New Sumerpur Golden Transport, Kanpur V. Income Tax Officer-2(3), Kanpur

ITA 579/LKW/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 3589 (ITAT-LUCKNOW)
• Duration Of Justice: 1 year(s) 5 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-02-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 15-09-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C K SINGH
• Keywords: Audit objection; Tangible material; Difference of opinion; Reason to believe; Change of opinion
• Section: 147; 148; 40A(3); 143(3); 143(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH SMC , LUCKNOW BEFORE SHRI. A. D. JAIN, VICE PRESIDENT ITA NO. 579/LKW/2017 ASSESSMENT YEAR: 2010 - 11 NEW SUMERPUR GOLDEN TRANSPORT 76/164, HALSEY ROAD KANPUR V. INCOME TAX OFFICER 2(3) KANPUR T AN /PAN : AAGFN4235L (APP ELL ANT) (RESPONDENT) APPELLANT BY: SHRI RAKESH GARG, ADVOCATE RESPONDENT BY: SHRI C. K. SINGH, D.R. DATE OF HEARING: 19 0 2 201 9 DATE OF PRONOUNCEMENT: 22 0 2 201 9 O R D E R THIS IS ASSESSEES APPEAL FOR ASSESSMENT YEAR 2010 - 11 AGAINST THE ORDER OF THE LD. CIT(A) - I, KANPUR, DATED 18/8/2017, TAKING THE FOLLOWING GROUNDS: - 01. BECAUSE THE RE - ASSESSMENT FRAMED UNDER SECTION 147/143(3) OF TH E I.T. ACT, 1961 AND UPHELD BY CI T(A) IS VOID ABINITIO, BAD IN LAW AND BE QUASHED. 02. BECAUSE THERE BEING NO MATERIAL FORMING TO BELIEVE THE NOTICE ISSUED UNDER SECTION 148 IS WITHOUT JURISDICTION, BAD IN LAW, THE RE - ASSESSMENT FRAMED THEREAFTER IS CONTRARY TO PRINCIPLE OF LAW, THE CIT(A) HAS ERRED IN LAW IN UPHOLDING THE SAME. 03. BECAUS E THE ENTIRE MATERIAL HAVING BEEN PLACED BY THE ASSESSEE BEFORE THE AO AT THE TIME OF THE ORIGINAL ASSESSMENT AND THE AO HAVING APPLIED HIS MIND AND ACCEPTED THE VIEW OF THE ASSESSEE, THE ASSESSMENT CANNOT BE REOPENED MERELY ON THE BASIS OF CHANGE OF OPINI ON, THE REASSESSMENT FRAMED BE QUASHED. ITA NO.579/LKW/2017 PAGE 2 OF 8 04. BECAUSE THE RE - ASSESSMENT PROCEEDINGS HAVE BEEN INITIATED ON THE OPINION EXPRESSED BY THE REVENUE AUDIT PARTY, AND THERE BEING NO 'MATERIAL', THE AO HAVING FAILED TO APPLY HIS MIND, BEING A CASE OF 'CHANGE OF O PINION', ON REAPPRAISAL OF THE MATERIAL ALREADY OH RECORD, THE NOTICE U/S 148 AS WELL AS THE REASSESSMENT U/S 147 ARE WITHOUT JURISDICTION AND BE QUASHED. 05. BECAUSE THE CIT(A) HAS ERRED ON FACTS IN UPHOLDING THE DISALLOWANCE OF RS.5,05,955/ - MADE UNDER SECTION 40A(3) OF THE ACT, WHICH DISALLOWANCE BEING CONTRARY TO THE PROVISIONS OF LAW, FACTS AND CIRCUMSTANCES OF THE CASE BE DELETED. 06. BECAUSE THE CI T(A) HAS FAILED TO APPRECIATE THAT THE ENTIRE PAYMENT OF RS.5,05,955/ - INCURRED FOR THE PURPOSE OF B USINESS BEING FULLY VERIFIABLE AND GENUINE, FOR REASONS OF BUSINESS EXPEDIENCY, THE DISALLOWANCE OF THE SAME IS CONTRARY TO THE PROVISIONS OF LAW BE DELETED. 