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Income Tax Appellate Tribunal, “A” BENCH, PUNE
Before: SHRI D. KARUNAKARA RAO, AM & SHRI VIKAS AWASTHY, JM
आदेश / ORDER
PER VIKAS AWASTHY, JM
This appeal by the Department is directed against the order of Commissioner of Income Tax (Appeals), Pune-6 dated 28.01.2015 for the assessment year 2004-05.
2 ITA No.478/PUN/2015 A.Y.2004-05
The facts of the case as emanating from the records are: The assessee-
firm is a promoter and developer of land. The assessee filed its return of
income for the assessment year under appeal on 25.02.2005 declaring
income of Rs.9,98,000/-. The assessee in its return of income claimed
deduction of Rs.1,79,57,010/- u/s.80IB (10) of the Income Tax Act, 1961
(hereinafter referred to as ‘the Act’). In scrutiny assessment proceedings,
assessee’s claim of deduction u/s.80IB(10) was accepted vide order dated
19.10.2006. Subsequently, the assessment in the case of assessee was
reopened and notice u/s. 148 was issued to the assessee on 18.01.2007. In
re-assessment proceedings, assessee’s claim of deduction u/s.80IB(10) was
disallowed. Aggrieved by the assessment order dated 28.12.2007 passed u/s.
143(3) r.w.s. 147 of the Act, the assessee filed appeal before the
Commissioner of Income Tax (Appeals). The First Appellate Authority upheld
the findings of Assessing Officer. The assessee carried the matter in second
appeal before the Tribunal. The Tribunal vide order dated 28.02.2011
remitted the issue back to the file of Assessing Officer with a direction to
follow the decision of Special Bench of Tribunal in the case of Brahma
Associates Vs. JCIT in ITA No. 1417/PN/2006 for the assessment year 2003-
In assessment proceedings, giving effect to the order of Tribunal, the
Assessing Officer allowed the claim of deduction u/s. 80IB(10) of the Act to
the assessee. However, in the same proceedings, the Assessing Officer issued
fresh notice u/s. 148 of the Act on 30.03.2011 and once again reopened the
assessment to disallow labour charges amounting to Rs.70,07,097/-. Against
the addition on account of labour charges made by the Assessing Officer vide
order dated 27.12.2011 passed u/s. 143(3) r.w.s 147 and 254 of the Act, the
assessee filed appeal before the Commissioner of Income Tax (Appeals). The
Commissioner of Income Tax (Appeals) accepted the claim of assessee and
3 ITA No.478/PUN/2015 A.Y.2004-05
deleted the addition holding that the addition has been made by Assessing
Officer on the basis of ‘change of opinion’.
Now, the Department is in second appeal before the Tribunal assailing
the findings of Commissioner of Income Tax (Appeals) on this issue.
Shri Ajay Modi representing the Department submitted that notice
u/s. 148 was issued to the assessee by the Assessing Officer as the assessee
had never furnished information with respect to labour charges amounting
to Rs.70,07,097/-. The assessee has debited Rs.7,64,13,469/- under the
head ‘labour charges’ but at the time of assessment proceedings, the
assessee furnished information with respect to labour charges only to the
tune of Rs.6,94,06,372/-. The ld. DR vehemently supporting the assessment
order prayed for reversing the findings of Commissioner of Income Tax
(Appeals). Further, to buttress his submissions, the ld. DR placed reliance on
the following decisions:
i) Dalmia (P) Ltd. Vs. Commissioner of Income Tax 348 ITR 469 (Delhi) ii) Consolidated Photo & Finvest Ltd. Vs. Assistant Commissioner of Income tax 281 ITR 394 ( Delhi) iii) Dr.Amin’s Pathology Laboratory Vs. P.N. Prasad, Joint Commissioner of Income Tax (No.1) 252 ITR 673 (Bombay)
The notice of appeal was sent to the assessee through RPAD on
05.02.2017 for 18.04.2017. The notice was duly served as is evident from
acknowledgement available on the file. On 18.04.2017, the case was
adjourned to 27.07.2017, as the Bench did not function on the said date. On
27.07.2017, the appeal was adjourned to 09.10.2017 for identical reasons.
On 09.10.2017, a fresh notice of hearing was issued to the assessee for
4 ITA No.478/PUN/2015 A.Y.2004-05
12.12.2017. On 12.12.2017, none appeared on behalf of assessee despite
service of notice. The acknowledgment indicating service of notice is available
on file. It appears that the assessee is not serious in pursuing its appeal.
Thus, we are deciding this appeal on the basis of submissions made by the
ld. DR and material available on record.
We have heard the submissions made by the ld. DR and have perused
the orders of Authorities below. We have also considered the decisions on
which the ld. DR has placed reliance. We observe that in second round of
proceedings before the Assessing Officer, the Assessing Officer has issued
notice u/s.148 to the assessee questioning allowability of labour charges.
