VASUDEV B. SARDA, MUMBAI V. ITO 25(2)(4), MUMBAI

ITA 5826/MUM/2015

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8789 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-11-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 29-03-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 28-12-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: V JUSTIN
• Keywords: Reopening of assessment; Opportunity of being heard; Principle of natural justice; Difference of opinion; Change of opinion
• Section: 143(3); 194C; 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'E' BENCH, MUMBAI BEFORE SHRI B.R. BASKARAN, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO.5826/MUM/2015 (ASSESSMENT YEAR: 2007-08) SHRI VASUDEV B. SARDA VS. INCOME TAX OFFICER - 25(2)4 NO. 2, OM CHAITNYA TOWER HAPPY HOME COMPLEX SHANTI PARK, MIRA ROAD (E) MUMBAI 401107 PRATYAKASH KAR BHAVAN BANDRA KURLA COMPLEX BANDRA (E), MUMBAI 400051 PAN AAKPS0958B APPELLANT RESPONDENT APPELLANT BY: NONE RESPONDENT BY: SHRI V. JUSTIN DATE OF HEARING: 01.11.2017 DATE OF PRONOUNCEMENT: 01.11.2017 O R D E R PER PAWAN SINGH, JM THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A)-44, MUMBAI DATED 13.03.2015 FOR A.Y. 2007-08 . 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF AP PEAL: - 1. ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED ASSESSING OFFICER ERRED IN INITIATING PROCE EDINGS U/S 147 AND IN ISSUING NOTICE U/S 148 OF THE INCOME TAX ACT , 1961. 2. ON THE FACTS IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE LEARNED ASSESSING OFFICER ERRED IN INITIATING PROCE EDINGS U/S 147 AND IN ISSUING NOTICE U/S148 OF THE INCOME TAX ACT, 1961. THE ASSESSMENT ORDER IS BAD-IN-LAW IN AS MUCH AS: A) THERE IS NO NEXUS OF THE REASONS FOR REOPENIN G THE ASSESSMENT WITH THE FACTS OF THE CASE. B) NO NEW MATERIAL HAD COME ON RECORD NOR ANY NE W INFORMATION HAD BEEN RECEIVED BY THE ASSESSING OFFI CE AND IT WAS ONLY A CASE OF FRESH APPLICATION OF MIND BY THE ASSESSING OFFICER TO THE SAME SET OF FACTS WHICH TA NTAMOUNT TO A CHANGE OF OPINION AND ITA NO. 5826/MUM/2015 SHRI VASUDEV B. SARDA 2 C) CHANGE OF OPINION DOES NOT PROVIDE JURISDICTION TO ASSESSING OFFICER TO INITIATE PROCEEDINGS U/S. 147 OF THE INC OME TAX ACT, 1961. 3. A) ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW THE LEARNED ASSESSING OFFICER ERRED IN TREATING THE EXPENDITURE INCURRED IN RESPECT OF PURCHASE OF SAND, RUBBLE, BR ICKS AND METALS AMOUNTING TO RS.41,86,482/- AS AMOUNT PAID TOWARDS SUB-CONTRACTS LIABLE TO TDS U/S. 194C OF TH E INCOME TAX ACT, 1961, AND THE REASONS ASSIGNED FOR DOING S O ARE WRONG AND CONTRARY TO THE FACTS AND CIRCUMSTANCES O F THE CASE, PROVISIONS OF THE INCOME TAX ACT,1961 AND THE RULES MADE THERE UNDER. B) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED ASSESSING OFFICER ERRED IN OBSERVING TH AT THE APPELLANT IS NOT HAVING ANY FIXED ASSETS IN THE NAT URE OF TRUCKS/LORRIES IN ITS PROP. CONCERN M/S. LAXMI TRAN SPORT