TMI Blog2012 (12) TMI 899X X X X Extracts X X X X X X X X Extracts X X X X ..... n and what are the cogent and relevant materials available with it to form an opinion that the said expenditure was required to be disallowed u/s 40(a)(ia), for not having deducted TDS. In favour of assessee - SPECIAL CIVIL APPLICATION NO. 12673 OF 2011 - - - Dated:- 31-8-2012 - AKIL KURESHI AND Ms. SONIA GOKANI, JJ. Manish J. Shah for the Petitioner. Mrs. Mauna M. Bhatt for the Respondent. JUDGMENT Ms. Sonia Gokani, J. - Petitioner is a public limited company dealing in manufacture and sale of Tea. The petitioner submitted return for the AY 2006-07 on 26th December 2006. A revised return was filed on 26th October 2007 alongwith computation of the total income which was picked up for scrutiny assessment by the respondent. A letter was addressed on 18th December 2008 calling for certain information - one of which was with regard to clarification of various kinds of tea sold in terms of quantity and amount, and the details of selling and distribution expenses of Rs. 3,27,65,760/- and the details of the persons to whom it is paid and whether there was a deduction of tax at source. This was replied to on 26th December 2008. Further details were called for wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that a mere change of opinion does not justify initiation of re-assessment proceedings. The objections raised, read thus - "13. We find from the reasons that your goodself believe that discount given in trade incentive scheme is in fact commission paid against the sale and hence covered under the provisions of section 194C of IT Act and tax ought to have been deducted which is not done and therefore expenditure of Rs. 22,70,869 was required to be disallowed u/s. 40a(ia) of the Act." "14. In this connection, we may invite your attention to provisions of Section 194C, which reads as under. .......It may be seen from above that section applies for payment for carrying out any work in pursuant of contract. In our case, there is no case of carrying out any work. You will please appreciate that we have sold goods to super-stockist, who has in turn sold it to retailer and as per the sales promotion scheme introduced, based on the quantity purchased, the retailer is given discount as per the scheme. Thus, it is not a case of contract for service but contract for goods which is not covered under section 194C of the Act. Further, as per the reasons recorded, even as per your version, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Assessing Officer vide its order dated 17th August 2011, relying on the judgment of this Court in case of Dishman Pharmaceuticals Chemicals Ltd. [SCA No. 15304/2010] wherein it has been held that the assessee himself has not declared any details which is affecting the calculation of income of the assessee and the income is under assessed, then, assessee cannot take objection that he had disclosed all the facts during the course of assessment proceedings. According to the Assessing Officer, after insertion of Clause (c) to Explanation 2 of Section 147 of the Act, even if the Assessing Officer has considered the same issues and allowed certain reliefs; which are otherwise not allowable as per the provisions of the Act, the same amounts to deemed concealment, and therefore, even where there is a change of opinion, on same set of facts, if the original opinion formed by the Assessing Officer is not as per law, re-opening is permissible. Relying on the judgment of Kerala High Court in case of CIT v. Popular Vehicle Service Ltd., it is stated that the scope of Section 147 of the Act, after amendment, is large enough to cover the situation whereby deductions have been granted wrongly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for substantiating the submissions are as follows :- [1] CIT v. Gordhanbhai Jethabhai [1994] 205 ITR 279 (Guj.) [2] Rayon Silk Mills v. CIT [1996] 221 ITR 155 (Guj.) [3] CIT v. Nirma Chemicals Works (P.) Ltd. [2009] 309 ITR 67. 8. He emphasized that entire material that was required for the purpose of assessment was on record and yet, if there was any doubt, further details could have been asked for. Though the re-opening is within four years and when all requisite details were sufficiently provided and disclosed in original income according to Learned Counsel and there is no new material available with the Assessing Officer, this is a mere change of opinion. 9. Challenging this, learned counsel Shri Manish R Bhatt urged that this re-opening is since within four years, it is not only the non-disclosure which is criteria for re-opening. He urged that the issue that this is not a commission but a discount given to the sellers, is not the question to be gone into by the Assessing Officer and there are powers available with the Assessing Officer in post 1st April 1989 period, when amendment to clause [c] to explanation 2 of Section 147 has come into being. Reliance is pla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such income had not been included in the reasons recorded under Section 148(2) of the Act. 12. It needs to be noted here that the return was taken in scrutiny assessment. At the time of original assessment made u/s. 143(3) of the Act, there was already a query raised and the assessment was finalized, and therefore, the question that would arise is whether there is a change of opinion on the part of the Assessing Officer when the impugned notice under Section 148 of the Act was issued. Under these circumstances, the only query that requires to be made is - whether in the present proceedings, the Assessing Officer has reason to believe that income chargeable to tax has escaped assessment and whether such satisfaction of the Assessing Officer gets reflected in the form of reasons recorded. 13. The Assessing Officer noted as mentioned hereinabove that the assessee-company had paid discount under the trade incentive slab scheme "Garma Garam" offer to three different parties. According to the Assessing Officer, this payment was in fact the commission paid against sale and there was no TDS deducted. The amount of Rs. 22,70,869/- which was expenditure, the same was required to be disal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hout deducting TDS, the same ought to have been reflected somewhere in the computation of income and that would have bearing on the computation itself. In absence thereof, even within four years the assessment when is sought to be re-opened, it is required to be seen as to whether the Assessing Officer has reason to believe that the income has escaped the assessment, particularly on having raised query at the time of original assessment and the assessee-appellant having fulfilled the obligation of furnishing the requisite details. The Assessing Officer after the amendment w.e.f 1st April 1989 though is not constrained not to re-open the assessment, if he has a reason to believe that the income has escaped the assessment, but, at the same time, in wake of detailed scrutiny of the very same issue under Section 143(3) at the time of original assessment, it shall have to be recorded by the Court as to whether this was not a mere change of opinion on the part of the Assessing Officer. 15. Section 194-H of the Act makes it obligatory on the part of any person, who is responsible for paying, on or after the 1st day of June 2001, to a resident, any income by way of commission or brokerag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opening beyond four years where the only requirement would be that either the return of income is not filed, or that there is no true and full disclosure by the assessee in the original assessment, resulting into escapement of the income in the year under consideration. It is demonstrated by the petitioner-assessee that at the time of original assessment, in reply to the specific query raised, specific reply had been furnished with regard to the amount of discount paid by way of trade incentive slab scheme and the query also was whether on the amount paid, tax was deducted at source or not. Having furnished all the requisite details, if the Assessing Officer chose not to deem it fit to reflect its consideration in the assessment order originally passed after scrutiny, on the very same grounds and materials when it seeks to reopen the assessment on the ground of escapement of income it is required of the respondent to point out as to how this is not a mere change of opinion and what are the cogent and relevant materials available with it to form an opinion that the said expenditure was required to be disallowed under Section 40(a)(ia) of the Act, for not having deducted TDS. With th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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