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TMI Blog2018 (8) TMI 1199X X X X Extracts X X X X X X X X Extracts X X X X ..... re quash the proceedings u/s. 148 of the Act and allow the appeal of the assessee. Decided in favor of assessee. - ITA No.2048/Bang/2018 - - - Dated:- 17-8-2018 - SHRI N.V. VASUDEVAN, JUDICIAL MEMBER For The Appellant : Shri S. Sukumar, Advocate For The Respondent : Shri K. Dhandapani, Jt.CIT(DR)(ITAT), Bengaluru ORDER This is an appeal by the assessee against the order dated 28.02.2018 of the CIT(Appeals), Bengaluru-6, Bengaluru relating to assessment year 2009-10. 2. The assessee is a partnership firm. The assessee is engaged in the business of carrying out sub-contracts on behalf of M/s. Murudeshwar Ceramics Ltd. For the AY 2009-10, the assessee filed return of income declaring total income of ₹ 70,390. The return filed was accepted u/s. 143(1) of the Income-Tax Act, 1961 [ the Act ]. 3. On 27.03.2014, the AO issued a notice u/s. 148 of the Act for the AY 2009-10 stating that he proposes to reassess the total income of the assessee for the AY 2009-10. The reasons recorded by the AO for initiating proceedings u/s. 148 of the Act was as follows:- Reasons for the belief that income has escaped assessment: As per the informat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st take up for consideration the issue with regard to validity of initiation of proceedings u/s. 148 of the Act by the AO. At the time of hearing, the ld. counsel for the assessee filed before us a copy of the decision of the Tribunal in the case of M/s. Mookambika Enterprises v. DCIT, ITA Nos.972, 974/Bang/2017 for AYs 2007-08 2009-10, order dated 7.7.2017. In the aforesaid order, reassessment proceedings were initiated against the assessee in those appeal by the AO, after recording identical reasons as were recorded in the present case of the assessee. The Tribunal held that initiation of reassessment proceedings was not valid. The following were the relevant observations of the Tribunal:- Thus the reasons recorded by the AO for all three years are almost identical and the basic reason for forming the belief that the income assessable to tax has escaped assessment is that M/s. Murudeshwar Ceramics Ltd. inflated expenses using the assessee s name in respect of the labour charges and transportation charges for all these three years as given in the above reasons. Further this belief was formed by the AO that the assessee facilitated the inflated expenses in case of M/s. M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is loaded to the tractors in the quarry 2. As the roads are small only tractors can move in those roads 3. The loaded clay is transported to the stockyard of the company 4. It is unloaded there 5. From the stockyard MCL vehicles transports it to the factory. 6. We charge normally a margin of 4%. 17. What are the documentary evidence in support of the above activity referred in the above Q.(8)and where is kept? Ans: The documentary evidence are:' 1. The amounts paid to the transportors are through vouchers 2. The documents are kept only in Hubli in the premises of Murudeshwar Bhavan as it is convenient for us to keep it in one place as day to day operations are conducted from there. 18. What are the books of accounts maintained in M/s Mookambika Enterprises for the last 6 F.Ys? Ans: Normal books of accounts are maintained (Cash Book, Bank Book Ledger)for the last 6 F.Ys and Income tax returns have been filed and I am furnishing the copies of the same. 19. Who is maintaining the Books of accounts of M/s Mookambika Enterprises Ans: Sri Mykalmaradi, helps us in maintaining the accounts as i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Ceramics Ltd. to M/s. Mookambika Enterprises as per books of account of Murudeshwar Ceramics Sl. No. FY Debit Credit Balance 1. 2005-06 1,11,83,613 1,15,11,246 3,27,632(Cr.) 2. 2006-07 1,60,30,067 1,75,70,010 15,39,943(Cr.) 3. 2007-08 1,28,13,244 1,48,77,536 20,64,291(Cr.) 4. 2008-09 4,71,26,575 4,92,81,601 21,55,026(Cr.) 5. 2009-10 6,46,79,281 6,74,83,273 28,03,992(Cr.) 6. 2010-11 6,69,24,735 6,91,25,850 22,01,115(Cr.) 7. 2011-12 (upto31.01.2012) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hing else to say? Ans: The nature of business is carried on with MCL is as per agreement dated 1/4/2005 which has been enclosed to my letter. I reiterate the affidavit filed by me in respect of the firms transaction with MCL which has been filed before your good self. I have answered the questions from memory other than this, I do not have anything to say. 9. It is clear from the questions and answers thereto in the said statement that the assessee provided labour under various categories as explained in the answer to question no. 14. The assessee also explained that they were normally charging 4% margin in providing the labour. It was specifically pointed out that attendance register is maintained at the factory where all the labours sign and for raising the bill on M/s. Murudeshwar Ceramics Ltd. The certified copy of the attendance register was produced by the partners. The assessee also produced the copies of return filed with various authorities regarding the labour supplied by the assessee to M/s. Murudeshwar Ceramics Ltd. It was also explained that PF and ESI were deducted from the wages / salary of the labourers and remitted on a monthly basis. Service Tax was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to believe that the amounts mentioned in the reasons were actually income assessable to tax and escaped assessment. The AO himself accepted the entire business activity of the assessee as genuine except the adhoc disallowance of 15% on cash expenditure. 10. It is pertinent to note that there is no new record or fact came to the knowledge of the AO at the time of framing the reassessment but the entire record which was already available with the revenue as produced by the assessee at the time of recording the statement of partner of the assessee prior to the issuing the notice u/s. 148 and therefore if the said record, the facts and details as explained by the assessee are taken into consideration it makes clear that the transactions of business activity of the assessee were duly established and found to be genuine. The Assessing Officer in the reassessment proceedings accepted the genuineness of the business activity of the assessee as against the reasons recorded by the AO for reopening of the assessment. Thus the AO itself on the basis of the same record as it was available at the time of issuing the notice u/s. 148 has negated the very reason and foundation of belief that the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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