M/s The Punjab State Coop Bank Ltd., Chandigarh V. ACIT, Chandigarh

ITA 734/CHANDI/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 5357 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 7 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-01-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 07-06-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Keywords: Difference of opinion; Revised return; Change of opinion; Reassessment proceedings
• Section: 143(3); 194C; 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH B, CHANDIGARH BEFORE MS. DIVA SINGH, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO.734/CHD/2016 (ASSESSMENT YEAR : 2009-10) THE PUNJAB STATE COOP BANK LTD., VS. THE A.C.I.T., SCO 175-187, SECTOR 34A, CIRCLE 2(1), CHANDIGARH. CHANDIGARH. PAN: AAAAP0253B (APPELLANT) RESPONDENT) ASSESSEE BY : SHRI M.R.SHARMA, ADV. DEPARTMENT BY : SHRI MANJIT SINGH, SR.DR DATE OF HEARING : 03.01.2018 DATE OF PRONOUNCEMENT : 08.01.2018 ORDER PER ANNAPURNA GUPTA, A.M.: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESS EE AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-, CHANDIGARH DATED 11.03.2016 RELATING TO ASSESSMENT 2009-10. 2. GROUND NOS.1 & 4 RAISED BY THE ASSESSEE ARE GENE RAL IN NATURE AND HENCE, NEED NO ADJUDICATION. 3. GROUND NO.2 RAISED BY THE ASSESSEE READS AS UNDE R: 2. THAT THE ORDER OF THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 2(1), CHANDIGARH AS UPHELD BY THE COMMISSIONER OF INCOME TAX (APPEALS)-1, CHANDIGARH INITIATING RE-ASSESSMENT PROCEEDINGS U/S 147 AND ISSUANCE OF THE NOTICE U/S 148 IN THE FACTS AND CIRCUMSTANCES OF THE CASE, MORE SO WHEN THE CLAIM F OR THE AMOUNT DISALLOWED HAD BEEN MADE IN THE RETURN WHICH HAS BEEN ACCEPTED IN SCRUTINY ASSESSMENT IS BAD IN LAW AND NEEDS TO BE SET ASIDE. 4. THE ASSESSEE IN THE ABOVE GROUND HAS CHALLENGED THE VALIDITY OF THE ASSESSMENT ORDER PASSED U/S 147 OF THE ACT. 2 BRIEFLY, STATED, THE ASSESSMENT IN THE IMPUGNED CAS E WAS COMPLETED ON 15.12.2011 DETERMINING INCOME AT RS.19,33,72,110/-. SUBSEQUENTLY, THE CASE WAS REOP ENED ON THE GROUND THAT THE ASSESSEE SOCIETY WAS REQUIRE D TO DEDUCT TAX ON PAYMENTS OF RS.7,57,372/- MADE ON AC COUNT OF PRINTING, STATIONARY AND ADVERTISEMENT AND SUCH EXPENDITURE WAS NOT ALLOWABLE U/S 40(A)(IA) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). NOTICE U/S 148 OF THE ACT WAS ISSUED ON 30.9.2013 AND DULY SERVED UPON THE ASSESSEE. THE AUTHORIZED REPRESENTATIVE OF THE ASS ESSEE REQUESTED TO PROVIDE REASONS FOR REOPENING THE CASE AND THE SAME WAS PROVIDED TO HIM VIDE LETTER DATED 10.6.201 4. THE ASSESSEE MADE TWO OBJECTIONS AGAINST SUCH REOPENING . THE OBJECTIONS WERE DISPOSED OFF BY PASSING A SPEAKING