COMPANY, WHICH IS WRONG AND CONTRARY TO THE FACTS A ND CIRCUMSTANCES OF THE CASE. C) THE LEARNED ASSESSING OFFICER ERRED IN PASSIN G THE ASSESSMENT ORDER U/S 143 (3) R.W.S. 147 OF THE INCO ME TAX ACT, 1961 WITHOUT GIVING ADEQUATE OPPORTUNITY TO SU BMIT FURTHER DETAILS TO SUBSTANTIATE ITS CLAIM ON THE IN APPLICABILITY OF PROVISIONS OF TDS ON PURCHASES, WHICH IS WRONG A ND CONTRARY TO THE FACTS AND CIRCUMSTANCES OF THE CASE , PROVISIONS OF THE INCOME TAX ACT, 1961 AND THE RULE S MADE THERE UNDER. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE LEARNED ASSESSING OFFICER FAILED TO APPRECIATE THAT THE AMOUNT OF AUDIT FEES DO NOT EXCEED RS.20,000/- AND THEREFORE THE PROVISIONS OF TDS U/S. 194J OF THE INCOME TAX ACT,1961 ARE NOT APPLICABLE, WHICH IS WRONG AND CONTRARY TO THE TO THE FACTS AND CIRCUMSTANCES OF THE CASE, PROVISIONS OF THE INCOME TAX ACT, 1961 AND THE RULES MADE THEREUNDER. 5. THE LEARNED COMMISSIONER OF INCOME TAX APPEALS -44 PASSED THE ORDER WITHOUT GIVING OPPORTUNITY OF BEING HEARD TO ASSESSEE AND OUGHT TO HAVE INQUIRED ABOUT REASONS OF NON ATTENDA NCE BY THE ASSESSEE TO MEET THE CAUSE OF NATURAL JUSTICE AND S HOULD HAVE PASSED THE ORDER ON THE MERITS OF THE CASE. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS PROPRIETOR OF M/S. LAXMI TRADING CORPORATION AND M/S. LAXMI TRANSPORT COMPANY. M/S. LAXMI TRADING CORPORATION IS DOING BUSINESS OF BUIL DING MATERIAL AND M/S. LAXMI TRANSPORT COMPANY IS IN THE BUSINESS OF TRANS PORTATION. ASSESSEE FILED ITS RETURN OF INCOME FOR THE IMPUGNED ASSESSM ENT YEAR ON 30.10.2007 DECLARING TOTAL INCOME OF RS.5,95,770/-. THE ASSESS MENT WAS COMPLETED ON ITA NO. 5826/MUM/2015 SHRI VASUDEV B. SARDA 3 20.12.2009 UNDER SECTION 143(3) DETERMINING THE TOT AL INCOME OF THE ASSESSEE AT RS 6,56,800/-. SUBSEQUENTLY THE ASSESSMENT WAS REOPENE D UNDER SECTION 147 OF THE ACT. THE ASSESSMENT WAS RE OPENED AS THE AO NOTED THAT THE ASSESSEE HAS SHOWN CONTRACTUAL EXPEN SES OF TRANSPORT AT RS 89,96,387/-. THE ASSESSEE MADE TDS OF RS 1,83,777/-. THE ASSESSEE DOES NOT OWN FIXED ASSETS LIKE TRUCK OR LORRIES. THUS IT WAS FOUND THAT THE ASSESSEE HAS NOT INCURRED EXPENSES LIKE PETROL AND DIESEL. THE ASSESSEE WAS LIABLE TO MAKE PAYMENT ON ACCOUNT OF CONTRACT F OR SUPPLY OF BUILDING MATERIAL TO OTHER PARTIES ON PAYMENT OF RS 89,96,387/-. ON THE BASIS OF THE ABOVE OBSERVATION THE ASSESSMENT WAS REOPENED. NOTICE UNDER SECTION 148 DATED 28.03.2012 WAS SERVED UPON THE ASSESSEE. THE ASSESSEE FILED ITS REPLY DATED 04.10.2012. IN THE REPLY ASSESSEE CONTE NDED THAT THE RETURN ORIGINALLY FILED MAY BE TREATED AS RETURN IN RESPON SE TO NOTICE UNDER SECTION 148. THE AO PASSED THE ASSESSMENT ORDER UND ER SECTION 143(3) R.W.S 147 ON 15.03.2013. THE AO WHILE PASSING THE A SSESSMENT ORDER MADE AN ADDITION UNDER SECTION 40(A)(IA) OF RS 41,86,482/- AND RS22,472/- FOR VIOLATION OF SECTION 194C AND SECTI ON 194J RESPECTIVELY. ON APPEAL BEFORE CIT(A) THE REOPENING OF ASSESSMENT AS WALL AS