DCIT, Ludhiana V. Sh. Vikas Sharma, Ludhiana

ITA 833/CHANDI/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 77156 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 year(s) 9 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-06-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 28-10-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 01-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Depreciation; Search and seizure; Tangible material; Difference of opinion; Procedural lapse; Competent authority; Reason to believe; Change of opinion
• Section: 143(3); 194C; 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A, CHANDIGARH BEFORE SHRI T.R.SOOD, ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO.833 /CHD/2011 ASSESSMENT YEAR : 2006-07 THE D.C.I.T., VS. SH.VIKAS SHARMA, CIRCLE 1, PROP.SHIVA OIL CARRIES, LUDHIANA. 3040, SECTOR 32-A, CHANDIGARH ROAD, LUDHIANA. PAN: ABEPS7453C AND ITA NO.1084 /CHD/2013 ASSESSMENT YEAR : 2010-11 THE INCOME TAX OFFICER, VS. SH.VIKAS SHARMA, WARD 1(3), PROP.SHIVA OIL CARRIES, LUDHIANA. 3040, SECTOR 32-A, URBAN ESTATE CHANDIGARH ROAD, LUDHIANA. PAN: ABEPS7453C (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI AKHILESH GUPTA, DR RESPONDENT BY : SHRI SUDHIR SEHGAL DATE OF HEARING : 28.05.2014 DATE OF PRONOUNCEMENT : 19.06.2014 O R D E R PER SUSHMA CHOWLA, J.M. : THESE TWO APPEALS FILED BY THE REVENUE ARE AGAINST THE SEPARATE ORDERS OF THE COMMISSIONER OF INCOME TAX(APPEALS)-I , LUDHIANA DATED 02.06.2011 AND 20.09.2013 RESPECTIVELY AGAINST THE ORDERS PASSED UNDER SECTION 143(3) OF INCOME TAX ACT, 1961 (IN SHORT T HE ACT). 2 2. BOTH THE APPEALS FILED BY THE REVENUE AGAINST TH E SAME ASSESSEE ON SIMILAR ISSUE WERE HEARD TOGETHER AND A RE BEING DISPOSED OFF BY THIS CONSOLIDATED ORDER FOR THE SAK E OF CONVENIENCE. ITA NO.833/CHD/2011 : 3. THE REVENUE IN ITA NO.833/CHD/2011 HAS RAISED FO LLOWING GROUNDS OF APPEAL : 1. THAT THE LD. CIT(A) HAS ERRED BOTH IN LAW AND ON FACTS BY HOLDING THAT RE-OPENING OF ASSESSMENT IS INVALID & VOID ABINITIO DESPITE OF THE FACT THAT THERE WAS NO PROCEDURAL LAPSE IN REOPENING THE ASSESSMENT U/S 147 OF THE L.T. ACT 1961 AS IS CLEARLY EVIDENT FRO M THE REASONS RECORDED BEFORE ISSUE OF NOTICE U/S 148 OF L.T.ACT, 1961. (COPY OF REASONS RECORDED IS ENCLOSED AS ANNEXURE). 2. THAT THE LD. C1T(A) HAS ERRED IN LAW AND ON FAC TS IN DELETING THE ADDITION OF . 62,21,063/- MADE U/S 40(A)(IA) OF TH E L.T. ACT, 1961 AS THE ASSESSEE HAD FAILED TO DEDUCT TDS AS PER PROVISIONS OF SECTION 194C OF IT ACT 196ION FREIGHT PAYMENT MADE. 3. THAT THE ORDER OF THE LD, C1T(A) BE SET-ASID E AND THAT OF THE A.O. BE RESTORED. 4. THAT THE APPELLANT CRAVES LEAVE TO ADD OR AMEND ANY GROUND OF APPEAL BEFORE IT IS FINALLY DISPOSED OFF. 4. THE ISSUE IN GROUND NO.1 RAISED BY THE REVENUE I S AGAINST REOPENING OF ASSESSMENT UNDER SECTION 147 OF THE AC T. 5. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E HAD FILED RETURN OF INCOME DECLARING TOTAL INCOME OF RS.4,15,160/- ON 2 9.10.2006. THE ASSESSMENT IN THE CASE OF THE ASSESSEE WAS COMPLETE D UNDER SECTION 143(3) OF THE ACT AT ASSESSED INCOME OF RS.4,87,500 /- VIDE ORDER DATED 8.12.2008. THEREAFTER NOTICE UNDER SECTION 148 OF THE ACT WAS ISSUED TO THE ASSESSEE ON 10.6.2009. IN RESPONSE TO THE NOT ICE ISSUED UNDER SECTION 148 OF THE ACT THE ASSESSEE FILED REVISED R ETURN DECLARING INCOME OF RS.4,15,160/-. THE ASSESSEE FILED THE SAID RET URN IN PROTEST AND THE ASSESSING OFFICER HAD NOTED THAT NO OBJECTIONS WERE RAISED TO THE CONTINUATION OF THE PROCEEDINGS UNDER SECTION 147/ 148 OF THE ACT. THE 3 ASSESSEE WAS ASKED TO PRODUCE COMPLETE DETAILS REGA RDING ITS BUSINESS OF BOOKING THE TANKERS FROM DIFFERENT PARTIES AND SUPP LIED TO THE CUSTOMERS. THE ASSESSEE HAD CLAIMED THAT NO TDS WAS REQUIRED T O BE DEDUCTED FROM THE FREIGHT EXPENSES AS FORM NOS.15-I AND 15-J HAD BEEN SUBMITTED TO THE DEPARTMENT. THE ASSESSING OFFICER EXAMINED FO RM NO.15-J SUBMITTED BY THE ASSESSEE AND FOUND CERTAIN DISCREP ANCIES. THE ASSESSEE WAS SHOW CAUSED TO EXPLAIN AS TO WHY THE EXPENSES O F RS.62,21,063/- SHOULD NOT BE DISALLOWED IN VIEW OF THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. THE ASSESSING OFFICER ULTIMATELY MADE ADDITION OF RS.62,21,063/- AS THE ASSESSEE HAD FAILED TO DEDUCT TDS UNDER THE PROVISIONS OF SECTION 194C OF THE ACT AND CONSEQUEN TLY DISALLOWANCE AS PER SECTION 40(A)(IA) OF THE ACT. 6. BEFORE THE CIT (APPEALS) THE ASSESSEE FURNISHED WRITTEN SUBMISSIONS WHICH ARE REPRODUCED UNDER PARA 3 AT PA GES 4 TO 6 OF THE APPELLATE ORDER AND EVEN PLACED THE RELIANCE ON VAR IOUS CASE LAWS. THE CIT (APPEALS) NOTED THAT EARLIER THE ASSESSING OFFI CER HAD DECIDED THE CASE OF THE ASSESSEE UNDER SECTION 143(3) OF THE AC T VIDE ORDER DATED 8.12.2008 AND NO ADDITION ON THE ISSUE RAISED IN RE -ASSESSMENT PROCEEDINGS WERE MADE. THE CIT(A) FURTHER OBSERVED THAT IT IS ALSO A MATTER OF RECORD THAT ALL THE INFORMATION CALLED FO R DURING THE ASSESSMENT PROCEEDING WAS DULY FILED BY THE ASSESSE E ALONGWITH THE BOOKS OF ACCOUNT . THE CIT (APPEALS) HELD THAT NO NEW FACTS WERE POINTED OUT BY THE ASSESSING OFFICER TO REOPEN THE ASSESSMENT AND IN FACT THE REASONS RECORDED CLEARLY SHOW THAT THE INFORMAT ION WAS COMPLETELY AVAILABLE IN THE RETURN OF INCOME AND ALSO DURING T HE ORIGINAL ASSESSMENT PROCEEDINGS AND NO ADVERSE VIEW OF THE S AME WAS TAKEN AT THE TIME OF PASSING OF ORIGINAL ASSESSMENT ORDER . THE CIT (APPEALS) THUS HELD THAT THE ASSESSING OFFICER TOOK A DIFFERE NT VIEW ON THE SAME 4 FACTS/INFORMATION AVAILABLE ON RECORD TO CONCLUDE T HAT THE INCOME HAD ESCAPED ASSESSMENT. PLACING RELIANCE ON THE RATIO LAID DOWN BY THE HONBLE DELHI HIGH COURT IN SITA WORLD TRAVELS (IND IA) LTD. VS. CIT [274 ITR 186(DEL)], IT WAS HELD THAT THE REASONS R ECORDED TO REOPEN THE ASSESSMENT WERE CLEARLY IN THE NATURE OF DIFFERENCE OF OPINION AND THE ASSESSMENT COULD NOT BE REOPENED MERELY BECAUSE SUB SEQUENTLY THE ASSESSING OFFICER CHANGED HIS OPINION OR SOME OTHER