Rafeeq Iqbal, Hyderabad V. ITO, Ward 9(1), Hyderabad

ITA 709/HYD/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 69770 (ITAT-HYDERABAD)
• Duration Of Justice: 4 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-09-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 10-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MAYA MAHEWARI
• Keywords: Reopening of assessment; Tangible material; Reason to believe; Reassessment proceedings
• Section: 143(3); 194C; 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH, HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO.709/HYD/ 2013 ASSESSMENT YEAR 2005-06. RAFEEQ IQBAL, -V- ITO, WARD-9(1), HYDERABAD. HYDERABAD. PAN:AAFPI 4532 C (APPELLANT) (RESPONDENT) APPELLANT BY SHRI KC DEVDAS RESPONDENT BY SMT. MAYA MAHEWARI DATE OF HEARING 11-7-2013 DATE OF PRONOUNCEMENT 13-09-2013 ORDER PER SAKTIJIT DEY, J.M: THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 28-2-2013 OF CIT (A) V, HYDERABAD PERTAINING TO ASSESSMENT YEAR 2005-06. 2. BRIEFLY THE FACTS ARE, THE ASSESSEE IS AN INDIVI DUAL ENGAGED AS CLEARING AND FORWARDING AGENT. FOR THE ASSESSM ENT YEAR UNDER DISPUTE, THE ASSESSEE FILED HIS RETURN OF INC OME DECLARING TOTAL INCOME OF RS.3,20,708/- ON 5-10-2006. THE RE TURN WAS INITIALLY PROCESSED U/S 143(1) OF THE ACT. SUBSEQU ENTLY, THE ASSESSING OFFICER NOTICING THAT THE TDS CERTIFICAT E SUBMITTED ALONG WITH RETURN REFLECTED GROSS RECEIPTS OF RS.85 ,33,333/- 2 ITA NO.709 OF 2013 RAFEEQ IQBAL, HYDERABAD. WHEREAS THE ASSESSEE IN PROFIT AND LOSS A/C HAD AD MITTED GROSS RECEIPTS OF RS.34,34,491/- INITIATED ACTION U/S 14 7 OF THE ACT BY ISSUING A NOTICE U/S 148 OF THE ACT ON 1-2-2011. D URING REASSESSMENT PROCEEDINGS, WHEN THE ASSESSING OFFICE R CALLED UPON THE ASSESSEE TO EXPLAIN AS TO WHY THE DIFFEREN CE OF RS.50,98,842/- IN THE GROSS RECEIPTS SHOULD NOT BE ADDED TO THE INCOME RETURNED, THE ASSESSEE EXPLAINED THAT HE IS THE PROPRIETOR OF M/S R.S. TRAVELS, PRAKASH NAGAR, BEGUMPET, HYDE RABAD DOING CLEARING AND FORWARDING AGENCY WORK. DURING THE RE LEVANT PREVIOUS YEAR, THE ASSESSEE HAS DONE WORK FOR VARIO US PARTIES AND THE AMOUNT RECEIVED/RECEIVABLE ARE DULY ACCOUNTED F OR IN THE BOOKS OF ACCOUNTS. IT WAS FURTHER CONTENDED THAT R EIMBURSEMENT OF EXPENSES AMOUNTING TO RS.82,86,283/- HAS BEEN S PENT BY THE FIRM ON BEHALF OF VARIOUS CUSTOMERS AND THE SAME HA S BEEN RECOVERED COMPLETELY FROM THEM. HENCE THESE ARE NE ITHER INCOME NOR EXPENSES AND A FEW OF THE PARTIES HAVE DEDUCTED TDS ON REIMBURSEMENT OF EXPENSES. THE ASSESSING OFFICER A FTER RECEIVING REPLY FROM THE ASSESSEE FURTHER ASKED HIM TO FURNIS H THE DETAILS OF SERVICES RENDERED TO THE CUSTOMERS AND FURNISH T HE DETAILS LIKE NAME AND ADDRESS OF THE CUSTOMER, DATE OF INCURRING THE EXPENDITURE ON BEHALF OF THE CUSTOMER, NATURE OF EX PENSES ETC., SUCH AS DATE OF REIMBURSEMENT OF EXPENSES, AMOUNT R EIMBURSED, MODE OF REIMBURSEMENT WITH DETAILS OF CHEQUE NUMBER AND DATE. HE FURTHER ASKED