Shri Rajnibhai Shivlal Modi, Himatnagar V. The Income Tax Officer, S.K.Ward-3, Himatnagar

ITA 866/AHD/2016

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 3485 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 1 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-06-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 07-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: L P JAIN
• Keywords: Reopening of assessment; Audit objection; Principle of natural justice; Tangible material; Difference of opinion; Revised return; Change of opinion; Reassessment proceedings; TDS
• Section: 143(3); 142(1); 13; 22; 148; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH (CONDUCTED THROUGH VIRTUAL COURT) BEFORE: SHRI RAJPAL YADAV, VICE PRESIDENT AND SHRI AMARJIT SINGH, ACCOUNTANT MEM BER SHRI RAJNIBHAI SHIVLAL MODI, PROP. OF CASA CONSTRUCTION, NR. SNEHAL SOCIETY, MAHAVIRNAGAR, HIMATNAGAR-383001 PAN: ABLPM3892N (APPELLANT) VS THE ITO, S.K. WARD-3, AAYAKAR BHAVAN, NEAR TOWN HALL, HIMATNAGAR (RESPONDENT) REVENUE BY: SHRI L.P. JAIN, SR. D.R. ASSESSEE BY: SHRI TUSHAR HEMANI, A. R. DATE OF HEARING : 10-05-2021 DATE OF PRONOUNCEMENT : 04-06-20 21 /ORDER PER : AMARJIT SINGH, ACCOUNTANT MEMBER:- THIS ASSESSEES APPEAL FOR A.Y. 2009-10, ARISES FRO M ORDER OF THE CIT(A)-2, AHMEDABAD DATED 22-01-2016, IN PROCEEDING S UNDER SECTION 143(3) R.W.S. 147 OF THE INCOME TAX ACT, 1961; IN S HORT THE ACT. 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APP EAL:- 1. THE LEARNED CIT(A) HAS ERRED BOTH IN LAW A ND ON THE FACTS OF THE CASE IN CONFIRMING THE ACTION OF AO IN REOPENING THE ASSESS MENT U/S 147 OF THE ACT. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, LEARNED CIT(A) OUGHT TO HAVE HELD THAT THE ITA NO. 866/AHD/2016 ASSESSMENT YEAR 2009-10 I.T.A NO. 866/AHD/2016 A.Y. 2009-10 PAGE NO SHRI RAJNIBHAI S. MODI VS. ITO 2 ACTION OF REOPENING IS WITHOUT JURISDICTION AND NOT PERMISSIBLE EITHER IN LAW OR ON FACTS. 2. THE LEARNED CIT(A) HAS ERRED BOTH IN LAW AN D ON THE FACTS OF THE CASE IN CONFIRMING THE ADDITION ON ACCOUNT OF RA BILL RECEI PTS AMOUNTING TO RS.54,66,560/- AFTER HOLDING THAT THE APPELLANT HAS FAILED TO OFFER IT FOR TAX. IN FACTS AND CIRCUMSTANCES OF THE CASE, THE APPELLANT HAS ALREADY OFFERED INCOME PORTION OUT OF THE SAID RECEIPTS. 3. ALTERNATIVELY AND WITHOUT PREJUDICE TO THE ABOVE, THE ADDITION MAY KINDLY BE RESTRICTED TO THE INCOME PORTION OUT OF THE SAID RE CEIPTS. 