SIBA NARAYAN ROUT,BHADRAK vs. ACIT, BALASORE CIRCLE, BALASORE

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ITA 209/CTK/2016Status: DisposedITAT Cuttack31 January 2018AY 2008-093 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that reassessment based solely on an audit objection, especially when the original assessment had considered the same facts, is not sustainable. The assessee had also substantiated grounds before appellate authorities.

What were the facts?

The Assessing Officer disallowed hire charges of Rs. 1,18,15,509/- for non-deduction of TDS. The assessee did not comply with notices seeking details and evidence of TDS. The reassessment was initiated based on an audit objection.

What were the issues?

Whether reassessment proceedings initiated on the basis of an audit objection are valid, particularly when the original assessment had already considered the relevant facts.

Which sections of the Income-tax Act were involved?

Section 147,Section 143(3),Section 144,Section 142(1),Section 40(a)(ia)

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2 ITA No. 209/CT K/ 2016 Asse ssment Year : 20 08- 200 9

Act made by the LD AO is highly illegal, contrary to facts, contrary to weight of evidence, arbitrary and ought to be rejected.”

3.

The brief facts of the case are that in this case, the original

assessment was completed u/s.l43(3) on 26.10.2010. Subsequently the

Assessing Officer noticed that the assessee had claimed expenses of

Rs.1,18,15,509/-under the head "hire charges" and has not produced any

evidence of TDS on such hire charges paid. However, the assessee did

not file any return in response to notice u/s.148 of the Act. The Assessing

Officer then issued notice u/s.142(1) of the Act requesting the assessee

to furnish details under the head hire charges and evidence of TDS on

hire charges. The assessee did not comply with the notice. The Assessing

Officer again sent another notice U/S.142(1) of the Act for compliance on

20.03.2014 requesting the assessee to furnish the above information.

There was no compliance from the assessee on this occasion too. It was

in this backdrop that the Assessing Officer noted that the assessee has

claimed expenses of Rs.1,18,15,509/- under the head "hire charges"

where the assessee is supposed to deduct TDS while making such

payment of hire charges. In spite of opportunities provided the assessee

did not produce any evidence that TDS has been deducted while making

such payments. Therefore, the Assessing Officer completed the

assessment u/s.144 of the Act as per his best judgment. Since the

payments attracted provisions of section 40(a)(ia] of the Act, the

Assessing Officer disallowed the hire charges paid amounting to

Rs.1,18,15,509/-u/s.40(a)(ia)of of the Act.

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Ld A.R. submitted that the issue is covered by the decision of Hon’ble

Supreme Court in the case of Indian and Eastern Newspaper Society vs

CIT, 119 ITR 996 (SC),wherein, it was held that information of an internal

audit party of the Income Tax Department on a point of law cannot be

regarded as “information” within the meaning of Section 147(b) of the

I.T.Act, 1961.

8.

On the other hand, ld D.R. supported the orders of lower

authorities.

9.

We have heard the rival submissions, perused the orders of lower

authorities and materials available on record. The ld A.R.’s contention

that the Assessing Officer has passed reassessment order based on audit

objection, which cannot be sustainable and further on merits, the

assessee has substantiated the grounds before the appellate authorities.

Ld A.R. emphasised on annulling the assessment u/s.147 of the Act as the

same was based on audit objection irrespective of the fact that the

original assessment was completed u/s.143(3) of the Act on 26.10.2010

and the assessment has been reopened on the ground of non-deduction

of TDS and as per the audit objection. Ld A.R. explained that in the

original assessment, the Assessing Officer has looked into these aspects

and passed the assessment order and on the very same set of facts and

based on audit objection, the assessment cannot be reopened. Whereas

ld D.R. submitted that the Assessing Officer has ignored the provisions of

TDS in the original assessment and due to audit objection, the

6 ITA No. 209/CT K/ 2016 Asse ssment Year : 20 08- 200 9

11.

In the result, appeal filed by the assessee is allowed.

Order pronounced on 31/01/2018. Sd/- sd/- (N.S Saini) (Pavan Kumar Gadale) ACCOUNTANT MEMBER JUDICIALMEMBER Cuttack; Dated 31 /01/2018 B.K.Parida, SPS Copy of the Order forwarded to : 1. The Appellant : Siba Narayan Rout, Bimbalbar, Patuli Circle, Barikpur, Bhadrak 2. The Respondent. ACIT, Balasore 3. The CIT(A)- Cuttack 4. Pr.CIT- Cuttack 5. DR, ITAT, Cuttack 6. Guard file. //True Copy// BY ORDER,

SR.PRIVATE SECRETARY ITAT, Cuttack

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