TO FURNISH DOCUMENTARY PROOF FOR T HE EXPENSES AND AMOUNT STATED TO HAVE BEEN INCURRED ON BEHALF O F CUSTOMERS ALONG WITH A COPY OF AGREEMENT, IF ANY ENTERED INTO WITH THE CUSTOMERS. LETTERS WERE ALSO ISSUED TO THE COMP ANIES ASKING THEM TO FURNISH INFORMATION REGARDING THE NATURE OF WORKS EXECUTED/SERVICES RENDERED BY THE ASSESSEE FOR WHOM PAYMENTS WERE MADE AND ALSO FURNISH COPY OF AGREEMENT IF ANY ENTERED INTO WITH THE ASSESSEE. IN RESPONSE TO THE LETTER ISSUED , THE ASSESSEE 3 ITA NO.709 OF 2013 RAFEEQ IQBAL, HYDERABAD. SUBMITTED A LETTER GIVING DETAILS OF AMOUNT SPENT F OR MATERIAL RELEASE AND AMOUNT REIMBURSED. HOWEVER, AS NOTED B Y THE ASSESSING OFFICER, HE DID NOT FURNISH ANY DOCUMENTA RY EVIDENCE IN SUPPORT OF PAYMENTS MADE FOR MATERIAL RELEASE. AS SUCH IT CANNOT BE VERIFIED AS TO WHAT THE AMOUNT IS SPENT. 3. THE ASSESSING OFFICER IN THE ASSESSMENT ORDER FURTHER NOTED THAT THE COMPANY DID NOT RESPOND TO THE OFFI CE LETTER ASKING THEM TO FURNISH THE DETAILS. THE ASSESSING OFFICER THEREFORE CAME TO A CONCLUSION THAT IN ABSENCE OF DETAILS/SERVICES RENDERED AND DOCUMENTARY EVIDENCE IN SUPPORT OF PAY MENT MADE TO CUSTOM HOUSE, THE ASSESSEE CLAIM CANNOT BE ACCE PTED. HE FURTHER CONCLUDED THAT THE AMOUNT OF RS.85,33,333/- SHOWN IN THE TDS CERTIFICATE IS A CONTRACT RECEIPT AND HENCE AS SESSABLE AS SUCH. SINCE THE ASSESSEE HAD CREDITED AN AMOUNT OF RS.34,34,491/- TO THE PROFIT LOSS A/C, THE ASSESSI NG OFFICER TREATED THE DIFFERENTIAL AMOUNT OF RS.50,98,842/- A S ESCAPED INCOME AND ADDED TO THE INCOME RETURNED BY COMPLET ING THE ASSESSMENT ACCORDINGLY. THE ASSESSEE BEING AGGRIEV ED OF THE ASSESSMENT ORDER SO PASSED PREFERRED AN APPEAL BEFO RE THE CIT (A). 4. IN COURSE OF HEARING OF APPEAL, THE ASSESSEE REI TERATED THE STAND TAKEN BEFORE THE AO AND IN SUPPORT OF SUCH CO NTENTION, THE ASSESSEE ALSO FURNISHED LETTERS OF THE CUSTOMERS AL ONG WITH COPY OF THE LEDGER ACCOUNTS OF THE ASSESSEE APPEARING IN THEIR BOOKS OF ACCOUNTS WITH REGARD TO THE REIMBURSEMENT OF EXPENS ES IN RESPECT OF MAJOR CLIENTS M/S WIPRO, XL ENERGY LTD., AND M/S GRANITE MART LIMITED WHEREIN THE AFORESAID COMPANIES ADMITTED OF REIMBURSEMENT OF THE EXPENDITURE INCURRED BY THE AS SESSEE. ON THE AFORESAID CONTENTIONS RAISED BY THE ASSESSEE, T HE CIT (A) CALLED FOR A REMAND REPORT FROM THE ASSESSING OFFIC ER. THE 4 ITA NO.709 OF 2013 RAFEEQ IQBAL, HYDERABAD. ASSESSING OFFICER IN THE REMAND REPORT SUBMITTED TH AT IN THE TDS CERTIFICATE THE NATURE OF PAYMENT WAS MENTIONED AS CONTRACTS AND TDS WAS MADE U/S 194C OF THE ACT. FROM THE LED GER EXTRACTS FURNISHED FROM WIPRO AND OTHERS, THE ASSESSING OFFI CER OBSERVED THAT THE ASSESSEE WAS PAID CLEARING AND FORWARDING CHARGES AND NOWHERE IT WAS MENTIONED AS SERVICE CHARGES. THE AS SESSING OFFICER FURTHER NOTED THAT THE GROSS RECEIPTS AS PE R TDS CERTIFICATE ENCLOSED WITH THE RETURN OF INCOME AND GROSS RECEIP TS AS PER THE INFORMATION RECEIVED FROM THE CLIENTS ALSO DIFFER. ON EXAMINING THE