07. BECAUSE THE CI T(A) HAS FAILED TO APPRECIATE AND CONSIDER THE PAPER BOOK DATED 21,07.2017 AND THE WRITTEN SUBMISSIONS, FILED ALONGWITH ENCLOSURES ON 18.08.2017 ITSELF, WHEN THE PRESENCE WAS PUT IN , THE ORDER PASSED BY THE CIT (A) IS BAD IN LAW AND BE QUASHED. 2 . THE ASSESSEE FIRM IS ENGAGED IN THE BUSINESS OF TRANSPORTATION. ITS REGULAR ASSESSMENT WAS ORIGINALLY COMPLETED AT A TOTAL INCOME OF RS.1,57,570/ - , AS AGAINST A DECLARED INCOME OF RS.71,660/ - , VIDE ASSESSMENT ORDER PASSED UNDER SECTION 143(3) OF THE ACT, ON 11/3/2013. THEREAFTER, ON 13/10/2014, THE ASSESSING OFFICER RECORDED THE FOLLOWING R EASONS TO BELIEVE ESCAPEMENT OF INCOME: - 'ASSESSEE M/S, NEW SUMERPUR GOLDEN TRANSPORT, 76/164, HAISEY ROAD, KANPUR DERIVES INCOME FROM TRANSPORT BUSINESS. ASSESSEE IS FIRM. RETURN DECLARING TOT AL INCOME OF RS.71,660/ - WAS FILED ON 28.09. 2010 WHICH HAS BEEN PROCESSED U/S. 143(1) OF I.T. ACT, 1961. ASSESSEE CASE WAS ALSO SELECTED UNDER SCRUTINY AND CASE ITA NO.579/LKW/2017 PAGE 3 OF 8 WAS ASSESSED U/S. 143(3) OF I.T. A CT, 1961 ON TOTAL INCOME OF RS. 1,57,570/ - . DURING THE COURSE OF RAP OBJECTION, IT IS FOUN D THAT ASSESSEE HAS DEBITED RS. 58,3 5,339/ - UNDER THE HEAD OF DIESEL EXPENSES IN THE PROFIT & LOSS A/C. AS PER SEC.4 0 A(3) OF I.T ACT, 1961, IF AN ASSESSEE INCURRED ANY EXPENDITU RE IN RESPECT OF WHICH PAYMENT I N EXCESS OF RS.20,000/ - IS MADE OTHERWISE THAN ACCOUNT PAYEE CHEQUE OR AN ACCOUNT P AYEE BANK DRAFT, 100% OF SUCH EXPENDITURE WILL NOT BE ALLOWABLE AS DEDUCTION. THEREFORE, THE EXPENSES UNDER THE HEAD OF DIESEL EXPENSES TO THE TUNE OF RS.5 , 05,955/ - OUT OF RS.58,35,339/ - WHICH WERE PAID BY THE ASSESSEE ON CASH WHICH WAS TO BE ADDED BACK TO THE INCOME OF THE ASSESSEE. AFTER TAKING INTO ACCOUNT OF CASE LAW OF APEX COURT IN THE CASE OF INDIAN AND EASTERN NEWSPAPERS SOCIETY ( I.E.N.S. FOR SHORT) (119 ITR 998), THE OPINION RENDERED BY THE AUDIT PARTY IS ONLY AN INFORMATION, AO DETERMINED HIMSELF AND HAVE REASON TO BELIEF THAT INCOME HAS ESCAPED ASSESSMENT. AFTER CONS I DERATION THE RAP OBJECTION AND CASE RECORDS OF THE ASSESSEE, IT IS GATHERED THAT ASSESSEE MADE PAYMENT IN CASH TO THE TUNE OF RS.5, 0 5,955/ - OUT OF RS.58,35,339/ - UNDER THE HEAD OF DIE SEL EXPENSES. AFTER PLAIN READING OF THE SEC. 40A(3) OF I.T. ACT, 1961, IT IS FOUND THAT ASSESSEE IS NOT IN PREVIEW OF RULE 6DD OF THE INCOME - TAX RULES, 1962. THEREFORE, AO HAS REASON TO BELIEVE THAT AMOUNT OF RS.'5,05,955/ - AS DEBITED IN PROF IT & LOSS A/C AND PAYMENT MADE I N CASH IS A PART OF THE ESCAPED 'ASSESSMENT. DATED: 13/10/2014 SD/ - (GOVIND SINGH) INCOME TAX OFFICER - 2(3) KANPUR' 3 . THE REASSESSMENT ORDER WAS PASSED ON 23/3/2016, REASSESSING THE TOTAL INCOME OF THE ASSESSEE AT RS.6,63,520/ - , MAKIN G A DISALLOWANCE OF RS.5,05,955/ - , HOLDING THAT THE ASSESSEE HAD VIOLATED ITA NO.579/LKW/2017 PAGE 4 OF 8 THE PROVISIONS OF SECTION 40A(3) OF THE ACT, QUA SUCH EXPENDITURE CLAIMED. THE LD. CIT(A), BY VIRTUE OF THE IMPUGNED ORDER DATED 18/8/2017, HAS DISMISSED THE ASSESSEES APPEAL. 