| The Tax Publishers2020 TaxPub(DT) 0624 (Sur-Trib) INCOME TAX ACT, 1961
Section 147
Reasons recorded by for reopening of assessment AO were patently incorrect because TDS provisions as per section 194C were applicable only if total turnover in immediately preceding financial year exceeded Rs. 40 lakhs and not during the year under consideration. Also, WIP representing current assets, including cost of material, labour and other direct overheads incurred by assessee, ownership of which remained vested with assessee, did not constitute 'turnover' as used in section 44AB. Further, second line of reasons stated as 'however, it was seen from the records that assessee had shown total turnover of Rs. 37 lakhs from his construction activitiesâ€. This showed that notice under section 148 has been issued in absence of fresh tangible material and on relooking the same material available on record which was not permissible. Accordingly, reopening was quashed.
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Reassessment - Validity - Reason to believe - No tangible material and patent mistake of law
AO reopened assessment based on turnover of concerned year which exceeded Rs. 40 lakhs, if WIP of Rs. 18 lakhs as shown by assessee was added to turnover shown at Rs. 37 lakhs and hence, provisions of section 44AB were applicable and hence, assessee was liable to deduct tax under section 194C from payment of labour expenses.Held: Reasons recorded by AO were patently incorrect because. TDS provisions as per section 194C were applicable only if total turnover in immediately preceding financial year exceeded Rs. 40 lakhs and not during the year under consideration. Also, WIP representing current assets, including cost of material, labour and other direct overheads incurred by assessee, ownership of which remained vested with assessee, did not constitute 'turnover' as used in section 44AB. Further second line of reasons stated as 'however, it was seen from the records that assessee had shown total turnover of Rs. 37 lakhs from his construction activitiesâ€. This showed that notice under section 148 has been issued in absence of fresh tangible material and on relooking the same material available on record which was not permissible. Accordingly, reopening of assessment was quashed.
Relied:ACIT v. ICICI Securities Primary Dealership Ltd. [2012] 24 taxmann.com 310 (SC) : 2012 TaxPub(DT) 2968 (SC), CIT v. Kelvinator of India Ltd. (2010) 320 ITR 561 (SC) : (2010) 187 Taxman 312(SC) : 2010 TaxPub(DT) 1335 (SC), Nilamben Sandipbhai Parikh v. Asstt. CIT [2019] 109 Taxmann.com 336 (Guj) : 2019 TaxPub(DT) 5130 (Guj-HC), Gujarat Power Corporation Ltd. v. Asstt. CIT (2013) 350 ITR 266 (Gujarat) : 2013 TaxPub(DT) 0409 (Guj-HC), Asstt. CIT v. B.K. Jhala & Associates (1999) 69 ITD 141 (Pune-Trib) : 1999 TaxPub(DT) 772 (Pune-Trib) (PB-22-241) and Esque Finmark (P) Ltd. v. Asstt. CIT (2014) 48 Taxmann. com 292 (Mum-Trib) : 2014 TaxPub(DT) 4574 (Mum-Trib).
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2009-10
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