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Income Tax Appellate Tribunal, ‘B’ BENCH: CHENNAI
Before: SHRI MANJUNATHA G & SHRI MANOMOHAN DAS
This appeal by the Revenue is directed against the order passed by the learned Commissioner of Income Tax (Appeals)-1, Trichy [CIT(A)] dated 31.05.2019 and pertains to Assessment Year [AY] 2012-13. The Revenue has raised the following grounds of appeal:
1. The order of CIT(A) is bad in law and contrary to the facts of the case.
2 -: 2. The Ld. CIT(A) had erred in quashing the reopened assessment order.
3. The ld. CIT(A) had failed to note that the issue in reassessment had not been discussed in previous order and it is a case of no opinion and not based on change of opinion.
The ld. CIT(A) had failed to note that the assessee had neither produced bills for the purchase of fixed assets, nor proof for claim made in the original return of income, towards which addition had been made.
5. The ld. CIT(A) had erred in admitting that there was no apparent failure in part of the assessee to disclose true facts with respect to Sundry Creditors.
6. The appellant craves leave to add, allow or modify any grounds of appeal.”
The facts of the case are that the assessee company filed its return of income for the Assessment Year [AY] 2012-13 on 30-09-2012 declaring a total income of Rs.86,57,330/-. The case was selected for scrutiny under CASS for the reason of large increase of unsecured loans. The ld. Assessing Officer after considering the reply /materials submitted by the assessee had completed the assessment vide order dated 20-03-2015. The ld. AO assessed the income of the assessee at Rs. 92,94,355/- against the returned income of Rs. 86,57,330/-.
The aforesaid original assessment was reopened by the ld. AO believing that income chargeable to tax has escaped assessment.
Accordingly, notice under section 148 dated 28-03-2018 issued which was served upon the assessee on 29-03-2018. The assessee in respond filed return of income on 27-04-2018 declaring Rs. 92,94,350/- as income. Subsequently, notices under section 143(2) and 142(1) issued to the assessee on 01-10-2018 and 24-12-2018
3 -: respectively. Thereafter, the ld. AO vide order dated 31-12-2018 reassessed the income of the assessee at Rs. 2,61,59,635/-.
Aggrieved, the assessee filed 1st appeal before the ld. CIT(A). 4. The ld. CIT(A) vide order dated 31-05-2019 quashed the re- assessment order. Aggrieved, the Revenue filed the present appeal before the Tribunal.
Heard the representatives of both the parties and perused the material on record. The Ld. DR is in support of the reassessment order passed by the Ld. AO. The Ld. DR relied on certain decisions. On the other hand, the Ld. AR is in support of the order of the Ld. CIT(A). The Ld. AR submitted that the reassessment order passed by the Ld. AO was merely a change of opinion. The Ld. AR also submitted that the reassessment proceeding had been initiated instead of revision procedure u/s 263 of the Act was due to expiry of time. The Ld. AR relied on certain court decisions also in support of his case.
We carefully considered the rival submissions of the parties and also perused the observations of the lower authorities. The ld. AO reopened the original assessment by observing as follows:
4 -: “In the balance sheet, the unsecured loan amount was shown at Rs. 1,28,38,991/- whereas in the paid up share capital holding pattern as on 31-03-2012, the unsecured loan amount of Rs. 27,06,080/- was included in the share capital. The confirmation letters received from the sundry creditors were not reflecting the amounts shown against them in the books of accounts produced by the assessee. The amount of sundry credits as per the books is Rs. 25,24,949/-. The confirmation letters received shows the amount at Rs. 43,85,999/-. The assessee had failed to furnish the details with regard to the addition to fixed assets to the tune of Rs. 5,82,26,801/- shown in the depreciation statement. The assessee had shown payment of crane hire charges at Rs. 14,47,877/- for the AY 2012-13. Details were furnished by the assessee for Rs. 14,97,877/-. The assessee failed to produce details with regard to the difference of Rs. 50,000/-. Further, the assessee had also claimed maintenance for cranes under the head “Factory Overheads-Rs.8,82,189/-. In the absence of depreciation schedule available on file, the assessee had failed to explain with documentary proof the claim of Rs. 8,82,189/-. During the course of original assessment proceeding, the assessee had not provided the explanation for cash credits found in the bank account statement, viz. A/c No. 0067009102100 maintained with the State Bank of Travancore. From the details available on record, it was observed that the cash credits were made by the Directors totaling o Rs. 1.07 crores. The assessee had failed to provide details viz. confirmation letters and ledger extracts of the Directors as appearing in the Books of accounts of the assessee- company”.