ORDER DATED 30.7.2014. DISCUSSING IN DETAIL IN THE ASSES SMENT ORDER, THE ASSESSING OFFICER HELD THAT THE PURCHASE OF PRINTED MATERIAL AS PER ASSESSEES SPECIFICATION W AS NOTHING BUT WORK CONTRACT IRRESPECTIVE OF THE FACT WHETHER SALES TAX/VAT WAS PAID ON IT OR NOT AND WAS LIABLE FOR DEDUCTION OF TAX U/S 194C OF THE ACT. ACCORDINGLY, DISALLOWANCE OF RS.7,57,372/- WAS MADE U/S 40(A)(IA ) OF THE ACT. 5. BEFORE THE LD.CIT(APPEALS) THE ASSESSEE CHALLENG ED THE VALIDITY OF THE ORDER PASSED U/S 147 OF THE ACT ON THE BASIS THAT THE REOPENING WAS MERELY BASED ON CHAN GE OF OPINION. THE LD.CIT(APPEALS) DISMISSING THE CONTEN TION OF THE ASSESSEE HELDING THAT THE PRINCIPLE OF CHANGE O F 3 OPINION COULD BE APPLIED ONLY IN SITUATIONS WHERE T HE ASSESSING OFFICER HAD APPLIED HIS MIND AND SINCE IN THE PRESENT CASE THE ASSESSING OFFICER HAD NOT ALREADY CONSIDERED THE ISSUE IT WAS NOT A CASE OF CHANGE OF OPINION. THE RELEVANT FINDINGS OF THE LD.CIT(APPEA LS) IN THIS REGARD AT PARA 6.2 OF THE ORDER ARE AS UNDER: IN REGARD TO CHANGE OF OPINION THE ASSESSING OFFIC ER HAS CATEGORICALLY DISCUSSED IN THE SAID ORDER BY QUOTING SEVERAL DECISIONS INCLUDING HON'BLE SUPREME COURT WHEREIN IT WAS DECIDED THAT 'THE PRINCIPLE THAT A MERE CHANGE OF O PINION CANNOT BE A BASIS OF REOPENING COMPLETED ASSESSMENT WOULD BE APPLICABLE ONLY TO SITUATIONS WHERE THE AO HAS APPLIED HIS MIND AND TAKEN A CONSCIOUS DECISION OH A PARTICULAR M ATTER IN ISSUE.' IT IS ALSO HELD BY SEVERAL COURTS THAT THERE MUST BE SOME MATERIAL WHICH CAN BE REGARDED AS INFORMATION, ON THE BASIS OF WHICH THE ASSESSING OFFICER CAN HAVE REASO N TO BELIEVE THAT ACTION U/S 147 IS CALLED FOR. INFORMATION MEANS T HE COMMUNICATION OR RECEPTION OF KNOWLEDGE OR INTELLIGE NCE. IT INCLUDES KNOWLEDGE OBTAINED FROM INVESTIGATION STUDY OR INSTRUCTION. THE REASONS WHICH MAY WEIGH WITH THE AO MA Y BE RESULT OF HIS OWN INVESTIGATION AND MAY COME FRO M ANY SOURCE THAT HE CONSIDERS RELIABLE. IN VIEW OF THE ABOVE DISCUSSION, IT IS NOT A CASE WH ERE THE ASSESSING OFFICER HAD ALREADY CONSIDERED THE ISSUE IN QUESTION AND THUS IT IS NOT A CASE OF CHANGE OF OPINI ON. HENCE, IT IS HELD THAT THE REASSESSMENT PROCEEDINGS ARE VALID. GROUND OF APPEAL NO. 2 IS DISMISSED. 6. BEFORE US THE LD. COUNSEL FOR ASSESSEE REITERATE D THAT THE REOPENING WAS MERELY ON THE BASIS OF CHANGE OF OPINION SINCE THE ISSUE ON WHICH REOPENING HAD BEEN RESORTED TO HAD ALREADY BEEN CONSIDERED DURING ASSESSMENT PROCEEDINGS. THE LD. COUNSEL FOR ASSESSE E, IN SUPPORT OF HIS CONTENTION, DREW OUR ATTENTION TO TH E COPY OF REASONS RECORDED FOR REOPENING PLACED AT PAPER B OOK PAGE NO.26 AND POINTED OUT THEREFROM THAT THE REASO N FOR REOPENING WAS THAT THE