OFFICER TAKES A DIFFERENT VIEW. THE CIT (APPEALS) THUS HELD THAT R EOPENING OF ASSESSMENT UNDER SECTION 148 OF THE ACT TO BE INVAL ID AND ASSESSMENT FRAMED WAS HELD TO BE VOID ABINITIO. THE CIT (APPEA LS) FURTHER ADJUDICATED THE ISSUE RAISED ON MERITS. THE CIT ( APPEALS) HELD THAT THE DEFECTS POINTED OUT BY THE ASSESSING OFFICER IN FOR M NOS.15-J AND 15-I WOULD NOT RENDER THE SAME TO BE INVALID AND IN ANY CASE THE COMPETENT AUTHORITY FOR THE SAME WAS NOT THE ASSESSING OFFICE R. SINCE THE ASSESSEE HAD FURNISHED THE SAID FORMS IN TIME AND A S THERE WAS NOTHING ON RECORD TO SHOW THAT FORMS WERE NOT ACCEPTED, SAM E WOULD NOT AMOUNT TO DEFAULT UNDER THE PROVISIONS OF SECTION 194C OF THE ACT AND, THEREFORE, NO CONSEQUENT ADDITION WAS CALLED FOR UNDER SECTION 40(A)(IA) OF THE ACT. IT WAS FURTHER HELD BY THE CIT (APPEALS) THAT THE P ROVISIONS OF SECTION 194C OF THE ACT WERE NOT APPLICABLE TO THE FACTS OF THE CASE AS THE ASSESSEE HAD ONLY HIRED THE TRUCKS FROM TIME TO TIM E. RELIANCE WAS PLACED ON THE RATIO LAID DOWN BY THE HON'BLE PUNJA B & HARYANA HIGH COURT IN CIT VS. UNITED RICE LAND LIMITED [322 ITR 594 (P&H)] AND THE ADDITION MADE BY THE ASSESSING OFFICER WAS DELE TED. 7. THE REVENUE IS IN APPEAL AGAINST BOTH ASPECTS OF THE ISSUE I.E. VIDE GROUND NO.1 THE REVENUE HAS RAISED THE ISSUE AGAINS T RE-ASSESSMENT PROCEEDINGS AND VIDE GROUND NO.2 AGAINST THE DELETI ON OF ADDITION ON MERITS. 5 8. THE LEARNED D.R. FOR THE REVENUE POINTED OUT THA T THE ORIGINAL ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF TH E ACT AND RE- ASSESSMENT PROCEEDINGS WERE INITIATED ON PERUSAL OF PROFIT & LOSS ACCOUNT. 9. THE LEARNED A.R. FOR THE ASSESSEE IN REPLY SUBMI TTED THAT RE- ASSESSMENT PROCEEDINGS IN THE CASE OF THE ASSESSEE WERE NOTHING BUT MERE CHANGE OF OPINION AS SAME TDS CERTIFICATES WER E CONSIDERED BY THE ASSESSING OFFICER. RELIANCE WAS PLACED ON THE DEC ISION OF THE HON'BLE SUPREME COURT IN CIT VS. KELVINATOR OF INDIA LTD. [ 320 ITR 561 (SC)]. 10. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ORIGINAL ASSESSMENT IN THE CASE OF THE ASSESSEE WAS COMPLETED UNDER SECTION 143(3) OF THE ACT VIDE ORDER DATED 8.12.200 8 AT ASSESSED INCOME OF RS.4,87,500/- AS AGAINST DECLARED INCOME OF RS.4 ,15,160/-. THEREAFTER THE ASSESSING OFFICER RECORDED REASONS F OR REOPENING THE ASSESSMENT AT PAGES 1 AND 2 OF THE ASSESSMENT ORDER , WHICH READ AS UNDER: THE ASSESSEE, A CARRIAGE CONTRACTOR, HAS FILED HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR UNDER CONSIDERATION ON 29.1 0.2006 DECLARING INCOME AT RS.4,15,155/-. ASSESSMENT IN THE CASE W AS FRAMED U/S 143(3) OF THE I.T. ACT, 1961 ON 08.12.2008 AT AN IN COME OF RS.4,87,500/-. 2. A PERUSAL OF THE INCOME AND EXPENDITURE ACCOUNT FURNISHED ALONGWITH THE RETURN OF INCOME REVEALS THAT ASSESSE E HAS SHOWN INCOME FROM 'FREIGHT RECEIVED' AND 'INTEREST FROM BANK' AT RS. 1,00,90,369/- AND RS. 360/- RESPECTIVELY. HOWEVER ON TOTALING THE VALUE OF TDS CERTIFICATES ATTACHED WITH THE RETURN, ON THE BASIS OF WHICH CREDIT FOR TDS AT RS. 3,65,975/- HAS BEEN CLAIMED, THE AMOUNT PAID/CREDITED TO THE ASSESSEE'S ACCOUNT COMES TO RS.1,63,11,432/-. AS SUCH THE ASSESSEE HAS SHOWN 'FREIGHT RECEIVED' SHORT BY RS. 62,21,0 63/-. 