IT : Since intimation under section 143(1) does not amount to assessment, question of change of opinion does not arise, and therefore, reopening of assessment based on sufficient material, forming reason to believe that income has escaped assessment, is valid
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[2013] 33 taxmann.com 426 (Gujarat)
HIGH COURT OF GUJARAT
Rhythm Chemicals (P.) Ltd.
v.
Assistant Commissioner of Income-tax*
AKIL KURESHI AND MS. SONIA GOKANI, JJ.
SPECIAL CIVIL APPLICATION NO. 3569 OF 2013
MARCH 26, 2013
Section 147, read with section 143, of the Income-tax Act, 1961 - Income escaping assessment - Non-disclosure of primary facts [In case of section 143(1) assessment] - Assessment year 2005-06 - Assessee's return was accepted under section 143(1) - Later, notice under section 147 was issued for reopening of assessment - Whether intimation under section 143(1) cannot be treated as an order of assessment - Held, yes - Whether, since intimation under section 143(1) did not amount to assessment, question of change of opinion did not arise, and therefore, reopening of assessment based on sufficient material forming reason to believe that income had escaped assessment, was valid - Held, yes [Paras 7 & 8] [In favour of revenue]
FACTS
| ■ | The return filed by the assessee for assessment year 2005-06 was accepted under section 143(1), and no scrutiny was done under section 143(3). | |
| ■ | The Deputy Commissioner issued notice on 30-3-2012, stating that he had reason to believe that income had escaped assessment and sought to reopen assessment. | |
| ■ | The assessee's objections to the reopening of assessment were rejected, against which instant petition was filed by assessee. |
HELD
| ■ | The assessment for the assessment year 2005-06 was not done after scrutiny as provided under section 143(3) and the return filed by the assessee was accepted under section 143(1). [Para 4] | |
| ■ | In Asstt. CIT v. Rajesh Jhaveri Stock Brokers (P.) Ltd. [2007] 291 ITR 500/161 Taxman 316 (SC), it was held that under the first proviso to the newly substituted section 143(1), the acknowledgement of the return shall be deemed to be an intimation under section 143(1) where (a) either no sum is payable by the assessee, or (b) no refund is due to him. It is significant that the acknowledgement is not done by any Assessing Officer, but mostly by ministerial staff and it cannot be said that any 'assessment' is done by them. Therefore, there being no assessment under section 143(1)(a), the question of change of opinion, as contended, does not arise. [Para 6] | |
| ■ | Bearing in mind above ratio of the decision, in the present case, in an assessment which was previously not taken in scrutiny, the Assessing Officer found that there were no cash sales in the financial year 2004-05 and that therefore total sales of Rs. 53,750 was unexplained. The Assessing Officer also pointed out that the total sum of Rs. 1,20,000 through different entries was deposited in cash in the bank account of the assessee during the said period which was also unexplained. Such reasons cannot be stated to be lacking validity permitting the Assessing Officer to assess the income. [Para 7] | |
| ■ | Therefore, there was sufficient material with the Assessing Officer to form a belief that income chargeable to tax had escaped assessment. Whether, in fact, such additions can be made or not, must be judged on the basis of material, which may come on record during such reassessment proceedings. [Para 8] | |
| ■ | Petition is dismissed. [Para 9] |
CASE REVIEW
Asstt. CIT v. Rajesh Jhaveri Stock Brokers (P) Ltd. [2007] 291 ITR 500/161 Taxman 316 (SC) (para 6) followed.
CASES REFERRED TO
Asstt. CIT v. Rajesh Jhaveri Stock Brokers (P.) Ltd. [2007] 291 ITR 500/161 Taxman 316 (SC) (para 6).
Hardik V. Vora for the Petitioner.
ORDER
Akil Kureshi, J. - Draft amendment is allowed.
2. Petitioner has challenged notice dated 30.3.2012 issued by Deputy Commissioner proposing to assess income of the petitioner assessee for the Assessment Year 2005-06 stating that he had reason to believe that income chargeable to tax for the said year had escaped assessment. The petitioner applied on 17.4.2012 to the Deputy Commissioner seeking a copy of the reasons recorded by him for the purpose of issuing the impugned notices. Under communication dated 26.11.2012 such reasons were supplied to the petitioner, which read as under:-
"2. The reasons recorded for reopening the assessment is as under:-
On verification of the audit report for F.Y. 2004-05, it is noticed that the assessee company has shown purchases of Rs.78,225 out of direct expenses of Rs.2,25,357. Asset of Rs. 26,47,198/- were added during the F.Y.2004-05. Previous year liability was shown at Rs.8,45,507/- which reduced during the F.Y. 2004-05 to Rs.3,50,883/- hence the company has paid Rs.4,97,624/- ( Rs. 8,48,507/- Rs. 3,50,883) under this head during F.Y. This shows that the company has borne total expenses of Rs.33,70,179/- during F.Y. against which there are provisions of Rs.33,401/-. Hence, during F.Y. 2004-05 total expenses of the company was Rs.33,55,778/-(Rs.33,70,179-Rs. 34,401).
On perusal of the bank statement, it was observed that there is total debit during the year of Rs.23,83,738/- which includes Rs.2,95,000/- in the form of cheques return i.e. the cheque which was not honoured and other charges of Rs.528/-. Hence, total expenses made through Bank of Baroda is Rs.20,88,210/- ( Rs.23,83,738/- Rs. 2,95,000/- Rs. 528).
Further, during the F.Y. 2004-05, the assessee company had only one bank account i.e. with Bank of Baroda A/c. No.02810200000213. The total expenses made by the company as per audit report including liability is Rs.33,35,778/- against total expenses of Rs.20,88,210/- as per bank statement. Sundry creditors as per balance sheet are Rs.3,50,833/- for which no details have been provided. Hence, there is a difference of Rs.12,47,568/- (Rs.33,35,778/- Rs. 20,88,210/-) in expenditure which appears to be unexplained expenditure made during the F.Y.2004-05 by the company. During the said year no manufacturing has been done, rather trading has been done and sales of Rs.53,570/- have been made. This means that no cash sales have been made which can explain the difference in expenses.
During the F.Y.2004-05 the assessee has deposited cash in the bank account which is as under:
| Date | Particulars | Amount (Rs.) | |
| 28.06.2004 | By cash | 45,000 | |
| 09.07.2004 | By cash | 5,000 | |
| 06.12.2004 | By cash | 60,000 | |
| 30.12.2004 | By cash | 10,000 | |
| Total.. | 1,20,000 |
During the year the total sales of Rs.53,750/- and the cash deposit of Rs.1,20,000/- remains unexplained."
3. The petitioner raised objections under communication dated 22.1.2013 objecting to the reopening of the assessment. Such objections were, however, rejected by an order dated 1.3.2013. Hence this petition.
4. At the outset, we may record that the assessment for the Assessment Year 2005-06 was not done after scrutiny as provided under Section 143(3) of the Income Tax Act, 1961 and that the return filed by the petitioner came to be accepted under Section 143(1) of the Act. In the background of such admitted facts, we need to examine the challenge of the petitioner to the impugned notice.
5. Learned counsel for the petitioner mainly contended that the reasons recorded by the Assessing Officer lacked validity and that therefore no reopening can be based on such reasons even in case of non-scrutiny assessment. He further submitted that the Assessing Officer cannot be stated to have reason to believe that income chargeable to tax has escaped assessment. He submitted that the Assessing Officer has, without proper verification of the balance sheet of the assessee, come to certain conclusions which are totally erroneous.
6. We may once again remind ourselves that notices for reassessment have been issued in case of a non-scrutiny assessment. In this context, we may refer to the decision of the Apex Court in the case of Asstt. CIT v. Rajesh Jhaveri Stock Brokers (P.) Ltd. [2007] 291 ITR 500/161 Taxman 316 in which it was held and observed as under:-
| "13** | ** | ** |
In the scheme of things, as noted above, the intimation under section 143(1)(a) cannot be treated to be an order of assessment. The distinction is also well brought out by the statutory provisions as they stood at different points of time. Under section 143(1)(a) as it stood prior to April 1, 1989, the Assessing Officer had to pass an assessment order if he decided to accept the return, but under the amended provision, the requirement of passing of an assessment order has been dispensed with and instead an intimation is required to be sent. Various circulars sent by the Central Board of Direct Taxes spell out the intent of the Legislature, i.e., to minimize the departmental work to scrutinize each and every return and to concentrate on selective scrutiny of returns. These aspects were highlighted by one of us (D. K. Jain J) in Apogee International Limited v. Union of India[[1996] 220 ITR 248]. It may be noted above that under the first proviso to the newly substituted section 143(1), with effect from June 1, 1999, except as provided in the provision itself, the acknowledegement of the return shall be deemed to be an intimation under section 143(1) where (a) either no sum is payable by the assessee, or (b) no refund is due to him. It is significant that the acknowledgement is not done by any Assessing Officer, but mostly by ministerial staff. Can it be said that any "assessment" is done by them? The reply is an emphatic "no". The intimation under section 143(1)(a) was deemed to be a notice of demand under section 156, for the apparent purpose of making machinery provisions relating to recovery of tax applicable. By such application only recovery indicated to be payable in the intimation became permissible. And nothing more can be inferred from the deeming provision. Therefore, there being no assessment under section 143(1)(a), the question of change of opinion, as contended, does not arise.
| ** | ** | ** |
16. Section 147 authorises and permits the Assessing Officer to assess or reassess income chargeable to tax if he has reason to believe that income for any assessment year has escaped assessment. The word "reason" in the phrase "reason to believe" would mean cause or justification. If the Assessing Officer has cause or justification to know or suppose that income had escaped assessment, it can be said to have reason to believe that an income had escaped assessment. The expression cannot be read to mean that the Assessing Officer should have finally ascertained the fact by legal evidence or conclusion. The function of the Assessing Officer is to administer the statute with solicitude for the public exchequer with an inbuilt idea of fairness to taxpayers. As observed by the Delhi High Court in Central Provinces Manganese Ore Co. Ltd. v. ITO [1991 (191) ITR 662], for initiation of action under section 147(a) (as the provision stood at the relevant time) fulfilment of the two requisite conditions in that regard is essential. At that stage, the final outcome of the proceeding is not relevant. In other words, at the initiation stage, what is required is "reason to believe", but not the established fact of escapement of income. At the stage of issue of notice, the only question is whether there was relevant material on which a reasonable person could have formed a requisite belief. Whether the materials would conclusively prove the escapement is not the concern at that stage. This is so because the formation of belief by the Assessing Officer is within the realm of subjective satisfaction (see ITO v.Selected Dalurband Coal Co. Pvt. Ltd. [1996 (217) ITR 597 (SC)] ; Raymond Woollen Mills Ltd. v. ITO [ 1999 (236) ITR 34 (SC)].
