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Income Tax Appellate Tribunal, “G” BENCH, MUMBAI
Before: SHRI SAKTIJIT DEY & SHRI N.K. BILLAIYA
ITA Nos. 3853, 3854 & 3855/M/2014 are appeals by the assessee against three separate orders of the Ld. CIT(A)-16 for assessment years 2006-07 to 2008-09 and 481 & 4482/M/2014 are cross appeals by the Revenue against the respective orders of the Ld. CIT(A) for assessment years 2006-07 to 2008-09. This bunch of appeals was heard together as issues involved are common and are disposed of by this common order for the sake of convenience.
At the very outset, the Ld. Counsel for the assessee stated that in all the appeals by the assessee the additions made u/s. 148 have been challenged qua the reasons recorded for reopening. As this issue goes to the root of all the assessment under consideration, we proceed by deciding this issue first.
The grievance of the assessee reads as under:
“The Ld. CIT(A) erred in confirming the addition made by the Ld. AO. Inspite of the fact that no additions were made for reasons recorded for reopening u/s. 148 & erred in not following Jurisdictional High Court’s & other High Courts decision.”
It was further agreed by the representatives of both sides that facts in issues relating to the aforementioned grievance are identical in all the years under consideration. On this concession of the rival representatives, we proceed by considering the facts for assessment year 2006-07 in ITA No. 3853/M/2014.
Facts of the case show that the original return of income was filed on 30.11.2006 declaring total income at Rs. 11,17,249/-. The 3 M/s. Gennex Cresa Partners Consultants P. Ltd.
return of income was duly processed u/s. 143(1) of the Act. The said order u/s. 143(1) was subject to a rectification order passed on 5.8.2010.
5.1. On perusing the details vis-à-vis the TDS certificate, the Assessing Officer noticed that in the profit & loss account the assessee has offered income of Rs. 1,62,20,109/- which included other income of Rs. 11,71,955/- and income from services rendered amounting to Rs. 1,50,48,154/-. The AO further found that as per the TDS certificate, the assessee has received professional fees of Rs. 1,54,63,228/- and commission of Rs. 4,83,869/- totaling to Rs. 1,59,47,097/-. The AO compared this income as per the TDS certificate with the income shown in the profit & loss account, the total of which was shown at Rs. 1,50,48,154/-. The AO was of the firm belief that professional fees and commission amounting to Rs. 8,98,943/- was not disclosed by the assessee, 5.2. The assessment was reopened and accordingly statutory notice u/s. 148 was issued. The reassessment proceedings started, queries were raised and complied by the assessee and finally the reassessment order was made at an income of Rs. 1,10,14,930/-.
5.3. The reassessment order was challenged before the Ld. CIT(A) on the ground that the additions made by the AO are other than the reasons recorded and hence the reopening is bad in law. However, this challenge of the assessee did not find any favour with the Ld. CIT(A).
4 M/s. Gennex Cresa Partners Consultants P. Ltd.
Aggrieved, the assessee is before us. The Ld. Counsel for the assessee straightaway drew our attention to the reasons recorded for reopening of the assessment which is placed at exhibit-12 and 13 of the Paper Book. The Ld. Counsel further drew our attention to the impugned assessment order and pointed out that no additions have been made for the reasons for which the assessment was reopened. The Ld. Counsel vehemently stated that this is against the settled proposition of law laid down by the Jurisdictional High Court of Bombay in the case of CIT Vs Jet Airways (I) Ltd in 331 ITR 236.
Per contra, the Ld. Departmental Representative could not bring any distinguishing decision in favour of the Revenue.
We have given a thoughtful consideration to the orders of the authorities below. With the assistance of the Ld. Counsel, we have also considered the relevant documentary evidences brought on record and referred to before us. The reasons recorded for reopening of the assessment read as under:
To: The Principal Officer, M/s. Gennex Cresa Partners Consultants Pvt. Ltd., S-202, Nimbus Centre, Oberoi Complex, Andheri (W), Mumbai-400 053 Dear Sir, Sub : Intimation of reasons for re-opening the assessment u/s. 147 of the I.T. Act for A.Y. 2006-07- reg
In this regard, your assessment for the A.Y. 2006-07 has been reopened for the following reasons:
5 M/s. Gennex Cresa Partners Consultants P. Ltd.
The assessee has filed return for A.Y. 2006-07 on 28.11.2006 declaring total income of Rs. 11,17,249/-. The return of income was processed u/s. 143(1) on 28.1.2008. Vide letter dt. 12.3.2010, the assessee submitted the copies of balance sheet, profit & loss account, TDS certificates etc and requested for credit of TDS. Accordingly, rectification order u/s. 154 was passed on 5.8.2010. On going through the TDS certificates and P&L account, it is found that the asesee has offered income of Rs. 1,62,20,109/- inclusive of other income of Rs. 11,71,995/- and income from services rendered amounting to Rs. 1,50,48,154/-. However, as per the TDS certificates submitted by the assessee, it is seen that the assessee has received income as under:
Income as per TDS Certificate Income as per Return 1. Professional Fees (i)Revenue from 7607201 transaction services (i) Santhosh Wilson 199021 (ii) Valuation fees 377500 (ii)Dewan Housing Finance 82650 (iii) Affiliation fees 345000 Corpn. Ltd. (iv) Indirect incomes 12926 (iii) Bharat Petroleum 149220 (v) Facility Management 370712 Corpn. Ltd., (vi) Project management 2622315 (iv) Golf Links Software 6099266 Bangalore Park P. Ltd. (vii)Project management 3712500 8767771 (v) Nvidia Graphics P. Ltd 3 Pune (vi) Halcrow Consulting 165300 India Ltd 15463228 15048154 II Commission Other Income (i) Birla Sunlife Insurance 116371 (i) Dividend income 883031 Co. Ltd. (ii) Exchange Rate 8664 (ii) Honeywell Automation 86987 Difference (I) Ltd (iii) Long Term Capital 242833 (iii) Metlife India Insurance 148271 Gain Co. P. Ltd (iv) Short Term Capital 37427 (iv) PBC Ventures Ltd 52896 Gain (v) Vatika Hospitality 79344 P.Ltd
483869 1171955 15947097 16220109 As per TDS Certificates, the assessee has received professional fees of Rs. 1,54,63,228/- and Commission of Rs. 4,83,869/- totaling to Rs. 1,59,47,097/-. However, it has offered to tax revenue from transaction services of Rs. 76,07,201/-, valuation fees of Rs. 3,7,50/-, Affiliation fees of Rs. 3,45,000/-, Indirect incomes of Rs. 12,926/-, Facility Management of Rs. 3,70,712/-, Project Management (Bangalore) of Rs. 26,22,315/- and Project management (Pune) of Rs. 37,12,500/- totaling Rs. 1,50,48,154/- resulting
6 M/s. Gennex Cresa Partners Consultants P. Ltd. into not disclosing the total income received under the head of Professional Fees and Commission amounting to Rs. 8,98,943/- (Rs. 1,54,63,228/- -Rs. 1,50,48,154/-).
In view of the above, it is crystal clear that the assessee has not offered income of Rs. 8,98,943/- pertaining to Professional fees and Commission earned during the F.Y. 205-06 relevant to A.Y 2006-07. Hence,. I have reason to believe that professional fees and commission income amounting to Rs. 8,98,943/- has escaped assessment within the meaning of Sec. 147 of the I.T. Act. Hence the assessment in the case of M/s. Gennex Cresa Partners Consultants Pvt. Ltd for A.Y. 2006-07 is hereby reopened u/s. 147 by issue of notice u/s. 148 of the I.T. Act. In this regard, you are requested to furnish objections/submissions, if any on 21.4.2011. Yours faithfully, Sd/- (EKNATH ABHANG) Income Tax Officer 8(1)-4,Mumbai 9. A perusal of the aforementioned reasons shows that the assessment was reopened on the pretext that income of Rs. 8,98,943/- has escaped assessment within the meaning of Sec. 147 of the Act.
9.1. Keeping in mind the aforementioned reasons and the quantum of income alleged to have been escaped assessment, the AO has completed the assessment as under:
Business income as per computation 8,36,989 of the assessee Add: As discussed above (i) Disallowance u/s. 14A (para-7) 41,140/- (ii) Business promotion expenses 49,169/- (para-8) (iii) Out of pocket expenses u/s. 5,07,600/- 40A(2)(b) (Para-9) iv) Salary Expenses (para-10) 9,12,500/- (v) Commission expenses (para-11) 5,81,276/- (vi) Professional fees expenses 77,91,807/- (para-12)
7 M/s. Gennex Cresa Partners Consultants P. Ltd.
(vii) Unexplained expenditure u/s. 2,57,020/- 1,01,40,512 69C (para-13) Income from Business & 1,09,77,501 Profession Long Term Capital Gain 2,42,833/- Less: Exempted 2,42,833/- ------ Short term capital gain 37,427 Total income 1,10,14,928 Rounded off to Rs. 1,10,14,930 9.2. A perusal of the aforementioned computation of assessed income show that there is no addition not even a whisper of the income of Rs. 8,98,943/- alleged to have escaped assessment vide reasons for reopening the assessment. The Hon’ble Jurisdictional High Court of Bombay in the case of Jet Airways (supra) inter alia held as under:
“However, if after issuing a notice u/s. 148, he accepted the contention of the assessee and holds that the income which he has initially formed a reason to belief had escaped assessment, has as a matter of fact not escaped assessment, it is not open to him independently to assess some other income. If he intends to do so, a fresh notice u/s. 148 would be necessary, the legality of which would be tested in the event of a challenge by the assessee”.
9.3. As mentioned elsewhere, no additions have been made on account of income which forms a reason to believe as escaped assessment. Respectfully following the findings of the Hon’ble Jurisdictional High Court of Bombay (supra), in our considered opinion, the reassessment order is bad in law and deserves to be vacated. We hold accordingly. Grievance raised vide ground No. 1 is allowed.
8 M/s. Gennex Cresa Partners Consultants P. Ltd.
9.4. This makes all other grievances infructuous and the cross appeals by the Revenue otiose.
In the result, the appeals filed by the assessee are allowed and the appeals filed by the Revenue are dismissed.
Order pronounced in the open court on 4th January, 2016.