TaxTMI 
TaxTMI 
2023 (8) TMI 1612
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....nce. 3. Amongst other grounds, the Revenue has taken ground of quashing the order passed by the Ld. AO on the ground of maintainability of re-assessment proceeding initiated under Section 148 of the Act by the Ld. CIT(A) on the count of change of opinion. Since this relates to the very maintainability of the entire proceeding initiated under Section 148 of the Act, we have decided to proceed with the matter to deal with this ground at the very threshold. ITA No.386/Ahd/2020 - A.Y. 2008-09 4. The appeal preferred by the Revenue for A.Y. 2008-09 is barred by limitation for 60 days due to administrative reason, particularly, movement of the file in the department, as was the argument advanced by the Ld. DR, which has not been controverted by the Ld. AR with all his fairness. Hence, the delay is condoned. 5. We have heard the rival submissions made by the respective parties and we have also perused the relevant materials available on record. 6. The brief facts leading to the case is this that the assessee company, engaged in the business of fabrication and erection, e-filed its return of income through electronic media declaring total income Rs. 2,67,91,420/-, which was initially....
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....no question of non-payment of this VAT amount as the said amounts have already paid at the time of booking purchases. Furthermore, as a routine accounting policy the Sales-tax expense for the year is transferred to Sales-tax payable account and is set-off against input credit available. We are herewith enclosing ledger copy of VAT/Sales-tax expense and VAT/Sales-tax payable for your kind reference As it is well settled accounting rule, any VAT/Sales-tax paid on purchases (input credit) is usually shown as current asset if the same is eligible for set-off against future VAT/Sales-tax liability. The said input credit is availed against VAT/Sales-tax payable on sales. Furthermore where a set-off is not available or the VAT paid on purchases is not eligible as input credit, the same is definitely an expense of the assessee In the present case, the amount debited to Sales-tax expenses have been arrived after the above explained treatment of Sales-tax expense, Sales-tax payable and input credit receivable. There is no anomaly in the present case, of the assessee company and the treatment of VAT/Sales tax and expenses claimed are in consonance with the prescribed accounting treatmen....
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....ing the assessment u/s. 147 of the Act. 2. For appreciating the facts in a proper perspective the chronology of events is given hereunder: Event Date Assessment Year 2008-09 Filing of return of income U/s. 139(1) 30-09-2008 Assessment completed u/s. 143(3) rws 144C(3) 29-11-2011 Completion of 4 years from the end of AY 31-03-2013 Notice u/s. 148 issued on 27-02-2015 Order u/s. 148 framed on 27-10-2015 Reopening beyond the period of 4 years: The appellant filed return of Income on 30-9-2008 declaring therein total income of Rs. 2,67,91,420. The return of income was accompanied by Audit Report with all enclosures and schedules thereto. The case was selected for scrutiny and all the details called for by Assessing Officer were filed before him. Regular books of accounts were also produced. The assessment was completed u/s 143(3) at a total income of Rs. 2,69,50,080 on 29-11-2011 (page 69 to 72). 4. On 27-2-2015 notice u/s 148 was served on the appellant. Your appellant filed return on 04.06.2015 in the office of Assessing Officer in pursuance of notice u/s. 148 of the Act. 5. Notice u/s. 148 is challenged mainly on ground of non-fulfillment of conditions prescr....
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.... would notice that there is no mention about the satisfaction of the conditions of Proviso to Section 147. We seek to rely on the decision of Bombay High Court in the case of IPCA Laboratories Ltd. vs. Gajanand Meena, Dy. CIT 251 ITR 416 (Bom). We also rely on the following decisions in this regard: - Garden Silk Mills Ltd. 222 ITR 27, 29, 30 (Guj) - Kaira District Co-op. Milk Producers Union Ltd. 216 ITR 371 (Guj) - Orient Beverages Ltd. 208 ITR 509 (Cal) (ii) On the perusal of the reasons recorded (page 74) your kind office would notice that there is no allegation that the Appellant had failed to disclose fully and truly all material facts necessary for assessment. In the following decisions it has been held that failure to mention that reopening is done on account of failure on the part of the Assessee to disclose fully and truly all material facts necessary for assessment makes the proceedings invalid. a. Haryana Acrylic Manufacturing Co. vs. Commissioner of Income- Tax and Another [2009] 308 ITR 38 (Delhi) "29. In the reasons supplied to the petitioner, there is no whisper, what to speak of any allegation, that the petitioner had failed to disclose fully and truly ....
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....ed that the Assessing Officer has made the following reference to the exercise of jurisdiction U/s. 147. "In this case, the assessee has filed return of income for A. Y. 2008-09 on 30.09.2008, declaring of Rs. 2,67,91,420/-. The case was selected for scrutiny assessment u/s 143(3) was finalized on 29-11-2011, income was assessed of Rs. 2,69,52,580/- u/s 143(3) of the IT. Act. It was seen from P/L and annexure attach with it that assessee had debited a sum of Rs. 1,27,92,992/- as duties and taxes, out of this amount Rs. 62,92,692 was debited on account of VAT payment. It is observed from the ledger of VAT submitted by the assessee that only Rs. 5,31,615/- was actual payment and remaining Rs. 57,61,077 was either VAT payable or credit on purchase as evident from Journal entry passed for these claimed expenditures. It is seen from noticed from 3 CD that there was no outstanding VAT liability was shown either outstanding as on 31.03.2008 nor there was any mention of subsequent payment before filing of return. Further, as assessee is showing sales exclusive of VAT, separate VAT account is maintained and credit on account of payment of VAT on inputs and actual payment of VAT on outpu....