4 . APRO POS GROUND NOS. 1 TO 4, THE LD. A.R. OF THE ASSESSEE HAS CONTENDED THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE REASSESSMENT FRAMED, DESPITE THE ASSESSING OFFICER HAVING HAD NO MATERIAL WITH HIM TO FORM THE BELIEF OF ESCAP E MENT OF INCOME, SINCE THE ASSE SSING OFFICER HAD, AT THE TIME OF FRAMING THE ORIGINAL ASSESSMENT, DULY APPLIED HIS MIND AND H AD CORRECTLY ACCEPTED THE CLAIM OF THE ASSESSEE; THAT THE REOPENING OF THE COMPL E TED ASSESSMENT OF THE ASSESSEE BEING BASED ON A MERE CHANGE OF OPINION, SUCH REAS SESSMENT REQUIRES TO BE QUASHED. 5 . ON THE OTHER HAND, THE LD. D.R. HAS PLACED STRONG RELIANCE ON THE IMPUGNED ORDER. IT HAS BEEN CONTENDED THAT AS CORRECTLY OBSERVED BY THE ASSESSING OFFICER ON THE BASIS OF HIS REASONS TO BELIEVE ESCAPEMENT OF INCOME, SINCE HE FOUND THAT THE ASSESSEE HAD MADE PAYMENT IN CASH FOR DIESEL EXPENSES, TO THE TUNE OF RS.5,05,955/ - , IN VIOLATION OF THE PROVISIONS OF SECTION 40A(3) OF THE ACT , WITHOUT COMING WITHIN THE EXCEPTIONS PROVIDED BY RU LE 6DD OF THE I.T. RULES, 1962, SUCH AMO UNT WAS REQUIRED TO BE DISALLOWED; THAT THE LD. CIT(A) HAS ALSO CORRECTLY OBSERVED THAT THE ASSESSING OFFICER HAD RECORDED HIS OWN INDEPENDENT SATISFACTION TO REOPEN THE ASSESSMENT. 6 . HEARD. THE QUESTION IS WHETHER INDEED THERE HAS BEEN A CHANGE OF OPINIO N WHICH PROMPTED THE REOPENING OF THE COMPLETED ASSESSME NT . A PERUSAL OF THE ORIGINAL ASSESSMENT ORDER (COPY AT APB: 44 - 46) DATED 11/3/2013 SHOWS THAT THE ISSUE OF DIESEL EXPENSES DOES NOT FIND MENTION/DISCUSSION THEREIN. 7 . A PERUSAL OF THE REASONS OF BELIE F OF ESCAPEMENT OF INCOME, REPRODUCED HEREINABOVE, SHOWS THAT IT WAS DURING THE COURSE OF RAP ITA NO.579/LKW/2017 PAGE 5 OF 8 OBJECTION THAT IT CAME TO LIGHT THAT THE ASSESSEE HAD DEBITED AN AMOUNT OF RS. 58,35,339/ - UNDER THE HEAD OF DIESEL EXPENSES , IN ITS PROFIT & LOSS ACCOUNT. AS PER THE PROVISIONS OF SECTION 40A(3) OF THE ACT, SUCH EXPENSES, TO THE TUNE OF RS.5,05,955/ - , INCURRED IN CASH, WERE REQUIRED TO BE ADDED BACK TO THE ASSESSEES INCOME, WHICH HAD NOT BEEN DONE IN THE ORIGINAL ASSESSMENT. 8 . THE STAND OF THE ASSESSEE HAS BEEN T HAT AT THE TIME OF ORIGINAL ASSESSMENT PROCEEDINGS, THE BOOKS OF ACCOUNT AND OTHER RELEVANT DETAILS, AS REQUIRED BY THE THEN ASSESSING OFFICER, HAD BEEN PRODUCED AND WERE EXAMINED, AS IS ALSO EVIDENT FROM THE ORIGINAL ASSESSMENT ORDER DATED 11/3/2013. THE ACCOUNTS, WHICH WERE AUDITED, WERE PRODUCED ALONG WITH THE BI LLS AND VOUCHERS, ETC. , AND THEY WERE EXAMINED BY THE THEN ASSESSING OFFICER. COPY OF THE ACCOUNT OF M/S KUMAR FILLING STATION WAS FILED. THEREIN, TRANSACTIONS