DCIT, NEW DELHI vs. SRL LIMITED (EARLIER KNOWN AS SUPER RELIGARE LABORATORIES LTD), NEW DELHI

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ITA 1890/DEL/2015Status: DisposedITAT Delhi27 June 2018AY 2008-098 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal upheld the CIT(A)'s decision, finding that the AO had wrongly assumed jurisdiction under Section 147 as the reopening was based on a change of opinion and not new material. Consequently, the additions made by the AO were deleted.

What were the facts?

The Assessing Officer (AO) reopened the assessment of SRL Limited for AY 2008-09, making additions for alleged sales suppression and non-deduction of TDS. The assessee objected to the reopening, but the AO proceeded with the additions. The CIT(A) cancelled the AO's order, holding that the reopening was based on a change of opinion and erroneous facts.

What were the issues?

Whether the Assessing Officer wrongly assumed jurisdiction under Section 147 due to a change of opinion and whether the additions for sales suppression and non-deduction of TDS were justified.

Which sections of the Income-tax Act were involved?

Section 147,Section 143(3),Section 40(a)(ia),Section 194H

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, DELHI BENCH: ‘G’ NEW DELHI

Before: SHRI N. K. SAINI & MS SUCHITRA KAMBLE

For Respondent: Adv &, Ms. Deepika Agarwal, Adv
Hearing: 31.05.2018Pronounced: 27.06.2018

PER SUCHITRA KAMBLE, JM

1.

This appeal is filed by the Revenue against the order dated 19/01/2015 passed by CIT(A)-8, New Delhi for Assessment Year 2008-09.

2.

The grounds of appeal are as under:-

1. The Ld. CIT(A) has erred in law and on facts in cancelling the order passed by the AO u/s 147/143(3) holding that the AO has wrongly assumed jurisdiction u/s 147 of the Income Tax.

2. The Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs.6,53,980/- made by the AO being difference of sales disclosed in the submission filed during the course of assessment and sales shown in the Profit & Loss account. 3. The Ld. CIT(A) has erred in law and on facts in deleting addition of Rs.11,14,54,020/- made by the AO u/s 40(a)(ia) for non-deduction of TDS. 4. "The appellant craves to amend modify, alter, add or forego any ground of appeal at any time before or during the hearing of this appeal."

3. Return of income for the Assessment Year 2008-09 was filed on 28/09/2008 at an income of Rs. 8,26,20,030/-. The case was selected for scrutiny and order was passed u/s 143(3) on 20/12/2010 at Rs. 26,77,79,100/-. Subsequently, case was reopened u/s 147 of the Income Tax Act, 1961 by issuing notice u/s 148 dt. 28-03-2012 by recording the following reasons: "During the year, it is noticed that the assessee has shown a total sales of Rs. 8,30,47,926/- in its P/L a/c. The bifurcation of the sale has also been filed as Sch.-8. The party wise sales details submitted by the assessee shows the total sales during the year at Rs. 8,37,01,906/-. Therefore, the difference of Rs. 6,53,980/- (8,37,01,906- 8,30,47,926) was suppressed by the assessee which should be added back to the income of the assessee." In compliance to the notice issued u/s 148 and after obtaining the copy of reasons recorded, the assessee objected the reopening of the case. The Assessing officer added Rs. 6,53,980/- on account of suppression of Sales and disallowed Rs. 11,14,54,029/- u/s 40(a)(ia) on account of non-deduction of TDS u/s 194H of Income Tax Act, 1961.

4. Being aggrieved by the Assessment Order, the assessee filed appeal before the CIT(A). The CIT(A) allowed the appeal of the assessee.

5.

The Ld. DR submitted that the CIT(A) has erred in holding that the Assessing Officer has wrongly assumed jurisdiction u/s 147 of the Income Tax. The Ld. DR further submitted that the CIT(A) has erred in deleting the addition of Rs.6,53,980/- made by the Assessing Officer being difference of sales disclosed in the submission filed during the course of assessment and sales shown in the Profit & Loss account. The Ld. DR further submitted that the CIT(A) has erred in deleting addition of Rs.11,14,54,020/- made by the Assessing Officer u/s 40(a)(ia) for non-deduction of TDS. The Ld. DR relied upon the Assessment Order.

6.

The Ld. AR submitted that as regards Ground No. 1, the CIT(A) has rightly decided this issue in favour of the assessee as the Assessing Officer has only given its change of opinion and the original assessment u/s 143(3) was passed after going through all the details by the earlier Assessing Officer. The re-opening is on the same ground to that of the Original Assessment Proceedings u/s 143(3) of the Act. The Ld. AR submitted that the reasons are not proper and are not according to the provisions of the Income Tax Act, 1961. As regards to Ground No. 2, it is submitted that the CIT(A) has rightly deleted the addition on account of account of suppression of Sales, as the assessee has given all the details during the Original Assessment Proceedings u/s 143(3) of the Act. In fact, the figures mentioned by the Assessing Officer while re-opening are not that of the Assessee’s records. As regards to Ground No. 3, it is submitted that the CIT(A) rightly deleted this addition made u/s 40(a)(ia) for non-deduction of TDS. The Ld. AR further submitted that the similar addition is deleted by the Tribunal in assessee’s own case for A.Ys. 2006-07 and 2008- 09 being and 2276/DEL/2012 vide order dated 07.05.2015.

