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Income Tax Officer, Ward 5 (2) , Ahmedabad Versus M/s. Pioneer Irrigation Pvt. Ltd.

2016 (7) TMI 666 - ITAT AHMEDABAD

Reopening of assessment - reasons to believe - difference between the sub-contract income shown by the assessee in its P&L Account and that reflected in the TDS certificates - Held that:- On perusing reasons for reopening of the assessment as noted in the assessment order, it is seen that reassessment was initiated on account of under assessment of income to the extent of ₹ 3,38,508/-, being the difference between the sub-contract income shown by the assessee in its P&L Account and that re .....

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ent order framed u/s.144 r.w.s.254 of the Act vide order dated 14/12/2010 in the second round of appeal also, no addition of suppressed receipts has been made by the AO. Thus, there is no addition of suppressed receipts of ₹ 3,38,508/- in the reassessment proceedings, meaning thereby that no addition was made on the ground which was the basis for reaching the conclusion of escapement of income in the reasons recorded for issuance of notice u/s.148 of the Act. We find that the Hon’ble Bomba .....

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r, Sr. DR. For the Assessee : Shri Sunil Talati, AR ORDER Per Shri Anil Chaturvedi, Accountant Member This is an appeal filed by the Revenue and the Cross-Objection filed thereof by the assessee, both against the order of the Commissioner of Income-Tax (Appeals)-XI, Ahmedabad dated 25/04/2012 for Assessment Year 2002-03. 2. The brief facts of the case, as culled out from the assessment records are as under:- 2.1. Assessee is a company stated to be engaged in the business of manufacturing and sup .....

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shown by the assessee in its P&L Account and that shown in the TDS certificates, the difference being to the extent of ₹ 3,38,508/-. Thereafter, assessment was framed u/s.143(3) r.w.s. 147 and 144A vide order dated 18/12/2006 and the total income was determined at ₹ 33,97,402/- inter alia by making addition on account of contract income, labour site expenses, site vehicle expenses, machinery rent expenses and unexplained cash credits, the aggregate of such additions being ₹ .....

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artmental authorities and restored the assessment to the file of AO with a direction to complete the assessment de novo in accordance with law. Pursuant to the directions of the Tribunal, AO passed the order u/s.144 r.w.s. 254 of the Act vide order dated 14/02/2010and determined total income of ₹ 65,26,337/-. Aggrieved by the order of the AO, assessee carried the matter before the ld.CIT(A), who vide order dated 25/04/2012 (in Appeal No.CIT(A)-XI/407/Wd-5(2)/10-11) granted substantial reli .....

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rther noticed that the ITAT s order dated 21.5.2010 was further contested in miscellaneous application and the Hon ble ITAT decided miscellaneous application in M.A.No.311/Ahd/2009 dated 9/6/2010. In para 4 of this order the Hon ble ITAT has upheld we may also not hear that once the entire assessment is restored to the file of the A.O for completion of assessment de-novo in accordance with law, the assessee is at liberty to file any details and evidences before the A.O. for completion of assessm .....

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/5/2007 as these receipts were duly declared by the appellant. Again the A.O. in remand report dated 28/3/2012 had opined that the alleged suppressed receipts were duly declared in the Income Tax return. In view of these findings, I am of the considered view that satisfaction recorded before issuing the notice u/s.148 is not linked with the initiation of proceedings. It is a settled proposition of law that in reopening the assessment, there must be tangible material to reach to the conclusion th .....

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vs. ITO 236 ITR 34 (S.C.) and CIT vs. Kelvinator of India Ltd., 320 ITR 561 (S.C.) 3.5. It is also a matter of fact that the A.O. has not made addition against the suppressed income of ₹ 3,38,508/- in the impugned assessment order as mentioned in the satisfaction for reopening the assessment. It is a well established proposition of law that the assessing officer can make other additions along with the addition as mentioned in the satisfaction for re-opening the assessment, however, the re .....

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tenable. 4. Since the appeal has been allowed technical grounds and the assessment order has been quashed by me in the preceding paras, accordingly, the other grounds of appeal becomes infructuous. However, it will be worthwhile to discuss the merits of the case. The additions made by the A.O. in the assessment order are not sustainable for the following reasons:- A. In the impugned order the A.O. had assessed the income @8%. The A.O. had derives support in this regard from the provisions of se .....

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tant case provisions of sec.44AD will not be applicable as the turnover is definitely more than ₹ 40 lakhs. B. During the assessment proceedings the appellant has filed following details:- a) Details of bank account b) Details of shareholding c) Details of unsecured loans and deposit d) Details of addition to fixed assets e) Details of opening and closing stock f) Details of sundry debtors/creditors g) Details of loans advances/deposits h) Details of provisions i) Details of monthwise purc .....

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u) Copy of TDS return v) Details of unabsorbed losses/depreciation w) Copy of wealth tax return x) Apart from this, the appellant on 21/9/2010 had submitted complete books of accounts along with vouchers, bills, cheque books, slip books, etc. The A.O. has not taken cognizance of these evidences while passing the assessment order. It is also a matter or record that the A.O. had not found any specific defects in the books of accounts inspite of the fact that all the relevant details were submitted .....

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hat provisions of sec.145 could not be invoked without rejecting the books of accounts. Reliance in this regard is placed on ITO vs. Dr.Kailash Sharma & Sons (2005) 84 TTJ 955. D) The A.O. has also not recorded a finding that the system of accounting followed by the appellant is such that correct profits cannot be deduced. Without recording such finding in my considered view provisions of sec.145 cannot be invoked. Reliance in this regard is placed on CIT vs. Margadarse Chit Funds Pvt.Ltd. ( .....

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ce u/s.148 was not made. This way addition of ₹ 65,26,337/- is not tenable. 4.1. In view of above facts, I am inclined to agree with the contentions of the ld.A.R. Accordingly, the addition of ₹ 65,26,337/- made by the A.O. towards low gross profit is ordered to be deleted. This ground of appeal is allowed. 2.2. Aggrieved by the order of the ld.CIT(A), Revenue is now in appeal before us and has raised the following grounds:- 1. The ld. CIT(A) has erred in law and on facts in holding .....

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d. Commissioner of Income-tax (A) may be set-aside and that of the Assessing Officer be restored. 3. Assessee in its Cross Objection No.143/Ahd/2012 for AY 2002-03 (arising out of ITA No.1454/Ahd/2012 - AY 2002-03-Revenue s appeeal) has raised following grounds:- 1. The learned CIT(Appeals) has erred in granting the relief and deleting the addition only to the extent to income determined by the Assessing Officer, i.e. ₹ 65,26,337/- as against the relief claimed in the grounds of appeal of .....

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g interest u/s.234A, 234B and 234D and also of non-granting of interest u/s.244A holding and deciding that it is pre-matured. It is submitted that the assessee is not at all liable to pay any interest and therefore, it is submitted that the same be held now. 4. We first take up Revenue s appeal in ITA No.1454/Ahd/2012 for AY 2002-03. 4.1. First ground is with respect to quashing of assessment order. 4.2. Before us, ld.DR supported the order of AO and submitted that despite the directions of the .....

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dition on the other issues which were not included in the reasons recorded u/s.148(2) of the Act. He thus supported the order of AO. 4.3. The Ld.AR, on the other hand, reiterated the submissions made before AO and ld.CIT(A) and further submitted that the preliminary condition for reopening the assessment is that there must be tangible material to reach the conclusion that there has been escapement of income from assessment and the reasons recorded by the AO must have a live link with the formati .....

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ave heard the rival submissions, perused the material available on record and gone through the orders of the authorities below. The issue in the present case is with respect to reopening of the assessment and the additions made in reassessment. On perusing reasons for reopening of the assessment as noted in the assessment order, it is seen that reassessment was initiated on account of under assessment of income to the extent of ₹ 3,38,508/-, being the difference between the sub-contract in .....

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assessee in the income-tax return. We further find that in the assessment order framed u/s.144 r.w.s.254 of the Act vide order dated 14/12/2010 in the second round of appeal also, no addition of suppressed receipts has been made by the AO. Thus, there is no addition of suppressed receipts of ₹ 3,38,508/- in the reassessment proceedings, meaning thereby that no addition was made on the ground which was the basis for reaching the conclusion of escapement of income in the reasons recorded for .....

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d-When Expln. 3 to s. 147 was introduced, Parliament stepped in to correct what it regarded as an interpretational error in the view which was taken by certain Courts that the AO has to restrict the assessment or reassessment proceedings only to the issues in respect of which reasons were recorded for reopening the assessment-However, Expln. 3 does not and cannot override the necessity of fulfilling the conditions set out in the substantive part of s. 147-AO has to assess or reassess the income .....

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