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TMI Blog2015 (3) TMI 600X X X X Extracts X X X X X X X X Extracts X X X X ..... ding that reopening of assessment is invalid and void ab initio despite the fact that there was no procedural lapse in reopening the assessment under section 147 of the Income-tax Act 1961 as is clearly evident from the reasons recorded before the issue of notice under section 148 of the Income- tax Act, 1961. (copy of reasons recorded is enclosed as annexure). 2. That the learned Commissioner of Income-tax (Appeals) has erred in law and on facts in deleting the addition of Rs. 62,21,063 made under section 40(a)(ia) of the Income-tax Act, 1961 as the assessee had failed to deduct TDS as per the provisions of section 194C of the Income-tax Act, 1961 on freight payment made. 3. That the order of the learned Commissioner of Income-tax (Appeals) be set aside and that of the Assessing Officer be restored. 4. That the appellant craves leave to add or amend any ground of appeal before it is finally disposed of." 4. The issue in ground No. 1 raised by the Revenue is against reopening of assessment under se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ow that the information was completely available in the return of income and also during the original assessment proceedings and no adverse view of the same was taken at the time of passing of the original assessment order. The Commissioner of Income-tax (Appeals) thus held that the Assessing Officer took a different view on the same facts/information available on record to conclude that the income had escaped assessment. Placing reliance on the ratio laid down by the hon'ble Delhi High Court in Sita World Travels (India) Ltd. v. CIT [2005] 274 ITR 186 (Delhi), it was held that the reasons recorded to reopen the assessment were clearly in the nature of difference of opinion and the assessment could not be reopened merely because subsequently the Assessing Officer changed his opinion or some other officer takes a different view. The Commissioner of Income-tax (Appeals) thus held that reopening of assessment under section 148 of the Act to be invalid and assessment framed was held to be void ab initio. The Commissioner of Income-tax (Appeals) further adjudicated the issue raised on merits. The Commissioner of Income-tax (Appeals) held that the defects pointed out by the Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment in the case was framed under section 143(3) of the Income-tax Act, 1961 on December 8, 2008 at an income of Rs. 4,87,500. 2. A perusal of the income and expenditure account furnished along with the return of income reveals that the assessee has shown income from 'freight received' and 'interest from bank' at Rs. 1,00,90,369 and Rs. 360, respectively. However, on totalling the value of TDS certificates attached with the return, on the basis of which credit for TDS at Rs. 3,65,975 has been claimed, the amount paid/credited to the assessee's account comes to Rs. 1,63,11,432. As such the assessee has shown 'freight received' short by Rs. 62,21,063. 2.1 As such the income from the freight received has not been shown as per TDS certificates, whereas, as per the provisions of section 199(1) of the Income-tax Act, 1961 the assessee can claim credit of the tax deducted at source only in respect of the income declared in the said assessment year. Since the assessee has claimed cre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of freight received, is not admissible. 3. In view of the above facts, I have reasons to believe that the income to the extent stated above has escaped assessment in terms of the provisions of section 147 of the Income-tax Act, 1961." 11. The perusal of the reasons recorded for reopening the assessment reflect that no tangible material had come to the knowledge of the Assessing Officer or had been received by the Assessing Officer. The reasons recorded for reopening of assessment itself reflects the Assessing Officer to have perused the income and expenditure account furnished along with return of income. The first part of the reasons recorded reflects discrepancies in the receipts against which no addition has been made in the hands of the assessee. The second part of the reasons recorded for reopening of assessment were the expenditure booked on account of freight paid, where the assessee was found to have failed to comply with the provisions of section 194C of the Act and consequently the expenditure of Rs. 62,21,063 was not allowable in the hands of the assessee in view of the provisions of section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ition and if the concept of 'change of opinion' is removed, as contended on behalf of the Department, then, in the garb of reopening the assessment, review would take place. One must treat the concept of 'change of opinion' as an in-built test to check abuse of power by the Assessing Officer. Hence, after April 1, 1989, the Assessing Officer has power to reopen, provided there is 'tangible material' to come to the conclusion that there is escapement of income from assessment. Reasons must have a live-link with the formation of the belief. Our view gets support from the changes made to section 147 of the Act, as quoted hereinabove." 12. The hon'ble Supreme Court held that the Assessing Officer has power to reopen the assessment provided there was tangible material to come to the conclusion and there was escapement of income from the assessment. In view thereof where there is no tangible material coming to the knowledge of the Assessing Officer and where the assessment had already been completed in the hands of the assessee, the recording of reasons in such case in the absence of any tangible material, would amount to change of opinion, where the reassess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Assessing Officer had pointed out several defects in the said Forms 15-J and 15-I and was of the view that the said expenditure should be disallowed in the hands of the assessee. It may be pointed out that the said Forms 15-I and 15-J are to be filed before the prescribed authority, i.e., the Commissioner of Income-tax and not the Assessing Officer. Admittedly the said forms were filed before the prescribed authority and within the prescribed time and no defect was pointed out by the said authority. In the absence of the same, we find no merit in the observation of the Assessing Officer in this regard. Further the assessee is not eligible for tax deduction at source as the amounts paid by the assessee were on behalf of the principal on whose behalf it was arranging the said tankers. The assessee had entered into contract with several parties on whose behalf it was arranging the trucks from time to time and the expenditure was booked as freight payment against which freight income was received by the assessee. 16. We find that identical issue arose before the hon'ble Punjab and Haryana High Court in CIT v. United Rice Land Ltd. [2010] 322 ITR 594 (P&H) and the facts noted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... comply with the provisions of section 194C read with section 40(a)(ia). 2. On the facts and circumstances of the case and in law, the learned Commissioner of Income-tax (Appeals) has erred in deleting the disallowance of Rs. 85,357." 19. The issue raised vide ground of appeal No. 1 by the Revenue is identical to the issue raised vide ground No. 2 in I. T. A. No. 833/Chd/2011 as the facts of the issue are identical. Our decision in I. T. A. No. 833/Chd/2011 shall apply mutatis mutandis to ground No. 1 raised by the Revenue in I. T. A. No. 1084/Chd/2013. The ground of appeal No. 1 raised by the Revenue is dismissed. 20. The issue in ground No. 2 raised by the Revenue is against deletion of disallowance of Rs. 85,357. The Assessing Officer had disallowed one-fifth of car expenses and telephone expenditure as being attributable to personal use by the assessee, resulting in addition of Rs. 1,22,351. The Commissioner of Income-tax (Appeals) upheld the disallowance of one-fifth out of car running and car repair expenses but held that no disallowance was warranted in respect of car depreciation and car insur ..... X X X X Extracts X X X X X X X X Extracts X X X X
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