TMI Blog2018 (6) TMI 542X X X X Extracts X X X X X X X X Extracts X X X X ..... (a)(ia) of the Act need no adjudication. - ITA No. 944/Hyd/2017 - - - Dated:- 8-6-2018 - Smt. P. Madhavi Devi, Judicial Member And Shri S.Rifaur Rahman, Accountant Member For the Assessee : Shri A. Srinivas For the Revenue : Shri M.H. Naik, DR ORDER Per Smt. P. Madhavi Devi, J. M. This is assessee s appeal for the A.Y 2009-10 against the order of the CIT (A)-6, Hyderabad, dated 1.11.2016. The assessee has raised the following grounds of appeal: 1. The order of the Appellate Commissioner is contrary to law, facts circumstances of the case. 2. The Appellate Commissioner ought not to have dismissed the appeal without giving adequate opportunity to the assessee to present its case. 3. Without prejudice to the ground at item No.2 above, the Appellate Commissioner ought not to upheld that the issuance of notice by the AO u/s.148 when all facts were before the AO at the time of original assessment made u/s.143(3). 4. The Appellate Commissioner ought not to have upheld the validity of the notice u/s.148 was correct, when in fact the notice u/s.148 issued by the AO, tantamounted to change of opinion on the same facts, without any fresh evidence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was submitted that this transaction is not covered by the TDS provisions. The AO however, was not convinced with the assessee s contentions and held that the return of money was subject to TDS and since no TDS was made, it is to be disallowed u/s 40(a)(ia) of the Act. Accordingly, he brought it to tax. Aggrieved, the assessee preferred an appeal before the CIT (A), who confirmed the order of the AO and the assessee is in second appeal before us. 5. The learned Counsel for the assessee, reiterated the submissions made before the authorities below and submitted that the Chapter XVIIB of the Act, deals with the deduction of tax at source and the nature of transactions for which TDS is to be made. He submitted that the return of advance, by the assessee, does not fall under any of these categories. Therefore, according to him, no disallowance u/s 40(a)(ia) can be made. He also drew our attention to the notice issued by the AO dated 15.07.2011 during the assessment proceedings u/s 143(3) of the Act, wherein the assessee was asked to explain, the details of the sum claimed as expenses, and that the assessee has given the details of the expenses, which is placed at page 5 of the paper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under: 28. Now, undoubtedly an order of the assessment which has been passed in subsequent assessment year may furnish a foundation to reopen an assessment for an earlier assessment year. However, there must be some new facts which come to light in the course of assessment for the subsequent assessment year which emerge in the order of the assessment. Otherwise, a mere change of opinion on the part of the Assessing Officer in the course of assessment for a subsequent assessment year would not by itself legitimise reopening of assessment for an earlier year. The point, we make it clear herein is that whether in the course of assessment proceedings for subsequent year certain additional information is obtained by the Revenue which was not available to it in the course of assessment for an earlier year, that may legitimately be utilised as a ground for reopening of assessment of the earlier year. Whether the reopening has taken place within four years that may legitimately give rise to an inference of escapement of income. The new information which has come to the knowledge of the Revenue, therefore, constitutes tangible material. If there is a fresh material that that would not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ather Sri S. Hanumanth Reddy. 3. (a) As a consequence of death of my father I became one of the successor to the interests and rights in the layout at Gachibowli village, Serilingampally Mandal, R.R. District, entrusted for development to M/s. Lumbini Constructions Ltd, as evidenced by the Development Agreement dated 28th February 2006, duly registered with the office of Sub- Registrar, Moosapet on 31st March 2006 (Vide Document No. 5630/2006). I became entitled to 9 plots (bearing Nos. 3, 11, 54, 67, 72, 75, 85 95) on which houses shall be constructed and in one plot I am an equal co-owner with my older brother S. Narayan Reddy in the layout (bearing No. 7) in the project that is in progress. (b) On one such allotted plots bearing No. 7 that is equally owned by myself and my brother I received an amount of ₹ 2,50,000 as advance towards my 1/2 Share from N. Vasumathi Reddy. The liability to the capital gains, tax will arise in the year in which the property, shall be transferred to the vendee. 4. In the year under consideration, I jointly purchased 28.75 Guntas of land from S. Suresh Kumar on February 16th, 2006 Vide registered Sale Deed (Doc. No. 2277/2006) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as not considered the same and there was no assessment. Consequently, mere formation of another view in the course of assessment proceedings for A.Y. 2007-08 would not justify the Revenue for reopening the assessment for A.Y. 2006-07 though the reopening of assessment has taken place within the period of 4 years. The power to reopen assessment is structured by law. Guiding principles which were laid down by the Supreme Court in the case of Kelvinator of India Ltd. (supra) must be fulfilled. In the present case, there is no tangible material, no new information and no fresh material which came before the Revenue in the course of assessment for A.Y. 2007-08 to justify reopening of assessment for A.Y. 2006-07. The Department Representative taken a plea before us that in view of judgement in the case of Rajesh Jhaveri Stock Brokers Pvt. Ltd., (cited supra), the return was processed only u/s. 143(1) of the Act and there is no regular assessment and reopening of assessment is justified. The DR submitted that the judgement in the case of Kelvinator of India Ltd. (cited supra) covers cases where the first assessment was made u/s. 143(3) and that it does not apply to cases where the return ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ary for the Assessing Officer to hold or entertain a belief that income chargeable to tax had escaped assessment for the reasons recorded by him. Therefore, the condition that the Assessing Officer must have reason to believe and the further condition that those reasons must have a live link with the formation of the belief is applicable equally to cases where the return was processed under section 143(1) as also to cases where the return was examined and an assessment was made by a speaking order under section 143(3). The only distinction recognized in section 147 between the two is where it is provided by the proviso that where the earlier assessment was made under section 143(3), no action for reopening the assessment can be taken after the expiry of four years from the end of the relevant assessment year unless income chargeable to tax has escaped assessment because of the failure on the part of the assessee to file a return or to disclose fully and truly all material facts necessary for the assessment. Such an exception has not been provided for in a case where the return has been processed under section 143(1) in which case the proviso will have no application. If it is corre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aped assessment. We may also add that before us the Department has not produced any tangible material on the basis of which the reasons were recorded to demonstrate that there was a live link or nexus between them and the requisite belief. Being so, the reopening cannot be held as valid. 32. Same view was taken by the Third Member Mumbai Bench in the case of Telco Dadajee Dhackajee Ltd. v. Dy. CIT, ITA No. 4613/Mum/2005 dated 12th May 2010 . Further same view was taken by Delhi High Court in the case of CIT v. Orient Crafts Ltd. [2013] 29 taxmann.com 392 and also by Gujarat High Court in the case of Inductotherm (India) (P.) Ltd. v. Dy. CIT in Special Civil Application 858 of 2006 dated 6.8.2012. Further, Bombay Bench in the case of Delta Airlines Inc.v. ITO(International Taxation) [2013] 33 taxmann.com 192 (Mum.) wherein it was held as follows: '8. We have considered the rival submissions and perused the material on record. It IS observed that in the return of income originally filed for the year under consideration on 18.10.2001, exemption was claimed by the assessee in respect of interest income as per provisions of Article-7 of Indo-US treaty and this fact was cle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsel, the view expressed by Hon'ble Gujarat High Court in the said case that there is no necessity for the Assessing Officer to have fresh facts coming to his notice subsequent to original assessment to justify reopening has not been subscribed to by the Full Bench of Hon'ble Delhi High Court in the case of Kelvinator of India Ltd. (supra) which has been affirmed by Hon'ble Supreme Court. As held by Hon'ble Delhi High Court, if the contention of the revenue based on the decision of Hon'ble Gujarat High Court in the case of Praful Chunilal Patel (supra) is accepted, the same would confer an arbitrary power upon the Assessing Officer to reopen the proceedings only on the slightest pretext, which is not permissible. 10. Learned Departmental Representative has also relied on the decision of Hon'ble Supreme Court in the case of Rajesh Jhaveri Stock Brokers (P) Ltd. (supra) to contend that the reopening of assessment completed originally ujs. 143(1) is permissible without there being any new material coming to the possession of the Assessing Officer if the reasons recorded for reopening of assessment are otherwise valid. The learned counsel for the assessee, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e change of opinion, it is open to an assessee to challenge the notice on the ground that there is no reason to believe that income chargeable to tax has escaped assessment. As regards the decision of Hon'ble Supreme Court in the case of Rajesh Jhaveri Stock Brokers (P) Ltd. (supra) cited by the Revenue and relied upon by the Accountant Member, the Third Member held that the same was applicable in cases where the return was processed u/s 143(1) but later on notice was issued u/s 148 and the assessee challenges the notice on the ground that it is prompted by a mere change of opinion. The Third Member then referred to the decision of Hon'ble Supreme Court in the case of Kelvinator of India Ltd. (supra) wherein it was held that there should be tangible material to come to the conclusion that income had escaped assessment. Relying on the said decision, it was held by the Third Member that while resorting to section 147 even in a case where only an intimation had been issued u/s 143(1)(a), it is essential that the Assessing Officer should have before him tangible material justifying his reason to believe that income had escaped assessment. Since there was no such tangible mate ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
