TMI Blog2016 (6) TMI 1431X X X X Extracts X X X X X X X X Extracts X X X X ..... e legislature. Any casual and irresponsible reopening of an already concluded assessment is misuse of process of law and pierces the faith of the taxpayers upon the incometax department. If the directors have not shown the commission income in their individual returns and if these facts are true, then first of all, the individual cases of the directors should have been reopened, that too, after verification of primary facts. It is further noticed by us that on facts also, the Assessing Officer has gone wrong. It is shown to us that commission was paid as part of salary to the directors. Therefore, the assessee was liable to deduct TDS u/s 192 and not u/s 194H. The company provided for the commission as part of salary in the impugned year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2005-06 on the following grounds: 1. Whether on the facts and in the circumstances of the case and in law, the Ld. C!T(A) has erred in quashing proceedings u/s. 147 of the I. T. Act on the basis of fact that re-opening was done after the lapse of four years, though in similar circumstances jurisdictional High Court has held the reassessment valid in the case of Pranawa Leafin Pvt. Ltd.? 2. Whether on the facts and in the circumstances of the case and in law, the Ld. C!T(A) has erred in deleting the addition on account of commission payment which was provision in nature during the year and same was also not reflected in the return of income of the Directors? The appellant prays that the order of the Ld.C!T(A) be set aside and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he part of the assessee to disclose fully and truly all material facts necessary for the assessment for that assessment year. For the purpose of examining the validity of the reopening vis-a-vis aforesaid proviso we need to first examine the reasons recorded by the Assessing Officer. The reasons recorded by the Assessing Officer are reproduced below: On perusal of case records it is noted that the assessee has claimed expenses on account of commission paid to the Directors Shri Sanjay Jhaveri of ₹ 46,70,703/- and Mr. Prashant J. Sarkar of ₹ 46,70,703/- However it is noted that in the return of income filed by Mr. Sanjay Jhaveri, commission received from assessee company was not offered to tax. Since commission income was no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 147. Law in this respect is settled on the basis of various judgements coming from various courts all over the country. The ld.counsel of the assessee placed reliance before us on the following judgements: 1. Hindustan Lever Ltd vs. R.B. Wadkar, A.C.IT.268 ITR 332 (Bom) 2. Allanasons Ltd. v DC IT 369 ITR 648 (Bom) 3. Business India v Jt. CIT 370 ITR 154 (Bom) 4. DIL Ltd. v ACIT 343 ITR 296 (Bom) 5. Monitor India P Ltd. v Union of India 343 ITR 236 (Bom) 4.2 We have gone through these judgments and find force in the arguments of ld.counsel of the assessee. The reasons are not sustainable in the eyes of law as no case is made out in the reasons about the failure of the assessee to fully and truly disclose all the mate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disclosing all material facts needed for the assessment. We derive support from the judgement of Hon ble Supreme Court in the case of CIT vs Kelvinator of India Ltd 320 ITR 561 (SC) and the judgment of the Hon ble Bombay High Court in the case of CIT vs Reliance Industries Ltd 382 ITR 574 (Bom). 4.4 We have also examined other crucial aspect, as to whether there was any escapement of income in this case. A perusal of the reasons reveals that as per the Assessing Officer the commission income was not offered in the return of income by the payee directors in their individual returns and, therefore, it would be presumed that no commission would have been paid by the assessee company to its directors. This is a case where Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made on account of salary is not covered u/s 40(a)(ia) of the Act. Thus, it is a clear case where the payment was duly made by the assessee, expenses were properly booked and claimed in the return of income and due compliance was made with regard to the provisions of TDS also. No case of escapement has been made out by the Assessing Officer, at all. It is not a case where any belief could have been formed about the escapement of income. The reopening has been done in an absolutely illegal manner and is a by-product of casual approach of the Assessing Officer, who had recorded the reasons. The ld.CIT(A) has rightly held that the reopening was not valid and has rightly quashed the same. Even on merits, no disallowance was liable to be made a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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