TaxTMI 
TaxTMI 
2022 (6) TMI 636
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....hority erred in not considering the contention of the appellant that a.o. grossly violated the principle of natural justice and totally failed to provide fair and reasonable opportunity and hence the impugned order may be set aside as invalid. 3. That the fact of the case is that during the year in subject, the appellant paid higher charges to each party not exceeding the limit provided under section 194 I of the IT. Act. All the expenses were clearly and fully accounted for and placed for verification. The assessing a.o. then, clearly verified all the transactions and materials furnished including hire charges and after verification he concluded that hire expenses were to be allowed as claimed and were in order, assessing total income at Rs.5,56,61,450/=. Revenue Audit party thereafter made a note that hire charges were to be disallowed u/s.40a(ia)of the Act as payment violated sec.194 I of the Act limit. But the a.o. who assessed clearly denied the charge inter alia stating that claim of hire charges of Rs.10,82,304/-, in dispute also, was in order. It is learnt further that response to remainder, the succeeding a.o. also verified the records etc., and succinctly reacted....
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....3(3) and section 147 of the LT. Act, which is also null and void. 5. That the Ld. First Appellate Authority erred in not considering the contention of the appellant that when originally at all times including at the stage of 143(1) and also at scrutiny stage the a.o. clearly was convinced of fact and materials produced before him that the hire charges could not be brought to ambit of Sec.40a(ia) of the IT. Act, on a primary reason that no payment exceeded the limit. This stand was later ratified by the two succeeding officers including while making reply to margin notes to audit report. This is in line with the finding of this Hon'ble Tribunal in case of ACIT V JUBILEE POLT HOUSING LTD AND in case of CIT V. CHOLOMANDALAM INVESTMENT). 6. That the Ld. First Appellate Authority erred in not considering the contention of the appellant that Hon'ble Courts clearly held that audit objection would not constitute a reason for reopening. (Honb'le Apex Court in case of INDIAN AND EASTERN NEWS PAPER and Hon'ble Madras High Court in Apollo Hospitals Enterprises v ACIT, citation - 287 ITR 25 Mad). 7. That the Ld. First Appellate Authority erred in not c....
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.... in not considering the contention of the appellant that as the a.o. never provided the materials he relied to assesee, the entire proceedings ought to have been set aside as invalid. Per order of the Hon'ble Calcutta High Court in case of Debashis Moulik v ACIT, in W.P. No.1174 of 2013, even all the materials called for not furnished, still the a.o. could not validly invoke sec.147 and reopen the assessment. 13. That the Ld. First Appellate Authority erred in not considering the contention of the appellant that alternatively, without admitting, even otherwise, if any amount is to be disallowed only the amount payable at the end of the financial year alone could be disallowed and not otherwise. 14. That the ld. First Appellate Authority erred in not considering the contention of the appellant that act of a.o. is nothing but change of opinion as at the time of scrutiny assessment hire charge expense was gone in detail by him and all details of party wise payment and as such change of opinion would not vest the a.o. with the authority to reopen assessment validly (ITAT, KOLKATA in case of Reliable Transport Agency v ACIT, in ITA 1066/2010). 15. That the....
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....f as may be deemed fit and necessary. 3. At the outset, appeals filed by the assessee for the AYs 2007-08 & 2008-09 are time barred by 18 days, for which, petition for condonation of delay has been filed. The Ld.AR for the assessee referring to petition filed by the assessee submitted that Chairman of the company was fell sick during the period, when order passed by the Ld.CIT(A) is received by the company. Because of ill-health, he could not attend the office work. Thus, for the above reason, there is a delay of 18 days in filing of these appeals. However, such delay is neither intentional nor to derive any undue benefit, but purely for the reasons beyond control of the assessee. Therefore, delay may be condoned in the interest of advancement of substantial justice. 3.1 The Ld.DR fairly agreed that the Bench may take appropriate decision to condone the delay. 3.2 We have heard both the sides and considered the petition filed by the assessee for condoning the delay in filing of these appeals for both the assessment years. Having considered reasons given by the assessee for not filing the appeals within the time prescribed under the Act, we find that the reasons given by th....
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.... an allegation from the AO that there is a failure on the part of the assessee to disclose fully and truly all material facts necessary for that assessments. In these cases, the AO has re-opened the assessments after recording reasons. Further, on perusal of such reasons, there is no allegation from the AO that there is a failure on the part of the assessee to disclose fully and truly all material facts necessary for that assessments. Therefore, on the basis of very same materials without any allegation, re-opening of assessment is bad in law and liable to be quashed. The assessee had also challenged additions made by the AO towards disallowance of hire charges u/s.40(a)(ia) of the Act, for non-deduction of TDS u/s.194I of the Act, and submitted that hire charges paid by the assessee to each party during the financial year relevant to the AYs 2007-08 & 2008-09, does not exceed a sum of Rs.1,20,000/- per annum, which is specified amount, for which, provisions of Sec. u/s.194I of the Act, is applicable. The assessee has filed all details and proved that hire charges paid, does not come u/s.194I of the Act, and consequently, the same cannot be disallowed u/s.40(a)(ia) of the Act. The ....
