TMI Blog2013 (11) TMI 161X X X X Extracts X X X X X X X X Extracts X X X X ..... arise at all in the proceeding u/s. 147 of the I.T.Act, 1961 - Held that:- The order of the learned CIT(A) insofar as after considering the legal issue with respect to validity of reassessment u/s.147 he had also considered the deletion of the amount brought on record by the Assessing Officer in the reassessment proceedings when the Assessing Officer has categorically given a finding that the amount of expenditure were incurred for transportation carriage expenses of Rs.33,86,803 and hire charges Rs.42,33,728 which were to be disallowed u/s.40(a)(ia) as no TDS has been deducted u/s.194C. He added the same to the income which was assessed by him u/s.143(3). It was clear that the Assessing Officer brought on record material which was not escapement of income but was opinion based in the disallowance u/s.40(a)(ia) when the non-deduction of tax as directed to him u/s.263 was to be followed by the learned Assessing Officer insofar as the material available to the Assessing Officer was not income having escaped assessment but non-deduction of tax at source u/s.194C. The learned DR before us has submitted the case laws relating to the computation of income under the provisions of Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n ble High Court of Orissa in the case of M/s.B.C.Nayak vrs. CIT [W.P.(C) N:797 of 2012] as in the amended provision of section 147 of the I.T.Act,1961 w.e.f. A/Y:1989-90 has not put any restrictions on the AO so as to exclude the application of reopening of any completed assessment proceeding even if made u/s.143(3). Also in the instant case since no opinion was ever formed, question of changing of such opinion does not arise at all in the proceeding u/s. 147 of the I.T.Act, 1961. 3. In the original assessment made u/s. 143(3) dated 28.09.2007, the AO has made disallowance I) Disallowance of Rs.17,186 ii) Low withdrawal by partners of Rs. 1,32,310. It is clearly evident from the record that AO had not examined the statutory application of provisions of section 40(a)(ia) of the I.T.Act,1961 in respect of various payments on transportation charges to 10 persons amounting to Rs.33,86,803 debited in the P L account. Since the assessee failed to substantiate the book result correctly along with all the information fully and truly before the AO the Ld.CIT(A) was erroneous not to examine the relevance of reopening of the case. 2. The brief facts as have been brought on r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onal condition of section 147 in case assessment is reopened after the expiry of 4 years from the end of the relevant assessment plays a important role. Section 147 empowers the Assessing Officer to reopen an assessment if the conditions prescribed therein are satisfied. The conditions are: i) The Assessing Officer has to record the reason for taking action under section 147. It is on the basis of such reasons recorded in the file that the validity of the order reopening a assessment has to be decided. Recorded reasons must have a live link with the formation of the belief. ii) The Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year. iii) The jurisdictional condition under section 147 is the formation of belief by the Assessing Officer that income chargeable to tax has escaped assessment for any assessment year. iv) No action can be initiated under section 147 after the expiry of 4 years from the end of the relevant assessment year unless the income chargeable to tax has escaped assessment by reason for the failure on the part of the taxpayer to disclose fully and truly all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of change of opinion (CIT vs. Kelvinator of India Ltd., (2002) 256 ITR 1,(Del) = (2003-TII-19-HC-DEL-INTL-LB) (CIT vs. Kelvinator of India Ltd., (2010) 2 SCC 723). Honorable Delhi High Court has held in the case of BLB Limited Vs. ACIT(2011) that legal misinterpretation by Assessing Officer in framing original assessment cannot be the basis of initiation of Assessment Proceeding u/s 147. The Honorable Delhi High Court held that the same cannot be a valid ground for reopening assessment u/s 147. So the Assessment is on valid u/s147. i. It was based on the audit objection and without independent application of the AO s mind ii. All the facts were already on record, there was no new material and it was a case of change of opinion This was held invalid in the case of ICICI HOME FINANCE COMPANY LIMITED Vs. ACIT) (Bombay High Court) Re-assessment proceedings cannot be initiated on the basis of change of opinion. Re-assessment proceedings can be initiated only when AO has tangible material to come to the conclusion that there is escapement of income. C.I.T. VS. KELVINATOR OF INDIA LTD. (2010) 320 ITR 561 (SC) All the material facts were fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he existing material already on record. This itself indicates that there was no independent application of mind by the AO before he issued the s. 148 notice (India Eastern Newspaper Society 119 ITR 996 (SC) followed). As per the proviso to sec 147 where an assessment under sub-section (3) of section 143 or u/s 147 has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under section 139 or in response to a notice issued under sub-section (1) of section 142 or section 148 or to disclose fully and truly all material facts necessary for his assessment, for that assessment year. Once all the material with regard to particular issue is before the AO and he chooses not to deal with the same, it cannot be said that he had not applied his mind to all the material before him. A presumption can be raised that he applied his mind to all the facts involved in the assessment (Idea Cellular 301 ITR 407 (Bom), Kelvin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s deductible at source under Chapter XVII-B and such tax has not been deducted or, after deduction, has not been paid,- (A) in a case where the tax was deductible and was so deducted during the last month of the previous year, on or before the due date specified in sub-s. (1) of s. 139; or B) in any other case, on or before the last day of the previous year. Besides the above The provisions of section 194C would not apply in relation to payments made for hiring or renting of equipments, etc. as per the Circular : No. 681, dated 8-3-1994. The provisions of Section 194C clearly indicate that no such deduction should be made by the assessee when no contract either written or verbal has been entered into between the parties hereto. We are relying on the following case laws : It was decided by the ITAT Cuttack Bench (ACIT Vs Vinod Transport),that The Assessing Officer or the learned CIT(A) ought to have verified the payment thereof in the subsequent year as expenses claimed in the impugned Assessment Year were only to be considered for disallowance u/s.40(a)(ia) r.w.s. 194C on 30.06.2011. Disallowance u/s. 40 a (ia) can be invoked only if the expenses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 147/148 when the original reason to believe of income having escaped assessment need not necessarily be brought to tax in the reassessment proceedings when other parameter were available to the Assessing Officer to compute an income on the issue of notice u/s.147/148.The learned Counsel for the assessee has submitted various case laws which directly relate to the finding that the transportation expenses and hire charges are not to be disallowed unless the provisions of Section 194C has not been complied with. No material has been brought on record by the Assessing Officer as can be perused in his order as to how these expenses can be disallowed without bringing on record the violation of the provisions of Section 194C, we are of the considered view that the learned CIT(A) has rightly considered the case of the assessee appellant before it following the decision of Hon ble jurisdictional High Court that the assessment records do not relate to such finding for assuming jurisdiction u/s.147. In this view of the matter, we are of the considered view that there is no infirmity in the order of the learned CIT(A). We uphold the same and dismiss the appeal of the Revenue. 7. In the re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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