17. The scope and effect of section 147 as substituted with effect from April 1, 1989, as also sections 148 to 152 are substantially different from the provisions as they stood prior to such substitution. Under the old provisions of section 147, separate clauses (a) and (b) laid down the circumstances under which income escaping assessment for the past assessment years could be assessed or reassessed. To confer jurisdiction under section 147(a) two conditions were required to be satisfied firstly the Assessing Officer must have reason to believe that income profits or gains chargeable to income tax have escaped assessment, and secondly he must also have reason to believe that such escapement has occurred by reason of either (i) omission or failure on the part of the assessee to disclose fully or truly all material facts necessary for his assessment of that year. Both these conditions were conditions precedent to be satisfied before the Assessing Officer could have jurisdiction to issue notice under section 148 read with section 147(a). But under the substituted section 147 existence of only the first condition suffices. In other words if the Assessing Officer for whatever reason has reason to believe that income has escaped assessment it confers jurisdiction to reopen the assessment. It is however to be noted that both the conditions must be fulfilled if the case falls within the ambit of the proviso to section 147. The case at hand is covered by the main provision and not the proviso.
18. So long as the ingredients of section 147 are fulfilled, the Assessing Officer is free to initiate proceeding under section 147 and failure to take steps under section 143(3) will not render the Assessing Officer powerless to initiate reassessment proceedings even when intimation under section 143(1) had been issued."
7. Bearing in mind above ratio of the decision, if we revert back to the facts of the case, in an assessment which was previously not taken in scrutiny, the Assessing Officer found that there were no cash sales in the financial year 2004-05 and that therefore total sales of Rs.53,750/- was unexplained. The Assessing Officer also pointed out that the total sum of Rs.1,20,000/- through different entries was deposited in cash in the bank account of the assessee during the said period which is also unexplained. We do not find that such reasons can be stated to be lacking validity permitting the Assessing Officer to assess the income.
8. Under the circumstances, we are not inclined to interfere. It is, however, clarified that nothing stated in this order should be seen as our opinion on the taxability of the amount in question. In other words, we only find that there was sufficient material with the Assessing Officer to form a belief that income chargeable to tax had escaped assessment. Whether, in fact, such additions can be made or not, must be judged on the basis of material, which may come on record during such reassessment proceedings.
9. With above observations, petition is dismissed.
[2013] 34 taxmann.com 47 (Article)
Services provided by Government and Government entities - Concept and valuation aspects
T.N. PANDEY
Ex-Chairman, CBDT
Introduction
1. Levy of tax on services in India has to be seen in two phases i.e. Pre-Finance Act 2012 and Post such Act w.e.f. 1-7-2012. This tax was, for the first time, introduced by the Finance Act, 1994 in view of the expanding contribution of service sector in the GDP growth of the country which constituted nearly 50 per cent of GDP at the relevant time. Shri Manmohan Singh, the then Finance Minister, in the budget speech for the year 1994-95 observed that there was no sound reason for exempting services from taxation.
First phase
2. The tax started by bringing within its fold services in a selective way through various years' Finance Acts. This scheme continued till the Finance Act, 2011.
Second Phase
3. The Finance Act, 2012 brought a fundamental change in taxation of services. This Act switched to comprehensive scheme of taxation by which all services have become taxable barring those placed in the 'Negative List' (section 66D) or are specifically exempted from tax by Government's notifications issued in exercise of power under section 93 of the Act.
Taxation of services by Government/Government entities
4. Taxation aspects concerning Government provided services thus also need consideration in two phases - Part-I and Part-II.
Part-I : Law upto Finance Act, 2011 (upto 30th June, 2011)
5. There was no specific provision concerning such services in the first phase. Exemptions were given to certain categories of services but Government services were not included under such exemptions because such services were not declared taxable by any Finance Acts since 1994. However, CBEC vide its Circular No. 87/7/2006-ST, dated 18-12-2006 clarified that no service tax on fee collected by public authorities while performing statutory functions/duties be collected. In this circular, it has been clarified that the activities performed by the sovereign/public authorities under the provision of law are in the nature of statutory obligations which are to be fulfilled in accordance with law. The fee collected by them for performing such activities is in the nature of compulsory levy as per the provisions of the relevant statute, and it is deposited into the Government treasury. Such activity is purely in public interest and it is undertaken as mandatory and statutory function. These are not in the nature of service to any particular individual for any consideration. Therefore, such an activity performed by a sovereign/public autho-rity under the provisions of law does not constitute provision of taxable service to a person and, therefore, no service tax is leviable on such activities. This circular was superseded by the CBEC's Master Circular No. 96/7/2007ST, dated 23-8-2007, in which the CBEC has expressed an identical view.
Part-II
6. In the second phase from 1-7-2012, all services are taxable. It, therefore, became necessary to consider about the taxability of Government provided services and whether these have been included in the Negative List or in Mega Government Exemption Notification. Section 66D(a) provides that all services provided by Government or Local bodies shall be non-taxable except a few services as under -
| "(a) | services by Government or a local authority excluding the following services to the extent they are not covered elsewhere- |
| (i) | services by the Department of Posts by way of speed post, express parcel post, life insurance and agency services provided to a person other than Government; | |
| (ii) | services in relation to an aircraft or a vessel, inside or outside the precincts of a part or an airport; | |
| (iii) | transport of goods or passengers; or | |
| (iv) | support services, other than services covered under clauses (i) to (iii) above, provided to business entities. |
| (b) | services by the Reserve Bank of India." |
It may be mentioned here that some of the services like transport of passengers is also specified in clause (o) and transport of goods is specified in clause (p) of section 66D. All the clauses viz. (a), (o) and (p) should be read harmoniously in order to determine taxability of service of transport of passengers or goods provided by Government or local authorities.
Why some Government services are taxable?
7. The object is to provide a level playing field. Certain services which are provided by non-governmental bodies (such as by private entrepreneurs) are also provided by Government bodies. Exempting such services rendered by Government bodies would have given an unfair advantage to them and weaken the position of private establishments in the same fields. The other reason is to avoid break in Cenvat chain as the support services provided by Government are normally in the nature of intermediary services.
Meaning of Government
8. There is no definition of Government in the Finance Act, 1994 (Act). However, as per section 2(23) of the General Clauses Act, 1897 the term "Government" has been defined to include both the Central Government and any State Government. The same explanation has been used even in section 21(12)(a) of Indian Penal Code, 1860.
The negative list provides for exemption of services of local authorities too. This term has, however, been defined in the Act to mean-
| (a) | a Panchayat as referred to in clause (d) of article 243 of the Constitution; | |
| (b) | a Municipality as referred to in clause (e) of article 243P of the Constitution; | |
| (c) | a Municipal Committee and a District Board, legally entitled to, or entrusted by the Government with, the control or management of a municipal or local fund; | |
| (d) | a Cantonment Board as defined in section 3 of the Cantonments Act, 2006. | |
| (e) | a regional council or a district council constituted under the Sixth Schedule to the Constitution; | |
| (f) | a development board constituted under article 371 of the Constitution; or | |
| (g) | a regional council constituted under article 371A of the Constitution. |
The term has been very widely defined not only to include body formed by the elected representatives at Panchayat or Municipality level but also include Cantonment Board and Regional Council formed for the local development of the area.
Services taxable
9. The Government services made taxable need to be examined in regard to sub-categories of such services. These are considered as under:
| (a) | Services by Postal Department - The services rendered by this department which are taxable are: |
| (i) | Speed post | |
| (ii) | Express parcel post | |
| (iii) | Life insurance | |
| (iv) | Agency services provided to person other than Government |
| All other services provided by department of posts will not be liable to be taxed. | ||
| (b) | Aircraft or vessel services - The services provided in relation to aircraft or a vessel, inside or outside the precincts or a port or an airport by Government or local authority are taxable services. For understanding the meaning of these words, reference to other enactments mentioned in section 65B of the Act is necessary. This shows: |
| (i) | Aircraft is defined in section 65B(7) to have the meaning assigned to it under the Air Craft Act, 1934. | |
| (ii) | Vessel: It is defined in section 65B(53) as per the meaning assigned to it in clause (z) of section 2 of the Major Port Trusts Act, 1963. | |
| (iii) | Airport : It is defined in section 65B(8) as per the meaning assigned to it in clause(b) of section 2 of the Airports Authority of India Act, 1994. | |
| (iv) | Port: It is defined in section 65B(38) as having the meaning assigned to it in clause (q) of section 2 of the Major Port Trusts Act, 1963 or in clause (4) of section 3 of the Indian Ports Act, 1908. |
Services of Airports and Ports of varied type taxable as such are:
| (a) | Airport Services : Some of such services are : |
| (i) | Transportation and Logistic Services | |
| (ii) | Passenger and cargo traffic control service | |
| (iii) | Baggage handling | |
| (iv) | Maintenance service | |
| (v) | Cleaning of aircraft | |
| (vi) | Amenities to passenger and visitor | |
| (vii) | Hostel restaurant and rest room service | |
| (viii) | Security service | |
| (ix) | Air traffic service | |
| (x) | Air safety service | |
| (xi) | Warehousing service | |
| (xii) | Ground safety service | |
| (xiii) | Search and rescue facility service | |
| (xiv) | Aeronautical communication service | |
| (xv) | Meteorological service | |
| (xvi) | Others (postal facility, catering service, money exchange, parking facility, telephone facility, ATM facility, pre-paid taxi service) |
Service tax is payable in respect of such services.
9.1 Port services -Section 45 of the Major Port Trust Act, 1963 provides for levy of various charges towards following services :
| ♦ | Trans-shipping of passengers or goods between vessels in the port or port approaches; | |
| ♦ | Landing and shipping of passengers or goods from or to such vessels, to or from any wharf, quay, jetty, pier, dock, berth, mooring stage or erection, land or building in the possession or occupation of the Board or at any place within the limits of the port or port approaches; | |
| ♦ | Carnage or porterage of goods or any such place; | |
| ♦ | Wharfage, storage or demurrage of goods or any such place. |
9.2 Vessel services - These include:
| ♦ | Stevedoring service: bringing the vessel to the dock or wharf. | |
| ♦ | Repairing, pilotage, towage, anchorage, hauling, berthing, morring, remorring, hooking, measuring services to the vessel | |
| ♦ | Railway haulage service | |
| ♦ | Labour charges |
Transport of Goods services
10. Clauses (o) and (p) of section 66D specifically deal with services of transport of passengers and transport of goods respectively. The services specified in clauses (o) and (p) in this respect are only taxable. Therefore, the taxability of services provided by Government or local authority will have to be seen in the light of the provisions contained in clauses (o) and (p) of section 66D.
