9911796707
TMI Blog2013 (11) TMI 8X X X X Extracts X X X X X X X X Extracts X X X X ..... ich reassessment proceedings can be validly initiated – There is subtle, though significant, distinction between reason to believe and reason to suspect – While the former is good enough to hold that income has escaped assessment and initiate suitable remedial measures in respect thereof, the latter can, at best, be the ground to verify and examine the matter further. In the present case, assessee has shown receipt of ₹ 1,20,35,798/- in its books of accounts is of no consequence as such figure has not been taken into account by the Assessing Officer while computing the income. As would be evident from the assessment order, the Assessing Officer is only considering receipt of ₹ 85,33,333/- as mentioned in the TDS certificate. Thus, considering the totality of facts and the circumstances of the case, the addition of ₹ 50,98,000 to the income of the assessee for the impugned assessment year is legally not sustainable and accordingly – Decided in favor of Assessee. - ITA No.709/Hyd/ 2013 - - - Dated:- 13-9-2013 - Chandra Poojari And Saktijit Dey, JJ. For the Appellant : Shri KC Devdas For the Respondent : Smt Maya Mahewari ORDER:- PER : Sak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere made and also furnish copy of agreement if any entered into with the assessee. In response to the letter issued, the assessee submitted a letter giving details of amount spent for material release and amount reimbursed. However, as noted by the Assessing Officer, he did not furnish any documentary evidence in support of payments made for material release. As such it cannot be verified as to what the amount is spent. 3. The Assessing Officer in the assessment order further noted that the company did not respond to the office letter asking them to furnish the details. The Assessing Officer therefore came to a conclusion that in absence of details/services rendered and documentary evidence in support of payment made to custom house, the assessee claim cannot be accepted. He further concluded that the amount of ₹ 85,33,333/- shown in the TDS certificate is a contract receipt and hence assessable as such. Since the assessee had credited an amount of ₹ 34,34,491/- to the profit loss a/c, the Assessing Officer treated the differential amount of ₹ 50,98,842/- as escaped income and added to the income returned by completing the assessment accordingly. The assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of service charges of ₹ 34.34.491 stated to have been included in the amount of ₹ 85,33,333/- where TDS was deducted by major parties is to be accepted, then the service charges earned out of remaining gross bills of ₹ 35,04,465/- is clearly not admitted by the assessee, since as per bill book, the gross receipts from the business stood at ₹ 1,20,35,798/-. On the basis of the aforesaid finding, the CIT (A) confirmed the order passed by the Assessing Officer treating the amount of ₹ 50,98,842/- as the income of the assessee which has not been shown. Being aggrieved of the orders of the CIT (A), the assessee is in appeal before us. 5. Ground Nos. 1 and 2 relate to validity of proceeding initiated u/s 147 of the Act. The learned authorised representative for the assessee at the outset fairly submitted before us that these legal grounds were inadvertently not raised before the CIT (A) though they directly arise out of the assessment proceedings. He further contended that since these are legal grounds and do not require any investigation into facts or law, they may be admitted for adjudication. 6. The learned AR arguing on the legal ground submitted b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pal. g. Arranging despatch of the goods as per direction of the principal by engaging transport. h. Carrying out various statutory and other formalities such as payment of expenses on account octroi, destuffing pelletisation, terminal handling, fumigation, dock fees, repairing and examination fees, landing and container charges, statutory labour charges, testing fees, sorting/marking/stamping/sealing on behalf of exporter/importer, crane lift/fork charges, taxi charges,. Photostat and fax charges, bank collection charges, courier service charges and miscellaneous other expenses on account of exporter/importer. 8. The learned authorised representative for the assessee further submitted that the assessee is entitled to service charges for rendering services as a clearing and forwarding agent, he assessee usually makes payment towards delivery order charges, custodian charges, customs duty freight charges, EDI charges, transportation charges on behalf of customers. These payments are subsequently reimbursed by the customers. There is no profit element involved and therefore the assessee recognised only service charges as revenue in his books of account for the services r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Ltd. (291 ITR 500) 3) WCI (Madras) (P) Ltd. Vs. ACIT (324 ITR 181) 10. With regard to the merits of the case, the learned Departmental Representative in his reply submitted that the assessee has not produced any books of accounts or any other evidence to substantiate its claim that the differential amount of ₹ 50,98,000/- was in reality reimbursement of expenses. He further submitted that since the assessee could not substantiate with necessary details the differential amount has been rightly been treated as income of the assessee. 11. We have considered rival submissions of the parties and perused the material on record as well as the orders of the revenue authorities. We have also applied our mind to the decisions relied upon by the parties. So far as the legal issue raised in ground Nos.1 and 2 is concerned, it is a fact on record that these grounds were not raised before the CIT (A) and has been raised for the first time before the Tribunal. However, considering the fact that these issues are purely legal issues and can be decided on the basis of the facts already available on record, we are inclined to entertain these grounds in view of the ratio laid down ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment proceedings can be validly initiated There is subtle, though significant, distinction between reason to believe and reason to suspect While the former is good enough to hold that income has escaped assessment and initiate suitable remedial measures in respect thereof, the latter can, at best, be the ground to verify and examine the matter further Mere fact that matter needs to be verified and examined further can never be a reason good enough to believe that income has escaped assessment and to invoke the reassessment proceedings Therefore, the very initiation of reassessment proceedings on the facts of the instant case was devoid of legally sustainable merits Reassessment quashed. 13. Following the aforesaid decision of the Kolkata Bench, the Income-tax Appellate Tribunal Hyderabad Bench in case of M/s. Vansu Erectors Private Limited, Hyderabad vs. ITO, Ward-3(2), Hyderabad (ITA No.456/Hyd/2012 dated 5-4-2013) also cancelled the reassessment made u/s 143(3) read with section 147 of the Act for the assessment of escaped income on the basis of receipts shown in the TDS certificate. In view of the ratio laid down as above by the co-ordinate benches of this T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t from the decision of the Income-tax Appellate Tribunal, Mumbai Bench in case of ITO vs. Travels Shipping (P) Ltd. (supra). In such view of the matter, the authorities below were not justified in treating the differential amount of ₹ 50,98,842 as income of the assessee without properly examining the explanation submitted by the assessee. 14. The observation made by the CIT (A) that the assessee has shown receipt of ₹ 1,20,35,798/- in its books of accounts is of no consequence as such figure has not been taken into account by the Assessing Officer while computing the income. As would be evident from the assessment order, the Assessing Officer is only considering receipt of ₹ 85,33,333/- as mentioned in the TDS certificate. Thus, considering the totality of facts and the circumstances of the case, we hold that the addition of ₹ 50,98,000 to the income of the assessee for the impugned assessment year is legally not sustainable and accordingly, we direct for deleting the same. 15. In the result, the assessee s appeal succeeds both on legal issue as well as with regard to merit of the case also. We therefore set aside the order of the CIT (A) by allowing ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