EXPENSES ON ACCOUNT OF PRINT ING, STATIONERY AND ADVERTISEMENT HAD NOT BEEN SUBJECTED TO 4 TDS AND WERE, THEREFORE, NOT ALLOWABLE AS DEDUCTION , WHICH FACT HAS BEEN POINTED OUT IN THE TAX AUDIT RE PORT ALSO. THE REASONS ARE REPRODUCED AS UNDER: 'AS PER RECORDS THE ASSESSEE SOCIETY CLAIMED AND WAS ALLOWED AN EXPENDITURE OF RS.25.96.105/-ON ACCOUNT OF P RINTING, STATIONERY AND ADVERTISEMENT ETC. AS PER SERIAL NO. 17 (F) OF THE FORM 3CD (AUDIT REPORT), THE ASSESSEE SOCIETY WAS RE QUIRED TO DEDUCT TAX AT SOURCE AT RS.17,1691- OUT OF PAYMENTS OF RS.7,57,372/- ON ACCOUNT OF STATIONERY AND PRINTING BUT THE ASSESSEE DIDN'T DEDUCT THE AFORESAID TAX AT SOURCE. THUS THE AFORESAID EXPENDITURE OF RS.7,57,1727- IS NOT ALLOW ABLE U/S 40(A)(IA) OF THE INCOME TAX ACT. I HAVE THEREFORE REASONS TO BELIEVE THAT THE ABOVE SAID INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. IN VIEW OF THIS, PROCEEDINGS UNDER SECTION 147 OF T HE INCOME TAX ACT, ARE BEING INITIATED IN THIS CASE AND NO TICE UNDER SECTION 148 OF THE INCOME TAX ACT, IS BEING ISSUED TO THE ASSESSEE FOR THE A.Y. 2009-10.' NOW THE REASONS RECORDED FOR RE-OPENING THE CASE HA S- BEEN PROVIDED. YOU ARE REQUESTED TO COOPERATE AND F ILE THE REQUISITE DETAIL. 7. THE LD. COUNSEL FOR ASSESSEE THEREAFTER DREW OUR ATTENTION TO THE REPLY FILED BY THE ASSESSEE DURING ORIGINAL ASSESSMENT PROCEEDINGS IN RESPONSE TO QUERY RAISED, EXPLAINING WHY DISALLOWANCES HAVE NOT BEEN MADE OF THE AFORESAID EXPENSES DESPITE BEING POINTED OUT BY THE TAX AUDITOR. RELEVANT REPLY FINDS PLACE AT PAPER BOOK PAGE NOS.11 TO 13 OF THE PAPER BOOK AND IS DATED 21.10.2 011 AND READS AS UNDER: 5. THAT REGARDING THE NON- DEDUCTION OF TAX AT SOUR CE IN RESPECT OF THE ITEMS OF PRINTING AND STATIONARY AS P ER THE SCHEDULE ATTACHED TO THE AUDIT REPORT IT IS SUBMITTED THAT IT IS A PURCHASE OF VARIOUS STATIONARY ITEM AND AS SUCH I T DOES NOT ATTRACT THE PROVISIONS OF SECTION 194C AS MENTIONED IN THE AUDIT REPORT. HOWEVER THE COPIES OF THE BILLS FOR THE PURCHASE ARE BEING ENCLOSED FOR YOUR PERUSAL AND RECORD. 5 8. LD. COUNSEL FOR ASSESSEE THEREAFTER DREW OUR ATTENTION TO THE ASSESSMENT ORDER PASSED ON 15.12.2 011 PLACED AT PAPER BOOK PAGE NOS.18 TO 24 AND POINTED OUT THEREFROM THAT NO DISALLOWANCE ON ACCOUNT OF THE SA ID EXPENSES WAS THEREAFTER MADE BY THE ASSESSING OFFIC ER. THE LD. COUNSEL FOR ASSESSEE ALSO DREW OUR ATTENTIO N TO THE FACT THAT INITIALLY THE ASSESSEE HAD FILED HIS RETURN OF INCOME FOR THE IMPUGNED YEAR ON 30.9.2009 AND HAD M ADE DISALLOWANCE OF THE IMPUGNED EXPENDITURE WHILE COMPUTING HIS INCOME. THE LD. COUNSEL FOR ASSESSEE DREW OUR ATTENTION TO THE ACKNOWLEDGEMENT OF THE RETURN OF INCOME FILED AND THE COMPUTATION OF INCOME