2016 (6) TMI 80 - AT - Income Tax

Reopening of assessment - TDS deduction u/s. 194C(2) - section 40(a)(ia) disallowance - Held that - The Revenue fails to highlight even a single case involving payment exceeding the threshold pecuniary limit of ₹ 50,000/- u/s. 194C(5) proviso of the Act. We hold in these facts and circumstances that the Revenue s contentions in support of both of its substantive grounds are devoid of merits. We reiterate our findings hereinabove that the Assessing Officer had called for specific details, assessee filed the same followed by assessment order noting that the assessing authority had perused all the material in record. We are of the opinion that the impugned reopening on this TDS issue amounts to change of opinion not sustainable as per hon ble apex court decision in Kalvenator s case (2010 (1) TMI 11 - SUPREME COURT OF INDIA ). Coupled with this, the Revenue is unable to make out a case in support of invoking TDS provision u/s. 194C of the Act (supra). We affirm CIT(A) s order on validity of impugned reopening as well as merits. - Decided against revenue

Summary

Issues:
Validity of reopening assessment under section 147 r.w.s. 143(3) of the Income Tax Act, 1961; Disallowance under section 40(a)(ia) of ?86,34,086 on job work payments to subcontractors without TDS deduction.

Validity of Reopening Assessment:
The appeal challenged the validity of the reassessment order under section 147 r.w.s. 143(3) by claiming it as a change of opinion. The CIT(A) analyzed the reasons for reopening, the original assessment order, audit report, and submissions. The CIT(A) found that the reopening was within the statutory time limit and rejected the contention of change of opinion. The CIT(A) held that the Assessing Officer's belief regarding the income escaping assessment was not honest and based on illogical conjectures. The CIT(A) concluded that the expenses related to job work payments had been examined in the original assessment, rendering the reopening a mere change of opinion. Consequently, the reopening was deemed invalid, and the reassessment proceedings were directed to be annulled.

Disallowance under Section 40(a)(ia):
The disallowance under section 40(a)(ia) of ?86,34,086 on job work payments to subcontractors without TDS deduction was contested. The assessee argued that none of the payments exceeded the specified limit of ?50,000 in any payee's case. The CIT(A) upheld the assessee's contentions, stating that the reopening was invalid, and therefore, the disallowance did not require separate adjudication. The Revenue challenged this decision, but the Tribunal found that the Assessing Officer had called for specific details of the payments, which were provided by the assessee and examined during the original assessment. The Tribunal held that the reopening amounted to a change of opinion, citing a Supreme Court decision. Additionally, the Revenue failed to demonstrate a case for invoking TDS provisions under section 194C of the Act. Consequently, the Tribunal affirmed the CIT(A)'s decision on the validity of the reopening and the disallowance under section 40(a)(ia).

In conclusion, the Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s order. The decision was pronounced in the open court on 06-05-2016.