BREAK-UP OF RS.85,33,333 FURNISHED BY THE ASSES SEE, THE ASSESSING OFFICER OBSERVED THAT THE SERVICE CHARGES RECEIVED SHOWN AT RS.34,34,491/- ARE ONLY OUT OF GROSS RECE IPTS OF RS.85,33,333/- AS MENTIONED IN THE TDS CERTIFICATE. HOWEVER, AS PER THE BILL BOOK OF THE ASSESSEE, THE GROSS BILLS FROM VARIOUS PARTIES WERE SHOWN AT RS.1,20,35,798/- WHICH IN OTH ER WORDS, WOULD MEAN THAT THE ASSESSEE HAD NOT SHOWN SERVICE CHARGES FOR THE REMAINING GROSS BILLS OF RS.34,34,491/-. THE C IT (A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE VIS-A-V IS REMAND REPORT CONCLUDED THAT THE CUSTOMERS IN THE DETA ILS SUBMITTED HAD NOT GIVEN BIFURCATION OF THE AMOUNTS PAID TO TH E ASSESSEE CLEARLY MENTIONING WHAT IS THE AMOUNT PAID TOWARDS REIMBURSEMENT AND WHAT IS TOWARDS SERVICES CHARGES . THEREFORE, HE CAME TO THE CONCLUSION THAT IN THE AB SENCE OF CLEAR- CUT DETAILS GIVING BIFURCATION OF CHARGES PAID TO THE ASSESSEE FOR THE SERVICES AND EXPENSES INCURRED TOWARDS CLEARING OF THEIR GOODS, ASSESSEES CLAIM CANNOT BE ACCEPTED. THE CI T (A) ALSO TOOK NOTE OF THE FACT IF THE ASSESSEES CLAIM OF SE RVICE CHARGES OF RS.34.34.491 STATED TO HAVE BEEN INCLUDED IN THE A MOUNT OF RS.85,33,333/- WHERE TDS WAS DEDUCTED BY MAJOR PART IES IS TO BE ACCEPTED, THEN THE SERVICE CHARGES EARNED OUT OF RE MAINING GROSS BILLS OF RS.35,04,465/- IS CLEARLY NOT ADMITTED BY THE ASSESSEE, 5 ITA NO.709 OF 2013 RAFEEQ IQBAL, HYDERABAD. SINCE AS PER BILL BOOK, THE GROSS RECEIPTS FROM THE BUSINESS STOOD AT RS.1,20,35,798/-. ON THE BASIS OF THE AFORESAID FINDING, THE CIT (A) CONFIRMED THE ORDER PASSED BY THE ASSESSING OFFICER TREATING THE AMOUNT OF RS.50,98,842/- AS THE INCOME OF THE ASSESSEE WHICH HAS NOT BEEN SHOWN. BEING AGGRIEVED OF THE ORDERS OF THE CIT (A), THE ASSESSEE IS IN APPEAL BE FORE US. 5. GROUND NOS. 1 AND 2 RELATE TO VALIDITY OF PROCEE DING INITIATED U/S 147 OF THE ACT. THE LEARNED AUTHORISED REPRESE NTATIVE FOR THE ASSESSEE AT THE OUTSET FAIRLY SUBMITTED BEFORE US T HAT THESE LEGAL GROUNDS WERE INADVERTENTLY NOT RAISED BEFORE THE CI T (A) THOUGH THEY DIRECTLY ARISE OUT OF THE ASSESSMENT PROCEEDIN GS. HE FURTHER CONTENDED THAT SINCE THESE ARE LEGAL GROUNDS AND DO NOT REQUIRE ANY INVESTIGATION INTO FACTS OR LAW, THEY MAY BE AD MITTED FOR ADJUDICATION. 6. THE LEARNED AR ARGUING ON THE LEGAL GROUND SUBMI TTED BEFORE US THAT THE REOPENING WAS MADE AFTER LAPSE O F FOUR YEARS AND THERE IS NO FRESH MATERIAL BEFORE THE ASSESSING OFFICER FOR REOPENING THE ASSESSMENT. IT WAS FURTHER SUBMITTED THAT AS PER THE REASONS MENTIONED IN THE ASSESSMENT ORDER, THE REOPENING WAS MADE ONLY FOR RECONCILIATION OF THE GROSS RECEI PTS ON THE BASIS OF TDS CERTIFICATE AS PER FORM 26AS WHICH CANNOT BE A MATTER SUBJECT TO PROCEEDINGS U/S 147 OF THE ACT. THE LEA RNED AUTHORISED REPRESENTATIVE FOR THE ASSESSEE FURTHER SUBMITTED THAT NO SANCTION UNDER SUB-SECTION (2) OF SECTION 151 OF THE ACT HAS BEEN TAKEN FROM THE PRESCRIBED AUTHORITY, HENCE INI TIATION