2.1 AS SUCH THE INCOME FROM THE FREIGHT RECEIVED HA S NOT BEEN SHOWN AS PER TDS CERTIFICATES, WHEREAS, AS PER PROVISIONS OF SECTION 199(1) OF THE I.T.ACT, 1961 THE ASSESSEE CAN CLAIM CREDIT OF THE TAX DEDUCTED AT SOURCE ONLY IN RESPECT OF THE INCOME DECLARED IN TH E SAID 6 ASSESSMENT YEAR. SINCE THE ASSESSEE HAS CLAIMED CR EDIT OF THE TAX OF RS.3,65,975/-, THE RECEIPT PERTAINING TO THIS MU CH CREDIT I.E. RS.1,63,11,432/- SHOULD HAVE ALSO BEEN DISCLOSED IN THE RETURN. HOWEVER, THE SAME HAS BEEN DISCLOSED IN THE RETURN. HOWEVER, THE SAME HAS BEEN SHOWN AT RS. 1,00,90,369/- I.E. SHORT BY R S. 62,21,063/-. 2.2 A PERUSAL OF THE BALANCE SHEET REVEALS THAT THE ASSESSEE HAS SUNDRY CREDITORS OF RS. 16,03,678/-, THE DETAIL OF WHICH S HOWS THAT THESE ARE ON ACCOUNT OF 'DIESEL EXPENSES, TANKER REPAIR EXPENSES , SPARE PARTS AND PAYABLE TO VARIOUS TANKER OWNERS. IT IS NOTICED THA T DIESEL EXPENSES, TANKER REPAIR EXPENSES ETC. HAVE BEEN BOOKED TO THE INCOME & EXPENDITURE A/C, WHEREAS NO EXPENDITURE ON ACCOUNT OF PAYMENT M ADE/PAYABLE TO OTHER TANKERS HAVE BEEN BOOKED. THE ASSESSEE HAS BE EN MAINTAINING SEPARATE ACCOUNT OF TANKERS ENGAGED TO CARRY OUT THE CONTRAC T AND HAS BEEN CREDITING THE BILL RAISED AND DEBITING THE PAYMENTS MADE TO T HEM. THE PAYABLE AS ON 31/03/2006 HAS BEEN SHOWN AS LIABILITY. 2.3 IN THE IMMEDIATELY-PRECEDING YEAR I.E. ASSESSME NT YEAR 2005-06, THE ASSESSEE HAS DEBITED A SUM OF RS. 80,76,983/- TO TH E INCOME & EXPENDITURE ACCOUNT ON ACCOUNT OF FREIGHT PAID. 2.4 DURING THE YEAR UNDER CONSIDERATION, THE ASSESS EE HAS CHANGED ITS METHOD OF ACCOUNTING OF FREIGHT PAID I.E. INSTEAD O F DEBITING THE SAME TO THE INCOME & EXPENDITURE A/C, HE HAS MAINTAINED SEPARAT E ACCOUNT. THE INTENTION OF THE ASSESSEE BEHIND THIS CHANGE OF ACC OUNTING IS TO GET RID OFF THE PROVISIONS OF SECTION 40(A)(IA) OF THE I.T.ACT, 1961. SINCE THE ASSESSEE WAS LIABLE TO DEDUCT TAX ON THE PROVISIONS OF SECTION 1 94C(2) OF THE ACT, THE ASSESSEE HAS CHANGED ITS ACCOUNTING STYLE AS HE HAS FAILED TO COMPLY WITH THE MANDATORY PROVISIONS OF THE ACT. THIS FACT IS EVIDE NT FROM PERUSAL OF THE AUDIT REPORT (COL. 27(B) DEALING WITH CHAPTER XVII- B OF FORM NO. 3CD WHEREIN IT HAS BEEN CERTIFIED AS 'NO' BY THE AUDITO R. AS SUCH THE ASSESSEE HAS FAILED TO COMPLY WITH THE PROVISIONS OF SECTION 194 C. THEREFORE, IN VIEW OF PROVISIONS OF SECTION 40(A)(IA) OF THE ACT, THE EXP ENDITURE ON ACCOUNT OF FREIGHT CREDITED/PAID AT RS.62,21,063/- TO THE E XTENT WHICH HAS NOT BEEN SHOWN AS PART OF FREIGHT RECEIVED, IS NOT ADMISSIBLE. 3. IN VIEW OF THE ABOVE FACTS, I HAVE REASONS TO BE LIEVE THAT THE INCOME TO THE EXTENT STATED ABOVE HAS ESCAPED ASSES SMENT IN TERM OF THE PROVISIONS OF SECTION 147 OF THE I.T. ACT, 1961 . 