Shreshth Leasing & Finance Ltd., Surat V. The DCIT, Surat

ITA 979/AHD/2016

• Counselvise Citation: [2018] 111 COUNSELVISE.COM (IT) 1925 (ITAT-SURAT)
• Duration Of Justice: 1 year(s) 11 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-03-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 19-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Search and seizure; Tangible material; Difference of opinion; Competent authority; Change of opinion; TDS
• Section: 40A(3); 143(3); 40(a)(ia); 22; 147

Judgement Text

M/S.SHRESHTH LEASING & FINANCE LTD IN ITA NO.979/A/2016/SRT FOR A.Y.2007-08 PAGE 1 OF 7 , , IN THE INCOME TAX APPELLATE TRIBUNAL SURAT BENCH, SURAT . . [ , . . , BEFORE SHRI C.M.GARG, JUDICIAL MEMBER AND SHRI O.P.MEENA, ACCOUNTANT MEMBER ITA NO.979/AHD/2016/SRT : ASSESSMENT YEAR: 2007-08 M/S.SHRESHTH LEASING & FINANCE LTD, SHARAD SOMANI, 118, SHREE HARI PARK, B/H. CENTRAL POINT, RING ROAD, SURAT 395 002. PAN: AADCS3850Q V S . THEY DY. COMMISSIONER OF INCOME TAX, CIRCLE-2(1)(2), SURAT. APPELLANT /RESPONDENT [ /ASSESSEE BY SHRI P. M. JAGASHETH, CA /REVENUE BY MRS. R.KAVITHA, SR. D.R. / DATE OF HEARING: 0 5 .0 3 .2018 /PRONOUNCEMENT DATE . 03 .2018 ORDER PER O. P. MEENA, AM THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX(APPEALS)-II, SURAT, DATED 10.02.2016 FOR THE ASSESSMENT YEAR 2007-08. 2. GROUND NO.1 RELATES TO CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN ISSUING NOTICE U/S.148 OF THE ACT AND RE-OPENING OF THE ASSESSMENT. 3. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE HAS FILED RETURN OF INCOME ON 12.09.2011 DECLARING TOTAL INCOME AT RS.7,44,012/-. THERE WAS A SEARCH AND SEIZURE OPERATION U/S.132 OF THE ACT CARRIED OUT IN THE BHATIA GROUP OF COMPANIES ON M/S.SHRESHTH LEASING & FINANCE LTD IN ITA NO.979/A/2016/SRT FOR A.Y.2007-08 PAGE 2 OF 7 25.09.2017. THUS, THE ASSESSMENT WAS COMPLETED U/S.143(3) R.W.S 153(C) OF THE ACT ON 30.12.2011 BY ACCEPTING THE RETURN OF INCOME OF RS.7,44,010/-. THEREAFTER, THE CASE WAS RE-OPENED BY ISSUING OF NOTICE U/S.148 OF THE ACT ON 29.03.2014 ON THE GROUND THAT THE ASSESSEE HAS NOT DEDUCTED TDS ON THE PAYMENTS OF PROFESSIONAL FEES OF RS.67,92,840/-. THIS ASSESSMENT WAS MADE U /S.144 R.W.S 147 OF THE ACT FROM 25.02.2005 BY MAKING DIS-ALLOWANCE OF AFORESAID AMOUNT U/S.40(A)(I) OF THE ACT. 4. BEING AGGRIEVED, THE ASSESSEE CHALLENGED THE ISSUE OF NOTICE U/S.148 OF THE ACT ON THE GROUND THAT ISSUE OF JURISDICTION AND NON-SUPPLY OF REASONS FOR RE-OPENING OF ASSESSMENT. HOWEVER, THE CIT(A) HELD THAT THE ASSESSEE HAS NOT FILED ANY RETURN OF INCOME WITHIN 30 DAYS OF THE ISSUE OF NOTICE U/S.148 DATED 29.03.2014 NOR OBJECTED TO ISSUE OF NOTICE DURING ASSESSMENT PROCEEDINGS. HENCE, FAILURE TO FILE RETURN OF INCOME WITHIN THE TIME PROVIDED IN THE NOTICE