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Before: Shri Laliet Kumar & Dr. Mitha Lal Meena
In the Income-Tax Appellate Tribunal, Agra Bench, Agra
Before : Shri Laliet Kumar, Judicial Member And Dr. Mitha Lal Meena, Accountant Member
ITA No. 283/Agr./2017 Assessment Year: 2008-09
Shri Dinesh Kumar Gupta, vs. Income-tax Officer, Prop. S.D. Buildrs, B-69, Trans 5(3), Firozabad. Yamuna Colony, Agra (UP) PAN: AFMPG 5248P (Respondent) (Appellant)
Appellant by Sh. R.C. Tomar, I.T.P. Sh. Waseem Arshad, Sr. DR Respondent by
Date of Hearing 03.09.2019 Date of Pronouncement 11.09.2019
ORDER Per Laliet Kumar, J.M.: This appeal is filed by the assessee feeling aggrieved from the order of ld. CIT(A)-2, Agra dated 30.11.2017 on the following grounds : 1. Because the pre-condition for invoking the provisions of sec. 147 that the escapement of the income had been occasioned by reason of failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment had not been satisfied, the reopening of assessment u/s 147, the issuance of notice u/s 148 and subsequent order are all without jurisdiction. 2. That reopening of closed assessment u/s 143(3) beyond four years from the end of relevant assessment year by invoking provisions of sec. 147 on the same set of facts considered under scrutiny assessment made is illegal.
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That the A.O. cannot take advantage of his own wrong and reopening of assessment after a lapse of four years on mere change of opinion by taking recourse to the provision of sec. 147 twice and Ld. C.I.T. (A) decision in sustaining the reopening of assessment by the A.O. is illegal. 4. That the legislature has not conferred the powers to the A.O. to review his own order in the garb of reopening and reopening of assessment u/s 147 is illegal. 5. That belief formed to reopen the assessment on mere opinion and at the behest of the audit party u/s 147 after a lapse of four years is invalid and illegal. 6. That in the case of estimate of income provision of sec. 40A(3) had no application and the addition of Rs. 1821313 sustained u/s 40A(3) is illegal. 7. That the expenditure in cash on purchase of gitti, sand etc. was incurred at the spot where banking facilities were not available and payment was made under compelling circumstances and inexpediency of business and addition sustained at Rs. 1821313/- is illegal and arbitrary.
The ld. AR had submitted that in the present case, the assessment u/s. 143(3)
was completed by the Assessing Officer on 01.12.2010, assessing the income of the
assessee at Rs.5,39,690/-. However, subsequently, the Assessing Officer had reopened
the assessment for the following reasons : "In this case the assessee has filed original return on 30.09.2008 declaring total income of Rs.5,81,790/-. The return was later revised on 5.11.2009 showing total income of Rs. 4,81,790/-. The case was processed u/s 143(1). The case was further selected for scrutiny under CASS and assessment was completed u/s 143(3) on total income of Rs. 5,39,690/- vide order dated 01.12.2010.
From perusal of assessment records it is found that the assessee has debited Rs. 27,47,003/- against material cost in the profit Loss account. The ledger account of
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material expenses shows various payments incurred in cash on different dates in excess of Rs. 20,000/-each, totaling to Rs. 18,21,313/- which are to be disallowed under the provision of section 40A(3) of the IT Act 1961 but the expenses have been allowed by the AO. Hence the amount of Rs. 18,21,313/- is liable to be disallowed and added back to the income of the assessee.
I therefore, have reason to believe that the income chargeable to tax of Rs, 18,21,313/-has escaped assessment within the meaning of section 147 of the IT Act 1961 in the case of Shri Dinesh Chand Gupta, B-69 Trans Yamuna Colony, Agra in the assessment year 2008-09 and the escapement occurred due to failure on the part of the assessee to disclose fully and truly all material facts relating to payments exceeding Rs. 20,000/- and even the tax audit is silent on this statutory requirement."