4. BOTH THE LOWER AUTHORITIES HAVE PASSED THE ORDERS WITHOUT PROPERLY APPRECIATING THE FACT AND THAT THEY FURTHER ERRED I N GROSSLY IGNORING VARIOUS SUBMISSIONS, EXPLANATIONS AND INFORMATION SUBMITTED BY THE APPELLANT FROM TIME TO TIME WHICH OUGHT TO HAVE BEEN CONSIDERED BEFORE PASSING THE IMPUGNED ORDER. THIS ACTION OF THE LOWER AUTHORITIES IS IN CLEAR BR EACH OF LAW AND PRINCIPLES OF NATURAL JUSTICE AND THEREFORE DESERVES TO BE QUASHE D. 5. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN CONFIRMING ACTION OF THE ID. AO IN LEVYING INTEREST U/S 234A/B /C OF THE ACT. 6. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN CONFIRMING ACTION OF THE ID. AO IN INITIATING PENALTY U/S 271( 1)(C) OF THE ACT. 3. THE FACT IN BRIEF IS THAT RETURN OF INCOME DECLA RING TOTAL INCOME OF RS. 9,14,742/- WAS FILED ON 29 TH SEP, 2009. IN THIS CASE ASSESSMENT ORDER U/S. 143(3) FOR THE YEAR UNDER CONSIDERATION WAS FINALIZ ED ON 22 ND DEC, 2011 AND TOTAL INCOME WAS DETERMINED AT RS. 14,92,400/-. TH EREAFTER, THE CASE WAS REOPENED BY ISSUING OF NOTICE U/S. 148 OF THE ACT O N 31 ST JANUARY, 2014. THE CASE WAS REOPENED ON THE REASONING THAT ASSESSEE HA S NOT SHOWN R.A. BILL AMOUNT TO RS. 57,57,910/- IN TOTAL TURNOVER. DURIN G COURSE OF RE-ASSESSMENT PROCEEDINGS, THE ASSESSEE HAS BROUGHT TO THE NOTICE OF THE ASSESSING OFFICER VIDE LETTER DATED 24 TH NOV, 2014 THAT THE ISSUE PERTAINING TO R.A. BILL O F RS. 57,57,910/- WAS ALREADY DISCUSSED IN ORIGINAL ASSES SMENT U/S. 143(3) OF THE ACT. THEREFORE, REOPENING OF ASSESSMENT WAS MERELY A CHANGE OF OPINION AND ASSESSEE HAD PLACED RELIANCE ON THE VARIOUS JUDICIA L PRONOUNCEMENTS. I.T.A NO. 866/AHD/2016 A.Y. 2009-10 PAGE NO SHRI RAJNIBHAI S. MODI VS. ITO 3 HOWEVER, THE ASSESSING OFFICER HAS NOT ACCEPTED THE SUBMISSION OF THE ASSESSEE STATING THAT ASSESSEE HAS NOT SUBMITTED AN Y FACT OF THE CASES REFERRED BY HIM. THEREFORE, THE ASSESSING OFFICER HAS ADDED THE FULL AMOUNT RS. 57,57,910/- OF THE R.A. BILL TO THE TOTAL INCOME OF THE ASSESSEE. 4. AGGRIEVED ASSESSEE HAS FILED APPEAL BEFORE THE L D. CIT(A). THE LD. CIT(A) HAS PARTLY ALLOWED THE APPEAL OF THE ASSESSE E AFTER GRANTING RELIEF TO THE EXTENT OF RS. 2,91,350/- WHICH WAS ALREADY SHO WN BY THE ASSESSEE IN THE REVISED RETURN AS ADDITIONAL INCOME EARNED ON THE R .A. BILL. 5. DURING THE COURSE OF APPELLATE PROCEEDINGS BEFOR E US, THE COUNSEL CONTENDED THAT ASSESSEE HAS ALREADY FILED REVISED R ETURN OF INCOME VIDE WHICH NET PROFIT OF RS. 2,91,350/- ON