Income Tax Appellate Tribunal - Kolkata
Camellia Enterprises Ltd., Kolkata vs Assessee on 20 March, 2013
आयकर अपीलीय अधीकरण, Ûयायपीठ - "C" कोलकाता,
IN THE INCOME TAX APPELLATE TRIBUNAL "C" BENCH: KOLKATA
(सम¢)Before ौी पी. सल, लेखा सदःय एवं/and ौी महावीर िसंह, Ûयायीक सदःय)
पी. के. बंसल
[Before Shri P. K. Bansal, AM & Shri Mahavir Singh, JM]
आयकर अपील संÉया / I.T.A Nos. 2134 & 2135/Kol/2009
िनधॉरण वषॅ/Assessment Years: 2000-01 & 2001-02
M/s. Camellia Enterprises Ltd. Vs. Income-tax Officer, Wd-8(2), Kolkata
(PAN: AABCC3132F)
(अपीलाथȸ/Appellant) (ू×यथȸ/Respondent)
Date of hearing: 20.03.2013
Date of pronouncement: 20.03.2013
For the Appellant: Shri S. L. Kochar, Advocate
For the Respondent: Shri L. K. S. Dehiya, CIT (DR)
आदे श/ORDER
Per Bench:
Both these appeals by assessee are arising out of separate orders of CIT(A) - XIII, Kolkata in Appeal Nos. 288 & 47/CIT(A)-XIII/8(2)/08-09 dated 16.09.2009 respectively. Assessments were framed separately by ITO, Ward-8(2), Kolkata u/s. 143(3) r.w.s. 144 of the Income-tax Act, 1961 (hereinafter referred to as "the Act") for Assessment Years 2000-01 and 2001-02 vide his orders dated 12.12.2007.
2. The first common issue in these two appeals of assessee is against the reopening of assessments u/s. 147 r.w.s. 148 of the Act. For this, assessee has raised common ground in both the years i.e. AY 2000-01 and 2001-02. The identically worded grounds raised in AY 2000-01 read as under:
"2. For that the Ld. CIT(A) ought to have accepted the ground taken by the appellant against the initiation of proceedings u/s. 147 of the Income Tax Act and ought not to have held that the proceedings were validly initiated."
3. Briefly stated facts are that the assessee company filed its returns of income for AY 2000-01 and 2001-02 on 08.11.2000 and 22.06.2011 declaring total income at Rs.4480/- and Rs.91,382/- respectively. In both the years, processing of returns u/s. 143(1) of the Act was done on 12.03.2004 and 11.10.2001. Subsequently, the AO issued notices u/s. 148 of the Act 2 ITA No.2134/K/2009 & ITA No.2135K/2009 Camellia Enterprises Ltd. AY. 00-01 & 01-02 for both the assessment years on 06.03.2007. No returns in response to these notices were filed and despite reminders there is no compliance to the notices u/s. 143(2) and 142(1) of the Act and AO completed the assessment as per information available on records for both the years. Aggrieved, assessee preferred appeals before CIT(A), who in both the years, confirmed the reopening and the relevant para 5 of his order for AY. 2000-01 reads as under:
"5. The argument taken by the assessee in grounds no. 1 to 3 is that the assessment framed u/s.147 is bad in law and the AO erred in initiating proceedings u/s.147 of the Income Tax Act, 1961.
The various arguments taken by the assessee in this regard are dealt below one by one:
(i) It has been pointed out that in the assessment order the order is shown to be passed u/s.
143(3)/144 and there is no mention of section 147. The assessee is correct in pointing out this fact but it appears to be a typing mistake wherein the AO omitted to mention section 147 in column no. 13 of his assessment order on page no.1. The discussion in the body of the assessment order clearly shows that this order has been passed in pursuance of proceedings initiated u/s. 147 and the AO had to pass an ex-parte order as provided in section 144 because there was total non-compliance on the part of the assessee. I am of the opinion that mere fact that section 147 is not mentioned in one of the columns of the format of the assessment order cannot render it bad in law as it is a minor typographical error. The exact nature of the order and the section under which the assessment has been completed is well understood from the body of the order.