On the basis of above, it was submitted that there was no fresh material
available with the Assessing Officer which could have triggered the reassessment
proceedings by issuing notice u/s. 148. It was submitted that the Assessing Officer in
the reassessment proceedings, has not been able to establish or bring on record any
evidence substantiating the failure on the part of the assessee in disclosing fully and
truly all material facts necessary for assessment. It was submitted that the Assessing
Officer in paragraph No. 3 of the original assessment order had given the comparative
net profit and NP rate for the assessment year 2006-07, 2007-08 and 2008-09. On the
basis of this comparison, it is clear that the NP rate of the assessee was progressive
and it was noted to be 11.48%. Further, in paragraph 3 of the original assessment order, it was mentioned by the Assessing Officer that “during the verification of purchase vouchers, it was found that bills of purchase were either from unregistered
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concerns or were of self made vouchers. Further payments towards purchase of material
and labour & wages have been made in cash”. Therefore, to cover up any possible
leakages by way of inflating these expenses, disallowance of Rs.50,000/- was made. It
was the submission of the ld. AR that in the reassessment proceedings, same material
was used by the AI which was duly mentioned in the original assessment order as
well as in the audit report. It was submitted that once the issue has been examined by
the Assessing Officer in the original assessment proceedings, then it is not open for
the Assessing Officer to change his view. For this proposition, the ld. AR has relied on
the decision of Hon’ble Supreme Court in the matter of CIT vs. Kelvinator of India, 320
ITR 561 (SC) , ICICI Bank Ltd. vs. DCIT, 268 ITR 203, CIT vs. George Williamson
(Assam) Ltd., 258 ITR 126 (Gau), Sirpur Paper Mills Ltd. vs. ITO, 114 ITR 404 (AP),
CIT vs. Simon Carves Ltd., 105 ITR 212 (SC) and several other legal pronouncements.
On the other hand, the ld. DR had submitted that the present case is not of
change of opinion and was not based only on audit report and there was independent
application of mind by the Assessing Officer. For this purpose he relied upon various
decisions as mentioned in the paper book, more particularly, the decision in the
matter of Larson & Tubro Ltd. in Civil appeal No. 5390 of 2007.
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We have heard the rival contentions of the parties and perused the record. The
original assessment order was finalized on 01.12.2010 and in paragraph No. 3, it was
noted by the Assessing Officer as under :
A.Y Gross receipts Net profit (Rs) N.P. rate N.P. @ 8% is (Rs) 2006-07 52,88,022 5,88,746 08.00% 4,23,042 2007-08 37,81,491 4,10,549 10.86% 3,15,942 2008-09 51,56,179 5,91,788 11.48% 4,23,177
As is apparent from above, the turnover, net profit as well as NP rate are progressive in comparison to last year and is above 8% as prescribed under presumptive rate of profit u/s. 44AD of the IT Act, 1961. Therefore, no adverse inference is drawn. However, during the verification of purchase vouchers, it was found that bills of purchase were either from unregistered concerns or were of self made vouchers. Further payments towards purchase of material and labour & wages have been made in cash. Therefore, to cover up any possible leakages by way of inflating these expenses, an adh- hoc addition of Rs.50,000/- is made to the total income to which the assessee has agreed upon.
As mentioned herein above, the reasoning for reopening as mentioned in the
assessment order clearly shows that the same material which was considered by the
Assessing Officer in the original assessment order was again considered by the
Assessing Officer in the re-assessment order and based on that, the reassessment
proceedings were finalized and income of the assessee was computed at
Rs.23,61,000/-. In our considered opinion, once the material/basis was considered
and examined by the Assessing Officer in the original assessment proceedings, which
is apparent from the finding recorded by the Assessing Officer in paragraph No.3, in
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our view, it is not permissible for the Assessing Officer for exercising powers u/s. 148
to reopen the assessment u/s. 147 of the Act. Even in the original assessment, the
Assessing Officer has also mentioned that the purchase vouchers were from
unregistered concerns and self made and further mentioned that the payments for
purchase of material and labour & wages were made in cash. Once, the same material
was available, then it was not open for the Assessing Officer to reopen the
assessment. We may fruitfully rely upon the decision of Kelvinator of India (supra)
relied upon by the assessee and respectfully following the decision of Hon’ble
Supreme Court and also other decisions in respect of reopening u/s. 147, the appeal
of the assessee is allowed.
In the result, the appeal is allowed.
Order pronounced in the open court on 11th September, 2019
Sd/- Sd/- (Dr. Mitha Lal Meena) (Laliet Kumar) Accountant Member Judicial member
Dated: Sept., 2019 *aks* Copy of order forwarded to: (1) The appellant (2) The respondent (3) Commissioner (4) CIT(A) (5) Departmental Representative (6) Guard File By order Assistant Registrar Income Tax Appellate Tribunal Agra Bench, Agra