TMI Blog2011 (5) TMI 667X X X X Extracts X X X X X X X X Extracts X X X X ..... f 2010 - - - Dated:- 26-5-2011 - Shri G.D. Agrawal, Vice-President (As a Third Member) Shri B.R. Mittal, Shri B.K. Haldar and C.D. Rao, JJ. Represented By: Shri Rajen Dhar for the Appellant. Shri D.R. Singhal for the Respondent. B.R. Mittal, The assessee has filed this appeal to assessment year 2005-06 against the order of ld. C.I.T.(A)-XIV, Kolkata dated 29/07/2010 on the following grounds :- "1. For that ld CIT(A) should have held that Assessment Order dated 29.12.2008 served on 05.01.2009 was barred by limitation, invalid and inoperative in law. 2. For that ld CIT(A) should have held that proceedings u/s 144 of the I.T. Act 61 and that u/s 147 of the Act are different proceedings as Sec 153 of the I.T Act 1961 provides different time-limit for each of the proceedings and therefore an order u/s 144 of the Act 1961 in a proceedings u/s 147 of the I.T. Act 1961 is misleading, unworkable and inoperative in law. 3. For that ld CIT(A), should have held that all and each disallowances and additions were fanciful surmise and should have deleted them. 4. For that ld CIT(A) was not justified in holding that the proceedings u/s 147 of the Act was valid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g unloading expenses and on 26/12/2008, the assessee's A/R appeared and informed his inability to produce those original documents, but assured that as and when the these documents would be available, the same will be furnished. On the above facts, the A.O. inferred that the final accounts submitted by the assessee had no basis and hence he rejected the statement of account filed along with the return u/s. 145(3) of the Act. The assessment was ultimately completed u/s. 144 read with section 147 of the Act on 29/12/2008 and computed the total income at Rs. 18,17,573/- by disallowing the following expenditure credit and adding the same to the total income of the assessee :- ( a ) Loading unloading expenses Rs. 3.65.634/- ( b ) Freight charges Rs. 4,21,713/- ( c ) Tyre expenses Rs. 2.64.780/ ( d ) Bogus credit as undisclosed income Rs.6.27,822/- 3. The assessee preferred appeal before the ld. C.I.T.(A) and opposed passing of the assessment order u/s, 144 read with section 147 of the Act. The assessee also challenged the additions made in the said assessment order under several heads, as mentioned above. Wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmissions, the ld. A/R relied on the decisions of Hon'ble Kerala High Court in the case of K. Joseph Jacob v. Agricultural ITO [1991] 190 ITR 464 and I.T.A.T. Jodhpur Bench in the case of Shanti Lal Godawat v. Asstt. CIT [2009] 126 TTJ 135. In regard to other grounds relating to additions made in the assessment, no specific argument was advanced, except relying on the written submissions filed. 5. On the other hand, the ld. Departmental Representative relied on the orders of the authorities below. He further submitted that the A.O. issued reasons recorded along with the notice u/s. 148 of the Act. A copy of such hand-written reasons found recorded in the order sheet of the case dated 07/5/2007 has been filed by the ld. Departmental Representative at the time of hearing before us. On consideration of the reasons recorded and failure of the assessee to comply with the same with required documents despite several opportunities being provided, the A.O. has rightly issued notice u/s. 148 to initiate reopening proceedings and passing consequential order u/s. 144/147 of the Act and the ld. C.I.T.(A) has justifiably upheld such action of the A.O. 6. We have heard the parties and peruse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der:- "However he did not disclose the recorded reasons till 05.12.2008 (Three years after the return was filed processed and 24 days before passing the order) when he said "The case was reopened for security" (p.p. 2 para 7 last line) so long he kept it secret even after several hearings from 16.08.2007 to 23.09.2008. CIT v. Smt. Varsha Goyal (2009) 319 ITR 92(P H)." The ld. Departmental Representative filed a copy of order sheet dated 7/5/2007 containing reasons recorded by the A.O. for his belief that income escaped assessment. Subsequent entry in the said order sheet was dated 15/5/2007 wherein it is written "Notice u/s 148 served on the assessee. Tear off placed in the record." From these two entries in the order sheet, which is a part of the record of the department, we find no mention that the seasons recorded in the order sheet on 7/5/2007 was actually served along with the notice u/s. 148 served on the assessee on 15/5/2007. The ld. C.I.T.