The notice u/s.148 of the Act was issued by the Assessing Officer on
30.03.2011 i.e. after the period of four years from end of relevant assessment
year. Under such circumstances, the proviso to section 147 gets attracted.
As per provision of section 147, re-opening of assessment after expiry
of four years from end of the relevant assessment year can only be initiated if
income chargeable to tax has escaped assessment by reason of failure on the
part of assessee to disclose fully and truly all material facts necessary for his
assessment.
In the present case, initial assessment order dated 19.10.2006 was
passed u/s. 143(3) of the Act. Thereafter, reassessment proceedings u/s.
147 r.w.s 148 were initiated qua assessee’s claim of deduction u/s. 80IB(10)
of the Act. The matter travelled up to Tribunal. The claim of assessee u/s.
80IB(10) was allowed in principle by the Tribunal. The matter was remitted
back to the file of the Assessing Officer to follow the decision of Special
Bench in the case of Brahma Associates Vs. JCIT (supra.). In the proceeding
5 ITA No.478/PUN/2015 A.Y.2004-05
arising from giving effect to the order of Tribunal, the Assessing Officer again
invoked the provision of section 148 of the Act questing payment of labour
charges. As has been pointed earlier, second re-opening has been done after
the elapse of four years from end of relevant assessment year. A perusal of
the assessment order dated 19.10.2006 passed u/s.143(3) of the Act reveal
that the Assessing Officer has dealt with the issue of labour charges and has
applied his mind during assessment proceedings. The relevant extract of the
findings of Assessing Officer on this issue are as under:
“Wages & Labour Charges :
On verification of Trading account it is seen that the assessee has debited Rs.7,64,13,469/- towards Wages & Labour Charges. After calculating proportionately i.e. the work done & claimed u/s. 80IB and other than this for which it works out to Rs.40,23,245/-. Out of that it is verified from the vouchers produced that some of the vouchers were self made and some of the Vouchers below Rs. 500/- were not available. Therefore, genuineness of the payment doubtful. Therefore on estimate Rs.1,00,000/- is disallowed & added to the return of income out of Rs. 40,23,245/-.”
Thus, it is not a case where the assessee has failed to disclose fully
and truly all material facts necessary for his assessment. The Assessing
Officer has applied his mind and has taken a conscious decision to disallow
Rs.1,00,000/- from total labour charges claimed by the assessee. The second
re-opening of assessment is in clear violation of provision to section 147 and
the law laid down by Hon'ble Supreme Court of India in the case of CIT Vs.
Kelvinator of India 320 ITR 561. We do not find any infirmity in the order of
Commissioner of Income Tax (Appeals) in holding that it is a case of ‘change
of opinion’. Accordingly, the impugned order is upheld and appeal of the
Revenue is dismissed.
The case laws on which the ld. DR has placed reliance are
distinguishable on facts. Hence, they do not support the case of Revenue.
6 ITA No.478/PUN/2015 A.Y.2004-05
Before pertaining with the order, we would like to observe that the
Assessing Officer does not have unfettered powers under the provisions of
the Act to invoke provision to section 147 at his own whims and fancies. The
Assessing Officer is a quasi- judicial Authority and thus, is expected to follow
well settled law and maintain judicial discipline. The canons provided to the
Department for re-opening /revisions are to be used judiciously. On mere
‘change of opinion’ the Assessing Officer cannot reopen assessment. Where
the provisions of section 147 r.w.s 148 have been invoked after four years,
the Assessing Officer has to show that the assessee has failed to disclose full
and true material necessary for assessment. The absence of such finding by
Assessing Officer is fatal for reopening of proceedings.
In the present case, we observe that the Assessing Officer has
exceeded his jurisdiction in invoking the provision of section 148 r.w.s 147 of
the Act beyond the four years.
In the result, the impugned order is upheld and appeal of the Revenue
is dismissed.
Order pronounced on Wednesday, the 28th day of February, 2018.
Sd/- Sd/- (डी. क�णाकरा राव/D. KARUNAKARA RAO) (�वकास अव�थी /VIKAS AWASTHY) लेखा सद�य/ACCOUNTANT MEMBER �या�यक सद�य/JUDICIAL MEMBER
पुणे / Pune; �दनांक / Dated : 28th February, 2018. SB
7 ITA No.478/PUN/2015 A.Y.2004-05
आदेश क� ��त�ल�प अ�े�षत / Copy of the Order forwarded to :
अपीलाथ� / The Appellant. 1. ��यथ� / The Respondent. 2. 3. The CIT (Appeals), Pune-6. 4. The CIT-5, Pune. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, “ए” ब�च, 5. पुणे / DR, ITAT, “A” Bench, Pune. गाड� फ़ाइल / Guard File. 6.
// स�या�पत ��त // True Copy // आदेशानुसार / BY ORDER,
�नजी स�चव / Private Secretary आयकर अपील�य अ�धकरण, पुणे / ITAT, Pune.