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TMI Blog2014 (7) TMI 1061X X X X Extracts X X X X X X X X Extracts X X X X ..... in such practice - AO had reason to believe that to verify the identity of sub-contractors and genuineness of the work, examination is required - It was not the reason to believe that an income had escaped assessment but he has reason to believe that an examination is required - There should be a definite reason so as to form a belief that some income had escaped assessment - Then only reopening is permissible – it was presumptive in nature and proceeded merely to further investigate the case on the point on which an inquiry had already conducted by the AO during the course of original assessment order - Such an action of reopening cannot be approved – thus, the order of the CIT(A) is upheld – Decided against revenue. - ITA No.1930/Ahd/2010 - - - Dated:- 30-6-2014 - Shri Mukul Kr. Shrawat And Shri N. S. Saini,JJ. For the Petitioner : Shri J. P. Jhangid, Sr. D. R. For the Respondent : Shri S. N. Soparkar, A. R. ORDER Per Shri Mukul Kumar Shrawat, Judicial Member This is an Appeal filed by the Revenue arising from the order of learned CIT(A)-I, Baroda, dated 29.03.2010. The ground raised by the Revenue is reproduced below: l. On the facts and in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said head was disallowed. The assessee had challenged the reopening of the assessment before learned CIT(A) and that legal plea of the assessee was accepted by learned CIT(A) in the following manner: 5. I have considered the submissions of the Id. A.R. and the facts of the case. The assessment record was called for and examined. I find from the case records that the entire details relating to sub-contract expenses of ₹ 1,03,71,416/- had been filed at the time of original assessment u/s 143(3). Copy of the ledger account showing details of party, date of payment, amount, etc. were all available with the Assessing Officer. Once this issue relating to the genuineness or otherwise of sub-contract expenses had been looked into at the assessment stage and there was due application of mind by the A.O., it would not be open for the assessing authority to reopen the assessment for inquiring into the same matter once again. 5.1 From a perusal of the assessment records I find that starting point for the reopening of the assessment appears to be a remark made by the Id. CIT - I while conducting review of the assessment that the sub-contract payment should have been scrutinized fur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wide powers to reopen the assessment. Learned CIT(A) went wrong to quash the proceedings initiated u/s. 147 of IT Act. He has further pleaded that in the original assessment no opinion was formed by the AO in respect of the expenditure towards payment to sub-contractor; hence, there was no question of forming of an opinion at that time. So, there was no question of change of opinion. Under the main provision of Section 147, if AO has reason to believe that any income chargeable to tax has escaped which comes to his notice subsequently then empower to re-compute the income by issuing the notice as prescribed under the Act. In the present case, the AO had reason to believe that in road construction business the sub-contractors are used which are not the genuine parties. In the course of original assessment proceedings, the assessee had not furnished the complete details of the sub-contractors and no inquiry was made due to which the said income had escaped from assessment. According to him, the reopening was justifiable as per law; hence, the order of learned CIT(A) should be reversed. 5. From the side of the respondent assessee, learned AR, Mr. S.N. Soparkar appeared and vehement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Housing Society Ltd. Vs. DCIT and Another, (2013) 353 ITR 413 (Guj.) 2. Arvind Polycot Ltd. Vs. Chandra Ram, (2013) 353 ITR 511 (Guj.) 3. Vodafone West Ltd. Vs. ACIT (No.3), (2013 354 ITR 572 (Guj.) 4. Gujarat Power Corporation Ltd. Vs. ACIT, (2013) 350 ITR 266 (Guj.) 5. Commissioner of Income Tax Vs (1)Kelvinator of India Ltd., (2010) 320 ITR 561 (SC) 6. We have heard both the sides at some length. At the outset, it is worth to mention that the assessment record for the year under consideration has been produced before us. There was an order-sheet which had mentioned that the said reply dated 17.11.2006 was kept in a separate record. Therefore, the finding on facts about the existence of the reply of the assessee dated 17.11.2006 as recorded by learned CIT(A) appears to be correct. This reply was in compliance of a questionnaire dated 10.11.2006 issued by the AO, wherein one of the query was in respect of the payment made to sub-contractors. The assessee has furnished the details of the sub-contractor expenses. Even in the books of account, the assessee has furnished the details of work expenses which had included the payment made to sub-contractors. Therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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