Support services to business entities (other than those discussed earlier)
11. The last category of Government services liable to tax are support services to business entities. The meaning of these terms are elucidated in later discussion.
| (a) | Business entity - The 'business entity' is defined in section 65B(17) as follows: | |
| '(17) "business entity" means any person ordinarily carrying out any activity relating to industry, commerce or any other business or profession' | ||
| Business entity is a person who ordinarily carries out activity for profit. However, if any person carries out any activity as a hobby or pleasure or pastime, the person cannot be considered as 'business entity'. | ||
| (b) | Support service - The word 'support service' is defined in section 65B(49) as follows: | |
| '(49) "support services" means infrastructural, operational, administrative, logistic, marketing or any other support of any kind comprising functions that entities carryout in ordinary course of operations themselves but may obtain as services by outsourcing from others for any reason whatsoever and shall include advertisement and promotion, construction or works contract, renting of immovable property, security, testing and analysis.' |
This definition encompasses following categories of service namely:
| (i) | Infrastructural | |
| (ii) | Operational, administrative, logistic, marketing or other support functions | |
| (iii) | Advertisement & Promotion, Construction or Works Contract, renting of immovable property, security, testing and analysis. |
11.1 Payment of tax in respect of support services - Entity No. 6 in Notification No. 30/2012-ST, dated 20-6-2012 is in respect of services provided by way of support services by Government or Local authorities to business entity.
Valuation of services provided by Government/Local authorities
12. Valuation is an integral part for levy of service tax. Service is, generally payable, on the amounts billed at the prescribed rate. It is also required to be paid on reimbursements unless the reimbursement satisfies the specified conditions in the valuation Rules. Thus, valuation is an important aspect in determining the base on which service tax is to be levied. For considering valuation aspects, reference is necessary to section 67 and Service tax (Determination of Value) Rules, 2006 ('Valuation Rules' for short).
The valuation provisions also need consideration in two Parts namely, position (i) prior to April 18, 2006 and (ii) w.e.f. April 18, 2006. Prior to April 18, 2006, tax was levied on the 'gross amount' charged by the service provider. As a corollary, consideration received in money was the sole basis to determine the value of taxable service. In cases where the service provider received any part of the consideration in non-monetary form or by way of reimbursement, such items did not figure in the invoice raised, thereby depressing the real value of taxable service.
To correct the lacunae, a new section 67 was substituted for then existing section 67 by the Finance Act, 2006 to take care, inter alia, of the situations where any part of the consideration for services rendered or to be rendered was not received in money form. By this amendment, all previous circulars on valuations were withdrawn. Finance Act, 2012 has further increased the essence of the Valuation Rules. This is because the definition of 'service' has been introduced in section 66B(44) of the Act and this definition of 'service' lays emphasis on the term ' consideration'.
According to section 67 read with rule 3 of the Valuation Rules the value of taxable service in different situations shall be as under:
| S. No. | Situation | Value of taxable service |
| (i) | In a case where the provision of service is for a consideration in money | The gross amount charged by the service provider for such service provided or to be provided by them. |
| (ii) | In a case where the provision of service is for a consideration not wholly or partly consisting of money | The value shall be such amount in money with the addition of service tax charged, is equivalent to the consideration. |
| (iii) | In a case where the provision of service is for a consideration which is not ascertainable. | According to rule 3(a) of Valuation Rules, in this case the value of taxable service shall be equivalent to the gross amount charged by the service provider to provide similar service to any other person in the ordinary course of trade and the gross amount charged is the sole consideration. |
| According to rule 3(b) of Valuation Rules, the service provider shall determine the equivalent money value of such consideration which shall, in no case be less than the cost of provision of such taxable service. |
12.1 Other provisions (new) in section 67 - These are:
| "(i) | Where the gross amount charged by a service provider, for the service provided or to be provided is inclusive of service tax payable, the value of such taxable service shall be such amount as, with the addition of tax payable, is equal to the gross amount charged. | |
| (ii) | The gross amount charged for the taxable service shall include any amount received towards the taxable service before, during or after the provision of such service. | |
| (iii) | Subject to the provisions of sub-sections (1), (2) and (3), the value shall be determined in such manner as may be prescribed. | |
| Explanation - For the purposes of this section,— |
| (a) | "consideration" includes any amount that is payable for the taxable services provided or to be provided; |
| (b) | ** | ** | ** |
| (c) | "gross amount charged" includes payment by cheque, credit card deduction from account and any form of payment by issue of credit notes or debit notes and book adjustment, and any amount credited or debited, as the case may be, to any account, whether called "suspense account" or by any other name, in the books of account of a person liable to pay service tax, where the transaction of taxable service is with any associated enterprise". |
12.2 General aspects in the exercise for determination of value - The foregoing discussion shows that in the exercise relating to valuation, the following aspects will need consideration:
| (i) | Service tax is to be imposed on the value of services rendered i.e. on consideration which can be in money form or in kind. Tax is payable on only the value of taxable service and not on the entire value of any contract. | |
| (ii) | When consideration is not ascertainable, it has to be worked out on the basis of section 67(1)(iii) and Rules. | |
| (iii) | Amount charged which does not relate to services rendered has to be excluded. | |
| (iv) | The gross amount liable to service tax will be inclusive of service tax payable. To work out the taxable amount, the following formula can be used- |
| Gross value of the Bill × 100 | = Service tax payable | |
| 100 + Rate of service tax | ||
| (including 2 per cent and 1 per cent education cess) | ||
| (v) | Value includes amount received before, during or after the provision of service. Thus service tax will be payable on the advances received also. | |
| (vi) | Treatment of reimbursement received - With effect from 18-4-2006, comprehensive provisions regarding determination of value of taxable service has been introduced. Accordingly, rule 5(2) of the Valuation Rules provides that the expenditure or costs incurred by the service provider as a pure agent of the recipient of service, shall be excluded from the value of the taxable service. This rule is applicable only when the prescribed conditions are satisfied. | |
| (vii) | Valuation can be only with reference to Valuation Rules. |
12.3 Valuation regarding taxable services of Government/Local authority - Though detailed Valuation Rules have been prescribed, in the case of Government provided services, these will have no application as these services are mostly on the basis of bills and consideration generally is in money. Hence, the service tax will be leviable on the gross amount charged by the service provider for the service provided or to be provided. Hence, detailed Rules of valuation will not be applicable in their cases.
IT: Where purchase of shares as well as sales thereof by assessee is established, surplus therefrom would be capital gain, investment of which would be entitled to section 54F exemption
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[2013] 33 taxmann.com 365 (Guwahati - Trib.)
IN THE ITAT GUWAHATI BENCH
Ramesh Kumar Goel
v.
Income-tax Officer, Ward - 2(2), Guwahati*
K. K. GUPTA, ACCOUNTANT MEMBER
AND K.S.S. PRASAD RAO, JUDICIAL MEMBER
AND K.S.S. PRASAD RAO, JUDICIAL MEMBER
IT APPEAL NO. 72 (GAU.) OF 2008
[ASSESSMENT YEAR 2004-05]
[ASSESSMENT YEAR 2004-05]
FEBRUARY 2, 2012
Section 54F, read with section 45, of the Income-tax Act, 1961 - Capital gains - Exemption of, in case of investment in residential house [Conditions precedent] - Assessment year 2004-05 - Assessee acquired shares and purchase of said shares was declared by him in earlier year and that was accepted by department - Shares were sold through stock brokers at price quoted at Stock Exchange at relevant time and sale consideration was received by account payee demand draft - Whether purchase of shares as well as sales thereof by assessee was established and, hence, sale proceeds of shares could not be treated as income from undisclosed sources; it would be capital gain - Held, yes - Whether assessee could not be denied exemption under section 54F for investment of sale proceeds of shares in acquiring residential unit - Held, yes [Para 6] [In favour of assessee]
FACTS
| ■ | The assessee claimed to have purchased 4000 equity shares of SCCL for a sum of Rs. 9,280 during the previous year and sold these shares for Rs. 6,33,718 and disclosed long-term capital gain of Rs. 6,24,106. Further, the assessee invested this amount in acquiring the residential unit and had claimed exemption under section 54F. | |
| ■ | The Assessing Officer found that the assessee was not able to produce the sale details of shares and particular of broker to whom the shares were sold, the Assessing Officer presumed that the sale is bogus and he added the surplus as income from undisclosed sources. | |
| ■ | On appeal | |
| ■ | The Commissioner affirmed the order of the Assessing Officer. | |
| ■ | On second appeal : |
HELD
| ■ | The assessee has also made available with the departmental authorities filing the copies of annual return, memorandum of association, Form No. 23AC and market quotation of shares of SCCL, having been downloaded from Taxman Website as on 31-3-2003 and 31-3-2004. The Assessing Officer has not accepted the sale proceeds claimed by the assessee for the reason that he has attempted to verify the address of SCCL, which was not fruitful. Except this aspect, there is no other contrary material made out by the Assessing Officer to show that the information furnished by the assessee, basing on that the assessee has made the claim, is incorrect simply because he has not been able to trace the said SCCL at the address given by the assessee. The Assessing Officer presumed that the sale proceeds are bogus and he did not accept the claim of the assessee. | |
| ■ | On perusal of the copies of the documents that were produced by the assessee before the Assessing Officer and also before the Tribunal through his paper book, it is found that the shares of SCCL have collected during the years 2003, 2004, 2005 and 2006 as can be seen from the document being downloaded from Taxman Website by the assessee clearly and categorically establishes that the existence of the said SCCL and the assessee purchased shares of the said company not at all disputed by the Assessing Officer and the sale proceeds of Rs. 6,33,718 were received by the assessee by way of demand draft on ABN Amro Bank and it was duly credited to his account. The Assessing Officer has not been able to make out any iota of evidence to contradict all these factual aspect. | |
| ■ | It is established principles of law that no assumption can be made basing on conjecture, suspicion and surmises. The findings of the Assessing Officer that the assessee could not identify the broker of the shares cannot be a basis of recording the transaction as bogus. From the overall consideration of the evidences produced by the assessee it is clear that the assessee has acquired the shares and purchase of the said shares declared by him in the earlier year and that was accepted by the department and the shares were sold through Stock brokers at the price quoted at the Stock Exchange at the relevant time and the sale consideration was received by assessee by account payee demand draft, will go to show that the purchase of shares as well as sales thereof by the assessee is established; more so, when the Assessing Officer has not been able to make out any positive material contradicting these factual aspects. Hence, the action of the Assessing Officer in treating the sale proceeds of the shares of Rs. 6,33,718 as income from undisclosed sources by denying the exemption claimed by assessee under section 54F of the Act in spite of the assessee making the capital gains and showing the investment of sale proceeds of the shares in acquiring residential unit inasmuch as the Assessing Officer has not denied the acquisition of the residential unit by the assessee. Hence, the actions of the departmental authorities are hereby set aside by allowing the issue raised by the assessee in his appeal. [Para 6] |
CASE REVIEW
Dhakeshwari Cotton Mills Ltd. v. CIT [1954] 26 ITR 775 (SC) and CIT v. Carbo Industrial Holdings Ltd. [2000] 244 ITR 422/[2001] 116 Taxman 199 (Cal.) (para 6) followed.