ADDITION UNDER SECTION 40(A)(IA) WERE CONFORMED. FURTHER, AG GRIEVED BY THE ORDER OF THE CIT(A) ASSESSEE IS IN APPEAL BEFORE US. 4. NONE APPEARED ON BEHALF OF THE ASSESSEE DESPITE RE PEATED CALL AND PROVIDING SUFFICIENT TIME TO THE ASSESSEE. NOTICE S ENT TO THE ASSESSEE THROUGH RPAD WAS RETURNED BACK WITH REMARKS OF POSTAL AUTHO RITIES UNCLAIMED. THEREFORE WE HAVE NO OPTION BUT TO HEAR THE LEARNED D.R. FOR REVENUE AND TO PASS THE ORDER ON THE BASIS OF THE MATERIAL AVAILAB LE ON RECORD. 5. THE LEARNED D.R. FOR REVENUE ARGUED THAT THE ASSESS EE HAS NOT SUBSTANTIATED ITS CONTENTION BEFORE THE AUTHORITIES BELOW NOR FILED ANY DOCUMENT BEFORE THE TRIBUNAL TO SUBSTANTIATE ITS CO NTENTION THAT HE WAS NOT LIABLE FOR MAKING TDS ON THE PAYMENTS MADE ON C ONTRACTUAL BASIS. 6. WE HAVE CONSIDERED THE SUBMISSIONS THE LEARNED D.R. FOR REVENUE AND PERUSED THE MATERIAL ON RECORD. ASSESSMENT UNDE R SECTION 143(3) WAS ITA NO. 5826/MUM/2015 SHRI VASUDEV B. SARDA 4 COMPLETED ON 10.12.2009 AND THE ASSESSMENT WAS REOP ENED ON 18.03.2012. THE ASSESSMENT WAS REOPENED ON THE BASI S THAT THE ASSESSEE HAS MADE CONTRACTUAL PAYMENT OF RS 89,96,387/- WITHOUT MAKING TDS. THE ASSESSMENT WAS REOPENED AFTER FOUR YEARS FROM T HE END OF RELEVANT ASSESSMENT YEAR. THE ASSESSMENT WAS REOPENED BY THE AO WHEN IT CAME TO HIS NOTICE THAT THE ASSESSEE HAS SHOWN SHOWN TRANSP ORT RECEIPT OF RS . 89,96,387/- THE ASSESSEE HAS NOT SHOWN ANY FIXED AS SETS LIKE TRUCKS AND LORRIES. HENCE THERE WAS NO OCCASION FOR THE AS SESSEE FOR DEBITING SUCH EXPENSES. THUS THE AO WAS OF THE VIEW THAT INCOME H AS ESCAPED ASSESSMENT DUE THE FAILURE ON THE PART OF THE ASSES SEE IN DISCLOSING FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR COMPLETI ON OF ASSESSMENT. THE AO SERVED NOTICE UPON THE ASSESSEE UNDER SECTION 14 8. NO RETURN WAS FILED BY THE ASSESSEE. THE ASSESSEE REQUESTED TO TREAT HI S ORIGINAL RETURN OF INCOME AS FILED IN RESPONSE TO NOTICE UNDER SECTION 148. DURING THE ASSESSMENT PROCEEDINGS THE ASSESSEE FAILED TO SUBST ANTIATE THAT HE WAS NO LIABLE TO DEDUCT TDS ON CONTRACTUAL PAYMENTS. THUS THE AO MADE ADDITION FOR VIOLATION OF SECTION 194C(2) AND SECTION 194J. AGAIN, BEFORE HE CIT(A) ASSESSEE FAILED TO SUBSTANTIATE HIS CONTENTION, HEN CE THE ADDITION WAS CONFIRMED. BEFORE US NEITHER THE ASSESSEE COME FORW ARD NOR FILED ANY DOCUMENTARY EVIDENCE TO PROVE HIS CONTENTION ABOUT NON DEDUCTION OF TDS ON CONTRACTUAL PAYMENTS. THUS WE DO NOT FIND ANY IL LEGALITY OR INFIRMITY IN REOPENING THE ASSESSMENT AS WELL IN MAKING ADDITION ON ACCOUNT OF VIOLATION OF SECTIONS 194C(2) AND 194J. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 1 ST NOVEMBER, 2017. SD/ - SD/ - B.R. BASKARAN) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 1 ST NOVEMBER, 2017 ITA NO. 5826/MUM/2015 SHRI VASUDEV B. SARDA 5 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) -44, MUMBAI 4. THE CIT - 32, MUMBAI 5. THE DR, E BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.