(ii) The assessee has also urged that if it had not filed the return in response to the notice issued u/s.148 how could the AO issue notice u/s.143(2). Hence, I feel that the AO might have issued notice u/s. 143(2) after initiating proceedings u/s. 147 and such notice may not be in accordance with law but that does not render the proceedings u/s. 147 invalid as after initiation of proceedings u/s.147 notice u/s.142(1) had also been issued.
(iii) The assessee has also argued that after filing of its original return u/s. 139, the same was processed u/s. 143(1) and refund was issued. It is contended that the refund was issued after thorough scrutiny of the return and the TDS certificates filed along with them. Therefore, after processing the return u/s.143(1) and issuing the refund the AO did not have any additional information to initiate proceedings u/s. 147 and issue notice u/s. 148 and hence the assessment should be cancelled.
Here, it may be noted that after filing of return u/s. 139 the return of the assessee had merely been processed and intimation u/s. 143(1) was sent to him along with the due refund on the basis of the return. Sending of intimation u/s.143(1) is not equivalent to completing assessment. After sending intimation u/s.143(1) the AO had every right as per law to examíne the return of income of the assessee to ascertain if any income had escaped assessment. When the AO examined the TDS certificates filed with the return of income the following details were observed by him:
Sr. No. Name of the party Amount TDS deducted Nature of Payment deducting tax paid/credited
1. Panbari Tea Co. Ltd. Rs. 5,42,262/- Rs. 1 l ,930/- Contractor
2. Dhunseri Tea & Ind. Ltd. Rs. 3,60,058/- Rs. 7,922/- Contractor & sub-
contractor 3 ITA No.2134/K/2009 & ITA No.2135K/2009 Camellia Enterprises Ltd. AY. 00-01 & 01-02
3. George Wiliamson Rs.30,00,000/- Rs.66,000/- Contractor (Assam) Ltd. Rs.15,00,000/- Rs.33,000/-
TOTAL : Rs.54,02,230/-
These details clearly indicated that the assessee was paid total amount of Rs.4,02,320/- by the above parties for certain work done or services rendered by it to these parties as contractor/sub- contractor. On the other hand, in the P&L A/c. of the assessee company sales of Rs.5,53,500/- was shown and other income (net) of Rs. 5,16,345/- was reflected. In the tax audit report the quantitative details of sale of Rs.5,53,000/- was shown which revealed that it was related to sale of certain items such as Penshi Bao and Progibb. The further details of the other income (net) of Rs.5,16,345/- was not given anywhere in the P&L A/c. or the enclosed schedules. On the basis of such information available in the return of income the AO prima facie believed that the contract/sub-contract charges of Rs.54,02,320/- were not reflected in the books of accounts of the assessee and income to that extent escaped assessment. I am of the opinion that on the basis of the above described facts available with the return of the assessee the AO was justifíed in having a belief that income had escaped assessment in the case of the assessee for A.Yr. : 2000-01.
In view of the above discussion, I hold that there is no infirmity in the proceedings u/s. 147 ínitiated by the assessing offìcer."
Since facts and circumstances are exactly identical in AY 2001-02, the CIT(A) also confirmed exactly by identically worded order. Hence, we need not to reproduce the same. Aggrieved, now assessee has challenged the reopening before Tribunal in both the years.
4. At the outset, Ld. counsel for the assessee drew our attention to page 13 of assessee's paper book, wherein the reasons recorded for issuance of notice u/s. 148 of the Act. The relevant reasons read as under:
"21.1.2007: It appears from the record that the assessee company received payment towards contract & sub contract to the tune of Rs.2,76,66,573.50 as per T.D.S certificates. But the assessee company neither credited the said income to the P&L A/c nor the same had been added to the income of the assessee in the computation of income for the year. I have reason to believe that the income which should had been shown by the assessee has escaped assessment within the meaning of section 147. Asstt. Record along with reasons for reopening is sent to the Add. C.I.T., Range-8, Kolkata for his kind approval for issuing notice u/s.148."
