M/S FRIENDS CONSTRUCTION CO, JANJGIR-CHAMPA (C.G.) V. THE INCOME TAX OFFICER, WARD-2(2), BILASPUR(CG)

ITA 83/BIL/2016

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 6576 (ITAT-RAIPUR)
• Duration Of Justice: 2 year(s) 8 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-01-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2007-2008
• Appeal Filed On: 18-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D K JAIN
• Assessee Lawyers: G S AGRAWAL
• Keywords: Reopening of assessment; Depreciation; Tangible material; Difference of opinion; Reason to believe; Change of opinion
• Section: 40(a)(ia); 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, RAIPUR BENCH, RAIPUR BEFORE SHRI ANIL CHATURVEDI, AM AND SHRI PARTHA SARATHI CHAUDHU RY , JM . / I TA NO. 83 /RPR /20 16 / ASSESSMENT YEAR : 2007 - 08 M/S. FRIENDS CONSTRUCTION CO. SABJI MARKET, P.O. AKALTARA, DIST. - JAN J GIR - CHAMPA (CG) PIN - 495552 PAN : AABFF5381J ....... / APPELLANT / V/S. THE INCOME TAX OFFICER, WARD 2(2), BILASPUR (CG) / RESPONDENT A SSESSEE BY : SHRI G.S. AGRAWAL REVENUE BY : SHRI D.K. JAIN / DATE OF HEARING : 16 .01.2019 / DATE OF PRONOUNCEMENT : 17 .01.2019 / ORDER PER PARTHA SARATHI CHAUDHU RY, JM : THIS APPEAL PREFERRED BY THE ASSESSEE EMANATES FROM THE ORDER OF THE LD. CIT(APPEALS), BILASPUR DATED 30.10.2015 FOR THE ASSESSMENT YEAR 2007 - 08 AS PER FOLLOWING GROUNDS OF APPEAL: 2 ITA NO. 83 /RPR /20 16 A.Y. 2007 - 08 1. UNDER THE FACTS AND THE LAW, THE LD. CIT(APPEALS) ERRED IN CONFIRMING THE DISALLOWANCE OF RS.6,74,870/ - U/S.40(A)(IA) FOR NON - DEDUCTION OF TAX U/S.194A REJECTING THE SUPPORTING AND EXPLANATION FILED. PRAYED THAT INTEREST HAS BEEN PAID TO FINANCIAL INSTITUTION OF NATIONAL REPUTE, WHO ARE FILING RETURN OF INCOME AND PAYING TAXES, THE DISALLOWANCE OF RS.6,74,870/ - 2. THAT THE LD. CIT(APPEALS) FURTHER ERRED IN CONFIRMING THE ALLOWANCE OF DEPRECIATION AT THE RATE 7.5% IS AGAINST 15% C LAIMED ON CENTERING MATERIAL. 2 . THAT APART FROM THE AFORESAID GROUND ON MERIT THE ASSESSE HAS ALSO PREFERRED ADDITIONAL GROUND WHICH IS AS FOLLOWS : 3. THAT UNDER THE FACTS AND THE LAW, INITIATION OF PROCEEDINGS U/S.147 AND THE ISSUE OF NOTICE U/S.148 IS NOT ACCORDING TO THE PROVISIONS OF SECTION 147 OF INCOME TAX ACT, 1961 AND THEREFORE, THE ASSESSMENT ORDER DATED 28.03.2013 BE ANNULLED. 3. THE BRIEF FACTS IN THIS CASE ARE THAT THE ORIGINAL ASSESSMENT WAS COMPLETED U/S.143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) ON 19.11.2009 ON TOTAL INCOME OF RS.1,22,148/ - AS AGAINST RETURNED INCOME OF RS.47,352/ - . THE TOTAL ADDITION ON ACCOUNT OF EXPENSES WAS RS.74,796/ - . ON VERIFICATION OF RECORDS IT WAS NOTICED THAT THE ASSESSEE HA D MADE TRANSPORT PAYMENT OF RS.4,11,320/ - TO M/S. DELHI BARODA ROAD LINES AND INTEREST PAYMENT OF RS.2,63,550/ - TO M/S. TATA MOTORS WITHOUT DEDUCTING TAX (TDS) VIOLATING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. APART FROM THE ABOVE THE ASSESSEE HAD CLAIMED DEPRECIATION @15% ON CENTERING MATERIAL SLAB WHICH WAS PURCHASED ON 3 ITA NO. 83 /RPR /20 16 A.Y. 2007 - 08 12.03.2007 RESULTING IN EXCESS CLAIM OF DEPRECIATION OF RS.19,790/ - . IN THE LIGHT OF THE ABOVE, THE ASSESSING OFFICER HAS REASON TO BELIEVE THAT INCOME TO THE EXTENT OF RS.6,94,66 0/ - HAD ESCAPED ASSESSMENT FOR THE A.Y.2007 - 08. TO BRING THE SAME IN TAX NET, NOTICE U/S.148 WAS ISSUED AFTER OBTAINING APPROVAL FROM JCIT, BILASPUR. NOTICE U/S.142(1) OF THE ACT WAS ALSO ISSUED ALONG WITH QUERY. THE RE - ASSESSMENT WAS DONE U/S.143(3) R.W.S.147 OF THE ACT. IT IS WITH REGARD TO RE - ASSESSMENT THAT THE LEGAL GROUND HAS BEEN RAISED BY THE ASSESSEE. 