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Income Tax Appellate Tribunal, BANGALORE BENCHES “ B ” BENCH: BANGALORE
Before: SHRI B.R. BASKARAN & SHRI PAVAN KUMAR GADALEShri M H Sudharshan Reddy, Shri R. Chandrashekar, Advocate. Shri Priyadarshi Misra, JCIT (D.R.)
IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCHES “ B ” BENCH: BANGALORE BEFORE SHRI B.R. BASKARAN, ACCOUNTANT MEMBER AND SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA No.1169/Bang/2018 (Assessment Year: 2008-09) Shri M H Sudharshan Reddy, 20, 1st H Cross, 8th Main, S S Layout, Shardha Colony, Basaveshwaranagar, Bangalore-560 079 ….Appellant. PAN ALIPS 3131M Vs. Dy. Commissioner of Income Tax, Circle 6(2)(1), Bangalore. ……Respondent. Assessee By: Shri R. Chandrashekar, Advocate. Revenue By: Shri Priyadarshi Misra, JCIT (D.R.)
Date of Hearing : 10.06.2020. Date of Pronouncement : 12.08.2020.
O R D E R PER SHRI PAVAN KUMAR GADALE, JM : The assessee has filed an appeal against the order of Commissioner of Income Tax (Appeals)-14, Bangalore passed u/s. 143(3) r.w.s. 147 and 250 of the Income Tax Act, 1961. 2. The assessee has raised the following grounds of appeal :
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The Brief facts of the case are that the assessee is a real estate agent engaged in formation and sale of sites, and filed the return of income for the AsstYear 2008-09 on 23.09.2008 with total income of Rs.47,72,140/-. Subsequently, the case was selected for scrutiny and notice under section 143(2) of the Act was issued. In compliance, the learned authorized representative appeared form time to time and the case was discussed. In the assessment proceedings, the Assessing Officer has called for details of land development expenses, commission paid and Hire charges. The assessee has produced the details along with vouchers and bills. Since most of the vouchers are self-certified and does not contain full details, the Assessing Officer made adhoc addition of expenses of Rs.6 lakhs and assessed the total income of Rs.53,72,140/- and passed the order under Section 143(3) of the Act dt.13.12.2010.Subsequently,the Assessing Officer has reopened the assessment by issue of notice/sec148 of the Act and reasons recorded letter dt.27.11.2014.In the reassessment proceedings, the Assessing Officer observed that the assessee has debited commission charges, land development cost and hire charges without deduction of tax and the payments exceeds the specified amounts under Section 194C and 194H of the Act. The assessee explained that in respect of commission
4 ITA No.1169/Bang/2018 charges of Rs.10,71,264/- the payments does not exceed the statutory limit. Further, the Chartered Accountant has qualified that the assessee has not complied the provisions of Chapter XVIIB of deduction of tax at source in Form no3CD clause 27(a). Whereas in respect of Hire charges, the contentions of the assessee are that the payments are towards JCB hire charges paid to various persons on different dates and the payments does not exceed the limit of Rs.20,000/- under the provisions under Section 194C of the Act. But the Assessing Officer was not satisfied with the explanations of the assessee and observed that the commission charges are subject to TDS under Section 194H of the Act and the Hire charges are subject to TDS under section 194C of the Act. In both the cases, the assessee has failed to deduct TDS and disallowed the claim and assessed total income of Rs.70,71,404/- and passed order under Section 143(3) r.w.s. 147 of the Act dt.19.01.2015. Aggrieved by the order, the assessee has filed an appeal with the CIT (Appeals), whereas the CIT (A) considering the grounds of appeal, submissions on validity of reassessment under Section 147 of the Act and applicability of provisions of TDS, has concurred with the action of the Assessing Officer and dismissed the assessee's appeal.Aggrieved by the order of CIT (Appeals), the assessee has filed an appeal with the Tribunal.
At the time of hearing, the learned Authorized Representative has argued on the legal ground of validity of reopening of assessment under Section 147 of the
5 ITA No.1169/Bang/2018 Act, whereas, the original assessment order under Section 143(3) was passed on 13.10.2010 and therefore issue of reassessment notice is beyond the time limit under the Act. The LdAr argued on the reasons recorded for issue of notice and explained that it is a mere change of opinion of the Assessing officer. The assessee has complied with the directions of Assessing officer in submitting the information on expenses supported with financial statements and tax audit report in the original assessment under Section 143(3) of the Act and prayed for allowing the appeal. Contra, the learned Departmental Representative supported the orders of CIT (Appeals) and submitted that in the original assessment, the Assessing Officer has overlooked the fact of non-deduction of TDS on Expenses and hence initiating the re assessment proceedings is valid.