CASES REFERRED TO
Dhakeshwari Cotton Mills Ltd. v. CIT [1954] 26 ITR 775 (SC) (para 6) and CIT v. Carbo Industrial Holding Ltd. [2000] 244 ITR 422/[2001] 116 Taxman 154 (Cal.) (para 6).
Somnath Ghosh for the Appellant. S. Bhattacharjee for the Respondent.
ORDER
K.S.S. Prasad Rao, Judicial Member - This appeal filed by the assessee having been aggrieved by the order of CIT(A) dated 28.01.2008 for AY 2004-05 in the case of the assessee. The assessee has raised the sole issue Regarding disallowance of the claim of assessee in respect of capital gains of Rs. 6,33,718/- and consequently disallowing the exemption claimed u/s. 54F of the Income-tax Act, 1961 (hereinafter referred to as 'the Act').
2. Both the parties were heard regarding the issue raised by the assessee and its legal implications.
3. On careful perusal of the material made available before the Tribunal and analyzing the same in the light of the rival submissions of both the parties, the undisputed facts relating to the issues are that the assessee is an individual engaged in trading in coal. During the year (under consideration the assessee has sold away 4000 equity shares of M/s. Stanley Credit Capital Ltd. (in short SCCL) which were purchased by him in the immediate preceding year at the sum of Rs. 6,33,718/- and the assessee has disclosed capital gain of Rs. 6,24,106/- on the sale of these equity shares. At the same time, the assessee has claimed exemption u/s. 54F of the Act, as he invested the said amount in purchasing the site and building thereon for self use. During the course of assessment proceedings, the assessee has categorically stated before the AO that he has made an investment of Rs. 9280/- towards purchase 4000 equity share of SCCL at Rs. 2.30 p. per share on 15.07.2002. The shares were purchased in physical mode on delivery basis through Stock broker M/s. N.M. Lohia & Co., Kolkata. This investment was disclosed in the financial statement submitted along with the return for the assessment year 2003-04. Later on, in the assessment year under consideration, the assessee has sold these equity shares of a sum of Rs. 6,33,7018/- being at Rs. 158.43 per share in the month of October, 2003 to a broker at Kolkata and received the proceeds by way of demand draft No. 161741 payable at ABN Amro Bank and it was credited on 31.10.2003. Accordingly, the assessee has earned a long term capital gain of Rs. 6,24,106/- (6,33,718 - 9,280/-. The assessee claimed exemption of the investment of such amount in acquiring the residential unit u/s. 54F of the Act. Since the assessee was not able to produce the sale details of shares and particulars broker to whom the shares were sold, the AO presumed that the sale is bogus and he added the sale proceeds after deducting cost of the shares as income from undisclosed sources while passing the assessment order. Aggrieved with this order, the assessee went in appeal before Ld. CIT(A) but was unsuccessful. Hence, the present appeal is filed by the assessee before the Tribunal.
4. During the course of hearing, the Ld. Representative of assessee has vehemently argued assailing the orders of the departmental authorities contending,inter alia, that the assessee has tiled the particulars of purchase of shares and disclosed the said purchases during the relevant assessment year. The assessee has also found that the said company M/s. SCCL is actually in existence by producing the address of the said company as Cabin No. 674, Padam tower, 14/113, Civil Lines, Kanpur (UP). The assessee has also procured copy of annual returns, Memorandum of Association, Form No. 23AC and market quotation of shares of SCCL downloaded from Taxmann Website as on 31st March, 2003, 2004, 2005 and 2006. Apart from these details, the assessee also requested the AO to verify the purchase and sale of shares from SCCL but the verification carried out by the AO was not fruitful. Thus, the assessee has categorically established the purchase of the said shares and both the departmental authorities have not disputed the purchases. But at the same time, they have not accepted the sale of the said shares in spite of the amount of Rs. 6,33,718/- was established by the assessee are received by demand draft and credit in his bank account. Both the departmental authorities have rejected the claim of the assessee basing on assumption and presumption but without making out any positive evidence to establish that the claim of the assessee is bogus. Hence, he sought for setting aside the orders of the departmental authorities by allowing the appeal of the assessee.
5. Contrary to this, the Ld. Departmental Representative vehemently argued supporting the orders passed by the departmental authorities and sought for upholding the same by dismissing the appeal of the assessee.
6. On careful analysis of the orders passed by the departmental authorities, the undisputed facts relating to the issue are that the assessee has purchased 4000 equity shares of M/s. SCCL. The investment of Rs. 9280/- on 15.07.2002 and this was disclosed during the relevant assessment year, the financial statement submitted along with the return for the AY 2003-04, the assessee has sold these shares, during the period under consideration for a sum of Rs. 6,33,718/- in the month of October, 2003 and received the proceeds by way of demand draft No. 161741 payable at ABN Amro Bank and this amount was credited the account of the assessee on 31.10.2003 and the assessee has categorically stated that he invested this amount in acquiring residential unit and claimed exemption from capital gains u/s. 54F of the Act. The assessee has substantiated the claim of purchase and sale of the said shares by producing the purchase details and the disclosure in the relevant assessment year in the financial statement filed along with the return for the relevant assessment year and he sold the said shares and established the same by the receipt of DD No. 161741 for Rs. 6,33,718/- and crediting the same in his bank account. The assessee has also made available with the departmental authorities filing the copies of annual return, memorandum of association form no. 23AC and market quotation of shares of M/s. SCCL having been downloaded from Taxman Website as on 31.03.2003, 2004, 2005 and 2006. In spite of all these particulars, the AO has not accepted the sale proceeds claimed by the assessee for the reason that he has attempted to verify the address of M/s. SCCL, which was not fruitful. Except this aspect, there is no other contrary material made out by the AO to show that the information furnished by the assessee, basing on that the assessee has made the claim, is incorrect simply because he has not been able to trace the said SCCL at the address given by the assessee. The AO presumed that the sale proceeds are bogus and he did not accept the claim of the assessee. On perusal of the copies of the documents that were produced by the assessee before the AO and also before the Tribunal through his paper book, it is found that the share of SCCL have collected during the year 2003, 2004, 2005 and 2006 as can be seen from the document being downloaded from Taxman Website by the assessee clearly and categorically establishes that the existence of the said SCCL and the assessee purchased shares of the said company not at all disputed by the AO and the sale proceeds of Rs. 6,33,718/- were received by the assessee by way of demand draft on ABN Amro Bank and it was duly credited to his account. The AO has not been able to make out any iota of evidence to contradict all these factual aspect but at the same time, he came to the conclusion by way of presumption and assumption that the sale proceeds of the assessee is bogus and added the same as income from undisclosed sources. It is an established principles of law that no assumption can be made basing on conjecture, suspicion and surmises that as hold by the Hon'ble Apex Court in the case of Dhakeswari Cotton Mills Ltd. v. CIT [1954] 26 ITR 775 (SC). In the case of CIT v. Carbo Industrial Holdings Ltd. [2000] 244 ITR 422/[2001] 116 Taxman 159 (Cal.), it was held by the Hon'ble Calcutta High Court that where the details furnished revealed that the purchases and sale of shares were not accepted as having been transacted on the same date, whereas payment by account payee cheques have not been disputed and merely because some brokers failed to appear, the assessee should not be punished for the default of a broker, and also on mere suspicion the assessee's claim should not be denied. By applying the ratios cited supra to the instant case, the finding of the AO that the assessee could not identify the broker of the shares cannot be a basis of recording the transaction as bogus. From an over all consideration of the evidences produced by the assessee it is clear that the assessee has acquired the shares and purchase of the said shares declared by him in the earlier year and that was accepted by the department and the shares were sold through Stock brokers at the price quoted at the Stock Exchange at the relevant time and the sale consideration was received by assessee by account payee demand draft, will go to show that the purchase of shares as well as sales thereof by the assessee is established more so, when the AO has not been able to make out any positive ' material contradicting these factual aspects. Hence, we are of the considered view that the action of the AO in treating the sale proceeds of the shares of Rs. 6,33,718/- as income from undisclosed sources by denying the exemption claimed by assessee u/s. 54 of the Act, in spite of the assessee making the capital gains and showing the investment of sale proceeds of the shares in acquiring residential unit inasmuch as the AO has not denied the acquisition of the residential unit by the assessee. Hence, the actions of the departmental authorities are hereby set aside by allowing the issue raised by the assessee in his appeal.
7. In the result, appeal of the assessee is allowed.
SB*In favour of assessee.
POST OFFICE SAVINGS ACCOUNT (AMENDMENT) RULES, 2013 - SUBSTITUTION OF RULE 4A & OMISSION OF RULE 4B
NOTIFICATION NO. GSR 323(E)[F.NO.2/6/2006-NS-II], DATED 20-5-2013
In exercise of the powers conferred by section 15 of the Government Savings Banks Act, 1873 (5 of 1873), the Central Government hereby makes the following rules further to amend the Post Office Savings Account Rules, 1981, namely:—
1.(1) These rules may be called the Post Office Savings Account (Amendment) Rules, 2013.
(2) They shall come into force on the date of their publication in the Official Gazette.