U/S.148 MAKES THE RETURN FILE SUBSEQUENT AFTER ELAPSE OF TIME AS NONEST. HENCE, IT IS DE-BARS THE ASSESSEE THE ASSESSEE TO QUESTION THE JURISDICTION OF THE ASSESSING OFFICER AS PER THE PROVISIONS OF SECTION 124(3)(B) OF THE ACT. WITH REGARD TO ISSUE OF NOTICE U/S.148 OF THE ACT, THE CIT(A) OBSERVED THAT THE PROVISION TO SECTION 147 PROVIDES THAT THE ACTION U/S.147 CAN BE TAKEN AFTER EXPIRY OF FOUR YEARS FROM THE END OF RELEVANT ASSESSMENT YEAR IN A CASE OF ASSESSMENT U/S.143(3), IF THERE IS FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE TRULY AND FULLY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT. THE REASONS TO BELIEVE EMPLOYED IN SECTION 147 MEANS THAT THE COMPETENT AUTHORITY HAS A CAUSE OR GROUND OR SOME JUSTIFICATION THAT SOME INCOME HAS ESCAPED ASSESSMENT IF THERE IS MISTAKE IN MAKING AN ASSESSMENT, HENCE RE-OPENING IS AS PER PROVISION OF THE ACT. ACCORDINGLY, THE CIT(A) HAS UPHELD THE RE-OPENING OF ASSESSMENT. M/S.SHRESHTH LEASING & FINANCE LTD IN ITA NO.979/A/2016/SRT FOR A.Y.2007-08 PAGE 3 OF 7 5. BEING AGGRIEVED, THE ASSESSEE FILED THIS APPEAL BEFORE US. THE LD.AUTHORISED REPRESENTATIVE SUBMITTED THAT THE NOTICE U/S.148 WAS ISSUED ON 29.03.2014 I.E. AFTER EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. THE NOTICE U/S.148 AFTER EXPIRY OF FOUR YEARS FROM THE END OF ASSESSMENT YEAR CAN BE ISSUED WHERE, THERE IS A FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE TRULY AND FULLY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT. THE LD.AUTHORISED REPRESENTATIVE REFERRED TO PARA 2 OF THE ASSESSMENT ORDER WHERE THE REASONS FOR RE-OPENING ASSESSMENT HAS BEEN RECORDED WHICH READS AS UNDER: IT IS NOTICED FROM THE COPY OF LEDGER OF DIRECT EXPENSES THAT THE ASSESSEE HAD MADE PAYMENTS EXCEEDING RS.20,000/- TOWARDS PROFESSIONAL FEES TO VARIOUS PARTIES TOTALING TO RS.67,92,840/-, ON WHICH TDS U/S.194J OF THE I.T.ACT HAS NOT BEEN DEDUCTED BY THE ASSESSE COMPANY. THIS IS IN CONTRAVENTION OF SECTION 40(A)(IA) OF THE I.T.ACT. IT IS FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ITS ASSESSMENT. TOTAL INCOME OF THE ASSESSEE COMPANY WHICH HAS ESCAPED ASSESSMENT IS TO THE EXTENT OF RS.67,92,840/-. 6. THUS, IT WAS CONTENDED THAT THE ASSESSEE HAD FURNISHED ALL INFORMATION DURING THE FIRST ROUND OF ASSESSMENT PROCEEDINGS FINALIZED U/S.143(3) R.W.S 153(A) OF THE ACT ON 30.12.2011. THE REASONS RECORDED BY THE ASSESSING OFFICER CLEARLY SHOWS THAT THE COPY OF LEDGER ACCOUNT OF DIRECT EXPENSES WAS AVAILABLE WITH THE FILE OF THE ASSESSING OFFICER WHICH SHOWED PAYMENT EXCEEDING RS.20,000/- TOWARDS PROFESSIONAL FEES. THEREFORE, THE INFORMATION OF PAYMENT OF PROFESSIONAL FEES WAS ALREADY ON RECORD OF THE ASSESSING OFFICER AS MENTIONED IN THE REASONS FOR RE-OPENING OF ASSESSMENT. HENCE, THERE WAS