TMI Blog2009 (8) TMI 12X X X X Extracts X X X X X X X X Extracts X X X X ..... ld - 26 to 32 of 2008 - - - Dated:- 10-8-2009 - K. RAVIRAJA PANDIAN and M. M. SUNDRESH, JJ. Mr. A. Thiagarajan for the appellant. Mrs. Pushya Sitaraman, for the respondent. JUDGMENT K. RAVIRAJA PANDIAN, J. - These appeals are filed against the common order of the Income Tax Appellate Tribunal 'C' Bench, Chennai dated 27.07.2007 made in ITA No.1066/Mds/2006 and ITA No.2560 to 2565/Mds/2005. The appeal was admitted by this Court on the following substantial questions of law: 1. Whether, on the facts and circumstances of the case, the finding of the Tribunal that the assessee had not explained the difference between receipts in TDS certificate and the amount credit in profit and loss account is correct in law when the same was accepted by the assessing officer in the assessment order itself? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in remanding the case without considering the fact that the appellant was maintaining its accounts in accrual system of accounting as per the provisions of the Companies Act and the method of accounting prescribed by the Institute of Chartered Accountants of India for corporate assessees? ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt carried that order on further appeal to the Tribunal. The assessee filed cross objections against the finding that the reopening of assessment is correct. The Tribunal allowed the appeal filed by the department by observing that it is incumbent on the assessee to explain by way of proper reconciliation and documentary evidence the reason for the discrepancy and remitted the matter to the file of the assessing officer for proper reconciliation of the difference between income as per TDS certificate and that taken for profit and loss account. The cross objection filed by the assessee has also been dismissed on the premise that the reopening on the basis of the factual error pointed out by the audit party is valid in law. The disclosure by the assessee must not only be true but should also be fully explained. In respect of the assessment years 1999-2000 to 2002-03, the Tribunal held that there was only processing under section 143(1) of the Act and any intimation under the provision cannot be treated as assessment order and for that purpose, the Tribunal relied on the decision of the apex Court in ACIT v. Rajesh Jhaveri Stock Brokers P. Ltd., (2007) 291 ITR 500. The corr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and 1998-99, the assessing officer observed that the regular assessment under section 143(3) of the Act for the assessment year 1997-98 was completed on 25.02.2000. Subsequent to the completion of the assessment, it was noticed that the operational income credited to the profit and loss account is less than the income as per the TDS certificate. 9. It is further contended that the assessing officer observed that the assessee, after deducting the operational expenses from the gross receipt is taking the net figure to profit and loss account. By netting the expenses, the assessee has not furnished the actual picture of transaction carried out by the company and thereby the true state of financial affairs of the assessee company have not been reflected properly in the return of the income filed. Hence, there is escapement of income to the extent of variation between the income admitted and the income as per the TDS certificate available on record. From the above observation, it is evident that the materials are available before the assessing officer while he was making the assessment under section 143(3) of the Act in respect of the assessment years 1999-2000 to 2002-03. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Date of filing of return Income returned (Rs) Date of completion of proceedings u/s 143(1) accepting the returned income Date of notice u/s 143(2) of the Act Date on which reconciliation was sought between income as per P L a/c gross receipt as per TDS certificate Recon-ciliation filed on 1996-97 20/9/96 192790 28.01.97 18.02.97 19.03.97 08.09.98 11.09.98 1997-98 30/09/97 282890 27.05.98 03.07.98 25.02.00 -- 1998-99 18.04.98 61290 22.01.99 22.11.99 20.02.01 -- -- 1999-00 06.12.99 58,140 21.08.00 17.07.00 -- -- -- 2000-01 30.11.00 132400 22.06.01 -- -- -- -- 2001-02 31.10.01 127460 18.10.02 -- -- -- -- 2002-03 124500 21.2.03 -- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as issued on 26.03.2003 and in respect of all other assessment years viz., 1997-98 to 2002-03, notice under Section 148 of the Act was issued on 29.03.2004. Subsequently, for the assessment year 1996-97, re-assessment was completed on 29.03.2004 and for the assessment years 1997-98 to 2002-03, re-assessment was completed on 28.02.2005. In respect of all the assessment years, the Assessing Officer re-opened the assessment on the ground that gross receipts are not transferred to the Profit and Loss Account and made additions. Aggrieved by that order, the assessee has filed an appeal to the Commissioner of Income Tax (Appeals). The said Commissioner of Income Tax (Appeals) upheld the re-opening of the assessment, but on merits, deleted the addition. Aggrieved by that order of the Commissioner of Income Tax (Appeals), the Revenue filed appeals before the Income Tax Appellate Tribunal. The Tribunal, considering the facts, held that there is no proper explanation on behalf of the assessee and only mere theoretical explanation was offered by the assessee and it is for the assessee to make reconciliation of the difference between the receipt in TDS Certificate and amoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fference between the receipt in TDS Certificate and amount credited in Profit and Loss Account. Further, the Assessing Officer was of the view that if the Profit and Loss Account is taken into consideration, there was a distorted picture of the true state of financial affairs or business operation of the assessee company, because the gross receipts were not transferred, but only net receipts were transferred to the Profit and Loss Account. In view of the above, the Assessing Officer was of the view that there is a failure on the part of the assessee to disclose fully truly all material facts necessary for the assessment. The Commissioner of Income Tax (Appeals) also upheld the validity of reopening. The Tribunal has given a specific finding in respect of re-opening, which reads as follows: "Upon a careful consideration of the issue and after hearing both the parties, we are of the opinion that re-opening on the basis of factual error pointed out by the internal audit party has been held to be valid by the Hon'ble Apex Court in CIT Vs. P.V.S.Beedies (P) Ltd., 237 ITR 213. Furthermore, Hon'ble Apex Court in Sri Krishna (P) ltd. Vs. ITO 221 ITR 538 had held that t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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