Reopening Assessment quashed: Reason to belief did not mention provision in which assessee was liable to deduct TDS

It emerges at the outset that the assessee’s identical substantive grievance in all these three cases seeks to reverse the PCIT’s revision directions in the exercise of section 263 proceedings thereby holding that the assessing authority’s as many reassessment issues had been framed without even examining or making section 194C r.w.s. 40(a)(ia) disallowance qua the payment(s) of transport charges without deducting TDS thereupon.

Additional substantive ground(s):

The assessee invited Income Tax Appellant Tribunal (ITAT’s) attention to the ground(s) raised in three petitions that reopening reasons recorded in these three assessment years are not sustainable, these reassessments deserve to be quashed as non-est leading to the annulment of the PCIT’s revision orders as well.

However, the Income Tax Department opposed the admission of assessee’s foregoing additional substantive ground at this belated stage.

ITAT Admitted Additional Grounds:

ITAT Found no merit in the Revenue’s instant technical objections pleading estoppel as well as approbate and reprobate in the light of Hon’ble apex court’s landmark judgment in NTPC vs. CIT (1998) 229 ITR 383 (SC); as considered the tribunal’s Special Bench decision in the case of All Cargo Global Logistic Ltd. vs. DCIT (2012) 137 ITD 287 (Mum) (SB), that this tribunal can very well entertain a pure question of law going to route of the mater so as to determine the correct tax liability of an assessee provided all the relevant facts form part of the records.

“We make it clear that the assessee’s detailed paper book running into 150 pages has already placed on record the corresponding reopening reasons in all these three assessment years. We thus admit the assessee’s forgoing additional substantive ground in these circumstances.”

ITAT Order:

9. We observe in light of above extracted re-opening reasons that the assessing authority had indeed failed to indicate as to under which provision of law in Chapter XVII of the Act the assessee was liable to deduct TDS on her impugned payments. The Revenue sought to highlight at this stage that the Pr.CIT has made it clear in the impugned revision directions that the assessee made contractual payments liable for TDS deduction u/s. 194C of the Act. We find no merit in the Revenue’s instant arguments once it is clear that the assessing authority had not specified in the reopening reasons about applicability of the particular statutory provision requiring TDS deduction or for that even suggest that the assessee’s payments were in the nature of contractual expenses involving TDS deduction u/s. 194C of the Act or any other provision as the case may be. And further that there existed contractual relationship between payer-payees hereunder. We thus quote hon’ble jurisdictional high court’s landmark decision in Hindustan Unilever Ltd. Vs. R B Wadkar (2004) 268 ITR 332 (Bom) and the Assessing Officer’s reopening reasons have to be read on standalone basis without any external help thereby rejecting any scope of addition, deletion or substitution therein at a later stage even it is found that at some point of time that the same were very well justifiable. We adopt the very reasoning cause hereinabove to quash all these three reassessments herein framed in 28-03-2013 as non-nest. We order accordingly. We also invoke “sublato fundamento cadit opus” that once the foundation of reopening is removed, collateral proceedings u/s. 263 in issues also follows the section as having no legs to stand. The assessee’s foregoing identical additional substantive ground raised in all these three appeals succeeds thereby rendering all other pleadings on merits as well as validity (regarding applicability of section 147 1st proviso in assessment years i.e. AYs 2006-07 and 2007-08) as infructuous. Ordered accordingly.

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