R.A. BILL OF RS. 57,57,910/- WAS DISCLOSED AND DURING THE COURSE OF ORIGINAL ASSESSM ENT PROCEEDINGS, THE ASSESSING OFFICER HAS ACCEPTED THE SUBMISSION OF TH E ASSESSEE AND NOT MADE ANY ADDITION IN THE ORIGINAL ASSESSMENT ORDER PASS ED U/S. 143(3) OF THE ACT. THE LD. COUNSEL HAS FURTHER SUBMITTED THAT THE REOP ENING OF THE ASSESSMENT WAS MERELY ON THE BASIS OF CHANGE OF OPINION AS THE SAME MATERIAL AND FACTS WERE ALREADY CONSIDERED BY THE ASSESSING OFFICER WH ILE FINALIZING ORIGINAL ASSESSMENT U/S. 143(3) OF THE ACT. THE LD. COUNSE L HAS ALSO PLACED RELIANCE ON THE DECISION OF CIT VS. NIRMA CHEMICAL WORKS PVT . LTD. 309 ITR 67 (GUJ) & GUJARAT POWER CORPORATION LTD. 350 ITR 266 (GUJ). THE LD. COUNSEL HAS ALSO SUBMITTED THAT ASSESSEE HAS ALSO N OT MADE ANY PAYMENT TO THE SUB-CONTRACTOR IN RESPECT OF SUCH R.A. BILLS AM OUNTING OF RS. 57,57,910/- AND UNPAID SUB-CONTRACT BILL OF THE SAME TO THE AMO UNT OF RS. 54,66,560/-. THE REVISED RETURN OF INCOME WAS FILED VOLUNTARILY SHOWING ADDITIONAL NET I.T.A NO. 866/AHD/2016 A.Y. 2009-10 PAGE NO SHRI RAJNIBHAI S. MODI VS. ITO 4 PROFIT OF RS. 2,91,350/-. CITING THE AFORESAID FAC TS AND CIRCUMSTANCES THE LD. COUNSEL SUBMITTED THAT REASSESSMENT ON THE SAME ISS UE IS MERELY A CHANGE OF OPINION WHICH IS LEGALLY NOT CORRECT. ON THE OTHE R HAND, LD. DEPARTMENTAL REPRESENTATIVE HAS SUPPORTED THE ORDER OF LD. CIT(A ). 6. HEARD BOTH THE SIDES AND PERUSED THE MATERIAL ON RECORD. THE ASSESSEE HAS FILED RETURN OF INCOME ON 29 TH SEPTEMBER, 2009 SHOWING TOTAL INCOME OF RS. 9,14,742/- PERTAINING TO THE YEAR UNDER CONSIDE RATION. HOWEVER, IN THE TOTAL TURNOVER OF RS. 2,77,56,554/-, R.A. BILL OF R S. 57,57,910 WAS NOT REFLECTED AND TO RECTIFY THIS MISTAKE THE ASSESSEE HAS VOLUNTARILY FILED REVISED RETURN OF INCOME ON 24-02-2010 BY OFFERING ADDITIONAL PROFIT OF RS. 2,91,350/- ON THE R.A. BILL OF RS. 57,57,910/- AND DECLARED REVISED TOTAL INCOME OF RS. 12,06,090/-. THEREAFTER, ASSESSMENT U/S. 143(3) OF THE ACT WAS FINALIZED ON 22 ND DECEMBER, 2011 AND ASSESSING OFFICER HAS DETERMINE D TOTAL INCOME AT RS. 14,92,400/-. SUBSEQUENTLY, THE CASE OF THE ASSESSEE WAS REOPENED BY ISSUING OF NOTICE U/S. 148 OF THE ACT O N 31 ST JAN, 2014 ON THE REASONING THAT ASSESSEE HAS NOT SHOWN R.A. BILL REC EIPT AMOUNT OF RS. 57,57,910/- IN HIS INCOME. DURING THE COURSE OF REASSESSMENT PROCEEDINGS VIDE LETTER DATED 3 RD NOV, 2014 IT WAS BROUGHT TO THE KNOWLEDGE OF THE ASSESSING OFFICER THAT ORDER