MADE WITH THE SAID PARTY WERE FU LLY DISCLOSED. IT WAS ONLY AFTER EXAMINING THESE DETAILS THAT THE ORIGINAL ASSESSMENT ORDER WAS FRAMED. IT WAS ONLY THEREAFTER THAT THE REVENUE AUDIT PARTY POINTED THAT THE AMOUNT OF RS.5,05,955/ - UNDER THE HEAD DIESEL EXPENSES, PAID BY THE ASSESSEE TO M/S KUMAR FILLING STATION, IN CASH, NEEDED TO BE DISALLOWED. THE ASSESSEE IS OF THE VIEW THAT THE ASSESSING OFFICER HA S EXAMINED ALL THE DETAILS ALONG WITH THE BOOKS OF ACCOUNT OF THE ASSESSEE IN THE ORIGINAL ASSESSMENT PROCEEDINGS AND HE HAVING NOT MADE ANY ADDITION BY WAY OF DISALLOWANCE UNDER THE PROVISIONS OF SECTION 40A(3) OF THE ACT, THE COMPLETED ASSESSMENT OF THE ASSESSEE COULD NOT HAVE BEEN REOPENED BY WAY OF A MERE CHANGE OF OPINION. THE LD. A.R. OF THE ASSESSEE HAS PLACED RELIANCE ON THE FOLLO WING DECISIONS FOR THE PROPOSITION THAT NO REOPENING OF A COMPLETED ASSESSMENT ON THE SAME MATERIAL IS SUSTAINABLE: - ITA NO.579/LKW/2017 PAGE 6 OF 8 ( 1 ) INCOME TAX OFFICER VS. TECH SPAN INDIA PVT. LTD., 304 ITR 10 (SC). ( 2 ) CIT VS. RAJAN N. ASWANI, 91 TAXMANN.COM 313 (BOMBAY). ( 3 ) MOTILAL R. TODI VS . ACIT, ORDER ( CL PB: 18 - 36) DATED 22/9/2015, PASSED BY THE ITAT, MUMBAI , IN ITA NO.2910/MUM/2013. 9 . IN CIT VS. KELVINATOR OF INDIA LTD. 320 ITR 561 (SC), IT HAS BEEN HELD, INTER ALIA, THAT THE ASSESSING OFFICER HAS THE POWER TO REOPEN A COMPLETED ASSESSMEN T, PROVIDED THERE IS TANGIBLE MATERIAL TO COME TO THE CONCLUSION THAT THERE IS ESCAPEMENT OF INCOME FROM ASSESSMENT; AND THAT THE REASONS RECORDED MUST HAVE A LIVE LINK WITH THE FORMATION OF BELIEF. IN THE PRESENT CASE, IT IS UNDISPUTED THAT IN THE ORIGIN AL ASSESSMENT PROCEEDINGS, THE ASSESSEE HAD PROVIDED BEFORE THE ASSESSING OFFICER, ALL MATERIAL, INCLUDING THE BOOKS OF ACCOUNT AND THE COPY OF ACCOUNT OF KUMAR FILLING STATION, WHEREIN, THE TRANSACTIONS MADE WITH THE SAID PARTY HAD BEEN FULLY DISCLOSED. THEREFORE, THERE WAS NO LAPSE ON THE PART OF THE ASSESSEE. IT DID ALL THAT WAS REQUIRED TO BE DONE . IT IS NOT IN THE HANDS OF THE ASSESSEE AS TO HOW AN ASSESSMENT ORDER IS TO BE WRITTEN, HE CAN MERELY PROVIDE THE INFORMATION DESIRED. IN THE PRESENT CASE , AS DISCUSSED, IN THE ORIGINAL ASSESSMENT PROCEEDINGS, ALL THE RELEVANT DETAILS WERE PROVIDED. THE MERE FACT THAT THE ASSESSING OFFICER DID NOT MAKE ANY ADDITION UNDER SECTION 40A(3) OF THE ACT, DOES NOT ENTITLE REOPENING OF THE ASSESSMENT. 