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....ine the proposed addition to be made by the AO. It may be necessary to examine as to whether the AO has relied on any material which was not present at the time of the assessment for coming to the conclusion that in the original assessment the income has escaped assessment due to the failure on the part of the appellant. We therefore now deal with the observations made by AO: * On the perusal of reasons recorded for reopening of assessment (refer page nos. 73 and 74) your kind office would notice that reopening is done mainly for the purpose of verification of the claim of expenditure of Rs. 57,61,077/- being VAT expense claimed for the year under consideration. The AO has stated that the Appellant has actually paid an amount of Rs. 5,31,615/- of the total expense of Rs. 62,92,692/- and the balance amount of Rs. 57,61,077/- was neither shown as outstanding VAT liability nor there was any mentioning of any subsequent payment before filing of return of income. * We most respectfully submit that the issue of VAT expense claimed by the Appellant was examined at the time of assessment u/s. 143(3) rws 144C(3) of the Act. We invite your kind attention to the to the notice issued by th....
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....e conclusion that income escaped assessment due to the failure on the part of the assessee, as of the basic contention made by the assessee before the First Appellate Authority as narrated in the written submission mentioned hereinabove. 11. Apart from that, the assessee submitted following on the ground of mere change of opinion in reopening assessment: "9. The appellant filed the return of income on 30-9-2008. Regular assessment u/s. 143(3) was completed on 29-11-2011. Subsequent to the completion of regular assessment u/s. 143(3) the AO reopened the case invoking provisions of section 148 of the Act. Vide notice dated 27-2- 2015 the AO reopened the case of the appellant. Copy of reasons recorded for reopening of assessment are attached on page no. 74. The AO had reopened the case for the purpose of making addition of Rs. 57,61,077. 10. We invite your kind attention to the reasons recorded for reopening of assessment vis- a-vis the reply filed by the appellant at the time of regular assessment proceedings u/s. 143(3) of the Act (refer page 65 and 68 of the paper book). 11. At the time of scrutiny u/s. 143(3) of the Act, the appellant was directed to file the details of dut....
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....uments produced by the appellant also the explanation given at the time of regular assessment proceedings that the AO had decided not to make any addition. We therefore submit it is not a case of allowing wrong deduction but allowing deduction as per law after in depth analysis of the documents produced by the appellant." 12. Series of judgments have been relied upon by the assessee before the First Appellate Authority in support of the ground of change of opinion as contended by the assessee. Upon calling for a remand report from the Ld. AO, the Ld. CIT(A) observed as follows: "Vide additional grounds of appeal, the appellant contended that the reassessment is bad in law as conditions prescribed in the first proviso to sec. 147 was not complied. More specifically the appellant contended that the failure of the appellant in furnishing material facts fully and truly necessary for the assessment at the time of assessment was not mentioned either in the notice or in the reasons. Hence, the appellant requested to treat the order as invalid. The appellant also contended that during the course of assessment proceedings, the information called for by the AO was provided and on the sa....
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....ails of duties and taxes and a reply was furnished by the appellant and considering the same the original assessment was completed. It is also a fact to be noted that the reassessment proceedings were initiated for the purpose of bringing VAT payments to tax u/s.436 of the Act and this particular issue form part of taxes and duties which was examined at the time of original assessment by the AO. The appellant relied on the decision of Hon'ble Supreme Court in the case of L &T Ltd. [113 taxmann.com 48] wherein the SLP filed by the revenue was dismissed holding that there is no failure on the part of the appellant to disclose material facts fully and truly and the reassessment was made on change of opinion. On going through the Hon'ble High Court order of the same case, it was found that the reasons recorded in that case do not have any allegation about failure of the appellant in furnishing material facts fully and truly for the purpose of assessment. It was also considered by the Hon'ble High Court that the AO proceeded to reopen the case on the same old material which was also available on record during the original assessment and hence held that the statutory requirem....
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....e failure on the part of the assessee to disclose truly and fully all material facts been satisfied, the Tribunal correctly held that the notice of reopening of assessment was invalid. No question of law arises." In the present case the AO also recorded the reasons similarly and the ratio is squarely applicable to the appellant's case also. The appellant also relied upon the decision of Hon'ble Jurisdictional High Court of Gujarat in the case of ALPS Technologies (P) Ltd. (81 taxmann.com) for the proposition that when the material facts were truly and fully discussed at the time of original assessment, initiation of proceedings to reopen on the same set of facts held to be invalid. Similarly, the appellant relied upon the decision of Hon'ble High Court of Gujarat in the case of Manan Exports (P) Ltd. (78 taxmann.com 225) for the proposition that reassessment on account of change of opinion is bad in law. After careful consideration of the material facts and the decisions as discussed above, it is held that the AO considered the material facts which were available at the time of original assessment for the purpose of reopening and the reasons recorded do not exhibi....
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.... before us, we find that as the precondition for initiation of proceeding under Section 147 of the Act by recording reasons of income, escaping assessment is not reflecting from the said order of reopening due to the failure on the part of the assessee, the same is not found to be sustainable and hence liable to set aside. Neither any allegation has been labelled against the assessee by the Ld. AO while reopening assessment under Section 148 of the Act in failing to disclose fully or truly all material facts necessary for assessment which admittedly goes against such reopening of assessment by the department. On this aspect, we have further considered the judgment passed by the Hon'ble Apex Court in the case of L&T Ltd., reported in 113 taxmann.com 48, wherein SLP filed by the Revenue was dismissed as there was no failure on the part of the appellant to disclose material facts fully and truly was found. The re-assessment was, thus, at the best made on change of opinion. 15. We have further considered the judgment passed by the Jurisdictional High Court in the case of ALPS Technologies (P) Ltd., reported in 81 taxmann.com holding that when the material facts were truly and fully di....