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TMI Blog2012 (5) TMI 202X X X X Extracts X X X X X X X X Extracts X X X X ..... ALCUTTA HIGH COURT) - assessment proceedings u/s 147 quashed. - IT APPEAL NO. 8555 (MUM.) OF 2010 - - - Dated:- 20-4-2012 - G.E. VEERABHADRAPPA, AMIT SHUKLA, JJ. Vipul B. Joshi and Sameer G. Dalal for the Appellant. P.C. Maurya for the Respondent. ORDER Amit Shukla, Judicial Member This appeal has been filed by the assessee against order dated 23.09.2010 passed by the Ld. CIT(A)-20, Mumbai for the quantum of assessment passed u/s.143(3)/147 for the A.Y. 2002-03 on the following ground of appeal :- "1. The Income Tax Officer and CIT(A) erred in disallowing the difference in Transport charges received amounting to Rs. 52,56,153/- as TDS was deducted on Transport charges received but payment for Transport charges was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence of Rs. 52,56,153/- is to be added to total income. 2. Expenses included of Rs. 28,16,683/- of vehicle expenditure are directly related to construction activity however it should have been included in the statement of work-in-progress. Sd/- Assessing Officer 4.1 In response to the aforesaid notice, the assessee submitted its reply vide letter dated 25.07.2003 on both the issues as were raised in the notice u/s.154. Thereafter, within three months a notice u/s.143(2) along with the notice u/s.142(1) both dated 23.10.2003 were issued by the A.O. to the assessee in respect of return filed on 30.10.2002. Thereafter, no proceeding seems to have been conducted by the A.O., either in pursuance of notice u/s.154 or in pursuance of not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d depreciation of Rs. 3,57,810/- are directly related to construction activities, it should have been included in the work in progress. Therefore, this has resulted in understatement of work in progress by Rs. 10,70,108/- and consequent under assessment of income to that extent. For the reasons discussed in the preceding paragraphs, I have therefore, reason to believe that income chargeable to tax has escaped assessment. For the A.Y. 2002-03, no assessment under subsection 3 of section 143 or section 147 has been made. The period of 4 years but not more than 6 years have elapsed from the end of the relevant assessment year and the income, which has escaped assessment amounts to or is likely to amount to more than Rs. 1 lakh. Hence to is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of his contention that the reopening u/s.147 cannot be done on the same ground on which proceedings u/s.154 have been initiated, he relied upon the judgement of Hon'ble Calcutta High Court in the case of Berger Paints India Ltd. v. Asstt. CIT [2010] 322 ITR 369. 6. Per contra, the learned Sr. DR submitted that the provisions of section 154 are invoked only for prima facie mistakes and as the issue involved do not fall within the purview of section 154, hence the A.O. did not had any option but to issue a notice u/s.148 for reopening the case. He further submitted that the reopening u/s.147 has been validly initiated on the basis of proper reasons recorded and since no assessment u/s.143(3) was passed, the same have been initiated r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nly, but it is a question of jurisdiction, a vital thing which can always be investigated and looked upon by the appellate courts. Here in this case, from a bare perusal of the "reasons recorded" it is evident that the same is based on the reasoning's given in the notice u/s.154 issued earlier by the A.O. and no new material have been brought on record showing any live link nexus with the income chargeable to tax which can be said to have escaped assessment. There are two issues which have been raised in the "reasons recorded", firstly, regarding debiting of contract receipts on net basis and secondly, expenses of the vehicles have not been included in the work-in-progress relating to the construction activities. The answer to these issues ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pted by the department, cannot be the ground for reopening the case as it does not affect the net profitability or income of the assessee ultimately the transport charges paid have to be reduced from the transport charges received to work out the profit; and secondly, the expenditure of vehicle expenses cannot be treated as part of work-in-progress of the construction activity, as the assessee was also engaged in the business of transport under which head the expenditure of vehicle expenses were debited. On these facts of the assessee's case, it cannot be held that the A.O. can entertained the "reason to believe" for income chargeable to tax escaping assessment. Thus based on such "reasons recorded", it cannot be held that the A.O. can acqu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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