2009 (8) TMI 12

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....ellant was maintaining its accounts in accrual system of accounting as per the provisions of the Companies Act and the method of accounting prescribed by the Institute of Chartered Accountants of India for corporate assessees? 3. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the respondent has jurisdiction to issue the notice is correct in law when admittedly, the respondent lacks jurisdiction? 4. Whether on the facts and in the circumstances of the case, the Tribunal was right in not considering the issue of limitation raised by the appellant is right in law? 2.  The facts are : The assessee is a company carrying on the business as clearing and forwarding agent. In respect of the assessment years 1996-97 to 2002-03 the assessing officer noted that there was a difference between the income as per the TDS certificate and that credited in the profit and loss account.  The assessee's explanation was that in this line of business, tax is deducted on the gross income including reimbursable expenses incurred by the assessee.  The explanation was not accepted by the assessing officer and he made an addition of th....

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....as only processing under section 143(1) of the Act and any intimation under the provision cannot be treated as assessment order and for that purpose, the Tribunal relied on the decision of the apex Court in ACIT v. Rajesh Jhaveri Stock Brokers P. Ltd., (2007) 291 ITR 500.  The correctness of the same is put in issue.  5. Mr. A. Thiagarajan, learned counsel for the appellant/assessee contended that in respect of assessment years 1996-97 to 1998-99 assessment order under section 143(3) was passed on 19.03.1997,  25.02.2000 and 20.02.2001 respectively.  However, notice under section 148 of the Act for revision of assessment was issued on 26.03.2003 for the assessment year 1996-97 and on 29.03.2004 for the assessment years 1997-98 and 1998-99, which is beyond the period of four years and hence barred by limitation, in the absence of any new material coming to the notice of the assessing officer. 6. It is contended that notice of assessment under section 148 of the Act suffers from "reason to believe" escapement of income for all the assessment years.  The assessing officer, in his order dated 28.12.2004, admitted that TDS certificates are the basis availa....

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....variation between the income admitted and the income as per the TDS certificate available on record.  From the above observation, it is evident that the materials are available before the assessing officer while he was making the assessment under section 143(3) of the Act in respect of the assessment years 1999-2000 to 2002-03.   In that case there cannot be any discrepancy.  When there is no discrepancy, there is no escapement of income.  He further concluded that the objection of the assessee that all the assessees doing the business of clearing and forwarding agency are following one and the same method of accounting, i.e., monies received for expenses are credited to bills for collection account and expenses incurred are debited to the said account and unclaimed surplus are transferred to profit and loss account.  This method has been prescribed by the Institute of Chartered Accountants in its guidance note on tax audit under section 44AB of the Act, wherein it is stated that under clause "(vi)  Reimbursement of customs duty and other charges collected by a clearing agent' would not form part of the gross receipt in business for the purpose of....

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....   --     --   1999-00   06.12.99   58,140   21.08.00 17.07.00       --   --     --   2000-01   30.11.00   132400 22.06.01     --       --   --     --   2001-02 31.10.01   127460     18.10.02     --       --   --     --   2002-03     124500   21.2.03     --       --   --     --     Date of notice u/s 148   Date on which copy of reasons for reopening were sought     Date on which only gist of reasons were furnished   Date on which objections  for reasons were filed   Date on which order against the reasons for reopening was passed   Date on which detailed objections for reassessment were filed together with clarification on variation betw....

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....the assessment year 1996-97, re-assessment was completed  on 29.03.2004 and for the assessment years  1997-98 to 2002-03, re-assessment was completed on 28.02.2005. In respect of all the assessment years, the Assessing Officer re-opened the assessment on the ground that gross receipts are not transferred to the Profit and Loss Account and made additions.  Aggrieved by that order, the assessee has filed an appeal to the Commissioner of Income Tax (Appeals).  The said Commissioner of Income Tax (Appeals)  upheld the re-opening of the assessment, but on merits, deleted the addition.  Aggrieved by that order of the Commissioner of Income Tax (Appeals), the Revenue filed  appeals  before the Income Tax Appellate Tribunal.  The Tribunal, considering the facts, held that  there is no proper explanation on behalf of the assessee  and only  mere  theoretical  explanation was offered by the assessee and it is for the assessee to make reconciliation  of the difference between the receipt in TDS Certificate and amount credited in Profit and Loss Account and there is no material  available on record to consider the ....

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....there is difference between the receipt in TDS Certificate and amount credited in Profit and Loss Account.  Further, the Assessing Officer was of the view that if the Profit and Loss Account is taken into consideration, there was a distorted picture of the true state of financial affairs or business operation of the assessee company, because the  gross receipts were not transferred, but only net receipts were transferred  to  the Profit and Loss Account.  In view of the above, the Assessing Officer was of the view that there is a failure on the part of the  assessee to disclose fully truly all material facts necessary  for the assessment. The Commissioner of Income Tax (Appeals) also upheld the validity of reopening.  The Tribunal has given a specific finding in respect of re-opening, which  reads as  follows: "Upon a careful consideration of the issue and after hearing both the parties, we are of the opinion that re-opening on the basis of factual error pointed out by the internal audit party has been held to be valid by the Hon'ble Apex Court in CIT Vs. P.V.S.Beedies (P) Ltd., 237 ITR 213.  Furthermore, Hon'ble Apex Court ....