OF PROCEEDINGS IS VITIATED. THE LEARNED AUTHORISED RE PRESENTATIVE FOR THE ASSESSEE FURTHER CONTENDED THAT THE MATERIALS O N RECORD CLEARLY REVEALED THAT THE REOPENING WAS MADE ONLY O N THE OBJECTIONS RAISED BY THE AUDIT. IN SUPPORT OF SUCH CONTENTION THE 6 ITA NO.709 OF 2013 RAFEEQ IQBAL, HYDERABAD. LEARNED AUTHORISED REPRESENTATIVE FOR THE ASSESSEE RELIED ON THE FOLLOWING DECISIONS:- I) CIT VS. SPLS SIDDHARTHA LTD. (345 ITR 223) II) GHANSHYAM K. KHABRANI VS. ACIT (346 ITR 443 ) 7. SO FAR AS THE MERIT OF THE ISSUE RELATING TO THE ADDITION OF RS.50,98,842/- AS RAISED IN THE REMAINING GROUNDS, THE LEARNED AUTHORISED REPRESENTATIVE FOR THE ASSESSEE SUBMITTE D THAT THE ASSESSEE HAS PRODUCED SUBSTANTIAL EVIDENCE NOT ONLY BEFORE THE ASSESSING OFFICER BUT ALSO BEFORE THE CIT (A) TO E STABLISH ITS CLAIM THAT THE DIFFERENTIAL AMOUNT AS PER TDS CERTI FICATE RELATE TO REIMBURSEMENT OF EXPENSES ON WHICH TAX WAS DEDUCTED AT SOURCE BY THE CUSTOMERS. EXPLAINING THE NATURE OF BUSINES S ACTIVITY CARRIED ON BY THE ASSESSEE, THE LEARNED AUTHORISED REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE PROPRIETARY CON CERN OF THE ASSESSEE M/S. R.S. TRAVELS IS A CLEARING AND FORWAR DING AGENT. THE NATURE OF SERVICES PROVIDED BY THE ASSESSEE INC LUDED LOADING/UNLOADING OF IMPORT OR EXPORT GOODS FROM TH E PREMISES OF EXPORTER/IMPORTER INCLUDED THE FOLLOWING:- A. LOADING/UNLOADING OF IMPORT OR EXPORT GOODS FROM/AT THE PREMISES OF EXPORTER/IMPORTER. B. PACKING, WEIGHMENT, MEASUREMENT OF EXPORT GOODS. C. TRANSPORTATION OF THE EXPORT GOODS TO THE CUSTOMS STATION OR THE IMPORT GOODS FROM THE CUSTOMS STATION TO IMPORTERS PREMISES. 7 ITA NO.709 OF 2013 RAFEEQ IQBAL, HYDERABAD. D. RECEIVING THE GOODS FROM THE FACTORIES OR PREMISES OF THE PRINCIPAL OR HIS AGENTS. E. WAREHOUSING OF THE GOODS. F. RECEIVING DESPATCH ORDERS FROM THE PRINCIPAL. G. ARRANGING DESPATCH OF THE GOODS AS PER DIRECTION OF THE PRINCIPAL BY ENGAGING TRANSPORT. H. CARRYING OUT VARIOUS STATUTORY AND OTHER FORMALITIES SUCH AS PAYMENT OF EXPENSES ON ACCOUNT OCTROI, DESTUFFING PELLETISATION, TERMINAL HANDLING, FUMIGATION, DOCK FEES, REPAIRING AND EXAMINATION FEES, LANDING AND CONTAINER CHARGES, STATUTORY LABOUR CHARGES, TESTING FEES, SORTING/MARKING/STAMPING/SEALING ON BEHALF OF EXPORTER/IMPORTER, CRANE LIFT/FORK CHARGES, TAXI CHARGES,. PHOTOSTAT AND FAX CHARGES, BANK COLLECTION CHARGES, COURIER SERVICE CHARGES AND MISCELLANEOUS OTHER EXPENSES ON ACCOUNT OF EXPORTER/IMPORTER. 8 . THE LEARNED AUTHORISED REPRESENTATIVE FOR THE ASSES SEE FURTHER SUBMITTED THAT THE ASSESSEE IS ENTITLED TO SERVICE CHARGES FOR RENDERING SERVICES AS A CLEARING AND FORWARDING AGENT, HE ASSESSEE USUALLY MAKES PAYMENT TOWARDS DELIVERY ORD ER CHARGES, CUSTODIAN CHARGES, CUSTOMS DUTY FREIGHT CHARGES, ED I CHARGES, TRANSPORTATION CHARGES ON BEHALF OF CUSTOMERS. THES E PAYMENTS ARE SUBSEQUENTLY REIMBURSED BY THE CUSTOMERS. THERE IS NO PROFIT ELEMENT INVOLVED AND THEREFORE THE ASSESSEE