11. THE PERUSAL OF THE REASONS RECORDED FOR REOPENI NG THE ASSESSMENT REFLECT THAT NO TANGIBLE MATERIAL HAD COME TO THE K NOWLEDGE OF THE ASSESSING OFFICER OR HAD BEEN RECEIVED BY THE ASSES SING OFFICER. THE REASONS RECORDED FOR REOPENING OF ASSESSMENT ITSELF REFLECTS THE 7 ASSESSING OFFICER TO HAVE PERUSED THE INCOME AND EX PENDITURE ACCOUNT FURNISHED ALONGWITH RETURN OF INCOME. THE FIRST PA RT OF THE REASONS RECORDED REFLECTS DISCREPANCIES IN THE RECEIPTS AGA INST WHICH NO ADDITION HAS BEEN MADE IN THE HANDS OF THE ASSESSEE. THE SE COND PART OF THE REASONS RECORDED FOR REOPENING OF ASSESSMENT WERE T HE EXPENDITURE BOOKED ON ACCOUNT OF FREIGHT PAID, WHERE THE ASSESS EE WAS FOUND TO HAVE FAILED TO COMPLY WITH THE PROVISIONS OF SECTION 194 C OF THE ACT AND CONSEQUENTLY THE EXPENDITURE OF RS.62,21,063/- WAS NOT ALLOWABLE IN THE HANDS OF THE ASSESSEE IN VIEW OF THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. IN THE FACTS AND CIRCUMSTANCES OF THE CA SE WHERE COMPLETE FACTS WERE AVAILABLE WITH THE DEPARTMENT AND IN THE ABSENCE OF ANY NEW FACTS COMING TO EXISTENCE, REOPENING OF ASSESSMENT IN THE PRESENT CASE ON IDENTICAL FACTS IS CLEARLY A CASE OF CHANGE OF OPIN ION AND NOT SUSTAINABLE IN LAW. THE PERUSAL OF THE REASONS RECORDED BY TH E ASSESSING OFFICER REFLECTS THAT THE ASSESSING OFFICER USED THE INFORM ATION WHICH WAS AVAILABLE AT THE TIME OF COMPLETION OF ORIGINAL ASS ESSMENT TO RECORD THE REASONS FOR REOPENING THE ASSESSMENT, WHICH HAVE BE EN COMPLETED AFTER DUE ENQUIRY VIDE ORDER PASSED UNDER SECTION 143(3) OF THE ACT. THE REASONS RECORDED IN THE PRESENT CASE ARE BASED ON S AME FACTS/INFORMATION AS WAS AVAILABLE ON RECORD WHEN THE ORIGINAL ASSESS MENT PROCEEDINGS WERE CONDUCTED IN THE HANDS OF THE ASSESSEE. IN TH E ABSENCE OF ANY FRESH FACTS COMING TO THE KNOWLEDGE OF THE ASSESSING OFFI CER, THERE IS NO MERIT IN THE RE-ASSESSMENT PROCEEDINGS INITIATED AGAINST THE ASSESSEE. THE HON'BLE SUPREME COURT IN CIT VS. KELVINATOR OF INDI A LTD. (SUPRA) HAD HELD AS UNDER: ON GOING THROUGH THE CHANGES, QUOTED ABOVE, MADE T O SECTION 147 OF THE ACT, WE FIND THAT, PRIOR TO DIRECT TAX LAWS (AMENDMENT) ACT, 1987 , RE- OPENING COULD BE DONE UNDER ABOVE TWO CONDITIONS AND FULFIL MENT OF THE SAID CONDITIONS ALONE CONFERRED JURISDICTION ON THE ASSESSING OFFIC ER TO MAKE A BACK ASSESSMENT, BUT IN SECTION 147 OF THE ACT [WITH EFF ECT FROM 1-4-1989], THEY ARE GIVEN A GO-BY AND ONLY ONE CONDITION HAS REMAINED, VIZ., THAT WHERE THE 8 ASSESSING OFFICER HAS REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT, CONFERS JURISDICTION TO RE-OPEN THE ASSESSMENT. THE REFORE, POST 1-4-1989 , POWER TO REOPEN IS MUCH WIDER. HOWEVER, ONE NEEDS TO GIVE A SCHEMATIC INTERPRETATION TO THE WORDS 'REASON TO BELIEVE' FAILING WHICH, WE ARE AFRAID, SECTION 147 WOULD GIVE ARBITRARY POWERS TO THE ASSESSING OFFICER TO R E-OPEN ASSESSMENTS ON THE BASIS OF 'MERE CHANGE OF OPINION', WHICH CANNOT BE PER SE REASON TO REOPEN. WE MUST ALSO KEEP IN MIND THE CONCEPTUAL