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TMI Blog2016 (7) TMI 611X X X X Extracts X X X X X X X X Extracts X X X X ..... he AO and order of assessment was already passed accepting the claim of the assessee that such TDS obligation had not extended to the assessee, who is an individual. From the reasons recorded by the AO u/s 148 of the Act it is clear that without any new material coming to the possession of the AO had merely a change of opinion, reassessment proceedings have been initiated by the AO. Such a course is not permissible as held by the Hon’ble Supreme Court in the case of CIT vs M/s. Kelvinator of India Ltd. (2010 (1) TMI 11 - SUPREME COURT OF INDIA ). We are of the view that the provision of section 194C (2) of the Act apply to a contractor and not to a person such as the assessee who was a trader in art silk fabricss. When the provision of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... addition made by the A.O. u/s. 40(a)(ia) by discussing the provision of section 194C(1), where the A.O. has applied the provision of section 194C(2) of the Act while making the disallowance u/s.40(a)(ia) of the Act. iv) That on the facts and circumstances of the case, Ld. CIT(A) has erred to apply the provision of section 194C(1) of the Act, where the assessee, being Contractor, made payment to sub-contractor and violated the provision of Section 194C(2) of the Act. v) The appellant craves leave to add, modify any question of Law in course of hearing of this appeal. 3. The Assessee is an individual. For A.Y.2005-06 the assessee filed return of income on 21.10.2005 declaring total income of ₹ 2,95,370/-. The assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the IT. Act, 1961 and added back to the total income for the relevant A. Y under consideration. It is further confirmed that you are still assessed under this jurisdiction and no file has been transferred to Surat 1. T. office . 5. In response to the notice issued u/s 148 of the Act the assessee sent a letter on 21.10.2005 requesting the AO to treat the return originally filed on 21.10.2005 as a return filed in response to notice u/s 148 of the Act. In the re-assessment proceedings the question that arose for consideration was as to whether there was an obligation on the part of the assessee to deduct tax at source in terms of seciton 194C of the Act. The stand of the assessee was that in so far as the obligation of an individual t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s.40(a)(ia) of the Act. 7. It was further submitted that as per Provisions of Section 194C of the Act as applicable for the Asst. Year 2005/06, no TDS was deductable by the individual or HUF from contractors. Only a contractor (being Individual or HUF) had to deduct tax @ l% on payments made to sub-contractor and this was the purport of proviso to Sec.194C(2) of the Act. It was submitted that the re-assessment proceeding u/s.147 was initiated on mere change of opinion, which is not permissible. The Assesse in this regard placed reliance on the following judicial pronouncements in which it has been laid down that reassessment proceedings cannot be initiated on a mere change of opinion. Sarthuk Securities Co. Pvt. Ltd. Vs ITO (2010) 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is cancelled. (2) The provisions of Section 194C as applicable during A. Y. 2005-06 did not cover the cases of Individuals and HUFs. The amendment relied upon by the A.O. came to force Jonly w.e.f. 0l.06.2007 when clause (k) was inserted in Section 194C(1) of the Act. The assessee has not made any payment to a sub-contractor. All his payments are to contractors. Thus the action of the A.O. in making a disallowance u/s.40(a)(ia) of the Act is misplaced. Reliance is placed on the following among others :- (a) CBDT Circular No.3 of 2008 dated 12.03.2008 (b) CIT v. Prashant H. Shah (2013) 29 taxmann.com 296(Guj) (c) CIT v. Vishnudutt Sharma (2013) 33 taxmann.com 284 (Guj) (d) ACIT v. Smt. Keya Seth ITA No.842 843/Koll2010 dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of opinion, reassessment proceedings have been initiated by the AO. Such a course is not permissible as held by the Hon ble Supreme Court in the case of CIT vs M/s. Kelvinator of India Ltd. (supra). We therefore are of the opinion that the conclusion of CIT(A) that initiation of re-assessment proceedings was merely a change of opinion and therefore invalid is just and proper and calls for no interference. We are of the view that the provision of section 194C (2) of the Act apply to a contractor and not to a person such as the assessee who was a trader in art silk fabricss. When the provision of section 194C(2) of the Act are not attracted the question of invoking the proviso to section 194C(2) does not arise. As rightly contended by the l ..... X X X X Extracts X X X X X X X X Extracts X X X X
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