Further, Ld. counsel for the assessee drew our attention to audited accounts for both years and took us to P&L Account for the year ended 31.03.2000 and 2001, wherein income disclosed is as under:
"INCOME For the Year 31.03.2001 For the year 31.03.2000
Sales 16,679,843.80 553,500.00
Other income 316,996.79 516,345.80
16,996,840.59 1,069,845.80"
4 ITA No.2134/K/2009 & ITA No.2135K/2009
Camellia Enterprises Ltd. AY. 00-01 & 01-02
Ld. Counsel for the assessee also drew our attention to Schedule J forming part of accounts wherein other income is disclosed as on 31.03.2000 and 2001 as under:
SCHEDULE "J"
OTHER INCOME
For the year ended For the Year ended
31.03.2001 31.03.2000
Brokerage & Supervision Charges (Net) 268,253.03 25,133.00
Labour charges (Net) 34,368.70 289,962.80
Interest received 14,375.00 1,250.00
316,996.79 516,345.80
In view of this, Ld. counsel for the assessee stated that he has categorically disclosed the net income and not the gross receipts as recorded in the TDS certificates. He stated that even from the reasons recorded it is clear that the AO has no tangible material to reopen the assessment u/s. 147 of the Act and in his support he relied on the decision of Hon'ble Delhi High Court in the case of CIT Vs. Orient Craft Ltd., ITA No.555/2012 dated 12.12.2012, wherein the Hon'ble Court has held as under:
"14. Certain observations made in the decision of Rajesh Jhaverì (supra) are sought to be relied upon by the revenue to point out the difference between an assessment and an intimation. The context in which those observations were made has to be kept in mind. They were made to point out that where an intimation is issued under section 143(1) there is no opportunity to the assessing authority to form an opinion and therefore when its finality is sought to be disturbed by issuing a notice under section 148, the proceedings cannot be challenged on the ground of change of opinion. It was not opined by the Supreme Court that the strict requirements of section 147 can be compromised. On the contrary, from the observations (quoted by us earlier) it would appear clear that the court reiterated that so long as the ingredients of section 147 are fulfilled an intimation issued under section 143( 1) can be subjected to proceedings for reopening. The court also emphasised that the only requirement for disturbing the finality of an intimation is that the assessing officer should have reason to believe that income chargeable to tax has escaped assessment. In our opinion, the said expression should apply to an intimation in the same manner and subject to the same interpretation as it would have applied to an assessment made under section 143(3). The argument of the revenue that an intimation cannot be equated to an assessment, relyìng upon certain observations of the Supreme Court in Rajesh Jhaveri (supra) would also appear to be self-defeating, because if an intimation is not an assessment then it can never be subjected to section 147 proceedings, for, that section covers only an assessment and we wonder if the revenue would be prepared to concede that position. It is nobody's case that an intimation cannot be subjected to section 147 proceedings; all that is contended by the assessee, and quite rightly, is that if the revenue wants to invoke section 147 it should play by the rules of that section and cannot bog down. In other words, the expression reason to believe cannot have two different standards or sets of meaning, one applicable where the assessment was earlier made under section 143(3) and another applicable where an intimation was earlier issued under section 143(1). It follows that it is open to the assessee to contend that notwithstanding that the argument of change of opinion is not available to him, it 5 ITA No.2134/K/2009 & ITA No.2135K/2009 Camellia Enterprises Ltd. AY. 00-01 & 01-02 would still be open to him to contest the reopening on the ground that there was either no reason to believe or that the alleged reason to believe is not relevant for the formation of the belìef that income chargeable to tax has escaped assessment. In doing so, it is further open to the assessee to challenge the reasons recorded under sectìon 148(2) on the ground that they do not meet the standards set in the various judicial pronouncements.
15. In the present case the reasons disclose that the Assessing Officer reached the belief that there was escapement of income "on going through the return of income"
filed by the assessee after he accepted the return under section 143(1) without scrutiny, and nothing more. This is nothing but a review of the earlier proceedings and an abuse of power by the Assessing Officer, both strongly deprecated by the Supreme Court in CIT Vs. Kelvinator (supra). The reasons recorded by the Assessing Officer in the present case do confirm our apprehension about the harm that a less strict interpretation of the words "reason to believe" vis-à-vis an intimation issued under section 143(1) can cause to the tax regime. There is no whisper in the reasons recorded, of any tangible material which came to the possession of the assessing officer subsequent to the issue of the intimation. It reflects an arbitrary exercise of the power conferred under section 147."
