TaxTMI 
TaxTMI 
2011 (5) TMI 667
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....sallowances 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 hold 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 bad paid excess advance tax of Rs. 60.395/ which he claimed to be refunded." 2. Vide the above grounds, the assessee has mainly contested the proceedings u/s. 148 and passing of order u/s. 144/147 of the Act and consequential addition made in such assessment order. The brief facts of the case are that the assessee filed his return of income along with Audit Report in Form 3CB. P/L Account and balance sheet for the assessment year under consideration on 29/10/2005 showing total i....
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....r 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. While dealing with the technical/legal issue regarding issuance of notice u/s 148 and subsequently passing of order u/s. 144 and 147 of the Act, the ld. C.I.T.(A) observed that in this case the return was only processed u/s. 143(1) and no regular assessment was .. completed. Further, TDS as required u/s. 194JC had not been deducted, which was a valid reason to believe that income had escaped assessment. He, therefore, held that there was no legal infirmity in issuing notice u/s. 148 and thus assessment was completed as per law u/s. 144/147 of the Act. On merits of the case, the ld. C.I.T.(A) gave partial relief to the assessee insofar as disallowance of loading & unloading, expenses are concerned. He, however, upheld the action of the A.O. with regard to disailowances/additions on account of freight charges, tyre expenses and sundry creditor. Hence this appeal by the assessee. 4. At the time of hearing before us, the ld. A/R of the assessee mainly submitted that reasons for reopening of the assessment were not validly re....
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.... 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 perused the material placed before us. The ld. A/R contended that as per sec. 153 of the Act, the impugned order passed u/s. 144 in a proceeding u/s. 147 was time-barred and hence inoperative in law. We observe that in this case the return filed by the assessee u/s. 139(1) was processed u/s. 143 (1) and no notice u/s. 143(2) was issued thereafter. Subsequently the A.O. observing that no TDS as required u/s. 194C of the Act was deducted on the payments made by the assessee towards freight charges, issued notice u/s. 148 dated 7/5/2007 and ultimately passed order under sec. 144 r.w.s. 147 of the Act on 29/12/2008. As per Sec. 153(1)(a), no order of assessment u/s 143 or sec. 144 shall be made at any time after the expiry of twenty one months from the end of the assessment year in which the income was first assessable. Assessment year involved in this case is 2005-06. Therefore, as per the said section, statutory time for passing 144 order expired on 31/12/2008. During course of hearing before us, the ld. A/R could not have produce....
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....ot 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 circumstances of the case and keeping in view the principle of natural justice, in our considered opinion, it would meet the ends of justice if the assessee is provided with another opportunity to comply with the reasons recorded by the A.O. in terms of proceeding u/s 148 of the Act. In view of the above we set aside the orders of the authorities below and restore the matter to the file of A.O. who is directed to give adequate opportunity of being heard and to consider such documentary evidence, as may be filed before him and pass a fresh assessment order. We order accordingly. 7. Since we have restored the issue of passing reassessment order for lack of opportunity being provided by the A.O. for furnishing reply by the assessee in response to reasons recorded for issuing notice u/s. 148, we do not consider necessary to adjudicate, other grounds of appeal raised against disallowances/additions made on account (a) loading & unloading expenses; (b) freight charges; (c) tyre expenses; and (d) bogus credit as undisclosed income. As m....
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.... 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 assessment. The appellant has neither taken such ground in writing nor sought permission of the tribunal to admit such a new ground, and not an additional ground on the subject-matter of appeal as is evidenced by the grounds of appeal taken by the assessee, during the hearing of the case. Thus, in my humble opinion the tribunal does not have the jurisdiction to adjudicate upon such a new ground. 4. The ld. JM, however, in para 6.1 of the proposed order has adjudicated such new ground. The ground adjudicated upon by the ld. JM is totally a new ground. It has no connection with the subject-matter of appeal, which has been agitated by the appellant in the grounds of appeal appended in Form No.36. 5. A new ground can be taken at any stage of the proceeding only when the same challenges the jurisdiction of any authority to pass an order. 6. The Hon'ble Apex Court's decision in the case of Addl. CIT v. Gurjargravures (P.). Ltd [1978] 111 ITR 1 while deciding the issue of the jurisdiction of the 1st appellate....