(A) is also silent on the issue. However, as per assessee, the A.O. did not disclose his reasons recorded till 5/12/2008, i.e. 24 days before passing the order u/s. 144/147 of the Act. Considering the totality of the facts and circu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erent time-limit for each of the proceedings and therefore an order u/s 144 of the Act 1961 in a proceedings u/s 147 of the I.T. Act 1961 is misleading, unworkable and inoperative in law. 3. For that ld CIT(A), should have held that all and each disallowances and additions were fanciful surmise and should have deleted them. 4. For that ld CIT(A) was not justified in holding that the proceedings u/s 147 of the Act was valid even in absence of fresh information. 5. For that ld CIT(A) wrongly held that the assessee was liable u/s 194C of the Act to deduct tax at source from Freight charges though the Lorries hired by the assessee carried goods only. 6. For that ld CIT(A) should have that the assessee was not liable to pay advance tax on additions disallowances u/s 208 of the I.T. Act 1961 hut on current income only and consequently was not liable to pay interest u/s 234B of the I.T. Act 1961 and that moreover he had paid, excess advance tax of Rs.60,395/- which he claimed to the refunded. " 3. From the grounds of appeal taken by the appellant it is clear that no ground has been taken by the appellant with reference to providing of reasons recorded for re-opening the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e following issue:- "Whether in the facts and circumstances of the case, the orders of the authorities below are required to be set aside and the matter remanded back to the file of the Assessing Officer for re-adjudication as held by the ld. J.M or the appeal is required to be heard on merit as held by the ld. A.M" The above issue is, therefore, referred u/s. 255(4) of the I.T Act' 61 to the Hon'ble President of the Income-tax Appellate Tribunal for referring the case to a Third Member. B.R. Mittal, Judicial Member - The above appeal was heard on 26/11/2010 and a draft order was proposed to ld. brother Sri B.K. Haldar, A.M. on 14/12/2010 for his consideration. Since ld. brother did not agree with the proposed order, he has prepared his separate order dated 04/03/2011 stating that the matter cannot be remanded back to the file of the A.O. for fresh adjudication and the grounds taken by the assessee are required to be decided on merits. However, the ld. A.M. has chosen not to pass his order on merits to adjudicate the grounds taken by the assessee. I discussed the matter with the ld. brother Sri Haldar to prepare his order on merits adjudicating the grounds taken by the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facts of the case as found by the ld. Members are that the assessee was engaged in the business of transportation and hire of heavy vehicles under the trade name 'M/s. Pratap Carrier'. Return was processed u/s. 143(1) of the Act. Initially, the case was not selected for scrutiny as no notice u/s. 143(2) was issued. However, subsequently finding that as per Auditor's report no TDS was deducted as required u/s. 194C of the Act from the payment of freight charges, the AO. formed an opinion that income had escaped assessment and thus with a view to scrutiny, the case was reopened by issuing notice u/s. 148 dated 07/5/2007, served upon the assessee on 15/5/2007. In response, The assessee requested the A.O. to treat the return originally filed on 29/10/2005 as return in response to the said notice u/s. 148 of the Act. On several dates, the case was fixed for hearing before the A.O. However, on some of the dates, the assessee or his authorized representatives were not present. However, in course of assessment proceedings, the assessee furnished written submissions, computerized books of account, bank statement, office copy of bills for hire charges transport charges showing month-wise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... different proceedings as Sec 153 of the I.T. Act 1961 provides different time-limit for each of the proceedings and therefore an order u/s 144 of the Act 1961 in a proceedings u/s 147 of the I.T. Act 1961 is misleading, unworkable and inoperative in law. 3. For that ld CIT(A), should have held that all and each disallowances and additions were fanciful surmise and should have deleted them. 4. For that ld CIT(A) was not justified in holding that the proceedings u/s 147 of the Act was valid even in absence of fresh information. 5. For that ld CIT(A) wrongly held that the assessee was liable u/s 194C of the Act to deduct tax at source from Freight charges though the Lorries hired by the assessee carried goods only. 6. For that ld CIT(A) should have that the assessee was not liable to pay advance tax on additions disallowances u/s 208 of the I.T. Act 1961 but on current income only and consequently was not liable to pay interest u/s 234B of the I.T. Act 1961 and that moreover he had paid excess advance tax of Rs.60,395/ which he claimed, to be refunded." 