We heard the rival submissions and perused the material on record. Prima facie, the learned Authorized Representative made submissions on the validity of reassessment proceedings, initiated beyond a period of four years and mere change of opinion on same set of facts, which cannot be sustained. The assessee in the original assessment proceedings under Section 143(3) of the Act has furnished the details and the fact of non-deduction of TDS was mentioned in the Form no 3CD Tax Audit Report u/sec44AB of the Act. We on perusal of the assessment order under Section 143(3) of the Act dt.13.12.2010 find that, the assessee has submitted
6 ITA No.1169/Bang/2018 the details and the Assessing Officer made adhoc addition referred at Page 2 para 2 of the order which is read as under :
Further on verification of Form No 3CD, placed at page 41 of the Paper book in particular Clause 27(a), the Chartered Accountant has qualified that the assessee has not complied with the provisions of Chapter XVIIB in respect of deduction of tax at source. The Assessing Officer observed that the assessee has produced the bills and vouchers and accepted the assessee claim of expenditure. Since the expense are self-certified and does not contain full details, therefore AO made an adhoc addition of Rs.6 lakhs towards expenses and was accepted by the assessee. Further, on perusal of the reasons for reopening of the assessment in the letter dt.27.11.2014, the assessing officer observed that since the assessee has not deducted TDS as per the provisions of Section 194 of the Act on expenses hence claim is required to be disallowed and brought to tax under Section 40a(ia) of the Act. The learned Authorized Representative emphasized that, the reasons are only a mere change of opinion and the assessee has made true and fair disclosure of
7 ITA No.1169/Bang/2018 facts and furnished the details in the original assessment proceedings and also there is no lapse on the part of assessee. Further the fact of non-deduction of TDS was placed on record in Form no3CD. At this stage, we consider it appropriate to refer to the provisions of Section 147 of the Act r.w.Explanation 1 which is read as under :
“ 147. If the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or recompute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned (hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year) : Provided that where an assessment under sub-section (3) of section 143 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under section 139 or in response to a notice issued under sub-section (1) of section 142 or section 148 or to disclose fully and truly all material facts necessary for his assessment, for that assessment year: Provided further that nothing contained in the first proviso shall apply in a case where any income in relation to any asset (including financial interest in any entity) located outside India, chargeable to tax, has escaped assessment for any assessment year: Provided also that the Assessing Officer may assess or reassess such income, other than the income involving matters which are the subject matters of any appeal, reference or revision, which is chargeable to tax and has escaped assessment. Explanation 1.—Production before the Assessing Officer of account books or other evidence from which material evidence could with due diligence have been discovered by the Assessing Officer will not necessarily amount to disclosure within the meaning of the foregoing proviso.”
We find that the assessee has produced bills and vouchers for expenditure, prima facie, the Assessing Officer has not verified the facts of TDS /material filed on
record, therefore the mistake on the part of assessing officer in the original assessment cannot be a reason for reopening of assessment. Further the assessment
8 ITA No.1169/Bang/2018 is reopened beyond the time limit prescribed under Section 149(1)(a)of the Act. We find that the assessment order u/sec143(3) of the Act was passedon 13-12-2010 for the Asst Year 2008-09 and whereas notice u/sec148 of the Act dated 21-01- 2014, was issued, which is beyond the expiry of four years from the end of assessment year 2008-09 and the assessee has filed the details and disclosed fully and truly all material facts relevant to the assessment year in consideration. We considering the facts and provisions of law, observe that the assessment was reopened beyond a period of four years and cannot be sustained. Accordingly, we quash the reassessment order and allow the appeal of the assessee. Since, we have decided the legal issue of reopening of assessment, again adjudicating on merits becomes academic.
In the result, appeal of the assessee is allowed.
Pronounced in the open court on the date mentioned on the caption page.
Sd/- Sd/- (B.R. BASKARAN) (PAVAN KUMAR GADALE) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 12.08.2020.
*Reddy GP
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Copy to
The appellant 2. The Respondent 3. CIT (A) 4. Pr. CIT 5. DR, ITAT, Bangalore. 6. Guard File
By order
Assistant Registrar Income-tax Appellate Tribunal Bangalore