TMI Blog2013 (5) TMI 157X X X X Extracts X X X X X X X X Extracts X X X X ..... under compulsion of the audit party and not independently, the action of re-opening would be vitiated. It is well settled that it is only the Assessing Officer whose opinion with respect to the income escaping assessment would be relevant for the purpose of reopening of closed assessment. It is, of course true, as held by the decision of the Apex Court in case of PVS Beedies Private Limited [1997 (10) TMI 5 - SUPREME Court] and Indian & Eastern Newspaper Society [1979 (8) TMI 1 - SUPREME Court ], if the audit party brings certain aspects to the notice of the Assessing Officer and thereupon, the Assessing Officer forms his own belief, it may still be a valid basis for reopening assessment. It writs large on the face of the record that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad received food preparation charges from lessee which were fixed amount as per agreements signed by assessee and lessee. As per agreements for food preparing charges, assessee was to provide only manpower for preparation of food and all materials and related expenditure was to be provided by lessee. The assessee had provided two persons at one such restaurant incurring salary expenditure of Rs. 1,59,000/= and had provided four persons at another such restaurant incurring salary expenditure of Rs. 3,18,000/=. As the assessee had ceased to do any business and he is deriving his income by virtue of various rent and money received under agreement and his role is limited to provide six persons to his handed over business, his income was require ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tart of the A.Y., the assessee had ceased himself from the restaurant business and had leased/licensed his entire assets of restaurant to other parties for which he received rents. As per terms of contract, repair/maintenance/replacement of leased building/furniture/ACs/Crockery and utensils and local taxes thereof were to be paid by lessee. Further, the assessee had received food preparation charges from lessee which were fixed amount as per agreements signed by assessee and lessee. As per agreements for food preparing charges expenditure was to be provided by lessee. The assessee had provided two persons at one such restaurant incurring salary expenditure of Rs. 1,59,000/= and had provided four persons at another such restaurant incurring ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aurant Business". When the assessee is shown the income under the head "Profit and Gain of business or profession" and paid salary to his employees, the salary expenditure is therefore allowable expenditure under the head business expenditure. The assessee has given a part of his asset on contract and managing the rest of his own. It is clearly mentioned in the decision of Hon'ble Supreme Court in the case of S.K. Sahana Sons Limited v. CIT [(1999) 104 Taxman 86/236 ITR 432 (SC)] that where the assessee company leased its colliery to the managing contractor and the assessee was to be paid the profit at a certain rate on the amount of coal raised, as income arose out of a contractual relationship between the principal and the agent, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oversial issue to the notice of the Assessing Officer, he had not agreed to the proposal for re-examination of the issue. Thereupon, he in fact, wrote a letter dated 8th June 2011 and gave elaborate reasons why he did not agree to make any addition on the controversial issue. 8. We may recall that the controversy was whether the assessee had discontinued his business of running restaurant and that therefore, the income should be treated as the income from such business or from other sources. 9. In his letter dated 8th June 2011, the Assessing Officer firmly asserted that the assessee's income from lease was to be assessed as business income and not as income from other sources. Despite his firm assertion, the audit party once again wrot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om the record that the Assessing Officer was of the opinion that no part of the income of the assessee has escaped assessment. In fact, after the audit party brought the relevant aspects to the notice of the A.O., she held correspondence with the assessee. Taking into account the assessee's explanation regarding non-requirement of TDS collection and ultimately accepted the explanation concluding that in view of the Board's Circular, tax was not required to be deducted at source. No income had therefore escaped assessment. Despite such opinion of the Assessing Officer, when ultimately the impugned notice came to be issued the only conclusion we can reach is that the Assessing Officer had acted at the behest of and on the insistence of the au ..... X X X X Extracts X X X X X X X X Extracts X X X X
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