DIFFERENCE BE TWEEN POWER TO REVIEW AND POWER TO RE-ASSESS. THE ASSESSING OFFICER HAS NO PO WER TO REVIEW; HE HAS THE POWER TO REASSESS. BUT REASSESSMENT HAS TO BE BASED ON FULFILMENT OF CERTAIN PRE-CONDITION AND IF THE CONCEPT OF 'CHANGE OF OPIN ION' IS REMOVED, AS CONTENDED ON BEHALF OF THE DEPARTMENT, THEN, IN THE GARB OF RE-OPENING THE ASSESSMENT, REVIEW WOULD TAKE PLACE. ONE MUST TREAT THE CONCEPT OF 'CHANGE OF OPINION' AS AN IN-BUILT TEST TO CHECK ABUSE OF POWE R BY THE ASSESSING OFFICER. HENCE, AFTER 1-4-1989 , ASSESSING OFFICER HAS POWER TO REOPEN, PROVIDED THERE IS 'TANGIBLE MATERIAL' TO COME TO THE CONCLUSION TH AT THERE IS ESCAPEMENT OF INCOME FROM ASSESSMENT. REASONS MUST HAVE A LIVE LI NK WITH THE FORMATION OF THE BELIEF. OUR VIEW GETS SUPPORT FROM THE CHANGES MADE TO SECTION 147 OF THE ACT, AS QUOTED HEREINABOVE. 12. THE HON'BLE SUPREME COURT HELD THAT THE ASSESSI NG OFFICER HAS POWER TO REOPEN THE ASSESSMENT PROVIDED THERE WAS T ANGIBLE MATERIAL TO COME TO THE CONCLUSION AND THERE WAS ESCAPEMENT OF INCOME FROM THE ASSESSMENT. IN VIEW THEREOF WHERE THERE IS NO TA NGIBLE MATERIAL COMING TO THE KNOWLEDGE OF THE ASSESSING OFFICER AND WHERE THE ASSESSMENT HAD ALREADY BEEN COMPLETED IN THE HANDS OF THE ASSESSEE , THE RECORDING OF REASONS IN SUCH CASE IN THE ABSENCE OF ANY TANGIBLE MATERIAL, WOULD AMOUNT TO CHANGE OF OPINION, WHERE THE RE-ASSESSMEN T PROCEEDINGS CANNOT BE INITIATED AGAINST THE ASSESSEE. 13. SIMILAR VIEW HAS BEEN LAID DOWN BY THE HON'BLE DELHI HIGH COURT IN SITA WORLD TRAVELS (INDIA) LTD. (SUPRA) WHICH IS REPRODUCED AS UNDER: FROM THE ORIGINAL ASSESSMENT ORDERS AS WELL AS ORD ER MADE BY THE APPELLATE AUTHORITY, IT WAS VERY CLEAR THAT THE ASSESSING OFF ICER WAS WELL AWARE ABOUT THE PRIMARY FACTS, NAMELY, THE CLAIM MADE BY THE ASSESS EE, THE CIRCUMSTANCES UNDER WHICH THE CLAIM WAS MADE AND THE PROVISIONS OF LAW WHICH COULD BE APPLIED WHILE GRANTING THE BENEFITS. A DECISION MAY BE WRON G OR RIGHT IS NONE OF THE CONCERN OF THE SUBSEQUENT OFFICER. IF THE PRIMARY F ACTS WERE NOT AVAILABLE OR THERE WAS CONCEALMENT OR THERE WAS NO APPLICATION O F THE MIND AT ALL, THEN A CASE FOR REOPENING THE ASSESSMENT COULD BE MADE OUT . BUT, WHEN ALL THE FACTS WERE PLACED BEFORE THE ASSESSING OFFICER AND THE AS SESSING OFFICER CONSCIOUSLY CONSIDERED THE FACTS AND ARRIVED AT A DECISION, THE N IT CANNOT BE REOPENED MERELY BECAUSE SUBSEQUENTLY HE CHANGES HIS OPINION OR SOME OTHER OFFICER TAKES A DIFFERENT VIEW. THE RELEVANT FACTS WERE TAKEN INTO CONSIDERATION BY THE ASSESSING OFFICER WHILE MAKING THE ASSESSMENT AND, THEREFORE, THERE WAS NO QUESTION OF ANY ESCAPEMENT OF INCOME CHARGEABLE TO INCOME-TAX. THEREFORE, IT W AS A CASE OF WRONGFUL 9 ASSUMPTION OF JURISDICTION AND AS SUCH THE NOTICES, THE SPEAKING ORDERS AND THE ASSESSMENT ORDERS MADE IN PURSUANCE TO THE NOTICES WERE REQUIRED TO BE QUASHED AND SET ASIDE AND WERE, ACCORDINGLY, SET AS IDE. THE PETITION WAS ALLOWED. 