2. In Post Office Savings Account Rules, 1981 (hereinafter referred to as the said rules), for rule 4A, following rule shall be substituted, namely :-
"4A(1) Basic Saving Account and matters connected therewith.— Notwithstanding anything contained in rules 4 and 5, and with the objective of facilitating payment of various Government benefits transferred under different schemes of Central and State Governments, the beneficiaries of any such scheme may open and operate Basic Saving Account and the Deposits required for opening of such account, etc. and other matters connected therewith shall be specified in the Table below, namely:—
| Type of account | Who may open the account | Deposit required for opening of account | Number of accounts that can be opened | Type of deposits that can be made into the account | Minimum balance to be maintained in the account | Who may operate the account | |
| 1 | 2 | 3 | 4 | 5 | 6 | 7 | |
| Basic Saving Account | (i) Registered adult member of any Government Welfare Scheme. (ii) Guardian of a minor whose name is registered for any Government Benefit. | Nil | One | Any Government benefit or any other deposit under the rules. | Nil | (i) An individual adult whose name is registered for any Government Welfare Scheme. (ii) A guardian of any minor whose name is registered under any Government Welfare Scheme. |
(2) Any Savings Account opened under rules 4A and 4B as they stood prior to the date commencement of these rules shall be deemed to be a Basic Savings Account under these rules."
3. In the said rules, rule 4B shall be omitted.
IT : Where there was failure on part of assessee to make true and complete disclosure in respect of share transactions entered into by it, in view of proviso to section 147, Assessing Officer was justified in initiating reassessment proceedings even after expiry of four years from end of relevant assessment year
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[2013] 33 taxmann.com 454 (Bombay)
HIGH COURT OF BOMBAY
Pranawa Leafin (P.) Ltd.
v.
Deputy Commissioner of Income-tax, Range -5(2)*
DR. D.Y. CHANDRACHUD AND A.A. SAYED, JJ.
WRIT PETITION NO. 167 OF 2013
MARCH 14, 2013
Section 147, read with section 45, of the Income-tax Act, 1961 - Income escaping assessment - Non-disclosure of primary facts [To tax capital gains] - Assessment year 2005-06 - Assessee filed its return stating that it had acquired 10 lakh shares of 'D' Ltd. - At time of computation of long term capital gain, assessee stated that date of acquisition of shares was 9-12-1994 - Cost of acquisition was stated to be Rs. 2.86 crores while date of sale was stated as 12-5-2004 - Assessee claimed that since indexed cost of acquisition was Rs. 4.50 crores whereas sale proceeds were Rs. 3.80 crores, there was long term capital loss of Rs. 70.88 lakhs - Assessment order was passed under section 143(3) - After expiry of four years from relevant assessment year, Assessing Officer initiated reassessment proceedings on ground that as per share certificates assessee had acquired those shares on 30-1-2004 which were sold on 12-5-2004 - According to Assessing Officer, transaction of sale of shares resulted in earning of short term capital gain which escaped assessment - Assessee filed instant writ petition contending that impugned reassessment proceedings were barred by limitation - Whether since there was failure on part of assessee to make a true disclosure that it was only on 30-1-2004 payment of final call money had been made for acquisition of shares of 'D' Ltd., Assessing Officer was justified in initiating reassessment proceedings even beyond period of four years from end of relevant assessment year - Held, yes [Paras 7 and 8] [In favour of revenue]
CASES REFERRED TO
Indian Hume Pipe Co. Ltd. v. Asstt. CIT [2012] 348 ITR 439/204 Taxman 347/16 taxmann.com 190 (Bom.) (para 4) and Dynacraft Air Controlsv. Smt. Sneha Joshi [2013] 214 Taxman 183/31 taxmann.com 254 (Bom.) (para 4).
Sanjiv M. Shah for the Petitioner. Abhay Ahuja for the Respondent.
ORDER
The Petitioner has challenged a notice issued by the Assessing Officer seeking to reopen an assessment for A.Y. 2005-06. The notice under Section 148 was issued on 27 March 2012, beyond the period of four years of the end of the relevant assessment year. Reasons have been disclosed to the assessee on 11 October 2012. The assessee filed its objections to the reopening of the assessment. The objections have been disposed of on 6 December 2012.
2. The assessee filed a return of income for A.Y. 2005-06. In the computation which is annexed to the return of income, the assessee inter alia claimed a long term loss on the sale of 10 lakh shares of a company by the name of Deepak Fertilizers and Petrochemicals Corporation Ltd. (DFPCL). In the computation of long term capital gains, the assessee stated that the date of acquisition of the shares was 9 December 1994. The cost of acquisition was stated to be Rs. 2.86 crores while the date of sale was stated as 12 May 2004. The assessee claimed that the indexed cost of acquisition was Rs. 4.50 crores and the sale proceeds were Rs. 3.80 crores. The long term capital loss was computed at Rs. 70.88 lakhs. During the course of the assessment proceedings, the Assessing Officer issued a notice under Section 148(1) on 22 August 2007 in which he inter alia sought a disclosure of the details of the profit on the sale of shares during the year. The assessee was required to produce a copy of the demat account and contract notes/bills in respect of the long term capital gain. In a reply dated 24 September 2007, the assessee stated that it had made payment on 9 December 1994 of an amount of Rs. 28.65 lakhs and was entitled to the allotment of 10 lakh equity shares at a premium of Rs.18.65 per share. The assessee stated that on 3 September 1996, it had exercised its right and was allotted 10 lakh equity shares. In the annexure to the letter, the assessee stated that the date of purchase was 9 December 2004 (this according to Counsel appearing on behalf of the Petitioner being an erroneous statement). On 13 December 2007, which was one day prior to the order of assessment, the assessee filed under cover of its letter, as many as fourteen annexures, including a share certificate of DFPCL. An order of assessment was passed on 14 December 2007 under Section 143(3). The order of the Assessing Officer contains no discussion on whether the assessee was entitled to claim a long term capital loss.
3. The foundation of the notice under Section 148 as disclosed in the reasons furnished to the assessee is that during the relevant previous year, the assessee had shown a long term capital loss of Rs. 70.88 lakhs on account of the sale of 10 lakh shares of DFPCL. The share certificate revealed that the assessee had acquired those shares on 30 January 2004 and which were sold by the assessee on 12 May 2004. According to Assessing Officer, there was a short term capital gain of Rs. 2.80 crores which was not offered to tax as a result of which there was an under assessment of income by Rs. 2.80 crores.
4. The reopening in the present case, has taken place beyond the period of four years of the end of the relevant assessment year. Since the order of assessment was passed under Section 143(3), the validity of the notice reopening the assessment would depend upon whether there was a failure on the part of the assessee to fully and truly disclose all material facts necessary for the assessment for that particular year. What should be a full and true disclosure of material facts has been elucidated in the judgment of a Division Bench of this Court in Indian Hume Pipe Co. Ltd. v. Asstt. CIT [2012] 348 ITR 439/204 Taxman 347/16 taxmann.com 190 (Bom.) thus:
"The full and true disclosure which the statute contemplates must be judged in the context of Epln.1 to S.147. The assessee cannot merely rely upon the fact that if the AO had followed an enquiry with due diligence on the basis of the account books or other evidence produced by the assessee, he could have discovered material evidence. The mere production of account books or other evidence from which material evidence could with due diligence have been discovered by the AO does not necessarily amount to a disclosure within the meaning of the first proviso to s. 147. The nature of the material produced and the circumstances in which it was produced assumes some significance.
Full and true disclosure must mean what the statute says. These disclosures cannot be garbled or hidden in the crevices of the documentary material which has been filed by the assessee with the AO. The assessee must act with candor and the disclosure must be full and true. A full disclosure is a disclosure of all material facts which does not contain any hidden material or suppression of fact. A true disclosure is a disclosure which is truthful in all respects. Just as the power of the Revenue to reopen an assessment beyond a period of four years is restricted by the conditions precedent spelt out in the proviso to s. 147, equally an assessee who seeks the benefit of the proviso to s. 147 must make a full and true disclosure of all primary facts." [At paras 9 and 11]
Where the reopening has taken place beyond the period of four years, the jurisdictional requirement is that there must be a failure on the part of the assessee to disclose fully and truly all material facts necessary for that assessment year. [Dynacraft Air Controls v. Smt.Sneha Joshi [2013] 214 Taxman 183/31 taxmann.com 254 (Bom.)]
5. Counsel appearing on behalf of the assessee submitted that in response to the questionnaire of the Assessing Officer, the assessee had in its reply dated 24 September 2007 disclosed that on 3 September 1996 the assessee had exercised its right to the allotment of 10 lakh equity shares of DFPCL and was allotted those shares. Finally, it was urged that on 13 December 2007, the assessee addressed a communication to the Assessing Officer to which the share certificate dated 3 September 1996 was annexed and which would show that the assessee had paid the final call on 30 January 2004.
6. On the other hand, Counsel appearing on behalf of the Revenue urged that the entirety of the material on record would show a suppression by the assessee of one material fact both in the return and in the assessment proceedings, namely, that the assessee had made the payment of Rs. 2.57 crores only on 30 January 2004. Counsel appearing on behalf of the Revenue submitted that the assessee had made an incorrect disclosure in the computation that was furnished with the return of income that the acquisition of the shares was on 9 December 1994. Another disclosure was made on 24 September 2007 in the chart annexed to the letter of the assessee which shows that the date of purchase as 9 December 2004. This is now stated to be an obvious mistake by the Counsel appearing on behalf of the Petitioner. On these grounds, it was urged that there was a failure on the part of the assessee to disclose all the primary facts. Merely tendering to the Assessing Officer one day before the Assessing Officer passed the order of assessment, a letter containing a compilation of statements including the share certificate would not amount to valid compliance with the provisions of law.
7. The computation of income that was filed by the assessee together with the return of income stated that the assessee had purchased 10 lakh shares of DFPCL on 9 December 1994 at a cost of Rs. 2.86 crores. The assessee claimed that it sold the shares on 10 May 2004. It was on this basis that the assessee claimed the benefit of indexation. What the assessee failed to disclose in the computation was the fact that the payment of Rs. 2.57 crores for the shares was in fact made on 30 January 2004. This was a fact which ought to have been disclosed to the Assessing Officer, but which was not disclosed even in the further letter of the assessee dated 24 September 2007. In that letter, the assessee disclosed the initial payment of Rs. 28.65 lakhs on 9 December 1994, but carefully avoided disclosure of the fact that the payment of Rs. 2.57 crores was made only on 30 January 2004. Finally, it was on 30 January 2004 that the assessee addressed a communication to the Assessing Officer containing as many as fourteen annexures. One of them was a share certificate of DFPCL. That share certificate contained an endorsement to the effect that the assessee has paid the final call on 30 January 2004. Explanation (1) to Section 147 provides that the production before the Assessing Officer of account books or other evidence from which material evidence could with due diligence have been discovered by the Assessing Officer would not amount to a disclosure within the meaning of the proviso. The nature of the disclosure has to be assessed in the facts and circumstances of each individual case. In the present case, there was a failure on the part of the assessee to make a disclosure that was candid, frank and true of the fact that it was only on 30 January 2004 that the assessee had made a payment of Rs. 2.57 crores for the acquisition of the shares of DFPCL.
