SIBA NARAYAN ROUT,BHADRAK vs. ACIT, BALASORE CIRCLE, BALASORE
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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Cases cited in this judgment(1)Show listHide list
Detected automatically from the text. Citations are also linked where they appear in the judgment. The count shows how many other judgments on BharatTax rely on the same authority.
- Indian & Eastern Newspaper Society v. CIT205 citing119 ITR 996 · 1979 · SC
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.”
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.
4 ITA No. 209/CT K/ 2016 Asse ssment Year : 20 08- 200 9
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.
On the other hand, ld D.R. supported the orders of lower
authorities.
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
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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