RECOGNI SED ONLY SERVICE CHARGES AS REVENUE IN HIS BOOKS OF ACCOUNT FOR THE SERVICES RENDERED TO CUSTOMERS AS CLEARING AND FORW ARDING AGENT. THE LEARNED AUTHORISED REPRESENTATIVE FOR THE ASSES SEE REFERRING 8 ITA NO.709 OF 2013 RAFEEQ IQBAL, HYDERABAD. TO THE LETTER ISSUED IN RESPECT OF MAJOR CLIENTS M/S WIPRO, XL ENERGY LTD., AND M/S GRANITE MART LIMITED IN RESPON SE TO THE INFORMATION CALLED FROM THEM BY THE ASSESSING OFFIC ER HAD CATEGORICALLY STATED THAT THE AMOUNT MENTIONED IN T HE TDS CERTIFICATE WAS TOWARDS REIMBURSEMENT OF EXPENSES I NCURRED BY THE ASSESSEE ON BEHALF OF THEM. IN THIS CONTEXT, T HE LEARNED AUTHORISED REPRESENTATIVE FOR THE ASSESSEE REFERRED TO THE LETTERS AT PAGES 6 AND 7 OF THE PAPER BOOK WHEREIN THE AFOR ESAID COMPANIES ADMITTED OF REIMBURSEMENT OF THE EXPENDIT URE INCURRED BY THE ASSESSEE. IT WAS SUBMITTED THAT THE CONCERNE D PARTIES ALSO FURNISHED LEDGER ACCOUNT COPIES OF THE ASSESSEE IN THEIR BOOKS OF ACCOUNTS IN SUPPORT OF THE FACT THAT THE EXPENSES INCURRED BY THE ASSESSEE ON BEHALF OF THEM WERE REIMBURSED. IT WA S THEREFORE SUBMITTED THAT IN SPITE OF SUFFICIENT EVIDENCE AVAI LABLE ON RECORD WITH REGARD TO THE ASSESSEES CLAIM OF REIMBURSEMEN T OF EXPENSES, REVENUE AUTHORITIES HAVE REJECTED SUCH CL AIM ON FLIMSY GROUND AND TREATED SUCH REIMBURSEMENT OF EXPENSES A S INCOME OF THE ASSESSEE. THE LEARNED AUTHORISED REPRESENTATIV E FOR THE ASSESSEE IN SUPPORT OF HIS CONTENTION THAT THE REIM BURSEMENT OF EXPENSES CANNOT BE TREATED AS INCOME OF THE ASSESSE E RELIED UPON A DECISION OF MUMBAI BENCH OF INCOME-TAX APPELLATE TRIBUNAL IN CASE OF ITO VS. TRAVELS & SHOPPING (P) LTD.(ITA NO.3595/MUM/2011 DATED 14-3-2012). 9 . THE LEARNED DEPARTMENTAL REPRESENTATIVE STRONGLY SUPPORTING THE ORDER OF THE REVENUE AUTHORITIES SUB MITTED THAT THE ASSESSEE HAVING NOT RAISED ANY GROUND CHALLENGI NG THE LEGALITY OF PROCEEDINGS U/S 147 OF THE ACT EITHER BEFORE THE ASSESSING OFFICER OR BEFORE THE FIRST APPELLATE A UTHORITY, HE CANNOT BE PERMITTED TO RAISE SUCH ISSUE FOR THE FIR ST TIME BEFORE THE TRIBUNAL. IN SUPPORT OF SUCH CONTENTION, THE L EARNED 9 ITA NO.709 OF 2013 RAFEEQ IQBAL, HYDERABAD. DEPARTMENTAL REPRESENTATIVE FURTHER SUBMITTED THAT THE PROCEEDINGS U/S 147 OF THE ACT HAVE BEEN INITIATED ON THE BASIS OF MATERIALS ON RECORD, THERE IS CLEAR EVIDENCE THA T THE ASSESSEE HAS NOT SHOWN THE RECEIPT OF RS.50,48,842/-. IN SU PPORT OF SUCH CONTENTION, THE LEARNED DEPARTMENTAL REPRESENTATIVE RELIED UPON THE FOLLOWING DECISIONS:- I) SRI KRISHNA PVT. LTD., ETC., VS. ITO AND OTHERS (221 ITR 538) 2) ACIT VS. RAJESH JHAVERI STOCK BROKERS PVT. LTD. (291 ITR 500) 3) WCI (MADRAS) (P) LTD. VS. ACIT (324 ITR 181) 10. WITH REGARD TO THE MERITS OF THE CASE, THE LEAR NED DEPARTMENTAL REPRESENTATIVE IN HIS REPLY SUBMITTED THAT THE ASSESSEE HAS NOT PRODUCED ANY BOOKS OF ACCOUNTS O R ANY OTHER EVIDENCE TO SUBSTANTIATE ITS CLAIM THAT THE DIFFERE NTIAL AMOUNT OF RS.50,98,000/- WAS IN REALITY REIMBURSEMENT OF EX PENSES. HE FURTHER SUBMITTED THAT SINCE THE ASSESSEE COULD NOT SUBSTANTIATE WITH NECESSARY DETAILS THE DIFFERENTIAL AMOUNT HAS BEEN RIGHTLY BEEN TREATED AS INCOME OF THE ASSESSEE. 