U/S. 143(3) WAS PASSED ON 27 TH JULY, 2011 AND ASSESSEE HAD FULLY AND TRULY DISCLOSED ALL THE MATE RIAL FACTS. AGAIN VIDE LETTER DATED 17 TH NOV, 2014 DURING THE COURSE OF REASSESSMENT PROCEE DINGS, THE ASSESSEE HAS BROUGHT TO THE NOTICE OF THE ASSESSING OFFICER THAT ADDITION OF RS. 57,57,910/- WAS ALREADY DISCUSSED ALONG WITH PR OFIT SHOWN IN THE REVISED RETURN OF INCOME WHILE FINALIZING ASSESSMENT U/S. 1 43(3) OF THE ACT. VIDE LETTER DATED 24 TH NOV, 2014, THE ASSESSEE HAS ALSO BROUGHT TO THE NO TICE OF THE I.T.A NO. 866/AHD/2016 A.Y. 2009-10 PAGE NO SHRI RAJNIBHAI S. MODI VS. ITO 5 ASSESSING OFFICER THAT IMPUGNED RE-ASSESSMENT WAS R EOPENED ON THE BASIS OF AUDIT OBJECTION RAISED BY THE AUDIT PARTIES AND NO TANGIBLE MATERIAL WAS BROUGHT ON THE RECORD FOR REOPENING THE ASSESSMENT. DURING THE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS IN RESPONSE TO NOT ICE U/S. 142(1) DATED 7 TH MAY, 2011 ISSUED BY THE ASSESSING OFFICER, THE ASS ESSEE HAS RESPONDED VIDE PARA 4 AND 5 OF HIS REPLY ON THE ISSUE SHOWING R.A. BILL OF RS. 57,57,910/- IN TOTAL TURNOVER. THE RELEVANT PART OF THE REPLY OF T HE ASSESSEE IS DISCUSSED AS UNDER:- 4. JUSTIFY REGARDING REVISED RETURN. THAT ASSESSEE HAS FILED ORIGINAL RETURN OF INCOME O N 29/09/2009 VIDE ACKNO. NO. 00058 IN DCIT SABARKANTHA CIRCLE, HIMATNAGAR AND DECLARED TOTAL I NCOME OF RS.RS.914742/-. AS PER RETURN FIGURE THERE IS REFUND DUE OF RS.441264/-. FOR THE YEAR UNDER CONSIDERATION ASSESSEE HAS ISSUE D R.A. BILLS OF RS.27756554/- CONTRACTEE HAS DEDUCTED THE JDS AN SAME AMOUNT. IN VIEW OF THAT THE R.A. BILLS IS NOT FINAL BILLS D UE TO INSPECTION BY THE CONTRACTEE WAS PENDING, THE ASSESSEE HAS NOT SHOWN R.A. BILLS AMOUNTS OF RS. 57 57910/- IN TOTAL TURNOVER. THE SAID MISTAKE FOUND AND THE ASSESSEE HAS VOLUNTA RY FILED REVISED RETURN OF INCOME WITHIN TIME PERIOD OF THE ACT AND DECLARED NET PROFIT OF RS.291 350/- ON ESCAPED TURNOVER OF RS.5757910/- AND PAID TAX THEREON. RESPECTED SIR, ASSESSEE EXTEND HIS CO-OPERATION WIT H THE DEPARTMENT AND AVOID LEGAL PROCEDURES AND PEACE OF MIND HE HAS FILED REVISED RETURN OF IN COME AND DECLARED TOTAL INCOME OF RS.1206090/-VOLUNTARY BEFORE ISSUED NOTICE U/S.143( 2) OF THE ACT. 5. RECONCILIATION OF TDS. FOR THE YEAR UNDER CONSIDERATION ASSESSEE HAS SHOWN GROSS RECEIPTS OF RS.20493983/- IN ORIGINAL RETURN OF INCOME AND CLAIMED TDS OF RS.626069/- AND IN REVISED RETURN OF INCOME DECLARED GROSS RECEIPTS OF RS.27756554/-. RECONCILIATION