14. APPLYING THE ABOVE SAID PRINCIPLES WE UPHOLD TH E ORDER OF THE CIT (APPEALS) IN HOLDING THE RE-ASSESSMENT PROCEEDINGS TO BE INVALID AND CONSEQUENTLY ASSESSMENT FRAMED THERE UNDER IN PURSU ANCE THERETO TO BE VOID ABINITIO. THE GROUND OF APPEAL NO.1 RAISED BY THE REVENUE IS DISMISSED. 15. NOW COMING TO THE ISSUE RAISED ON MERITS I.E. A GAINST DELETION OF ADDITION MADE UNDER SECTION 40(A)(IA) OF THE ACT. THE ASSESSEE HAD ENTERED INTO CONTRACT WITH DIFFERENT PARTIES TO SUP PLY TANKERS WHICH WERE BEING HIRED FROM TIME TO TIME, AGAINST WHICH FREIGH T PAYMENTS WERE MADE BY THE ASSESSEE. THE FIRST CONTENTION OF THE ASSES SEE IN THIS REGARD WAS THAT IT HAD FURNISHED FORM NO.15-J AND 15-I FOR NON DEDUCTION OF TAX AT SOURCE. THE ASSESSING OFFICER HAD POINTED OUT SEV ERAL DEFECTS IN THE SAID FORM NOS.15-J AND 15-I AND WAS OF THE VIEW THA T THE SAID EXPENDITURE SHOULD BE DISALLOWED IN THE HANDS OF TH E ASSESSEE. IT MAY BE POINTED OUT THAT THE SAID FORM NOS.15-I AND 15-J ARE TO BE FILED BEFORE THE PRESCRIBED AUTHORITY I.E. THE COMMISSION ER OF INCOME TAX AND NOT THE ASSESSING OFFICER. ADMITTEDLY THE SAID FO RMS WERE FILED BEFORE THE PRESCRIBED AUTHORITY AND WITHIN THE PRESCRIBED TIME AND NO DEFECT WAS POINTED OUT BY THE SAID AUTHORITY. IN THE ABSE NCE OF THE SAME, WE FIND NO MERIT IN THE OBSERVATION OF THE ASSESSING O FFICER IN THIS REGARD. FURTHER THE ASSESSEE IS NOT ELIGIBLE FOR TAX DEDUCT ION AT SOURCE AS THE AMOUNTS PAID BY THE ASSESSEE WERE ON BEHALF OF THE PRINCIPAL ON WHOSE BEHALF IT WAS ARRANGING THE SAID TANKERS. THE ASS ESSEE HAD ENTERED INTO CONTRACT WITH SEVERAL PARTIES ON WHOSE BEHALF IT WA S ARRANGING THE TRUCKS FROM TIME TO TIME AND THE EXPENDITURE WAS BOOKED AS FREIGHT PAYMENT AGAINST WHICH FREIGHT INCOME WAS RECEIVED BY THE AS SESSEE. 10 16. WE FIND THAT IDENTICAL ISSUE AROSE BEFORE THE H ON'BLE PUNJAB & HARYANA HIGH COURT IN CIT VS. UNITED RICE LAND LIMI TED (SUPRA) AND THE FACTS NOTED BY THE HON'BLE HIGH COURT AND THE D ECISION THEREOF ARE AS UNDER: THE ASSESSING OFFICER HAD HELD THE ASSESSEE LIABLE FOR DEDUCTION OF TAX ONLY ON THE ASSUMPTION THAT IT WAS HAVING AGREEMENT WITH TH E PARTIES THROUGH WHOM TRUCKS WERE ARRANGED FOR TRANSPORTATION OF GOODS. H OWEVER, THE COMMISSIONER (APPEALS) HAD RECORDED A FINDING OF FACT THAT THERE WAS NEITHER ANY ORAL OR WRITTEN AGREEMENT BETWEEN THE ASSESSEE AND THE TRAN SPORTERS FOR CARRIAGE OF GOODS, NOR HAD IT BEEN PROVED THAT ANY SUM OF MONEY REGARDING FREIGHT CHARGES WAS PAID TO THEM IN PURSUANCE OF A CONTRACT FOR A S PECIFIC PERIOD, QUANTITY OR PRICE. THAT FINDING OF FACT WAS RECORDED BY THE COM MISSIONER (APPEALS) AFTER CONSIDERING THE CERTIFICATES FURNISHED BY THE TRANS PORTERS. THE TRIBUNAL HAD ALSO RECORDED A FINDING OF FACT THAT THE DEPARTMENT HAD NOT CONTROVERTED THE SAID FINDING OF THE COMMISSIONER (APPEALS) EVEN BEFORE I T. WHILE RECORDING THE FINDING OF FACT, THE TRIBUNAL HAD CLEARLY STATED TH AT NOTHING HAD BEEN BROUGHT ON RECORD BY THE ASSESSING OFFICER TO PROVE THAT THERE WAS ANY WRITTEN OR ORAL