AO. 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/- SD/- (SUNIL KUMAR YADAV) (A. K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMBE R DATED: 07 /10/2015 AKS COPY OF THE ORDER FORWARDED TO : 1.THE APPELLANT 2.THE RESPONDENT. 3.CONCERNED CIT 4.THE CIT(A) 5.D.R., I.T.A.T., LUCKNOW ASSTT. REGISTRAR