OF TDS AM OUNT WITH TOTAL TURNOVER AS UNDER. TURNOVER SHOWN IN ORIGINAL RETURN OF INCOME RS.219 98644/- RECEIPTS FORM RELIANCE ENGINEERING RS. 5757910/- TURNOVER SHOWN IN REVISED RETURN RS.27756554/- SR. NO. NAME OF THE CONTRACTEE GROSS RECEIPTS TDS AMOUNTS 1 RELIANCE ENGINEERING ASSO, PVT. LTD. 458969.00 10419.00 2 RELIANCE ENGINEERING ASSO. PVT. LTD. 2214814.00 50277.00 3 RELIANCE ENGINEERING ASSO. PVT. LTD. 454126300 103087.00 4 RELIANCE ENGINEERING ASSO. PVT. LTD. 1256522.00 28523.00 5 RELIANCE ENGINEERING ASSO, PVT. LTD. 1733355.00 39347.00 6 RELIANCE ENGINEERING ASSO. PVT. LTD. 4511456.00 102411.00 I.T.A NO. 866/AHD/2016 A.Y. 2009-10 PAGE NO SHRI RAJNIBHAI S. MODI VS. ITO 6 7 RELIANCE ENGINEERING ASSO. PVT. LTD. 23856.00 542.00 8 RELIANCE ENGINEERING ASSO. PVT. LTD. 182948.00 4153.00 9 RELIANCE ENGINEERING ASSO. PVT. LTD. 1845243.00 41887.00 10 SPENCER RETAILS LIMITED 239007,00 5413.00 11 GANDHINAGAR CO-OP. MILK PRODUCE LTD. 9589333,00 217294.00 12 HIMATNAGAR KELVANI MANDAL 488444.00 11070.00 13 NEESHA LEISURE LTD. 356576 00 8080.00 14 GOVINDBHAI SHIVRAMBHAI PATEL 314768.00 3566.00 TOTAL................................. 27756554.00 626069.00 AFTER PERUSAL OF THE AFORESAID REPLY OF THE ASSESSE E, IT IS CLEAR THAT ASSESSEE HAS DULY EXPLAINED THAT HE HAS DECLARED NET PROFIT OF RS. 2,91,350/- ON TURNOVER OF RS. 57,57,910/- WHICH WAS DISCLOSED IN THE REVISED RETURN OF INCOME ALONG WITH RECONCILIATION OF TDS. AT PAGE NO. 26 OF THE PAPER BOOK, THE ASSESSEE HAS ALSO FILED A COPY OF LETTER FILED BEFORE THE ASSESSING OFFICER DURING THE COURSE OF ORIGINAL ASSESSMENT EXPLAINING JUSTIFICATION FOR FILING REVISED RETURN OF INCOME. THE ASSESSEE HAS EXPLAIN ED THAT BILL AMOUNT OF RS. 57,57,910/- WAS NOT INSPECTED BY THE CONTRACTEE THEREFORE THE SAME WAS NOT FINALIZED AND HE HAS ALSO NOT MADE PAYMENT OF S UB-CONTRACT EXPENSES ON THIS R.A. BILL AMOUNT TO RS. 54,66,560/-. IT WAS A LSO EXPLAINED THAT THIS MISTAKE WAS DETECTED ON VERIFICATION OF TDS, THEREF ORE, THE NET PROFIT AMOUNT OF RECEIPT OVER EXPENDITURE IN RESPECT OF THE AFORE SAID SUB-CONTRACT R.A. BILL TO THE AMOUNT OF RS. 2,91,350/- WAS OFFERED AS ADDI TIONAL INCOME. WE OBSERVE THAT ALL THESE MATERIAL FACTS WERE ALSO SUB MITTED BEFORE THE LD. CIT(A) HOWEVER THE LD. CIT(A) HAS NOT DISPROVED THE SE MATERIAL FACTS AND REJECTED THE APPEAL OF THE ASSESSEE SIMPLY STATING THAT THE REVISED RETURN OF I.T.A NO. 866/AHD/2016 A.Y. 2009-10 PAGE NO SHRI