11. WE HAVE CONSIDERED RIVAL SUBMISSIONS OF THE PAR TIES AND PERUSED THE MATERIAL ON RECORD AS WELL AS THE ORDER S OF THE REVENUE AUTHORITIES. WE HAVE ALSO APPLIED OUR MIND TO THE DECISIONS RELIED UPON BY THE PARTIES. SO FAR AS TH E LEGAL ISSUE RAISED IN GROUND NOS.1 AND 2 IS CONCERNED, IT IS A FACT ON RECORD THAT THESE GROUNDS WERE NOT RAISED BEFORE THE CIT ( A) AND HAS BEEN RAISED FOR THE FIRST TIME BEFORE THE TRIBUNAL. HOWEVER, CONSIDERING THE FACT THAT THESE ISSUES ARE PURELY L EGAL ISSUES AND 10 ITA NO.709 OF 2013 RAFEEQ IQBAL, HYDERABAD. CAN BE DECIDED ON THE BASIS OF THE FACTS ALREADY AV AILABLE ON RECORD, WE ARE INCLINED TO ENTERTAIN THESE GROUNDS IN VIEW OF THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT IN CAS E OF NATIONAL THERMAL POWER CO. LTD. VS. CIT (229 ITR 383) 12. NOW COMING TO THE CONTENTIONS RAISED BY THE LEA RNED AUTHORISED REPRESENTATIVE FOR THE ASSESSEE ON THIS ISSUE, AT THE OUTSET, WE WOULD LIKE TO OBSERVE THAT SO FAR AS THE LEARNED AUTHORISED REPRESENTATIVE FOR THE ASSESSEES CONTEN TION THAT THE PROCEEDINGS ARE INVALID SINCE THERE WAS NO APPROVA L FROM THE PRESCRIBED AUTHORITY AS MENTIONED IN SECTION 151(2) IS CONCERNED, WE ARE UNABLE TO ACCEPT SUCH CONTENTION AS NEITHER ANY GROUND IN THAT REGARD WAS RAISED BEFORE THE CIT (A) NOR ANY S PECIFIC GROUND RAISING THIS ISSUE HAS BEEN RAISED BEFORE US. HOWE VER, SO FAR AS THE OTHER CONTENTIONS OF THE LEARNED AUTHORISED REP RESENTATIVE FOR THE ASSESSEE THAT THE ASSESSMENT COULD NOT HAVE BEE N REOPENED MERELY BECAUSE OF RECONCILING THE DIFFERENCE BETWEE N THE RECEIPTS MENTIONED IN FORM NO.26AS AND AS SHOWN IN THE PROFI T AND LOSS ACCOUNT IS CONCERNED, WE ARE OF THE VIEW THAT SUCH CONTENTIONS IS OF SUBSTANCE. A PERUSAL OF THE ASSESSMENT ORDER AS WELL AS THE REMAND REPORT SUBMITTED BY THE ASSESSING OFFICER DU RING THE FIRST APPELLATE PROCEEDINGS CLEARLY REVEALS THE FACT THAT THE ASSESSMENT WAS REOPENED ONLY DUE TO THE DIFFERENCE BETWEEN THE GROSS RECEIPTS SHOWN IN THE TDS CERTIFICATE SUBMITTED WIT H THE RETURN OF INCOME AND DISCLOSED BY THE ASSESSEE IN THE PROFIT AND LOSS A/C. THERE WAS NO OTHER FRESH TANGIBLE MATERIAL BEFORE T HE ASSESSING OFFICER APART FROM THE TDS CERTIFICATES SUBMITTED W ITH THE RETURN FOR FORMING A BELIEF THAT INCOME HAS ESCAPED ASSE SSMENT. IN OUR VIEW, THE ASSESSMENT COULD NOT HAVE BEEN REOPEN ED ONLY ON THE BASIS OF DIFFERENCE IN THE TDS CERTIFICATE AND RECEIPTS SHOWN IN THE P & L A/C. THE INCOME-TAX APPELLATE TRIBUNAL , KOLKATA 11 ITA NO.709 OF 2013 RAFEEQ IQBAL, HYDERABAD. BENCH IN CASE OF MEHERA REID & CO. VS. ITO, 81 DTR (CAL.TRIB.) 376 HELD AS UNDER:- IN THE INSTANT CASE, ASSESSMENT HAS BEEN REOPENED O N THE GROUND THAT THERE IS DISCREPANCY BETWEEN PROFESSION AL INCOME DECLARED BY THE ASSESSEE AND THE