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....der of the Ld.CIT(A), submitted that the AO has formed reasonable belief of escapement of income on the basis of materials, which suggest escapement of income and thus, there is no merit in the arguments of the assessee that re-opening of assessments are bad in law. He further submitted that at the time of issue of notice, the AO has to make a reasonable belief of escapement of income. However, he does not require to prove escapement of income. In both the cases, there is sufficient materials to form reasonable belief of escapement of income and thus, the re-opening of assessments are valid in law and hence, the orders of the Ld.CIT(A) should be upheld. 9. We have heard both the parties, perused the materials available on record and gone through orders of the authorities below. The AO had reopened assessments for the AYs 2007-08 & 2008-09, on the basis of reasons recorded for re-opening of assessment, as per which, income chargeable to tax had been escaped assessment on account of payments made towards hire charges without deduction of TDS u/s.194I of the Act. The sole basis for the AO to form reasonable belief of escapement of income is Tax Audit Report filed by the assessee. A....
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....ruly all material facts necessary for that assessment years. Therefore, from the combined reading of provisions of Sec.147 of the Act, coupled with proviso provided therein, when assessments have been re-opened after four years from the end of the relevant assessment years, then, there should be an allegation from the AO on disclosure of necessary information for the purpose of completion of assessment proceedings. In both the cases, if you go through the reasons recorded for re-opening of assessments for both the assessment years, there is no iota of evidence from the reasons that there is an allegation from the AO on the part of the assessee to disclose fully and truly all material facts necessary for that assessment years. Therefore, we are of the considered view that re-opening of assessments are certainly bad in law and liable to be quashed. 11. The assessee has relied upon the decision of ITAT Chennai Benches in the case of in M/s.URC Construction (P) Ltd. v. ACIT in ITA No.2759/Mds/2016 dated 20.04.2017, wherein, the Tribunal had considered an identical issue in light of identical reasons recorded by the AO for re-opening of assessment on the issue of disallowance of hire....
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.... payments, payment of wages, interest, etc. before the Assessing Officer. The Assessing Officer has also called upon the assessee to produce the details of secured loan availed from bank and other financial institutions. The Assessing Officer has also conducted enquiry through Inspector of Income-tax in order to ascertain genuineness of sundry creditors. After examining the material, the Assessing Officer observed as follows at page 2 of the assessment order, copy of which is available at page 69 of the paper-book in the case of M/s URC Construction Pvt. Ltd.:- "On a perusal of details filed, it is seen that the assessee has not included TDS receipts of Rs.13,57,306 as income. Hence, the same is brought to tax. (Add: Rs.13,57,306) The assessee has defaulted in TDS payments on audit fees and hire charges paid of Rs.44,45,185. Hence the said sum of Rs.44,45,185 is disallowed u/s. 40(a)(ia) of the Income-tax Act, 1961. (Add: Rs.44,45,185)" 9. Therefore, it is obvious that the entire TDS certificates, opening stock, gross receipts from contractors, details of purchase, list of shareholders, copy of current account, copy of sales tax, general expenses cl....
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.... below for all the three years are set aside and the appeals of the assessees stand allowed. 12. The assessee has also relied upon the decision of the ITAT Chennai Benches in the case of N.Ramalingam & Co. v. ACIT in ITA No.1249/Mds/2016 dated 30.01.2018, wherein, the Tribunal after considering relevant reasons recorded by the AO for re-opening of assessment and also by following the decision of ITAT Chennai Benches in the case of M/s.URC Construction (P) Ltd. v. ACIT in ITA No.2759/Mds/2016 dated 20.04.2017, held that the re-opening of assessment is bad in law. The relevant findings of the Tribunal are as under: 7. We heard the rival submissions and perused the relevant material. The relevant portion of the above cited cases are extracted as under; "7, We have considered the rival submissions on either side and perused the relevant material available on record. A copy of the reasons recorded for reopening of the assessment in the case of the assessee, M/s.URC Construction (P) Ltd,, is available at page 52 of the paper-book, For the purpose of convenience, the reasons recorded by the Assessing Officer is reproduced hereunder- "The assessee is liable to....
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....annot stand in the eye of law. Accordingly, the orders of both the authorities below for all the three years are set aside and the appeals of the assessees stand allowed." 8. Since, the facts and legal position in this assessee's case is almost similar, following the above decision, we hold that the Assessing Officer has clearly recorded a finding that the details of TDS made on payment to subcontractors were furnished by the assessee and after examining them he passed the original assessment order. Further, in this case, in Form 3CD, against Item No. 22(b), in respect of the details in non-compliance with TDS provisions of Chapter XVII-8, the auditor has reported as Nil. When the facts are so, for validly re-opening the assessment certainly there should be fresh or new material before the Officer. From the reasons recorded which is extracted above, it is clear that the Assessing Officer has not indicated any such material and hence the re-assessment made amounts to change of opinion barred by limitation and hence it cannot be upheld. The corresponding appeal grounds are allowed. 13. In this view of the matter and by following the decision of co-ordinate Bench of th....