7.

We have heard both the parties and perused all the records. It is pertinent to note that while deciding the issue on the legal aspect the CIT(A) held that the order passed u/s 147/143(3) of the Act is bad in law. The CIT(A) held as under:

“3. I have considered the assessment order, written submissions filed by the Ld. AR of the appellant and also perused the original order passed u/s 143(3) of the I. T. Act. From the reasons recorded, it is clear that facts mentioned in the reasons recorded are not pertaining to the appellant. The total sales mentioned in the reasons recorded is 8,30,47,926/-. However, from the first line of the assessment order, it is clear that appellant has declared return income of Rs. 8,26,20,030/- on 28-09-2008.

3.1 I agree with the arguments with the Ld. AR of the appellant that Assessing Officer has not considered the directions of the Hon’ble Supreme Court in the case of GKN Driveshafts (India) Ltd. v. ITO 259 ITR 19 (SC). Ld. Assessing Officer has not considered the objection of the appellant and also not disposed off by a speaking order. Further Ld. Assessing Officer has also not considered the explanation filed by the appellant during the reassessment proceedings and mechanically added Rs. 6,53,980/- as a difference of sales which is recorded in the reasons of reopening the assessment . Ld. Assessing Officer further made an addition u/s 40(a)(ia) amounting to Rs.11,14,54,029/- without discussing the issue and also without verifying the facts. After considering the all facts, I find that while passing the first assessment order u/s 143(3) dt. 20-12-2010, Ld. Assessing Officer considered the total discount of Rs. 2,96,61,306/-, the discount aggregating to Rs. 18,51,59,032/- offered to collection centres and for international business was disallowed on account of reasons mentioned in that assessment order and the balance discount of Rs. 11,14,54,029/- offered to Doctor clinics, Hospitals, Nursing Homes and Appellant’s own House was allowed as deductible expenditure. This fact clearly indicates that whole amount of discount declared by the appellant was investigated and it was considered by the Ld. Assessing officer at the time of original assessment proceedings. From the re-assessment proceeding, it is not clear what was the new fact which was not disclosed by the appellant truly & fully on which Ld. Assessing officer has formed an opinion that TDS was deductible on discount claimed amounting to Rs. 11,14,54,029/-. After considering all these facts, I find that Ld. Assessing Officer has not verified the facts of the case and also recorded the reason without application of mind in a mechanical manner. It is a mere change of opinion by the Ld. Assessing officer without any reason. Since, the reasons recorded is on erroneous facts, I hold that Ld. Assessing Officer has wrongly assumed the jurisdiction u/s 147 of the I. T. Act. The order passed by the Ld. Assessing Officer u/s 147/143(3) of the I. T. Act is illegal and bad in law. Hence, it is cancelled. The additions made by the Ld. Assessing Officer are without any basis. Hence, same are also order to be deleted.

4.

In the result, appeal is treated as allowed.” Thus, from the findings of the CIT(A) as well as the reasons recorded by the Assessing Officer for re-opening, it is crystal clear that there is merely a change of opinion and the Original Assessment Order u/s 143(3) was clearly verified all the factors. Therefore, the CIT(A) rightly decided the legal issue in favour of the Assessee. There is no need to interfere with the findings of the CIT(A). Therefore, Ground No. 1 of the Revenue’s appeal is dismissed.

8.

Since legal Ground No. 1 is decided against the Revenue, there is no necessity of deciding the appeal in respect of the additions. But from the perusal of records it can be seen that the Ground No. 2 regarding suppression of sales, the Assessing Officer while passing order u/s 147/143(3) has not at all discussed anything. In fact, the assessee clearly submitted that the alleged difference of Rs. 6,53,980/- mentioned by the Assessing Officer is incorrect. The sales amount reported in profit and loss account for the subject A.Y. and submitted during the course of assessment proceedings is exactly the same. From the perusal of profit and loss account of the Assessee for the present Assessment Year, this submission of the Assessee proves to be true. Therefore, this addition was rightly deleted by the CIT(A).

9.

Regarding Ground No. 3, the addition of Rs. 11,14,54,029/- u/s 40(a)(ia) for non deduction of TDS u/s 194H, the same in earlier Assessment Year 2006- 07 and for A.Y. 2008-09 where revenue filed appeal against the original assessment order u/s 143(3), the Tribunal has decided this issue in favour of the assessee. Thus, in legal aspect as well as on merit the revenue does not have the case. Therefore, Revenue’s appeal stands dismissed.

10.

In result, appeal of the Revenue is dismissed.

Order pronounced in the Open Court on 27th June, 2018.

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