PROFESSIONA L INCOME AS PER TDS CERTIFICATES AND THAT IT REQUIRES VERIFICATION TO FIND OUT WHETHER ANY TAXABLE INCOME HAS ESCAPED ASSESSMENT THERE IS NOTHING IN THE REASON S TO INDICATE THAT THERE IS ESCAPEMENT OF INCOME A VAR IATION IN THESE TWO FIGURES DOES NOT NECESSARILY LEAD TO ESCA PEMENT OF INCOME MERE NEED TO VERIFY THE DISCREPANCY DOES N OT BRING THE MATTER WITHIN THE SCOPE OF CASES IN WHICH REASS ESSMENT PROCEEDINGS CAN BE VALIDLY INITIATED THERE IS SUB TLE, THOUGH SIGNIFICANT, DISTINCTION BETWEEN REASON TO BELIEVE AND REASON TO SUSPECT WHILE THE FORMER IS GOOD ENOUGH TO HOL D THAT INCOME HAS ESCAPED ASSESSMENT AND INITIATE SUITABLE REMEDIAL MEASURES IN RESPECT THEREOF, THE LATTER CA N, AT BEST, BE THE GROUND TO VERIFY AND EXAMINE THE MATTER FURT HER MERE FACT THAT MATTER NEEDS TO BE VERIFIED AND EXAM INED FURTHER CAN NEVER BE A REASON GOOD ENOUGH TO BELIEV E THAT INCOME HAS ESCAPED ASSESSM ENT AND TO INVOKE THE REASSESSMENT PROCEEDINGS THEREFORE, THE VERY INIT IATION OF REASSESSMENT PROCEEDINGS ON THE FACTS OF THE INSTAN T CASE WAS DEVOID OF LEGALLY SUSTAINABLE MERITS REASSESS MENT QUASHED. 13. FOLLOWING THE AFORESAID DECISION OF THE KOLKATA BENCH, THE INCOME-TAX APPELLATE TRIBUNAL HYDERABAD BENCH IN CA SE OF M/S. VANSU ERECTORS PRIVATE LIMITED, HYDERABAD VS. ITO, WARD-3(2), HYDERABAD (ITA NO.456/HYD/2012 DATED 5-4-2013) ALSO CANCELLED THE REASSESSMENT MADE U/S 143(3) READ WITH SECTION 147 OF THE ACT FOR THE ASSESSMENT OF ESCAPED INCOME ON THE B ASIS OF RECEIPTS SHOWN IN THE TDS CERTIFICATE. IN VIEW OF THE RATIO LAID DOWN AS ABOVE BY THE CO-ORDINATE BENCHES OF THIS TR IBUNAL, WE HOLD THAT THE REOPENING OF ASSESSMENT ON THE BASIS OF THE RECEIPTS 12 ITA NO.709 OF 2013 RAFEEQ IQBAL, HYDERABAD. SHOWN IN THE TDS CERTIFICATE IS NOT SUSTAINABLE IN LAW. THUS, ON THIS GROUND ALONE THE IMPUGNED ASSESSMENT ORDER IS LIABLE TO BE ANNULLED. HOWEVER, SO FAR AS THE MERIT OF THE ADDI TION IS CONCERNED, IT IS A FACT ON RECORD THAT THE REVENUE AUTHORITIES HAVE NOT DISPUTED THE FACT THAT THE ASSESSEE IS CARRYING ON BUSINESS AS CLEARING AND FORWARDING AGENT. IT IS ALSO A FACT O N RECORD, WHICH HAS ALSO BEEN CONFIRMED BY THE CUSTOMERS OF THE ASS ESSEE, THAT THE ASSESSEE INCURS EXPENDITURE ON BEHALF OF HIS CL IENTS AS A CLEARING AND FORWARDING AGENT WHICH IS SUBSEQUENTLY REIMBURSED BY THE CLIENT. IN FACT, LETTERS WRITTEN BY THE CLI ENTS AT PAGES 6 AND 7 OF THE PAPER BOOK CLEARLY REVEAL THAT THE CLI ENTS HAVE CONFIRMED THIS FACT BY MENTIONING THEREIN THAT THE ASSESSEE INCURS EXPENDITURE RELATING TO CUSTODIAN CHARGES, CUSTOM D UTY, DELIVERY ORDERS CHARGES ETC., ON THEIR BEHALF FOR CLEARING T HE GOODS AND SUBSEQUENTLY THESE EXPENDITURES ARE REIMBURSED TO T HE ASSESSEE. IN FACT, LEDGER ACCOUNT OF THE ASSESSEE IN THE BOOK S OF ACCOUNTS OF THE CONCERNED PARTIES WAS ALSO PRODUCED FOR VERI FICATION. A PERUSAL OF THE ORDER OF THE CIT (A) ALSO REVEAL THA T THE CIT (A) DOES NOT DISPUTE THE FACT THAT THE ASSESSEE HAS IN