10 . THE DECISIONS IN THE CASES OF TECH SPAN INDIA PVT. LTD. (SUPRA), RAJAN N. ASWANI (SUPRA) AND MOTILAL R. TODI (SUPRA), AMONGST NUMEROUS OTHERS, ARE TO THE SAME EFFECT. THEREFORE, THE ASSESSEE IS CORRECT IN ITS CHALLENGE IN THIS REGARD. ITA NO.579/LKW/2017 PAGE 7 OF 8 11 . ANOTHER ISSUE RAISED BY THE ASSESSEE IS THAT NO REOPENING OF A COMPLETED ASSESSMENT IS PERMISSIBLE ON THE BASIS OF OBJECTION RAISED BY THE REVENUE AUDIT PARTY. IN THIS REGARD, THE LD. A.R. OF THE ASSESSEE HAS PLACED RELIANCE ON THE FOLLOWING DECISIONS: - ( 1 ) JAGMOHAN LAL KANODIA VS. CWT , ORDER ( CL PB: 37 - 41) DATED 26/7/2013, PASSED BY THE HON'BLE JURISDICTIONAL ALLAHABAD HIGH COURT, IN WTA NO.166 OF 2008, FOR ASSESSMENT YEAR 1997 - 98. ( 2 ) INDIAN & EASTERN NEWSPAPER SOCIETY VS. CIT, 2 TAXMAN 197 (SC) (CLPB: 42 - 49). ( 3 ) PANKAJ JAISWAL VS. ACIT - 1, KA NPUR, ORDER (CLPB: 50 - 55) DATED 13/4/2017, PASSED BY THE LUCKNOW BENCH OF THE TRIBUNAL IN ITA NO.276/LKW/2016. 12 . IN ALL THESE CASES, IT HAS BEEN HELD THAT NO REOPENING OF A COMPLETED ASSESSMENT IS LEGALLY PERMISSIBLE ON THE BASIS OF OBJECTION RAISED BY THE A UDIT P ARTY. THE LD. CIT(A), IN THIS REGARD, HAS HELD THAT THE REASONS RECORDED BY THE ASSESSING OFFICER WERE BASED ON FACTUAL MATTERS OF THE CASE AND THESE REASONS ARE NOT THE SAME AS WERE SUGGESTED BY THE A UDIT T EAM AND THAT SO, THE REASONS RECORDED WERE NOT RECORDED IN A STEREOTYPED MECHANICAL MANNER BASED ON THE AUDIT OBJECTIONS. 13 . I, HOWEVER, FIND MYSELF UNABLE TO AGREE WITH THESE FINDINGS RECORDED BY THE LD. CIT(A). THE FACT REMAINS THAT THE ISSUE OF DISALLOWANCE UNDER SECTION 40A(3) OF THE ACT CAME TO THE KNOWLEDGE OF THE ASSESSING OFFICER ONLY DUE TO THE OBJECTIONS RAISED BY THE AUDIT PARTY. THEREFORE, RECORDING OF THE REASONS FOR REOPENING THE COMPLETED ASSESSMENT WERE TRIGGERED B Y NOTHING OTHER THAN THE OBJECTION RAISED BY THE AUDIT PARTY. THE F ACT THAT POST SUCH OBJECTION BEING RAISED, THE ITA NO.579/LKW/2017 PAGE 8 OF 8 ASSESSING OFFICER WENT INTO THE CASE RECORDS OF THE ASSESSEE, DOES NOT DETRACT FROM THE FACT THAT ALL THE NECESSARY DETAILS WITH REGARD TO THE PAYMENTS MADE TO KUMAR FILLING STATION WERE LAID BARE BY THE ASSES SEE BEFORE THE THEN ASSESSING OFFICER IN THE ORIGINAL ASSESSMENT PROCEEDINGS AND AFTER CONSIDERING THE SAME, THE ASSESSING OFFICER DID NOT MAKE ANY DISALLOWANCE/ADDITION UNDER SECTION 40A(3) OF THE ACT. 14 . THUS, KEEPING IN CONSIDERATION THE AFOREMENTIONED D ECISIONS REGARDING THE IMPERMISSIBLE REOPENING OF THE COMPLETED ASSESSMENT ON THE BASIS OF THE AUDIT OBJECTION RAISED BY THE REVENUE AUDIT PARTY ALSO , I HOLD THAT THE REOPENING OF THE COMPLETED ASSESSMENT IN THE CASE OF THE PRESENT ASSESSEE, BY WAY OF THE REASONS RECORDED AND ALL PROCEEDINGS PURSUANT THERETO , CULMINATING IN T HE IMPUGNED ORDER , ARE UNSUSTAIN ABLE IN LAW. THEY ARE, ACCORDINGLY, SET ASIDE AND QUASHED. 15 . IN VIEW OF THE ABOVE, NOTHING FU RTHER SURVIVES FOR ADJUDICATION, NOR WAS ANYTHING ELSE ARGUED . 16 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 22 / 02 /201 9 . SD/ - [ A. D. JAIN ] VICE PRESIDENT DATED: 22 ND FEBRUARY , 201 9 JJ: 1902 COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT(A) 4 . CIT 5 . DR BY ORDER ASS ISTANT REGISTRAR