RAJNIBHAI S. MODI VS. ITO 7 INCOME WOULD NOT GIVE ANY RIGHT TO THE ASSESSEE TO TAKE THE PLEA CHANGE OF OPINION. IN THE LIGHT OF THE ABOVE FACTS AND CIRC UMSTANCES, WE OBSERVE THAT ASSESSING OFFICER HAS REOPENED THE ASSESSMENT MEREL Y ON THE BASIS OF MATERIAL ALREADY AVAILABLE ON THE RECORD AT THE TIM E OF PASSING ASSESSMENT U/S. 143(3) OF THE ACT. THE ISSUE ON WHICH THE AS SESSMENT WAS REOPENED WAS SPECIFICALLY EXPLAINED BY THE ASSESSEE DURING T HE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS. WE HAVE ALSO PERUSED THE OB SERVATION OF THE HONBLE HIGH COURT OF GUJARAT IN THE CASE OF CIT VS . NIRMA CORPORATION LTD. 309 ITR 67 (GUJ) HELD THAT WHEREIN ASSESSING O FFICER ADOPTED ONE VIEW, MERELY BECAUSE COMMISSIONER TOOK A DIFFERENT VIEW OF MATTER, IT WOULD NOT BE SUFFICIENT TO PERMIT COMMISSIONER TO EXERCIS E POWER U/S. 263 UNLESS THE VIEW TAKEN BY THE ASSESSING OFFICER IS UNSUSTAI NABLE IN LAW. IT IS DEMONSTRATED FROM THE DETAILED SUBMISSION MADE BY T HE ASSESSEE IN THE FORM OF REVISED RETURN OF INCOME, REPLY IN RESPECT OF NO TICE U/S. 142(1) OF THE ACT AND OTHER CORRESPONDENCE MADE DURING THE COURSE OF ASSESSMENT PROCEEDINGS AS ELABORATED ABOVE IN THIS ORDER THAT NO TANGIBLE MATERIAL HAS COME IN POSSESSION OF THE ASSESSING OFFICER AFTER FRAMING T HE ASSESSMENT U/S. 143(3) OF THE ACT. ON THE OTHER HAND, THE REOPENING HAS B EEN MADE MERELY ON THE BASIS OF MATERIAL AVAILABLE ON RECORD WHICH HAS BEE N CONSIDERED BY THE ASSESSING OFFICER AT THE ORIGINAL ASSESSMENT STAGE. AFTER CONSIDERING THE JUDICIAL PRONOUNCEMENTS REFERRED BY THE LD. COUNSEL AND THE MATERIAL ON RECORD, WE ARE OF THE VIEW THAT REOPENING MADE IN T HE CASE OF THE ASSESSEE IN THE ABSENCE OF TANGIBLE MATERIAL AFTER FRAMING ASSE SSMENT U/S. 143(3) OF THE ACT IS NOT JUSTIFIED AS PER LAW THEREFORE WE QUASH THE ASSESSMENT HOLDING THAT THE ACTION OF THE ASSESSING OFFICER OF REOPENING WA S WITHOUT JURISDICTION. SINCE WE HAVE QUASHED THE ASSESSMENT NOT VALID AS P ER LAW, THEREFORE, IT IS I.T.A NO. 866/AHD/2016 A.Y. 2009-10 PAGE NO SHRI RAJNIBHAI S. MODI VS. ITO 8 NOT REQUIRED TO ADJUDICATE THE OTHER GROUNDS OF THE APPEAL OF THE ASSESSEE ON MERIT. ACCORDINGLY, THE APPEAL OF THE ASSESSEE IS ALLOWED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 04-06-2021 SD/- SD/- (RAJPAL YADAV) (AMARJIT SINGH) VICE PRESIDENT A CCOUNTANT MEMBER AHMEDABAD : DATED 04/06/2021 / COPY OF ORDER FORWARDED TO:- 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,