CURRED EXPENDITURE AS A CLEARING AND FORWARDING AGENT ON BEHALF OF HIS CLIENTS. HOWEVER, BY MERELY OBSERVING THAT NO BIFU RCATION OF THE RECEIPTS HAVE BEEN SUBMITTED, THE CIT (A) HAS REJEC TED THE CLAIM OF THE ASSESSEE WHEN THE ASSESSEES CLAIM OF INCURR ING OF EXPENDITURE HAS BEEN CONFIRMED BY THE RESPECTIVE CL IENTS AND NECESSARY EVIDENCE IN THIS REGARD HAS BEEN PRODUCE D, IN OUR VIEW, THE CIT (A) WAS NOT JUSTIFIED IN REJECTING SU CH CLAIM BY SIMPLY SAYING, NO BIFURCATION IS AVAILABLE. WHE N THE LEDGER ACCOUNT OF THE ASSESSEE IN THE BOOKS OF ACCOUNTS OF THE CONCERNED PARTIES HAS BEEN FURNISHED, THE NATURE OF EXPENDITU RE INCURRED COULD HAVE EASILY BEEN ASCERTAINED BY THE CIT (A) F ROM SUCH ACCOUNT. IN AFORESAID VIEW OF THE MATTER, WE DO NO T FIND ANY 13 ITA NO.709 OF 2013 RAFEEQ IQBAL, HYDERABAD. VALID REASON TO REJECT THE CLAIM OF THE ASSESSEE. IT IS ALSO A FACT, THAT THE ASSESSING OFFICER HAS NOT BROUGHT ANY MATE RIAL ON RECORD TO SHOW THAT THE AMOUNT OF RS.50,98,842/- WAS TOWAR DS SERVICES CHARGES. MERELY BECAUSE TAX WAS DEDUCTED AT SOURCE ON REIMBURSED EXPENSES, IT WILL NOT CONSTITUTE INCOME OF THE ASSESSEE. IN THIS REGARD WE DRAW SUPPORT FROM THE DECISION OF THE INCOME-TAX APPELLATE TRIBUNAL, MUMBAI BENCH IN CASE OF ITO VS. TRAVELS & SHIPPING (P) LTD. (SUPRA). IN SUCH V IEW OF THE MATTER, THE AUTHORITIES BELOW WERE NOT JUSTIFIED IN TREATING THE DIFFERENTIAL AMOUNT OF RS.50,98,842 AS INCOME OF TH E ASSESSEE WITHOUT PROPERLY EXAMINING THE EXPLANATION SUBMITTE D BY THE ASSESSEE. 14. THE OBSERVATION MADE BY THE CIT (A) THAT THE A SSESSEE HAS SHOWN RECEIPT OF RS.1,20,35,798/- IN ITS BOOKS OF A CCOUNTS IS OF NO CONSEQUENCE AS SUCH FIGURE HAS NOT BEEN TAKEN I NTO ACCOUNT BY THE ASSESSING OFFICER WHILE COMPUTING THE INCOME . AS WOULD BE EVIDENT FROM THE ASSESSMENT ORDER, THE ASSESSING OFFICER IS ONLY CONSIDERING RECEIPT OF RS.85,33,333/- AS MENTI ONED IN THE TDS CERTIFICATE. THUS, CONSIDERING THE TOTALITY OF FACTS AND THE CIRCUMSTANCES OF THE CASE, WE HOLD THAT THE ADDITIO N OF RS.50,98,000 TO THE INCOME OF THE ASSESSEE FOR THE IMPUGNED ASSESSMENT YEAR IS LEGALLY NOT SUSTAINABLE AND ACCO RDINGLY, WE DIRECT FOR DELETING THE SAME. 15. IN THE RESULT, THE ASSESSEES APPEAL SUCCEEDS B OTH ON LEGAL ISSUE AS WELL AS WITH REGARD TO MERIT OF THE CASE A LSO. WE THEREFORE SET ASIDE THE ORDER OF THE CIT (A) BY ALL OWING THE GROUNDS RAISED BY THE ASSESSEE. 14 ITA NO.709 OF 2013 RAFEEQ IQBAL, HYDERABAD. 16. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS ALLOWED. ORDER PRONOUNCED IN THE COURT ON 13-9-2013. SD/- ( CHANDRA POOJARI) ACCOUNTANT MEMBER SD/- (SAKTIJIT DEY) JUDICIAL MEMBER HYDERABAD, DATED THE 13 TH SEPT. 2013 COPY TO:- 1) SRI RAFEEQ IQBAL, 16-3-373, CHANCHALGUDA, MALKPET, HYDERABAD. 2) ITO, WARD-9(1), AAYAKAR BHAVAN, HYDERABAD. 3) CIT (A)V, HYDERABAD. 4) CIT-VI, HYDERABAD. 5.THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDERA BAD. JMR* 15 ITA NO.709 OF 2013 RAFEEQ IQBAL, HYDERABAD. *