We observe that the assessee had submitted its profit and loss account, balance sheet along with annexures, list of sundry creditors, bank statements, cash flow statements, confirmation letters from loan creditors confirming their closing balances during the original assessment and the same were considered by the ld. AO. The ld. AO did not find any infirmity during the original assessment proceedings except the areas of car maintenance, car insurances, fuel expenses and repetition of vouchers.
5 -: 8. Now we observe the observations of the ld. CIT(A). The ld.
CIT(A) while disposing the appeal have observed as under:
5.2. What these 9 cases cited above show that as long as assessee has given truthful disclosure of the primary facts, he cannot be hit with reopening u/s 148 of the IT Act, 1961. It is for the Income Tax Department to assess or reassess the case in the light of primary facts and not for the assessee to act as his own AO. As can be seen from the original assessment order and the reasons for reopening furnished by the AO and the comments of AO in the remand report, the details relied upon by the AO were fully present in the assessment record. There appears to be no new information coming to AO and from the facts and circumstances it also appears that there was no apparent failure in part of assessee to disclose true fact. 5.3. Argument that confirmations of creditors submitted were of amount more than was appeared in the balance sheet by itself emanates from the assessment order in hand and in normal course addition is resorted when creditor does not confirm the amount and not when for whatever reasons the amount confirm is more than what is shown in the books of account. 5.4. In similar manner, if cash has been deposited in the accounts of directors who have given loans to the assessee company and the same AO was the assessing officer for both the company and the directors whose PAN Numbers and identity was very much known to him. It stands to reasons that additions should have been made in hands of those directors and not in the hand of recipient company
From the forgoing, it is clear that the assessee had submitted the necessary documents/materials during the original assessment. The original assessment dated 20-03-2015 itself says that the assessee furnished the documents, such as profit & loss account, balance sheet along with annexures, list of sundry creditors, cash flow statement, bank statement of account, confirmation letters from loan creditors confirming their closing balance and copy of ledger accounts etc.
In view of the aforesaid facts, it cannot be said that the assessee had failed to furnish necessary documents/materials during the original
6 -: assessment proceedings. As there was no failure on the part of the assessee in filing of necessary documents / materials during the original assessment proceedings, reopening of the assessment was uncalled. Therefore, the ld. CIT(A) in his order correctly observed that it is for the Income Tax Department to assess or reassess the case in the light of primary facts and not for the assessee to act his own AO and that the reassessment proceedings are more in nature of review and change of opinion. The ld. CIT(A) relied on 9 court decisions while disposing of the appeal. The Hon’ble Supreme Court in the case of CIT v. Bhanji Lavji [1971] 79 ITR 582 (SC) held that the mere change of opinion or wrong legal reference will not empower the Assessing Officer to reopen assessment. In our considered opinion, the ld. AO thought that certain areas were remained to be considered during the original assessment. If that was the case, then, revision proceeding was to be initiated by the competent authority, not the reassessment proceeding.
In view of the aforesaid discussions, we consider it proper to dismiss the appeal of the Revenue. Accordingly, we dismiss the appeal of the Revenue and upheld the order of the ld. CIT(A) dated 31-05-2019.
7 -: 12. In the result, the appeal of the Revenue is dismissed.
Order pronounced on 27th September, 2023.