NO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE ALL MATERIAL FACTS TRULY AND FULLY NECESSARY FOR ASSESSMENT. HENCE, AS PER PROVISO TO SECTION 147, NO ACTION U/S.147 CAN BE TAKEN AFTER THE EXPIRY OF FOUR YEARS FROM THE RELEVANT ASSESSMENT YEAR WHEN THERE IS NO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE ALL MATERIAL FACTS TRULY AND FULLY NECESSARY FOR HIS ASSESSMENT. THE LD.AUTHORISED REPRESENTATIVE HAS ALSO PLACED M/S.SHRESHTH LEASING & FINANCE LTD IN ITA NO.979/A/2016/SRT FOR A.Y.2007-08 PAGE 4 OF 7 RELIANCE ON THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF ROYAL INFRASTRUCTURE VS. DCIT, CIRCLE-1(2)(1) [IN SPECIAL CIVIL APPLICATION NO.23178 OF 2017 DATED 20.01.2018] WHEREIN IT WAS HELD THAT IN ABSENCE OF ANY ALLEGATION OF ANY BREACHES IN THE YEAR UNDER CONSIDERATION, THE ASSESSING OFFICER WISHES TO RE-OPEN THE ASSESSMENT FOR THE CURRENT ASSESSMENT YEAR ON THE SIMPLE REASON. THERE WAS NO FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE TRULY AND FULLY ALL MATERIAL FACTS NECESSARY MANDATORY CONDITION WHICH MUST BE SATISFIED BEFORE RE-ASSESSMENT CAN BE PERMITTED, IMPUGNED NOTICE MUST GO. THE LD.AUTHORISED REPRESENTATIVE, FURTHER SUBMITTED THAT SINCE THE MATERIAL INFORMATION WAS AVAILABLE WITH THE ASSESSING OFFICER WHILE FINALIZING THE ORIGINAL ASSESSMENT, THEREFORE, THE RE-OPENING ON THE SAME SET OF FACTS AMOUNTS TO CHANGE OF OPINION WHICH IS NOT PERMITTED IN LAW IN THE LIGHT OF DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. KELVINATOR INDIA PRIVATE LTD (2010) 320 ITR 561 (SC) WHEREIN IT WAS HELD THAT WHEN NO NEW MATERIAL COME TO NOTICE OF THE ASSESSING OFFICER AFTER COMPLETION OF ASSESSMENT AND ASSESSMENT HAS BEEN RE-OPENED ON THE BASIS OF SAME MATERIAL, RE-OPENING OF ASSESSMENT IS NOT PERMISSIBLE. THE LD.AUTHORISED REPRESENTATIVE, FURTHER RELIED IN THE CASE OF WELLBORE ENGINEERING COMPANY VS. ACIT, CIRCLE-5(2) [SPECIAL CIVIL APPLICATION NO.21094 OF 2017 DATED 25.01.2018] WHEREIN PARA 9 THE HONBLE JURISDICTIONAL HIGH COURT HAS OBSERVED AS UNDER : 9. ANOTHER ASPECT OF THE MATTER IS THAT THE ASSESSMENT IS SOUGHT TO BE REOPENED ON THE GROUND THAT VARIOUS EXPENSES WERE PAID, OUT OF WHICH, PAYMENT WAS MADE IN CASH TO EIGHT PERSONS WHICH WAS REQUIRED TO BE DISALLOWED UNDER SECTION 40A(3) OF THE ACT. A PERUSAL OF THE DOCUMENTS ANNEXED ALONG WITH THE PETITION REVEALS THAT AT THE TIME OF THE SCRUTINY ASSESSMENT PROCEEDINGS UNDER SECTION 143(3) OF THE ACT, THE ASSESSING OFFICER HAD CALLED FOR DETAILS OF THE EXPENSES INCU9RRED BY THE PETITIONER, WHO HAD DULY SUBMITTED THE SAME. THE STATEMENTS SUBMITTED BY THE PETITIONER CLEARLY REVEALED THE PAYMENTS MADE IN CASH TO DIFFERENT PARTIES IN DETAIL. EVIDENTLY, THEREFORE, AT THE TIME OF THE REGULAR ASSESSMENT, THE ASSESSING OFFICER HAD