4. THE LD. AR OF THE ASSESSEE VEHEMENTLY ARGUED THAT IN ORD ER TO COMPLETE RE - ASSESSMENT U/S.147/148 OF THE ACT, THERE MUST BE CONCRETE OR TANGIBLE EVIDENCE WITH THE ASSESSING OFFICER SO TO FORM A REASON TO BELIEVE THAT THERE IS SOME INCOME THAT HAS BEEN ESCAPED ASSESSMENT. THERE MUST BE SOME NEW INFORMATION GATHER ED WHICH WAS CONTRARY TO THE FACTS AND MATERIAL AVAILABLE AT THE TIME OF PASSING ORIGINAL ASSESSMENT ORDER. THE LD. AR OF THE ASSESSE PLACED ON RECORD COPY OF THE LETTER TO THE ASSESSING OFFICER. DURING ASSESSMENT PROCEEDINGS , THEY HAVE FILED BOOKS OF ACCO UNTS, MATERIAL BILLS, VOUCHERS OF LABOUR PAYMENT AND OFFICE EXPENSES ARE ENCLOSED HEREWITH FOR THE VERIFICATION OF THE ASSESSING OFFICER. THIS HAS BEEN DONE IN RESPONSE TO THE DETAILS WHICH WAS ASKED BY THE ASSESSING OFFICER THROUGH LETTER DATED 19.01.200 9 WHEREIN THE INCOME TAX OFFICER ASKED THE ASSESSEE TO EXPLAIN THE SOURCES OF CAPITAL INTRODUCED FOR 4 ITA NO. 83 /RPR /20 16 A.Y. 2007 - 08 BUSINESS WITH PROOF ALSO FURNISHED PARTNERSHIP DEED, BANK STATEMENT ETC. THE LD. AR FURTHER SUBMITTED THAT ASSESSMENT WAS COMPLETED U/S.143(3) OF THE ACT A ND ALL THE RELEVANT DETAILS AND DOCUMENTARY EVIDENCE WERE WITH THE ASSESSING OFFICER. THAT REASONS RECORDED FOR REOPENING THE ASSESSMENT DOES NOT FROM ANY POINT OF VIEW SIGNIFIES THAT THERE IS SOME SPECIFIC EVIDENCE OR NEW MATERIAL ON RECORD WITH THE ASSE SSING OFFICER WHICH WAS NOT THERE AT THE TIME OF ORIGINAL ASSESSMENT BECAUSE OF WHICH HE HAS REASON TO BELIEVE THE INCOME HAS ESCAPED ASSESSMENT. ON THE CONTRARY, THE ASSESSING OFFICER HAS NOT BROUGHT ON RECORD ANY FRESH EVIDENCE OR MATERIAL. ALL THE DOCUM ENTARY EVIDENCES WERE ALREADY AVAILABLE WITH THE ASSESSING OFFICER. IN SUCH CIRCUMSTANCES, RE - ASSESSMENT PROCEEDINGS ARE BAD IN LAW AND LIABLE TO BE QUASHED. 4.1 THE LD. AR OF THE ASSESSEE HAS PLACED RELIANCE ON THE DECISION OF THE HONBLE SUPREME COURT OF INDIA IN THE CASE OF CIT VS. KELVINATOR ON INDIA LTD. REPORTED AS 228 CTR 488 (SC) WHEREIN IT HAS BEEN HELD THAT AFTER 1 ST APRIL, 1989 AO HAS POWER TO REOPEN THE ASSESSMENT U/S.147 PROVIDED AO HAS REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT AN D THERE IS TANGIBLE MATERIAL TO COME TO THE CONCLUSION THAT THERE IS ESCAPEMENT OF INCOME. MERE CHANGE OF OPINION CANNOT BE PER SE BE REASON TO RE - OPEN. IN THE CASE OF MANJUSHA ESTATE (P) LTD. VS. CIT REPORTED IN 226 CTR 283, THE HONBLE GUJARAT HIGH CO URT HAS HELD THAT IN THE ABSENCE OF ANY FAILURE ON 5 ITA NO. 83 /RPR /20 16 A.Y. 2007 - 08 THE PART OF THE ASSESSE OR ANY FRESH MATERIAL ON RECORD, THE REOPENING OF ASSESSMENT WAS BASED ON CHANGE OF OPINION AND THEREFORE, SAME CANNOT BE SUSTAINABLE. FURTHER, IN THE CASE OF JUSTI RAMA RAO VS. ITO , REPORTED AS 130 TTJ 66 (HYD.), IT WAS HELD THAT REASONS MUST DISCLOSE PRIMA FACIE THE FACTS WHICH WOULD JUSTIFY THE ISSUANCE OF NOTICE. AO MUST APPLY HIS MIND TO THE FACTS OF THE CASE BEFORE ISSUING NOTICE, IN THE ABSENCE OF WHICH THE REASSESSMENT WILL NOT BE VALID. 