5. In regard to the first dispute vide grounds No. l 2 above, there was no dispute between the ld. Members about ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his proposed order vide para 6.1. is as under :- "6.1. In regard to other allegation of the ld. A/R that reasons recorded were not disclosed along with the notice u/s. 148 dated 7/5/2007, we observe that the assessee during appellate proceeding brought to the notice of the ld. C.I.T.(A) of the said fact and the ld. C.I.T.(A) on page-7 of his order has reproduced the said claim of the assessee as under :- "However he did not disclose the recorded reasons till 05.12.2008 (Three years after the return was filed processed and 24 days before passing the order) when he said "The case was reopened for security" (p.p. 2 para 7 last line) so long he kept it secret ever after several hearings from 16.08.2007 to 23.09.2008. CIT v. Smt. Varsha Goyal (2009) 319 ITR 92 (P H)." The ld. Departmental Representative filed a copy of order sheet dated 7/5/2007 containing reasons recorded by the A.O. for his belief that income escaped assessment. Subsequent entry in the said order sheet was dated 15/5/2007 wherein it is written "Notice u/s 148 served on the assessee. Tear off placed in the record." From these two entries in the order sheet, which is a part of the record of the department, we fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y authority to pass an order. 6. The Hon'ble Apex Court's decision in the case of Addl. CIT v. Gurjargravures Pvt. Ltd [111 ITR 1] while deciding the issue of the jurisdiction of the 1st appellate authority has clearly laid down that subject matter of appeal before the AAC cannot travel beyond that of the subject-matter before the AO. Subsequently, the Hon'ble Supreme Court in the case of Jute Corporation of (I) Ltd v. CIT [187 ITR 688] has explained the ratio laid down by the Hon'ble Apex Court's said decision in the case of Gurjargravures Pvt. Ltd (supra). 7. The Hon'ble Allahabad High Court in the case of Dr.(Miss) Chandravati v. CIT [301 ITR 1721 has distinguished the case of Jute Corporation of (I) Ltd and held that a plea, which was not raised either before the AO or 1st Appellate Authority could not be raised for the first time before, the tribunal. Thus, even if the appellant sought to raise a plea Before the tribunal, which was not raised by him before the 1st appellate authority, the same cannot be admitted/adjudicate by the tribunal. 8. In this view of the matter, I hold that neither the assessee can raise such a plea for the first time before the tribunal nor the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esh information." In my considered opinion, the above ground is wide enough to challenge the entire proceeding initiated by the A.O. u/s. 148 and consequentially passing of order u/s. 144/147 of the Act by the A.O. and any objection and/or arguments advanced in this regard cannot be said to be out of the context of the ground which has not been taken before the Tribunal. When the assessee challenges the very proceeding u/s. 147 of the Act, it implies the other ingredients which, in his opinion, make the proceeding invalid in law. In tune with that, the assessee made submission; before the Tribunal. On perusal of the order of C.I.T.(A), in particular the observation made on page-7 of his order which is already reproduced in para 6.1 of ld. J.M.'s order, it is observed that the A.O. kept the reasons recorded secret even after several hearings from 16/8/2007 to 23/9/2008 and further it is not disputed that the A.O. did not disclose his reasons recorded to the assessee till 5/12/2008, i.e. 24 days before passing the impugned order u/s. 144/147 of the Act. It has been held by Hon'ble Apex Court in the case of GKN Driveshaft (India) Ltd. v. ITO [2003] 259 ITR 19 that although the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fresh after giving due opportunity of hearing to the assessee and considering such evidences as may be furnished before him. In view of the above, I agree with the ld. J.M. on these issues also. 11. The matter will now go to the regular Bench for passing the order as per the majority view. ORDER B.R. Mittal, Judicial Member - Since there was a difference of opinion between the ld. Members constituting the Division Bench of ITAT, Kolkata with regard to the following questions, the matter was referred to Third Member under section. 255(4) of the I.T. Act, 1961 for his opinion :- The ld. Accountant Member has set out the following question :- "Whether in the facts and circumstances of the case, the orders of the authorities below are required to be set aside and the matter remanded back to the file of the Assessing Officer for re-adjudication as held by the ld. JM or the appeal is required to be heard on merit as held by the ld. AM". The ld. Judicial Member has proposed the following question :- "Whether on the facts and in the circumstances of the case, the proposed order of ld. JM is justified or action suggested by the ld. AM is justified?" 2. Hon'ble President, ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