GONE INTO THE ISSUE AND HAD NOT THOUGHT IT FIT TO MAKE ANY DISALLOWANCE UNDER SECTION 40A(3) OF THE ACT. THEREFORE, THE REOPENING IS BASED UPON A MERE CHANGE OF OPINION, WHICH ALSO RENDERS THE IMPUGNED NOTICE UNSUSTAINABLE. M/S.SHRESHTH LEASING & FINANCE LTD IN ITA NO.979/A/2016/SRT FOR A.Y.2007-08 PAGE 5 OF 7 8. THE LD.AUTHORISED REPRESENTATIVE, FURTHER CITED DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF NDT SYSTEMS VS. ITO (2014) 363 ITR 603 (BOM) WHEREIN THE ASSESSEE HAS DISCLOSED ALL MATERIAL NECESSARY FOR DETERMINATION OF INCOME HAVE BEEN DISCLOSED BY THE ASSESSEE AND ASSESSING OFFICER TAKEN A PARTICULAR VIEW ON THIS DISCLOSED FACTS AS REFLECTED IN ASSESSMENT YEAR PASSED IN REGULAR PROCEEDINGS THEN IT WOULD NOT BE OPEN TO RE-OPEN THOSE ASSESSMENT PROCEEDINGS AS NO FRESH TANGIBLE MATERIAL ARE AVAILABLE WHICH WOULD WARRANT TAKING DIFFERENT VIEW FROM ONE TAKEN DURING REGULAR ASSESSMENT PROCEEDINGS. THE LD.AUTHORISED REPRESENTATIVE, FURTHER SUPPORTED HIS CONTENTION BY PLACING RELIANCE IN THE CASE OF ACIT VS. SUMA SILPA LTD (2015) 44 CCH 514 PUNE TRIBUNAL. 9. ON THE OTHER HAND, THE LD.SENIOR DEPARTMENTAL REPRESENTATIVE RELIED ON THE ORDERS OF THE LOWER AUTHORITIES. 10. WE HAVE CONSIDERED THE FACTS AND PERUSED THE MATERIAL ON RECORD. THE PERUSAL OF THE REASONS RECORDED FOR RE-OPENING OF ASSESSMENT SHOWS THAT THE ASSESSING OFFICER OBSERVED THAT THE COPY OF LEDGER OF DIRECT EXPENSES SHOWED THAT THE ASSESSEE HAD MADE PAYMENT EXCEEDING TO RS.20,000/- TOWARDS PROFESSIONAL FEES TO VARIOUS PARTIES TOTALING TO RS.67,92,840/- ON WHICH TDS U/S.194J HAS NOT BEEN DONE. THUS, THESE REASONS PRIMA FACIE ESTABLISHED THAT THE ASSESSEE HAS ALREADY FILED DETAILS OF EXPENSES DURING THE ORIGINAL ASSESSMENT PROCEEDINGS IN FORM OF COPY OF LEDGER ACCOUNT. THEREFORE, THERE IS NO PRIMA FACIE ANY FRESH MATERIAL CAME INTO THE KNOWLEDGE OF THE ASSESSING OFFICER AND THEREFORE THIS AMOUNTS TO CHANGE OF OPINION ON THE SAME SET OF FACTS WHICH HAVE BEEN ALREADY AVAILABLE ON THE RECORD ON THE FILE OF THE ASSESSING OFFICER. WE ALSO NOTICED THAT NOTICE U/S.148 HAS BEEN ISSUED AFTER EXPIRY OF FOUR M/S.SHRESHTH LEASING & FINANCE LTD IN ITA NO.979/A/2016/SRT FOR A.Y.2007-08 PAGE 6 OF 7 YEARS FROM THE END OF RELEVANT ASSESSMENT YEAR. THEREFORE, THE PROVISO TO SECTION 147 COMES INTO PICTURE, UNDER THE SAID PROVISO, NO ACTION CAN BE TAKEN AFTER EXPIRY OF FOUR YEARS UNLESS ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT BY REASON OF THE FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT. THEREFORE, WE FIND THAT THERE IS NO CASE OF FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT. SINCE ASSESSEE HAS ALREADY DISCLOSED THE DIRECT EXPENSES CLAIMED BY HIM. THEREFORE, WE ARE OF THE CONSIDERED OPINION THAT THE NOTICE U/S.148 HAS BEEN