The Kolkata bench of the Income Tax Appellate Tribunal(ITAT) has held thatthe Reassessment is not validin absence of failure to fully & truly disclose all material facts.
G.S. Atwal & Company (Engineers) Pvt. Limited, the assessee company was engaged as Del-Credere Commission Agent by Tata Steel Limited. The assessee used to earn commission income for the sale of by-products of coal, i.e. Tailings, Washery Rejects, etc. to the Brick-Bhatta Owners, Hardcoke Owners and other users at a fixed price.
In this process, it would get a commission @ Rs.133/- per Ton for Tailings and Rs.25/- per Ton for Washery Rejects. It would collect money from them, deposit that money in its Bank account and make payment to Tata Steel Limited through cheque/RTGS. It works as an agent for the purchase of those goods by alleged brick-Kilen owners, etc. It has filed its return of income for A.Y. 2011-12 on 12.08.2011 disclosing a total income of Rs.2,68,79,830/-. Similarly in A.Y. 2012-13, it filed its return of income on 18.09.2012 declaring total income at ‘NIL’. The assessment order was passedand reopened.
The assessee raised objections to the reopening, but its objections were rejected by the Assessing Officer in both years. The Assessing Officer has made the addition of Rs.46,76,77,656/- with the aid of section 68 of the Income Tax Act,1961.
It was evident that nowhere Assessing Officer has the alleged failure of the assessee to demonstrate which information was not disclosed by the assessee fully and truly.
A Coram of ITAT comprising of Shri Rajpal Yadav, Vice-President & Shri Rajesh Kumar, Accountant Member observed that there is no evidence with the Revenue to demonstrate that assessee has failed to disclose all material facts fully and truly for assessments of its income in A.Y. 2011-12 and 2012-13. It was held that the Appellate Authority has rightly quashed the assessments by holding that reopening is not valid in both years.
The CIT(Appeals) has deleted the addition on the ground that the assessee has made payments to Tata Steel Limited through the banking channel for the purchase of materials. It has worked as an agent, where it took the money from the ultimate purchasers of the coal residua.
The Tribunal held that the total purchase price, if collected by the assessee in cash as a middleman, cannot be added with the help of section 68, worst to worst the accounts could be rejected and profit could be estimated. While rejecting the appeal of the revenue, the Tribunal upheld the quashing of the reassessment proceedings.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to TaxscanAdFree. Follow us on Telegram for quick updates.