5. We find from the reasons recorded and the orders of the lower authorities that of the AO as well as CIT(A) while adjudicating the reopening issue in AY 2000-01 has gone into the details of TDS on contract payment including payments, which are as under:
Sl. No. Name of the party Amount TDS deducted Nature of payment deducting tax paid/credited
1. Panbari Tea Co. Ltd. Rs. 5,42,262/- Rs. 11,930/- Contractor
2. Dhunseri Tea & Inds. Ltd. Rs. 3,60,058/- Rs. 7,922/- Contractor & sub-
contractor
3. George Williamson Rs. 30,00,00/- Rs. 66,000/- Contractor (Assam) Ltd. Rs.15,00,000/- Rs. 33,000/-
In AY 2001-02, the details are as under:
Sl. No. Name of the party deducting Amount TDS deducted Nature of tax paid/credited payment
1. Aarbee Machineries Pvt. Ltd. Rs.1,33,45,818/- Rs. 1,46,804/- Contractor
2. Dhunseri Tea & Inds. Ltd. Rs.1,41,62,941/- Rs. 3,12,743/- Contractor & sub-contractor
3. George Williamson (Assam) Rs. 1,57,814/- Rs. 3.567/- Contractor Ltd. Rs.2,76,66,573/- Rs. 4,63,114/-
When we compared this with, the details i.e. disclosed by the assessee in Schedule J, labour charges net and brokerage and supervision charges net, which is minimal, and from this it cannot be inferred whether the assessee has disclosed in the return of income, the correct income or not and according to us, which is sufficient reason for reopening of the assessment.
6 ITA No.2134/K/2009 & ITA No.2135K/2009Camellia Enterprises Ltd. AY. 00-01 & 01-02 The AO has reasonable belief for reopening this assessment and we uphold the order of CIT(A) on this issue. This ground of assessee's appeals is in both the years are dismissed
6. Coming to the merits of the case in both the years, from the above details as well as the amount of net receipts disclosed i.e. brokerage and supervision charges net and labour charges net, it is clear that the assessee has no case. Even otherwise, we, during the course of hearing, allowed another opportunity to the assessee's counsel to file the details of accounts in entirety. He fairly denied that he has no details qua this and he failed to establish how he has accounted for the net receipts out of the gross receipts disclosed in TDS certificate. In such circumstances, we have no hesitation in confirming the order of CIT(A) and this issue of assessee's appeals in both the years is dismissed.
7. In the result, appeals of assessee are dismissed.
8. Pronounced in the open court.
Sd/- Sd/-
पी. सल, लेखा सदःय
पी. के. बंसल महावीर िसंह, Ûयायीक सदःय
(P. K. Bansal) (Mahavir Singh)
Accountant Member Judicial Member
तारȣख)
तारȣख) Dated : 20th March, 2013
(तारȣख
वǐरƵ िनǔज सिचव Jd.(Sr.P.S.)
7 ITA No.2134/K/2009 & ITA No.2135K/2009
Camellia Enterprises Ltd. AY. 00-01 & 01-02
आदे श कȧ ूितिलǒप अमेǒषतः- Copy of the order forwarded to:
1. अपीलाथȸ/APPELLANT - M/s. Camellia Enterprises Ltd., C/o, S. L. Kochar, Advocate, 86, Canning Street, Kol-1.
2 ू×यथȸ/ Respondent - ITO, Ward-8(2), Kolkata.
3. आयकर किमशनर (अपील)/ The CIT(A), Kolkata
4. आयकर किमशनर/ CIT Kolkata
5. ǒवभािगय ूितनीधी / DR, Kolkata Benches, Kolkata स×याǒपत ूित/True Copy, आदे शानुसार/ By order, सहायक पंजीकार/Asstt. Registrar.