ISSUED UNDER SAME SET OF FACTS AS ALREADY AVAILABLE ON THE FILE OF THE ASSESSING OFFICER. HENCE, IT IS CLEARLY A CASE OF CHANGE OF OPINION WHICH IS NOT PERMISSIBLE IN LAW AS HELD BY HONBLE SUPREME COURT IN THE CASE OF CIT VS. KELVINATOR OF INDIA PVT. LTD. (SUPRA) (2010) 320 ITR 561 (SC) WHEREIN IT WAS HELD THAT WHEN NO NEW MATERIAL COME TO NOTICE OF THE ASSESSING OFFICER AFTER COMPLETION OF ASSESSMENT AND ASSESSMENT HAS BEEN RE- OPENED ON THE BASIS OF SAME MATERIAL, RE-OPENING OF ASSESSMENT IS NOT PERMISSIBLE. AND ALSO IN JURISDICTIONAL HIGH COURT IN THE CASE OF WELL BORE ENGINEERING COMPANY VS. ACIT, CIRCLE-5(2) [SPECIAL CIVIL APPLICATION NO.21094 OF 2017 DATED 25.01.2018] WHEREIN PARA 9 THE HONBLE JURISDICTIONAL HIGH COURT HAS OBSERVED AS UNDER : 9. ANOTHER ASPECT OF THE MATTER IS THAT THE ASSESSMENT IS SOUGHT TO BE REOPENED ON THE GROUND THAT VARIOUS EXPENSES WERE PAID, OUT OF WHICH, PAYMENT WAS MADE IN CASH TO EIGHT PERSONS WHICH WAS REQUIRED TO BE DISALLOWED UNDER SECTION 40A(3) OF THE ACT. A PERUSAL OF THE DOCUMENTS ANNEXED ALONG WITH THE PETITION REVEALS THAT AT THE TIME OF THE SCRUTINY ASSESSMENT PROCEEDINGS UNDER SECTION 143(3) OF THE ACT, THE ASSESSING OFFICER HAD CALLED FOR DETAILS OF THE EXPENSES INCU9RRED BY THE PETITIONER, WHO HAD DULY SUBMITTED THE SAME. THE STATEMENTS SUBMITTED BY THE PETITIONER CLEARLY REVEALED THE PAYMENTS MADE IN CASH TO DIFFERENT PARTIES IN DETAIL. EVIDENTLY, THEREFORE, AT THE TIME OF THE REGULAR ASSESSMENT, THE ASSESSING OFFICER HAD GONE INTO THE ISSUE AND HAD NOT THOUGHT IT FIT TO MAKE ANY DISALLOWANCE UNDER SECTION 40A(3) OF THE ACT. THEREFORE, THE REOPENING IS BASED UPON A MERE CHANGE OF OPINION, WHICH ALSO RENDERS THE IMPUGNED NOTICE UNSUSTAINABLE. M/S.SHRESHTH LEASING & FINANCE LTD IN ITA NO.979/A/2016/SRT FOR A.Y.2007-08 PAGE 7 OF 7 11. IN THE LIGHT OF THE ABOVE FACTS AND CIRCUMSTANCES, WE FIND THAT PROCEEDINGS INITIATED BY WAY OF ISSUE OF NOTICE U/S.148 OF THE ACT IS NOT IN ACCORDANCE WITH LAW, ACCORDINGLY, SAME ARE QUASHED. ACCORDINGLY, GROUND NO.1 OF THE APPEAL IS ALLOWED. 12. GROUND NO.2 RELATES TO CONFIRMING ADDITION OF RS.67,92,840/- ON ACCOUNT OF DIS- ALLOWANCE MADE U/S.40(I)(A) OF THE ACT. SINCE, WE HAVE QUASHED THE RE-ASSESSMENT PROCEEDINGS ON LEGAL GROUND. THEREFORE, THIS GROUND HAS BECOME ACADEMIC AND INFRUCTUOUS, HENCE, NOT REQUIRED OUR ADJUDICATION. 12. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED ON THE TERMS INDICATE ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 22-03-2018. SD/- SD/- (C.M. GARG) (O.P.MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER / SURAT, DATED: 22 ND MARCH, 2018 S.GANGADAHRA RAO COPY OF ORDER SENT TO- ASSESSEE/AO/PR. CIT/ CIT (A)/ ITAT (DR)/GUARD FILE OF ITAT. BY ORDER / / TRUE COPY / / ASSISTANT REGISTRAR, SURAT