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Biseswar Pandey Versus I.T.O., Ward-2 (2) , Hooghly

2016 (7) TMI 609 - ITAT KOLKATA

Reopening of assessment - non offering of truck income - non deduction of tds u/s 194C - Held that:- With regard to the first reason recorded by the AO namely not offering truck income to the extent of ₹ 67,600/-, the assessee had declared income from lorry plying of ₹ 50,000/- under the head “income from Basanti Automobiles”. Income u/s 44AE of the Act has been taken in the capital account. Therefore the assessee had declared income from truck plying in the original return of income .....

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reason recorded by the AO is concerned it relates to the carriage inward charges in the business of wholesale dealing in potato seeds. As already observed that the AO examined the carriage inward account in the original assessment proceedings and did not think it fit that there was any violation of section 40(a)(ia) of the Act. It can thus be seen that this issue on which the AO initiated reassessment proceedings had been duly considered by the AO while concluding the proceedings u/s 143(3) of .....

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ed, the principle of change of opinion cannot apply. Further this is a case where the assessment has been reopened within 4 years of the end of the assessment year. Therefore the re-assessment proceeding cannot be treated as invalid on the ground that full and true disclosure of material fact was made in the original proceeding - Decided in favour of assessee - I.T.A No.246/Kol/2014 - Dated:- 8-7-2016 - Sri N.V.Vasudevan, JM, J. For The Appellant : Shri Somnath Ghosh, Advocate For The Respondent .....

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expense in the amount of ₹ 18,45,600/- on account of transportation of potato seeds from Punjab. This was shown as part of the purchase cost and incorporated in the purchase account and the purchases shown in the books of accounts by the Assessee at ₹ 1,70,73.975/- was inclusive of the Transportation expenses. In the course of the original assessment proceedings u/s.143(3) of the Act, the AO, made enquiries in respect of the transportation cost incurred by the Assessee. In reply to t .....

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ve incurred which has been explained by the A/R. discussed and heard.... The Ld. Assessing Officer thereafter framed the assessment order u/s. 143(3) of the Act determining the total income at ₹ 4,08.470/- by resorting to a disallowance in the amount of ₹ 8,100/- out of "Car running expense" to the income returned by the assessee. The order of assessment was passed on 31.12.2009. 3. The AO addressed a letter dated 22.6.2011 to the assessee in which, the AO raised two object .....

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ins have to be computed by applying presumptive income for heavy goods vehicle at ₹ 3500/- per month and other vehicles at ₹ 3150/- p.m. Since the Assessee owned one truck and two other vehicles, according to the AO income of ₹ 1,17,600/- ought to have been declared from the said business by the Assessee , whereas only ₹ 50,000/- had been declared by the Assessee. Hence, according to the AO there was escapement of income of ₹ 67,600/ (Rs.117600- ₹ 50000 ). 2. .....

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e fact that provisions of sec.40 (a) (ia) of the Act on expenditure of ₹ 16,43,100/- on account of carriage inward were attracted and hence would have to be added back to total income of the Assessee. This was not looked into while completing the original assessment. The AO after pointing out to the above facts called upon the Assessee to explain within 7(seven) days from receipts of the said letter why the above ₹ 17,10,700/- (Rs.16,43,100 + ₹ 67,600) should not be treated as .....

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f income of plying of trucks was not correct and that the Assessee had disclosed income from plying of his one lorry u/s. 44AE of the Act and that he had not used the Maruti Car and Toyota Innova on hire and therefore applying the provisions of s. 44AE of the Act in respect of the other two vehicles was erroneous. As far as disallowance of transportation charges u/s.40(a)(ia) of the Act is concerned, the Assessee submitted that the admissibility of the transportation charges were enquired into b .....

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eassessment proceedings would be merely on change of opinion which was not permissible in law. The Assessee also requested the AO to furnish a copy of the reasons recorded for initiating proceedings u/s.147 of the Act. 5. However. the Ld. Assessing Officer was not impressed by such submissions of the Assessee and he held that initiation of reassessment proceedings was valid. The AO further added a sum of ₹ 50,000/- as income from business of plying trucks on hire as the Assessee had given .....

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sum of ₹ 18,45,600/- which was expenses incurred on transportation charges had to be disallowed u/s.40(a)(ia) of the Act because of non deduction of tax at source on such payments by the Assessee as required by Sec.194-C of the Act. The AO further disallowed expense to the tune of ₹ 50.122/- out of depreciation on car, interest on car loan and car expenses. The AO thus completed the assessment u/s.147 of the Act by order dated 08-08-2012 computing the total income at ₹ 23.46,2 .....

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. The revenue has not preferred any appeal against the order of CIT(A) on which the relief was given to the assessee by CIT(A). The assessee is aggrieved by the order of CIT(A) for upholding the validity of initiation of proceedings u/s 147 of the Act and has preferred the present appeal before the Tribunal. 7. The grounds of appeal raised by the assessee in this regard are projected in ground nos. 1 to 3 of the grounds of appeal which read as under :- 1. FOR THAT the Ld. Commissioner of Income .....

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FOR THAT on a true and proper interpretation of the scope and ambit of the provisions of s. 147 of the Income Tax Act, 1961, the Ld. Commissioner of Income Tax (Appeals) XXXVI, Kolkata was absolutely in error in upholding the action of the Ld. Income Tax Officer, Ward 2(2), Hooghly of issuing notice u/ s. 148 of the Income Tax Act, 1961 misconstruing the crucial expression tangible material' in support of such futile exercise and the purported conclusion reached on that behalf is wholly erro .....

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I have heard the submissions of the ld. Counsel for the assessee and the ld. DR on the aforesaid grounds of appeal. I deem it convenient to deal with the arguments raised before me that the proceedings u/s 148 of the Act have not been validly initiated because the proceedings u/s 148 of the Act were initiated purely based on change of opinion without any fresh material coming to the knowledge of the AO. The undisputed facts in so far as the aforesaid issue are that the assessee is an individual .....

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t/carriage inward for the year ended 31.03.2007 totalling a sum of ₹ 18,45,600/-. Copy of the details so furnished is at page 43 of the assessee s paper book. The details of the purchase and the parties from whom the purchase was made are also given at page 42 of the assessee s paper book. The AO passed an order of assessment u/s 143(3) of the Act dated 31.12.2009. In the said order the AO has specifically recorded the fact that since the potato seeds were purchased by the assessee from Pu .....

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he assessee to file the return of income in response to the said notice. The assessee filed the return of income on 30.08.2011. In response to the aforesaid notice he demanded a copy of the reasons recorded for initiating the proceedings u/s 148 of the Act. It appears that the assessee was not furnished the reasons recorded by the AO but on the other hand, the AO had relied upon the letter dated 22.06.2011 which was issued to the assessee prior to the issue of notice u/s 148 of the Act. From a p .....

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disputed by the AO. Besides the above, there was no tangible material based on which the AO came to a conclusion that income from truck plying was not offered to tax by the Assessee in the original return of income. In fact the factual assertion in the letter dated 22.6.2011 that the Assessee owned three vehicles and that these were used in the business of plying trucks on hire is without any basis and is purely a surmise of the AO. 10. As far as the second reason recorded by the AO is concerne .....

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us the assessee filed the order sheet entry of the proceedings before the AO and these are available in pages 96 to 102 of the assessee s paper book. As far as the reassessment proceedings are concerned the first order sheet entry is dated 21.06.2011 and it refers to the audit query dated 10.02.2011. Thereafter there is a discussion with regard to seeking of an approval u/s 147 of the Act from CIT(A). 11. Thus it is clear that the reassessment proceedings have been initiated without any tangible .....

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essing Authority leads to the conclusion of escapement of income. Assessing Officer does not have power to review his own orders. He cannot under the guise of reassessment proceedings seek to review his own order. The Hon ble Supreme Court in the case of CIT. - VS-KELVINATOR OF INDIA LTD (2010) 320 ITR 561 (SC) has held that the AO has no power to reopen assessment proceedings merely on "change of opinion" and that even after the substitution of s. 147 of the Income Tax Act. 1961 by th .....

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re was escapement of income from assessment. 12. The ld. DR has however argued before me that though the transport inward charges were not inquired into by the AO he did not apply his mind on the applicability of the provision of section 40(a)(ia) of the Act. According to him the initiation of re-assessment proceedings were valid. In this regard, it is worthwhile to refer to the decision of the Hon ble Delhi High Court in the case of CIT vs Usha International Ltd. (2012) 348 ITR 485 (Del) wherei .....

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