5. ON THE OTHER HAND, THE LD. DR HAS PLACED RELIANCE ON THE ORDERS OF THE AUTHORITIES BELOW. 6. WE HAVE PERUSED THE CASE RECORDS, ANALYZED THE FACTS AND CIRCUMSTANCES OF THE CASE. WE HAVE ALSO CONSIDERED THE DECISIONS RELIED UPON BY THE LD . AR. IN THE FACTS AND CIRCUMSTANCES OF THIS CASE, WE FIND THAT IN THE PAPER BOOK FILED BY ASSESSEE BEFORE US, REQUISITE DOCUMENTS/DETAILS HAVE BEEN ASKED BY THE ASSESSING OFFICER DURING ASSESSMENT PROCEEDINGS AND THE ENTIRE RELEVANT DOCUMENTARY EVIDENCES VIZ. BOOKS OF ACCOUNT, MATERIAL BILLS AND VOUCHERS OF LABOUR PAYMENTS ETC. WERE SUBMITTED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER. THIS FACT HAS BEEN UNDISPUTED BY THE DEPARTMENT. 6 ITA NO. 83 /RPR /20 16 A.Y. 2007 - 08 FURTHER, ON PERUSAL OF THE REASONS RECORDED BY THE ASSESSING OFFICER FOR REOPENING OF ASSESSMENT, THERE IS NO CONCRETE OR NEW MATERIAL REFERRED BY THE ASSESSING OFFICER WHICH WAS NOT THERE IN FRONT OF HIM DURING SCRUTINY ASSESSMENT PROCEEDINGS. ONCE THE SCRUTINY ASSESSMENT PROCEEDINGS HAS BEEN COMPLETED AND THE REAFTER, TH E ASSESSING OFFICER DOES NOT HAVE ANY NEW EVIDENCE OR MATERIAL ON RECORD AGAINST ASSESSEE TO SUBSTANTIATE THAT THERE IS REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT. IN ABSENCE OF SUCH NEW EVIDENCE AND MATERIAL ON RECORD, ISSUANCE OF NOTICE U/S.148 OF THE ACT AND RE - ASSESSMENT U/S. 147 OF THE ACT IS NOT WARRANTED WITHIN THE TAXING STATUTES. THE HONBLE APEX COURT IN THE CASE OF CIT VS. KELVINATOR ON INDIA LTD. (SUPRA.) HAS CATEGORICALLY HELD THAT CHANGE OF OPINION CANNOT BE PER SE BE REASON TO RE - OPEN. IN THE CASE OF THE ASSESSEE, WHEN ALL THE DOCUMENTARY EVIDENCES HAVE ALREADY THERE WITH THE ASSESSING OFFICER AT THE TIME OF ORIGINAL ASSESSMENT PROCEEDINGS AND IN ABSENCE OF ANY NEW OTHER MATERIAL, IT IS NOTHING BUT MERE CHANGE OF OPINION AND MERE C HANGE OF OPINION CANNOT BE PER SE BE REASON TO REOPEN. 7. IN VIEW OF THE ABOVE DISCUSSION, WE SET ASIDE THE ORDER OF THE LD. CIT(APPEALS) AND ALLOW THE LEGAL GROUND OF THE ASSESSEE AND THEREFORE, DIRECT TO QUASH THE REASSESSMENT ORDER PASSED U/S.143(3) R.W.S.147 OF THE 7 ITA NO. 83 /RPR /20 16 A.Y. 2007 - 08 ACT. SINCE WE HAVE ALLOWED THE LEGAL GROUND OF THE ASSESSEE, THE GROUNDS ON MERIT BECOMES ACADEMIC. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRO NOUNCED ON 17TH DAY OF JANUARY , 201 9 . SD/ - SD/ - ANIL CHATURVEDI PARTHA SARATHI CHAUDHURY ACCOUNTANT MEMBER JUDICIAL MEMBER / RAIPUR ; / DATED : 17 TH JANUARY, 2019 . SB / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(APPEALS), BILASPUR (CG). 4. THE CIT, BILASPUR, (CG) 5. , , , / DR, ITAT, RAIPUR BENCH, RAIPUR . 6. / GUARD FILE. // TRUE COPY // / BY ORDER, / PRIVATE SECRETARY , / ITAT, RAIPUR . 8 ITA NO. 83 /RPR /20 16 A.Y. 2007 - 08 DATE 1 DRAFT DICTATED ON 16.01.2019 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 17.01.2019 SR.PS/PS 3 DRAFT PROPOSED AND PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/JM 5 APPROVED DRAFT COMES TO THE SR. PS/PS SR.PS/PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7 DATE OF UPLOADING OF ORDER SR.PS/PS 8 FILE SENT TO BENCH CLERK SR.PS/PS 9 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 10 DATE ON WHICH FILE GOES TO THE A.R 11 DATE OF DISPATCH OF ORDER 9 ITA NO. 83 /RPR /20 16 A.Y. 2007 - 08