8. In these circumstances and on the basis of the material as it stands, it cannot be said that the invocation of the jurisdiction to reopen the assessment beyond the period of four years did not fulfil the jurisdictional requirement. In our view, the Assessing Officer acted within jurisdiction since the record would indicate that there was a failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment of that assessment year. We, therefore, do not find any merit in the Petition. The Petition is accordingly dismissed.
IT : Where at time of disposing of issue relating to bad debts, Tribunal inadvertently failed to consider applicability of order passed by Supreme Court on similar issue to assessee's case, it was justified in recalling its earlier order for limited purpose of reconsideration of said aspect of case
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[2013] 33 taxmann.com 487 (Gujarat)
HIGH COURT OF GUJARAT
Deputy Commissioner of Income-tax, Circle 1(1)
v.
Daniel Measurement & Controls (India) (P.) Ltd.*
AKIL KURESHI AND MS. SONIA GOKANI, JJ.
TAX APPEAL NO. 860 OF 2012†
MARCH 4, 2013
Section 254 of the Income-tax Act, 1961 - Appellate Tribunal - Power of Rectification [Power to recall] - Tribunal passed an order in appellate proceedings in respect of assessee's claim for bad debts - Subsequently, assessee filed miscellaneous civil application wherein one of grounds raised was that since decision of Supreme Court rendered in case of TRF (T.R.F.) Ltd. v. CIT [2010] 190 Taxman 391 was not considered while deciding matter, there was an error apparent on face of record which required interference - Tribunal having noted that inadvertently such decision could not be considered at time of deciding appeal on merit, directed hearing of issue once again - Tribunal thus recalled its order for a limited purpose of deciding such issue - Whether since applicability of ratio of order passed by Supreme Court to facts of assessee's case was yet to be decided, Tribunal was perfectly justified in recalling its earlier order - Held, yes [In favour of assessee]
CASES REFERRED TO
TRF. Ltd v. CIT [2010] 323 ITR 397/190 Taxman 391 (SC) (para 2) Asstt. CIT v. Saurashtra Kutch Stock Exchange Ltd. [2005] 305 ITR 227/173 Taxman 322 (SC) (para 2).
K.M. Parikh for the Appellant.
ORDER
Ms. Sonia Gokani, J. - Challenging order of the Income Tax Appellate Tribunal dated 22.06.2012, following substantial questions of law have been proposed:
"A. Whether the impugned decision of the Hon'ble Appellate Tribunal amount to reversing the entire decision which was decided on merit after considering the existing law in this regard?
B. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal has erred in law in recalling its earlier order to examine it again in the light of the Hon'ble Supreme Court decision in the case of TRF Ltd. v. CIT (2010) 323 ITR 397 when ratio of that decision is not applicable to facts of this case and further, there cannot be any presumption that earlier Bench had not considered the decision?"
2. We have heard learned counsel Mr. K.M. Parikh, who has fervently made his submissions that, the Tribunal has wrongly exercised the powers when the matter was already decided on the merits. The Tribunal could not have applied the decision of (T.R.F.) Ltd. v. CIT [2010] 323 ITR 397/190 Taxman 391 (SC). He further urged that the said ratio would be applicable only in the case, where the bad debts become irrevocable, whereas, in the instant case, as could be noted from the record, the assessee had continuous business dealing with Gujarat Chemical Port Terminal Co. Ltd. (for short 'GCPTCL') in the past, and in future and therefore, the bad debts could not have been written off, as claimed by the assessee. He also has relied upon the decision of Apex Court in case of Asstt. CIT v. Saurashtra Kutch Stock Exchange Ltd. [2008] 305 ITR 227/173 Taxman 322 highlighting the scope of 'jurisdiction in case of rectification of the mistake and stated that on account of such ratio, there is no need for any interference.
3. We can notice from the decision that revenue had filed appeal against the order of the CIT(A) where, six grounds of appeal were raised and all were considered by the Tribunal. Subsequently, the assessee had filed misc. civil application and one of the grounds raised was that the decision of Supreme Court rendered in case of TRF(T.R.F.) Ltd (supra) was not considered and, therefore, there was an error apparent on the face of the record which requires interference.
4. The Tribunal, having noted that inadvertently such decision could not be considered at the time of deciding the appeal on merit, had directed the hearing of the issue once again and, therefore, recalled its order for a limited purpose of deciding such issue only to that extent. Such recall is to be operated.
5. We see no error in the approach of the Tribunal as in case of TRF(T.R.F.) Ltd (supra) the Apex Court has made it clear inter alia that it is not necessary for the assessee to establish any more that the debt has become irrevocable after 01.04.1989. It would be sufficient for him to write off the debt as irrevocable in his account. Such being a ratio of the Apex Court when it was not noticed by the Tribunal it chose to recall its earlier order. In the instant case, Tribunal is yet to decide the entire aspect on merits. It has merely directed the office to to refix the hearing on the question whether the ratio would be applicable to the case of assessee. As applicability of ratio to the facts is yet to be decided by the Tribunal and when it was perfectly justified in recalling the order for not having considered such ratio! at the time of deciding the entire case on merits, we see no reason to entertain this appeal as it does not give rise to any substantial question of law. The same is, therefore, dismissed.
IT : Where at time of disposing of issue relating to bad debts, Tribunal inadvertently failed to consider applicability of order passed by Supreme Court on similar issue to assessee's case, it was justified in recalling its earlier order for limited purpose of reconsideration of said aspect of case
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[2013] 33 taxmann.com 487 (Gujarat)
HIGH COURT OF GUJARAT
Deputy Commissioner of Income-tax, Circle 1(1)
v.
Daniel Measurement & Controls (India) (P.) Ltd.*
AKIL KURESHI AND MS. SONIA GOKANI, JJ.
TAX APPEAL NO. 860 OF 2012†
MARCH 4, 2013
Section 254 of the Income-tax Act, 1961 - Appellate Tribunal - Power of Rectification [Power to recall] - Tribunal passed an order in appellate proceedings in respect of assessee's claim for bad debts - Subsequently, assessee filed miscellaneous civil application wherein one of grounds raised was that since decision of Supreme Court rendered in case of TRF (T.R.F.) Ltd. v. CIT [2010] 190 Taxman 391 was not considered while deciding matter, there was an error apparent on face of record which required interference - Tribunal having noted that inadvertently such decision could not be considered at time of deciding appeal on merit, directed hearing of issue once again - Tribunal thus recalled its order for a limited purpose of deciding such issue - Whether since applicability of ratio of order passed by Supreme Court to facts of assessee's case was yet to be decided, Tribunal was perfectly justified in recalling its earlier order - Held, yes [In favour of assessee]
CASES REFERRED TO
TRF. Ltd v. CIT [2010] 323 ITR 397/190 Taxman 391 (SC) (para 2) Asstt. CIT v. Saurashtra Kutch Stock Exchange Ltd. [2005] 305 ITR 227/173 Taxman 322 (SC) (para 2).
K.M. Parikh for the Appellant.
ORDER
Ms. Sonia Gokani, J. - Challenging order of the Income Tax Appellate Tribunal dated 22.06.2012, following substantial questions of law have been proposed:
"A. Whether the impugned decision of the Hon'ble Appellate Tribunal amount to reversing the entire decision which was decided on merit after considering the existing law in this regard?
B. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal has erred in law in recalling its earlier order to examine it again in the light of the Hon'ble Supreme Court decision in the case of TRF Ltd. v. CIT (2010) 323 ITR 397 when ratio of that decision is not applicable to facts of this case and further, there cannot be any presumption that earlier Bench had not considered the decision?"
2. We have heard learned counsel Mr. K.M. Parikh, who has fervently made his submissions that, the Tribunal has wrongly exercised the powers when the matter was already decided on the merits. The Tribunal could not have applied the decision of (T.R.F.) Ltd. v. CIT [2010] 323 ITR 397/190 Taxman 391 (SC). He further urged that the said ratio would be applicable only in the case, where the bad debts become irrevocable, whereas, in the instant case, as could be noted from the record, the assessee had continuous business dealing with Gujarat Chemical Port Terminal Co. Ltd. (for short 'GCPTCL') in the past, and in future and therefore, the bad debts could not have been written off, as claimed by the assessee. He also has relied upon the decision of Apex Court in case of Asstt. CIT v. Saurashtra Kutch Stock Exchange Ltd. [2008] 305 ITR 227/173 Taxman 322 highlighting the scope of 'jurisdiction in case of rectification of the mistake and stated that on account of such ratio, there is no need for any interference.
3. We can notice from the decision that revenue had filed appeal against the order of the CIT(A) where, six grounds of appeal were raised and all were considered by the Tribunal. Subsequently, the assessee had filed misc. civil application and one of the grounds raised was that the decision of Supreme Court rendered in case of TRF(T.R.F.) Ltd (supra) was not considered and, therefore, there was an error apparent on the face of the record which requires interference.
4. The Tribunal, having noted that inadvertently such decision could not be considered at the time of deciding the appeal on merit, had directed the hearing of the issue once again and, therefore, recalled its order for a limited purpose of deciding such issue only to that extent. Such recall is to be operated.
5. We see no error in the approach of the Tribunal as in case of TRF(T.R.F.) Ltd (supra) the Apex Court has made it clear inter alia that it is not necessary for the assessee to establish any more that the debt has become irrevocable after 01.04.1989. It would be sufficient for him to write off the debt as irrevocable in his account. Such being a ratio of the Apex Court when it was not noticed by the Tribunal it chose to recall its earlier order. In the instant case, Tribunal is yet to decide the entire aspect on merits. It has merely directed the office to to refix the hearing on the question whether the ratio would be applicable to the case of assessee. As applicability of ratio to the facts is yet to be decided by the Tribunal and when it was perfectly justified in recalling the order for not having considered such ratio! at the time of deciding the entire case on merits, we see no reason to entertain this appeal as it does not give rise to any substantial question of law. The same is, therefore, dismissed.