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....ate 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 assessee. He has not agreed to. Therefore, there is a difference of opinion between the Members constituting the Bench. The ld. A.M. has proposed the question as mentioned hereinabove. However, I am of the opinion that the following question be referred to the Hon'ble President, I.T.A.T. u/s. 255(4) of the I.T. Act, 1961 to make a reference to the Third Member. " Whether, on the facts and in the circumstances of the case, the proposed order of ld. J.M. is justified or action suggested by the ld. A.M. is justified ?" ORDER 1. There is a difference of opinion between the Hon'ble Members of the Bench on the 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 th....
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....d written submissions, computerized books of account, bank statement, office copy of bills for hire charges & transport charges showing month-wise number of trips and list of labours employed for loading & unloading of goods transported. The A.O. required the assessee to produce the original bills in respect of freight charges, tyre expenses, loading & 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 r.w.s. 147 of the Act on 29/12/2008 on a total income of Rs. 18,12,573/- by disallowing the above expenditure and adding the same to the total income of the assessee. 4. Being aggrieved, the assessee preferred appeal before the ld. C.I.T.(A) agitating passing of the assessment order u/s. 144 read with section 147 of the Act and also challenging the additions made th....
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....ance 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 rejecting the grounds of the assessee. 6. In regard to grounds No. 3 to 5 of the grounds of appeal, I find that the assessee submitted before the Tribunal that reasons for reopening of the assessment were not validly recorded, inasmuch as the A.O. along with this notice u/s. 148 dated 07/5/2007 did not disclose the reasons recorded till 05/12/2007 by stating that the case was reopened for scrutiny. It was further submitted on behalf of the assessee that return was processed u/s. 143(1) of the Act and refund as per return was allowed to the assessee, which proved the satisfaction of the A.O. about the accounts of the assessee and audit report. It was further submitted that the A.O. did not issue any notice u/s. 142(1), but issued notice u/s. 148 on 07/5/2007, in response to which the assessee filed/produced before the A.O. audited books of account, computerized books of account, bank statement, office copy of bills for hire charges & transport charges, list of labours employed for loading & unloading of goods t....
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...."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 reasons 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 circumstances of the case and keeping in view the principle of natural justice, in our considered opinion, it would meet the ends of justice if the assessee is provided with another opportunity to comply with the reasons recorded by the A.O. in terms of proceeding u/s. 148 of the Act. In view of the above, we set aside the orders of the authorities below and restore the matter to the file of A.O., who is directed, to give adequate opportunity of being heard and to consider such documentary evidence, as may be filed before him and pass a fresh assessment order. We order accordingly." 7.1 Since the matter was sent back to th....
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....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 same can be admitted/adjudicated by us. The orders of the authorities below, therefore, cannot be set aside and the matter cannot be remanded back to the file of the AO for fresh adjudication on this ground. We are required to decide the grounds taken by the assessee on merit." 9. I have heard the parties and perused the material available on record. I have also carefully gone through the dissenting orders proposed by the ld. Members. In this case the assessment order was passed u/s. 144/147 pf the Act on 29/12/2008 making thereby several disallowances of expenses and additions thereof to the total income of the assessee for the assessment year under consideration. It was the allegation of the assessee that reasons recorded were not disclosed along with the notice u/s. 148 dated 07/5/2007 and when the matter was brought to the notice of the C.I.T.(A), he on page-7 of his order has stated that the A.O. did not disclose the recorded reasons till 05/12/2008, i.e. a few days before passing the order u/s. 144/147 of the Act, a....
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....er 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 assessee cannot ask for the copy of the reasons recorded by the Assessing Officer at the stage of filing the return in response to the notice u/s. 148, yet copy of the said reasons is liable to be supplied to the assessee after the assessee files the return. The relevant, portion of the observation of Hon'ble Apex Court in the said case reads as under: "When a notice under section 148 of the Income-tax Act, 1961, is issued, the proper course of action for the noticee is to file the return and, if he so desires, to seek reasons for issuing the notices. The Assessing Officer is bound to furnish reasons within a reasonable time. On receipt of reasons, the noticee is entitled to file objections to issuance of notice and the Assessing Officer is bound to dispose of the same by passing a speaking order." 9.2 From the above it is evident that the Hon'ble Apex Court has laid down the procedure which is to be followed when a notice u/s 148 is issued. As per Hon'ble Apex Court, on receiving the notice the assessee is to first file the retu....