Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2020 (9) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2020 (9) TMI 456 - AT - Income TaxReopening of assessment - Validity of reasons to believe - assessment initiated by reason of a revenue audit objection - HELD THAT:- Audit objection was toward short accounting of receipt, inferred on the basis of the TDS certificates, comparing the same with the books of account of the assessee. There is no dispute as to the nature of receipt, but only to the arithmetical accuracy of its accounts, doubted with reference to the TDS certificate/s, which stands duly clarified. It is, therefore, abundantly clear that the AO was satisfied with the assessee’s reply (to the audit objection) as to there being no escapement of income, yet proceeded to issue notice u/s. 148(1), so that the same was only due to the non-acceptance of his reply by the audit party, i.e., at its insistence. It is the audit objection, as finally obtains, i.e., after having regard and giving effect to the AO’s reply, that shall form part of the AO’s reason to believe escapement of income – to that extent, which is not so in the present case, and for which we have also perused the reasons recorded for the issue of notice u/s. 148(1), reproduced at para 2 (page 1) of the assessment order, forming part of the Tribunal’s record. Why, a discrepancy in the assessee’s accounts would result in a corresponding difference in its’ account with the party issuing the TDS certificate/s? We, accordingly, have, in the facts and circumstances of the case, little doubt that the assessment proceedings, though initiated by reason of a revenue audit objection, the same was not accepted by the AO inasmuch as he was not personally satisfied therewith. The terms of clause 10(c) of the Board circular clearly state of the revenue audit objection having been accepted by the Department. We are conscious that the words ‘accepted by the Department’, the import of which is surely wider, cannot be equated with the personal satisfaction of the AO issuing notice u/s. 148(1), in the absence of which, as found, as indeed in the instant case, the proceedings in Larsen & Toubro Ltd. [2017 (3) TMI 1064 - SUPREME COURT] were struck down. Therefore, even though, strictly speaking, the issue of notice itself signifies its acceptance by the Department, as canvassed by the ld. DR, it may be of no consequence as the reassessment proceedings itself do not, in view of our finding as to the lack of personal satisfaction of the AO, survive. The Revenue fails. Rectification u/s 254 - Interpretation of the relevant clause of the Board’s circular issued u/s. 268A(1) r/w s. 268A(5) - HELD THAT:- Rule of strict interpretation does not rule out applicability of reasonable construction to give effect to the purpose or intent of the provision (Shree Sajjan Mills Ltd. v. CIT [1985 (10) TMI 2 - SUPREME COURT]. We are again conscious that we have held clause 10(c) as not applicable even on the terms thereof even as notice u/s.148(1) was issued, implying acceptance of the audit objection by the Revenue Same was only on the basis of a finding of fact by us, based on uncontroverted evidence, that the audit objection was indeed not accepted, nor the reason/s for non-acceptance, as advanced by the Assessing Officer, controverted, so as to then say that the issue of notice u/s. 148(1) resulted due to his acceptance of the audit objection, and which was therefore held by us as on account of insistence of the audit party. We also noted that it was only due to proceedings arising by the very terms of the impugned order, restoring status ante, that new materials (viz. LAR) were admitted, allowing arguments involving contentious issues. We also noted that though the words ‘has been accepted by the Department’ in cl. 10(c) carries a broader connotation, i.e., than that of the words ‘accepted by the assessing authority’, an assessment made in the absence of the personal satisfaction of the assessing authority would not survive.
|