SUNIL IT : Where nature of subsidy, purpose for which same was made available and all other relevant factors were not examined, reducing subsidy from cost of depreciable asset required fresh consideration
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[2013] 33 taxmann.com 172 (Gujarat)
HIGH COURT OF GUJARAT
Munjal Auto Industries Ltd.
v.
Deputy Commissioner of Income-tax, Circle 4(1)*
AKIL KURESHI AND MS. SONIA GOKANI, JJ.
TAX APPEAL NOS. 342 TO 345 OF 2012
FEBRUARY 12, 2013
Section 43(1) read with section 254 of the Income-tax Act, 1961 - Actual cost [Subsidy] - Assessee received subsidy in form of sales tax deferment and claimed it as capital receipt - Assessing Officer taxed subsidy as revenue receipt - Commissioner (Appeals) reversed order of Assessing Officer - Tribunal upheld order of Commissioner (Appeals) and further directed Assessing Officer to reduce amount of subsidy from cost of depreciable assets - Whether assessee's contention that Tribunal had no power to give any consequential directions after upholding decision of Commissioner (Appeals) was justified - Held, no - Whether where nature of subsidy, purpose for which same was made available and all other relevant factors were not examined, treatment of subsidy required fresh consideration - Held, yes [Para 9] [Partly in favour of assessee]
FACTS
| ■ | The assessee engaged in the business of manufacture received incentive in the form of sales tax deferment from the state government and claimed it as capital receipt. | |
| ■ | The Assessing Officer held that subsidy was revenue receipt. | |
| ■ | On first appeal, Commissioner (Appeals) reversed the order of Assessing Officer. | |
| ■ | On second appeal by the revenue, Tribunal upheld the view of the Commissioner (Appeals) and directed the Assessing Officer to recalculate depreciation after reducing the amount of subsidy from the cost of fixed assets. | |
| ■ | The assessee contended that, the Tribunal having confirmed the view of Commissioner (Appeals) had no jurisdiction to pass any consequential directions. Further, contended that, it is not in every case that if a receipt is treated as capital in nature, it must be reduced from the cost of depreciable assets. |
HELD
| ■ | Under section 254(1) the Tribunal enjoys considerable power of discretionary character of passing such order as it thinks fit on an appeal presented before it either by the assessee or by the Revenue. The only requirement is that both parties to the appeal should be given a hearing. | |
| ■ | The Tribunal allowed the Revenue's appeal in part. Insofar as the substantive challenge to the Commissioner (Appeals) view that the receipt was capital in nature was rejected, however, the consequential fall out of such a view, namely, that the capital receipt should reduce the cost of acquisition was accepted by the Tribunal. It is not that the Tribunal had power either only to accept the view of the Commissioner (Appeals) in totoor to reject the same in its entirety. | |
| ■ | Insofar as the technical contention of the assessee that the Tribunal could not have entertained such a contention and given consequential direction is concerned, no interference was required. [Para 4] | |
| ■ | Question arises that where the Tribunal while held the receipts are capital in nature, it could also have given further direction. In that case, the same should go on to reduce the cost of acquisition. [Para 6] | |
| ■ | Though ordinarily, it may be true that the subsidies, which are in the nature of capital receipts given for covering the capital details for acquisition of fixed assets may go on to reduce the cost of acquisition of such assets and resultantly, may have no effect of reducing the depreciation available on the assets on such investment, nevertheless, this cannot be held to be a rule of universal application without examination of relevant facts. [Para 7] | |
| ■ | Though applicability of the proposition canvassed by the Tribunal itself was open to argument on the basis of facts on record, it was opined that the Tribunal committed an error in giving direction (1) without availing opportunity of hearing to the assessee and (2) without discussion of facts on record or law applicable to it. The relevant observation of the Tribunal is only discussed to throw light on this aspect of the matter. [Para 8] | |
| ■ | Under the circumstances, the Tribunal to consider the issue afresh bearing in mind the nature of subsidy, purpose for which the same was made available and all other relevant factors bearing in mind the case laws cited and which may further be argued before the Tribunal by both the sides. For this limiter purpose, the question is placed before the Tribunal for afresh consideration and disposal in accordance with law. [Para 9] |
CASE REVIEW
CIT v. Grace Paper Industries (P.) Ltd. [1990] 183 ITR 591/52 Taxman 18 (Guj.), Mehesana Distt. Coop. Milk Pro. Union v. CIT [2002] 258 ITR 780/[2003] 132 Taxman 40 (Guj.) and CIT v. Swastik Sanitary Works Ltd. [2006] 286 ITR 544 (Guj.) (para 4) followed.
J.P. Shah for the Appellant. K.M. Parikh for the Respondent.
ORDER
Akil Kureshi, J. - These Tax Appeals have been filed by the assessee challenging the common order of the Income Tax Appellate Tribunal (for short "ITAT"). We may notice the facts narrated in Tax Appeal No.342 of 2012. In such Appeal, the assessee has presented following substantial questions of law for our consideration:
| "(i) | Whether on the facts and in the circumstances of the case, the Tribunal was within its rights in giving a direction to the Assessing Officer that he must allow the depreciation on the actual cost reduced by the amount of such subsidy under sec.43(1) of the Income Tax Act, 1961 ? | |
| (ii) | Even if the reply to the above question is in the affirmative, whether the Tribunal was right in law in holding that the portion of the actual cost is met directly or indirectly by the above subsidy as required by section 43(1), and therefore, the Assessing Officer must allow depreciation on such reduced cost (actual cost less subsidy) ?" |
2. The assessee is a company engaged in the business of manufacture having its units at GIDC Estate, Waghodia, Baroda and outside of Gujarat also. In the Assessment Year 2003-2004, the assessee had received incentive in the form of sales tax deferment from the Government of Haryana under the scheme so formulated by the State Government. It gave boost to the investment in the industrial sector.
3. Between the revenue and the assessee, the dispute arose whether such receipt should be treated in the nature of capital as contended by the assessee or revenue receipt as contended by the revenue. The Assessing Officer held that subsidy was in the nature of revenue receipt. The assessee carried the matter before the Deputy Commissioner who reversed the order of the Assessing Officer. Revenue thereafter approached the Tribunal and the Tribunal though substantially upheld the view of the Commissioner, in the last paragraph of the judgment, made certain observation against the assessee which is the subject-matter of these appeals. Such observation is reproduced as under:
"But at the same time, we direct the AO to consider the receipt as subsidy received by the assessee for fixed assets and therefore, the AO should recalculate the depreciation as per the law after reducing the amount of subsidy from the cost of fixed assets as per the provisions of section 43(1) of the Act. Before doing so, the AO should provide reasonable opportunity of being heard to the assessee and thereafter he should pass necessary order as per the law on these aspects. The Ground No.2 is partly allowed as indicated above."
4. On 08.01.2013, after hearing learned counsel Mr. J.P. Shah, we have issued notice for final disposal, making following observations:
"Question No.1 reproduced above pertains to assessee's contention that the Tribunal had no power to give any such consequential directions, having once held that the Commissioner (Appeal) was correct in treating the receipt as capital in nature. Question No.2 pertains to the assessee's contention that it is not in every case that the moment a receipt is treated as capital in nature, it must go on to reduce the cost of acquisition of the depreciable assets and that therefore for the purpose of depreciation, the value of the capital investment should be correspondingly reduced.
Insofar as question No.1 is concerned, despite strong representation made by Shri J.P. Shah for the appellant, we are unable to see any illegality committed by the Tribunal. The Tribunal under section 254(1) of the Income Tax Act, 1961, has power to pass such order in an appeal as it thinks fit after giving both the parties to the appeal an opportunity of being heard. It is not the case of the appellant that no opportunity of being heard was granted. It is, in fact, the case of the appellant that such contention was not raised by the counsel for the Department in appeal before the Tribunal. No such ground having been taken in appeal, the same could not have been entertained by the Tribunal. In fact, counsel vehemently contended that the appeal of the Revenue before the Tribunal was whether the Commissioner (Appeal) was justified in treating the receipt as capital in nature. The Tribunal having confirmed such a view of the CIT (Appeals), thereafter, had no jurisdiction to pass any further order.
To our mind, such contention cannot be accepted. Firstly, as already noted, under sub-section (1) of section 254 of the Income-tax Act, the Tribunal enjoys considerable power of discretionary character of passing such order as it thinks fit on an appeal presented before it either by the assessee or by the Revenue. The only requirement is that both parties to the appeal should be given a hearing. Secondly, in essence, what the Tribunal did by passing the earlier noted consequential direction was to allow the Revenue's appeal partially. Insofar as the Revenue's stand that the receipt was revenue in nature was not accepted. However, insofar as the consequential relief prayed for by the Revenue, albeit, through an oral contention, that in case the Tribunal holds that the receipt was capital in nature the same should go to reduce the cost of acquisition was accepted. In fact, the Tribunal did so specify in the order itself by recording that ground No.2 is partially allowed.
The sum total of the above discussion is that in essence, what the Tribunal did was to allow the Revenue's appeal in part. Insofar as the substantive challenge to the CIT(Appeals) view that the receipt was capital in nature was rejected, however, the consequential fallout of such a view, namely, that the capital receipt should reduce the cost of acquisition was accepted by the Tribunal. We do not think that the Tribunal had power either only to accept the view of the Commissioner (Appeals) in toto or to reject the same in its entirety.
Insofar as the technical contention of the assessee that the Tribunal could not have entertained such a contention and given consequential direction is concerned, we do not see any reason to interfere. We may reiterate that it is not even the case of the assessee that he was taken by surprise and that the Tribunal did not permit reasonable opportunity of meeting with such a ground.
Insofar as the second question is concerned, we are, prima facie, of the opinion that the Tribunal proceeded on the basis that the moment there is a receipt of capital in nature by way of subsidy or incentive, the same should go to reduce the cost of acquisition as a necessary corollary. It appears that the Tribunal did not examine the nature of the scheme and the purpose for which the subsidy was being made available and such other relevant factors while deciding such an issue. In this respect, following three decisions cited by Shri J.P. Shah would be relevant.
| (i) | CIT v. Grace Paper Industries Pvt. Ltd., 183 ITR 591. | |
| (ii) | Mehesana Distt. Coop. Milk Pro. Union v. CIT ., 258 ITR 780. | |
| (iii) | CIT v. Swastik Sanitary Works Ltd. , 286 ITR 544. |
Issue notice for final disposal for consideration of question No.2 only, returnable on 12th February, 2013."