AGREEMENT BETWEEN THE ALLEGED PARTIES FOR CARRIAGE OF THE GOODS. IN VIEW OF THAT, NO INTERFERENCE WAS CALLED FOR WITH THE FINDING OF FACT RECORDED BY THE TRIBUNAL. THE APPEAL, BEING WITHOUT MERIT, WAS TO BE DISMISSE D. 17. IN THE FACTS OF THE PRESENT CASE ALSO, THE ASSE SSEE WAS MAKING PAYMENT FOR CARRIAGE OF GOODS AND THERE WAS ADMITTE DLY NO ORAL OR WRITTEN AGREEMENT BETWEEN THE ASSESSEE AND TRANSPOR TERS AND IN THE ABSENCE OF THE SAME, THERE IS NO MERIT IN THE ORDER OF THE ASSESSING OFFICER IN HOLDING THAT THE PROVISIONS OF SECTION 1 94C OF THE ACT HAD BEEN VIOLATED. IN THE ABSENCE OF THE SAME NO DISA LLOWANCE IS WARRANTED UNDER SECTION 40(A)(IA) OF THE ACT. UPHOLDING THE ORDER OF THE CIT (APPEALS) WE DISMISS GROUND NO.2 RAISED BY THE REVE NUE. ITA NO.1084/CHD/2013 A.Y. 2010-11 : 18. THE REVENUE IN ITA NO.1084/CHD/2013 HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD. CIT(A) HAS ERRED DELETING THE ADDITION OF R S. 46,59,129/- MADE BY THE AO AS THE ASSESSEE HAS FAIL ED TO COMPLY WITH THE PROVISIONS OF SECTION 194C READ WIT H SECTION 40(A)(IA). 11 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE DISALLOWAN CE OF RS. 85,357/- 19. THE ISSUE RAISED VIDE GROUND OF APPEAL NO.1 BY THE REVENUE IS IDENTICAL TO THE ISSUE RAISED VIDE GROUND NO.2 IN I TA NO.833/CHD/2011 AS THE FACTS OF THE ISSUE ARE IDENTICAL. OUR DECIS ION IN ITA NO.833/CHD/2011 SHALL APPLY MUTATIS MUTANDIS TO GRO UND NO.1 RAISED BY THE REVENUE IN ITA NO.1084/CHD/2013. THE GROUND OF APPEAL NO.1 RAISED BY THE REVENUE IS DISMISSED. 20. THE ISSUE IN GROUND NO.2 RAISED BY THE REVENUE IS AGAINST DELETION OF DISALLOWANCE OF RS.85,357/-. THE ASSESSING OFFI CER HAD DISALLOWED 1/5 TH OF CAR EXPENSES AND TELEPHONE EXPENDITURE AS BEING ATTRIBUTABLE TO PERSONAL USE BY THE ASSESSEE, RESULTING IN ADDITION OF RS.1,22,351/-. THE CIT (APPEALS) UPHELD THE DISALLOWANCE OF 1/5 TH OUT OF CAR RUNNING AND CAR REPAIR EXPENSES BUT HELD THAT NO DISALLOWANCE W AS WARRANTED IN RESPECT OF CAR DEPRECIATION AND CAR INSURANCE AND A LSO TELEPHONE EXPENSES. 21. THE REVENUE IS AGGRIEVED BY THE SAID ORDER OF T HE CIT (APPEALS). WE FIND NO MERIT IN THE ORDER OF THE CIT (APPEALS) IN THIS REGARD AND DIRECT THE ASSESSING OFFICER TO DISALLOW 1/10 TH OUT OF CAR DEPRECIATION AND CAR INSURANCE AND ALSO TELEPHONE EXPENSES. HOWE VER, THE DISALLOWANCE OUT OF CAR RUNNING AND CAR REPAIR EXPE NSES IS TO BE MADE TO THE EXTENT OF 1/5 TH AS THE ASSESSEE IS NOT IN APPEAL AGAINST THE SAID DISALLOWANCE. REVERSING THE ORDER OF THE CIT (APP EALS) TO THIS LIMITED EXTENT WE ALLOW THE GROUND NO.2 RAISED BY THE REVEN UE. 22. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IN ITA NO.833/CHD/2011 IS DISMISSED AND THE APPEAL FILED B Y THE REVENUE IN ITA NO.1084/CHD/2013 IS PARTLY ALLOWED. 12 ORDER PRONOUNCED IN THE OPEN COURT ON THIS 19 TH DAY OF JUNE, 2014. SD/- SD/- (T.R.SOOD) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 19 TH JUNE, 2014 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH