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TMI Blog2020 (1) TMI 1014X X X X Extracts X X X X X X X X Extracts X X X X ..... of alleged escapement of income is erroneous, thereby the reassessment order u/s.147 is bad-in-law. 3. The learned counsel for the assessee submitted that the additional ground of appeal be admitted as it is being purely a legal issue, goes to the root of the matter and no further inquiry is required for deciding the same as all facts are already on record and issue arise out of impugned order. This ground is modified version of regular Ground No.1 of appeal taken by the assessee. The learned counsel for the assessee placed reliance in the case of National Thermal Power Co. Ltd. v. CIT [1998] 229 ITR 383(SC). 4. Per contra, the ld. Sr. D.R. opposed the additional ground. 5. We have considered the facts and material on record. The additional ground being legal one, hence, admitted. Reliance is placed on the decision of Apex Court in the case of National Thermal Power Co. Ltd. v. CIT [1998] 229 ITR 383(SC) wherein it was held that the additional ground of appeal can be admitted where the issue involved is pure question of law not involving any investigation of facts. Now we are discussing the merits of ground. 6. The learned counsel for the assessee submitted that that the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t year being exceeded Rs. 40 lac, whereas turnover should exceeded in preceding year i.e. A.Y. 2008-09. The learned counsel for the assessee further referred Paper Book Page No. 8, which is Profit & Loss Account for the assessment year 2008-09 showing total turnover of Rs. 30,84,700. Hence, turnover was less than Rs. 40 lac hence, TDS was not required to be deducted under section 194C of the Act. The learned counsel relied in the case of Harshadbhai Naranbhai Bagadia v. ACIT [2012] 24 taxmann.com 47 (Gujarat) wherein it was held that liability of TDS in case of individual /HUF, under section 194C (2) arises only if in financial year immediately preceding financial year in which payment is made, total sales, gross receipts or turnover exceeded limits provided in section 44AB. However, the AO during assessment proceedings observed that the assessee has shown turnover of Rs. 55,97,205 from his construction activities which include total sales of Rs. 30,84,700 and WIP of Rs. 25,12,205 in A.Y. 2008-09. Thus, the AO has improved his reason was the recorded reasons for recording for reopening of assessment by considering the turnover of preceding year instead reasons stated the turnover o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome has escaped assessment. The learned counsel for the assessee further relied in the case of CIT vs. Kelvinator of India Ltd. [2010] 320 ITR 561/187 Taxman 312(SC) and Hon'ble Gujarat High Court in the case of Nilamben Sandipbhai Parikh v. ACIT [2019] 109 taxmann.com 336 (Gujarat) held there was no new tangible material available with the Assessing Officer to form a belief that there was escapement of income chargeable to tax, hence, impugned re-opening notice was unjustified. Similarly Hon'ble Gujarat High Court in the case of Gujarat Power Corporation Ltd. v. ACIT [2013] 350 ITR 266 (Gujarat) held that reopening of assessment on same claims on the basis of material , amounts to change of opinion. 9. On the other hand, the ld. Sr. D.R. submitted that turnover was enhanced by the CIT (A) during appellate proceedings hence, the assessee was liable for audit under section 44AB of the Act. Since the books of accounts were auditable hence, there was liability of TDS, hence, the AO has right reopen assessment. Ayush M Agarwal v. ITO Wd-1(3)(1)Surat/ITA No.2622/AHD/2016 for A.Y. 2009-10 Page 8 of 13 10. We have heard the rival submissions and perused the relevant material on reco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t TDS provisions as per Explain -L to section 194C are applicable only if total turnover in immediately preceding financial year is exceeded Rs. 40 lac. The perusal of Profit & Loss Account and balance sheet for the assessment year 2008-09 filed by the assessee appearing at Paper Book Page No. 5 to 9 shows that total turnover during assessment year 2008-09 was at Rs. 30,84,700. Hence, provisions to deduct tax at source as per 194C were not applicable in the case of the assessee during year under consideration. We notice that the AO has considered the turnover of immediately preceding financial year while rejecting the objection on reopening of assessment during the course of assessment proceedings and considered turnover exceeded Rs. 40 lac by including WIP therein. However, we are of the considered opinion that turnover does not include WIP as held by the Co-ordinate Bench of Tribunal of ACIT v. B.K. Jhala & Associates 69 ITD 141 (Pune- Trib) (PB-22-24] wherein it was held that work in progress representing current assets, including cost of material, labour and other direct overheads incurred by the assessee, ownership of which remained visited with the assessee, did not constitut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ounts had been furnished by assessee when called upon and thereafter, assessment was completed under section 143 (3), subsequently on a mere re-look of said accounts earlier furnished by assessee it is not permissible under section 147 to reopen assessment of assessee on ground that income has escaped assessment." The learned counsel also relied in the case of CIT vs. Kelvinator of India Ltd. [2010] 320 ITR 561/187 Taxman 312(SC). 14. In view of the foregoing, and judicial pronouncements as discussed above, we find that while reopening of assessment the AO has considered current assessment year's turnover to invoke provisions of section 194C which is not applicable as the assessee being individual. Hence, reasons were on wrong premises, which are not permitted under the statutes. Further, the AO has improved reasons for reopening of assessment during assessment proceeding, however, same is also not permissible. Further, the AO has erroneously considered total turnover including WIP which is not correct as turnover does not include WIP as held by Co-ordinate Bench of Kolkata Tribunal as discussed above. Further, the AO had no new tangible material, in his possession and relied on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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