TaxTMI 
TaxTMI 
2016 (7) TMI 609
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.... in respect of the transportation cost incurred by the Assessee. In reply to the query of the AO, the Assessee gave details of expenses incurred on this account and produced bills and vouchers in support of the aforesaid expenses. In the order of assessment framed u/s.143(3) of the Act dated 31.12.2009, the Assessing Officer had verified such transactions and recorded his satisfaction as follows: "In regard of the transport charges for potato seeds purchased from Punjab for which considerable amount of carrying charges for long distance (Punjab to Hooghly), the assessee have incurred which has been explained by the A/R. discussed and heard...." The Ld. Assessing Officer thereafter framed the assessment order u/s. 143(3) of the Act determining the total income at Rs. 4,08.470/- by resorting to a disallowance in the amount of Rs. 8,100/- out of "Car running expense" to the income returned by the assessee. The order of assessment was passed on 31.12.2009. 3. The AO addressed a letter dated 22.6.2011 to the assessee in which, the AO raised two objections to the order of assessment dated 31.12.2009 framed by him u/s.143(3) of the Act viz., "1. According to the AO, on scrutiny of the....
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....rom plying of his one lorry u/s. 44AE of the Act and that he had not used the Maruti Car and Toyota Innova on hire and therefore applying the provisions of s. 44AE of the Act in respect of the other two vehicles was erroneous. As far as disallowance of transportation charges u/s.40(a)(ia) of the Act is concerned, the Assessee submitted that the admissibility of the transportation charges were enquired into by the Ld. Assessing Officer by calling for details and evidence which was duly complied with and after due deliberation he was fully satisfied with the propriety of the expense. The Assessee argued that it was not proper to reopen completed assessment on this ground because no tangible material came to the possession of the AO based on which the AO entertained belief that income of Assessee chargeable to tax has escaped assessment. In such circumstances, the Assessee pleaded that initiation of reassessment proceedings would be merely on change of opinion which was not permissible in law. The Assessee also requested the AO to furnish a copy of the reasons recorded for initiating proceedings u/s.147 of the Act. 5. However. the Ld. Assessing Officer was not impressed by such submi....
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....ghly for his alleged assumption of jurisdiction u/s. 147 of the Income Tax Act, 1961 and the specious order passed u/s. 147/143(3) of Act in pursuance to the impugned notice dated 07-07-2011 issued u/s. 148 of the Act is therefore ab initio void, ultra vires and ex-facie null in law. 2. FOR THAT on a true and proper interpretation of the scope and ambit of the provisions of s. 147 of the Income Tax Act, 1961, the Ld. Commissioner of Income Tax (Appeals) XXXVI, Kolkata was absolutely in error in upholding the action of the Ld. Income Tax Officer, Ward 2(2), Hooghly of issuing notice u/ s. 148 of the Income Tax Act, 1961 misconstruing the crucial expression "tangible material' in support of such futile exercise and the purported conclusion reached on that behalf is wholly erroneous, flawed and contrary to the settled position in law. 3. FOR THAT the Ld. Commissioner of Income Tax (Appeals) XXXVI, Kolkata acted unlawfully in upholding the action of the Ld. Income Tax Officer, Ward 2(2), Hooghly of issuing notice u/s. 148 of the Income Tax Act, 1961 merely on change of opinion basing only on the evidence already adduced on record in course of the original assessment proceedings....
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....s recorded by the AO but on the other hand, the AO had relied upon the letter dated 22.06.2011 which was issued to the assessee prior to the issue of notice u/s 148 of the Act. From a perusal of the letter dated 22.06.2011 of the AO, it is clear that with regard to the first reason recorded by the AO namely not offering truck income to the extent of Rs. 67,600/-, the assessee had declared income from lorry plying of Rs. 50,000/- under the head "income from Basanti Automobiles". Income u/s 44AE of the Act has been taken in the capital account. Therefore the assessee had declared income from truck plying in the original return of income. This factual position is not being disputed by the AO. Besides the above, there was no tangible material based on which the AO came to a conclusion that income from truck plying was not offered to tax by the Assessee in the original return of income. In fact the factual assertion in the letter dated 22.6.2011 that the Assessee owned three vehicles and that these were used in the business of plying trucks on hire is without any basis and is purely a surmise of the AO. 10. As far as the second reason recorded by the AO is concerned it relates to the c....
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....gible material" to come to the conclusion that there was escapement of income from assessment. 12. The ld. DR has however argued before me that though the transport inward charges were not inquired into by the AO he did not apply his mind on the applicability of the provision of section 40(a)(ia) of the Act. According to him the initiation of re-assessment proceedings were valid. In this regard, it is worthwhile to refer to the decision of the Hon'ble Delhi High Court in the case of CIT vs Usha International Ltd. (2012) 348 ITR 485 (Del) wherein it was held that reassessment proceedings will be invalid in case an issue or query is raised and answered by assessee in original assessment proceedings and Assessing Officer does not make any addition in assessment order. 13. It is clear from the facts available on record that reassessment proceedings in the present case were initiated purely on the change of opinion. On this issue the CIT(A) has taken the following view :- "On perusal of the assessment record it is seen that during the course of original assessment, it is seen that no query regarding Tax deduction at source from transport payment has been made. Consequently no examina....