PLACED A T PAPER BOOK PAGE NOS. 1 TO 4. THEREAFTER, THE LD. C OUNSEL FOR ASSESSEE STATED THAT, THE RETURN WAS REVISED ON 12.1.2010 AND NO DISALLOWANCE ON ACCOUNT OF THE SAI D EXPENDITURE WAS MADE. COPY OF THE ACKNOWLEDGEMENT OF THE REVISED INCOME TAX RETURN ALONGWITH REVISED COMPUTATION OF INCOME WAS POINTED OUT TO US PLACED AT PAPER BOOK PAGE NOS.5 TO 8. THE LD. COUNSEL FOR AS SESSEE THEREAFTER DREW OUR ATTENTION TO THE ASSESSMENT ORD ER PASSED U/S 143(3) OF THE ACT PLACED AT PAPER BOOK P AGE NOS.18 TO 24 AND POINTED OUT THEREFROM THAT THE ABO VE FACTS FIND MENTION IN THE FIRST PARA OF THE ASSESSM ENT ORDER MEANING THEREBY THAT BOTH THE RETURNS WERE IN THE KNOWLEDGE OF THE ASSESSING OFFICER WHO HAD ULTIMATE LY SCRUTINIZED THE REVISED RETURN FILED BY THE ASSESSE E. 6 9. THE LD. DR WAS UNABLE TO CONTROVERT THE ABOVE FA CTS POINTED OUT BY THE LD. COUNSEL FOR ASSESSEE. 10. IN VIEW OF THE ABOVE, WE FIND THAT IT IS EVIDEN T FROM THE MATERIAL PLACED ON RECORD AND WHICH HAS REMAINE D UNCONTROVERTED BY THE LD. DR THAT THE ISSUE FOR WHI CH REOPENING WAS RESORTED IN THE PRESENT CASE HAD BEEN DULY CONSIDERED DURING ASSESSMENT PROCEEDINGS AND RE-OPE NING ON THE SAME ISSUE, THEREFORE, WE ARE AGREE WITH THE LD. COUNSEL FOR ASSESSEE, TANTAMOUNTED TO CHANGE OF OPI NION ON THE SAME SET OF FACTS WHICH CANNOT PER-SE BE THE REASON FOR REOPENING AS HAS BEEN SETTLED BY THE HON 'BLE APEX COURT IN THE CASE OF CIT VS. KELVINATOR OF IND IA LTD., 320 ITR 561 (SC). 11. THE LD.CIT(APPEALS), WE FIND, HAS NOT BASED HIS FINDINGS ,THAT THE ISSUE HAD NOT BEEN CONSIDERED BY THE ASSESSING OFFICER IN ASSESSMENT PROCEEDINGS, ON THE FACTS OF THE CASE. IN FACT, WE FIND THAT THE LD. CIT(A) H AS MERELY STATED A GENERAL PROPOSITION WITHOUT POINTING OUT A ND APPLYING THE SAME TO THE FACTS OF THE IMPUGNED CASE . 12. CONSIDERING THE ABOVE DISCUSSION WE DO NOT FIND ANY JUSTIFICATION FOR THE LD.CIT(A) TO JUSTIFY THE REOP ENING OF THE ASSESSMENT. THE REOPENING IS THUS CLEARLY BAD IN LA W AND LIABLE TO BE QUASHED. WE ACCORDINGLY SET ASIDE THE ORDER O F THE LD.CIT(A) AND QUASH THE REOPENING OF THE ASSESSMENT U/S 147/148 OF THE ACT. GROUND OF APPEAL NO.2 THEREFORE, STANDS ALLOWED. 7 13. SINCE WE HAVE SET ASIDE THE ASSESSMENT ORDER ON THE LEGAL GROUND RAISED BEFORE US, WE DO NOT FIND ANY N EED TO ADJUDICATE THE ISSUE RAISED BEFORE US BY THE ASSESS EE ON THE MERITS OF THE CASE IN GROUND NO.3 SINCE IT WOULD BE A PURELY ACADEMIC EXERCISE. 14. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (DIVA SINGH) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 8 TH JANUARY, 2018 *RATI* COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT 5. THE DR ASSISTANT REGISTRAR, ITAT, CHANDIGARH