5. We may record that against the very same judgment of the Tribunal insofar as it held that the sales tax benefits received by the assessee were in the nature of capital receipt, the revenue had approached this Court by filing Tax Appeal No.450/2012 and connected appeals. Such appeals came to be dismissed by judgment dated 28.01.2013. In the upheld view of the Tribunal, whether receipts are capital in nature. Insofar as the number of controversies between the parties is concerned, the same stands concluded at our level by virtue of the said judgment.
6. Short question arises that where the Tribunal while held the receipts are capital in nature, it could also have given further direction. In that case, the same should go on to reduce the cost of acquisition.
7. Though ordinarily, it may be true that the subsidies, which are in the nature of capital receipts given for covering the capital details for acquisition of fixed assets such as plants, machineries, land and building etc., may go on to reduce the cost of acquisition of such assets and resultantly, may have an effect of reducing the depreciation available on the assets on such investment, nevertheless, this cannot be held to be a rule of universal application without examination of relevant facts. In this respect, we had noticed several decisions of this Court cited by counsel for the assessee and noted by us in earlier order dated 08.01.2013.
8. Though applicability of the proposition canvassed by the Tribunal itself was open to argument on the basis of facts on record, in our opinion, the Tribunal committed an error in giving directions 1) without availing opportunity of hearing to the assessee and 2) without discussion of facts on record or law applicable to it. The relevant observation of the Tribunal is only discussed to throw light on this aspect of the matter.
9. Under the circumstances, we request the Tribunal to consider the issue afresh bearing in mind the nature of subsidy, purpose for which the same was made available and all other relevant factors bearing in mind the case laws cited before us and which may further be argued before the Tribunal by both the sides. For this limiter purpose, the question is placed before the Tribunal for afresh consideration and disposal in accordance with law.
10. We clarify that we express no opinion on merit or demerit of rival contentions raised before the Tribunal.
Tax Appeals disposed of,accordingly.
IT: Where only an invoice had been raised and work had not even commenced it did not constitute income for that year since revenue recognition on completion of certain milestone of work is an accepted method in mercantile system of accounting
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[2013] 33 taxmann.com 264 (Bangalore - Trib.)
IN THE ITAT BANGALORE BENCH 'C'
Davis Langdon & Seah Consulting India (P.) Ltd.
v.
Deputy Commissioner of Income-tax, Circle 11(1)*
N.V. VASUDEVAN, JUDICIAL MEMBER
AND JASON P. BOAZ, ACCOUNTANT MEMBER
AND JASON P. BOAZ, ACCOUNTANT MEMBER
IT APPEAL NO. 1190 (BANG.) OF 2011
[ASSESSMENT YEAR 2008-09]
[ASSESSMENT YEAR 2008-09]
DECEMBER 21, 2012
Section 5 of the Income-tax Act, 1961 - Income - Accrual of [Revenue recognition] - Assessment year 2008-09 - Assessee claimed an amount received during relevant assessment year as an advance - Revenue disallowed claim on basis that assessee had been consistently following mercantile system, therefore, amount should have been shown as revenue in year of raising invoice, that is, assessment year 2008-09 - Whether, where only an invoice had been raised and work had not even commenced it did not constitute income for that year since revenue recognition on completion of certain milestone of work is an accepted method in mercantile system of accounting - Held, yes [Para 6.5][In favour of assessee]
Section 133A of the Income-tax Act, 1961 - Survey [Effect of documents found] - Assessment year 2008-09 - Whether where, on basis of documents, information etc., found in course of survey, audited books of account could be totally disregarded - Held, no [Para 5.1][In favour of assessee]
FACTS
| ■ | The profit and loss account found during survey showed an amount of Rs. 72 lakhs as income for the relevant assessment year 2008-09, which was not shown in the return filed by the assessee. | |
| ■ | The assessee claimed that it was an 'advance' received during the relevant assessment year and had been shown as revenue in the subsequent year. | |
| ■ | The Assessing Officer, relying on the document found during survey concluded that entire amount of Rs. 72 lakhs was to be treated as income for the relevant assessment year. | |
| ■ | The Commissioner (Appeals) observed that assessee had been consistently following the mercantile system of accounting and, therefore, the said amount should be accounted as revenue in the year of raising invoice, that is, assessment year 2008-09. | |
| ■ | The assessee contended that the amount was shown as an advance in the audited books of account and further, contended that it is a regular trade practice to receive an advance at the time of signing the contract when the work has not even commenced and the revenue is to be recognized only when the work has progressed to a specified percentage. | |
| ■ | In the instant appeal the question arose at to whether amount of Rs. 72 lakhs was to be shown as income in relevant assessment year as held by revenue or in subsequent assessment year as submitted by the assessee. |
HELD
| ■ | A survey action under section 133A is conducted by the Assessing Officer in order to gather information for ascertaining the correct income eligible to tax in the case of an assessee. The findings that emerge from a survey action are a good indicator for understanding the real affairs of the business of an assessee. To that extent, the documents/information etc. found in the course of survey form an important part of evidence that can be utilized by the Assessing Officer to determine the correct income of the assessee. However, it does not automatically follow that the evidence found/collected in the course of survey is absolutely conclusive and has to be followed without proper examination/verification. Further, it cannot be the case that solely on the basis of documents/information etc., found in the course of survey action, the audited books of account can be totally disregarded. The assessee ought to be afforded adequate opportunity to explain the findings of the survey to reconcile the differences, if any, between the findings of the survey vis-Ã -vis the corresponding details in return of income. [Para 5.1] | |
| ■ | It was not in dispute that the assessee was consistently following the mercantile system of accounting. The mercantile system of accounting requires the person to account for its income and expenses on an 'accrual' basis rather than on actual basis. When the income accrues is a matter of fact that would depend upon the system of accounting regularly followed by the assessee. Merely because an invoice has been raised for a particular amount, it does not automatically become 'income' in the year of raising of the invoice. Recognition of income/revenue recognition based on certain milestones of work completed is an accepted method of accounting and it would also fall within the realm of mercantile system of accounting. Merely because a document found in the course of survey reflected the total invoice amount of Rs. 72 lakhs as part of 'revenue' for the year ending 31-3-2008, it would not be in the fitness of things to ignore or brush aside the audited books of account on the basis of which the return of income is filed only because the same amount is treated as an 'advance'. In these circumstances, the authorities below ought to have examined the claim of the assessee that the revenue recognition done in respect of this particular invoice is as per the system of accounting regularly followed by the assessee and whether the system of revenue recognition as a percentage of work completed is as per the accepted method of accounting. It was found that the authorities below have neither examined this issue nor brought on record any evidence to show that the assessee's proposition is incorrect. It was also seen that the assessee had claimed that the amount in question of Rs. 72 lakhs has been offered to tax in the subsequent year,i.e., the period relevant to assessment year 2008-09 which claim too, had not been examined by the authorities. In these circumstances in the interest of equity and justice, this issue was remanded back to the file of the Assessing Officer for examination of the claim of the assessee in the light of the facts on record, the views of the authorities below, submissions of the assessee and above observations. [Para 6.5] | |
| ■ | In the result appeal of the assessee is allowed for statistical purpose. |
B.N. Sudarshan for the Appellant. A. Sundar Rajan for the Respondent.
ORDER
Jason P. Boaz, Accountant Member - This appeal by the assessee is directed against the order of the Commissioner of Income Tax (Appeals)-I, Bangalore dated 12.09.2011 for Assessment Year 2008-09.
2. The facts of the case, in brief, are as under :
2.1 The assessee company (hereinafter referred to as 'the assessee') is in the business of Quality Surveying Services, providing the estimation of expenditure of already completed or partially completed or to be commenced works of civil constructions and electrical installations. It filed its return of income for Assessment Year 2008-09 on 24.9.2008 declaring income of Rs.5,75,68,722. In the case of the assessee, a survey action under section 133A of the Income Tax Act, 1961 (herein after referred to as 'the Act') was conducted at its business premises on 31.3.2008. In the course of survey, a document was found containing the computation of profit and loss for the F.Y. 2007-08 in which the net profit for the said period was Rs.6,57,08,388. A sworn statement of Mr. Lorimer A Doig, Director of the assessee was also recorded at the time of survey in which he stated that while the turnover for the year ending 31.3.2008 was approx. Rs.17 to 18 Crores and the net profit is around Rs.6 to 7 Crores. In the course of assessment proceedings the Assessing Officer called upon the assessee to explain the difference/shortfall of Rs.81,39,668 i.e. between the net profit of Rs. 6,75,61,800 reflected in the profit and loss account found in the course of survey on 31.3.2008 and the net profit of Rs.5,94,22,132 declared in the profit and loss account filed along with the return of income for Assessment Year 2008-09. The assessee stated that consultancy charges booked at Rs.17,72,25,886 in the profit and loss account found at the time of survey were inflated as it included a wrongly reported amount Rs.72,00,000 which was transferred to advances and an invoice having value of Rs.10 lakhs was reversed and that this reconciled the differences in the figure of net profit as was reflected at the time of survey vis-Ã -vis the net profit in the return of income for the relevant period. This explanation put forth by the assessee did not find favour with the Assessing Officer, who was of the view that the profit shown in the document found in the course of survey was conclusive and added the difference of Rs. 81,39,668 to the assessee's income thereby determining the income of the assessee at Rs.6,57,08,388 in the order of assessment for Assessment Year 2008-09 passed under section 143(3) of the Act on 29.11.2010.
2.2 The assessee was aggrieved by the order of assessment for Assessment Year 2008-09 dt.29.11.2010 and carried the matter in appeal before the CIT (Appeals). The CIT (Appeals) agreed with the findings of the Assessing Officer and dismissed the assessee's appeal by his order dt.12.9.2011.
3.1 Aggrieved by the order of the learned CIT (Appeals) dt.12.9.2011, the assessee is now before this Tribunal. In the grounds raised in this appeal the assessee contends as under :
| 1. | The learned CIT (A) I has simply and merely gone by the Assessing officers order without considering the facts and documents produced before him, without verifying the veracity and correctness of the figures shown in the Audited Balance sheet and appreciating the facts and substance of the case. | |
| 2. | The survey was conducted on 31/03/2007 at 11 clock in the morning and even if the records are maintained on minutes basis one full day was left for accounting entries. This fact is not considered by the assessing officer. How can the A O expect the company to close its books of its account in the morning. | |
| 3. | The A O failed to recognize the basis of accounting certain expenses on accrual basis and especially for the year ending where certain expense details are to come from various quarters and provision need to be made for expenses incurred but not paid as on a particular day. The AO has overlooked the basic accounting policy on accrual basis and proceeded on cash system of accounting. We would like to further state that the assessee had 4 branches at that time and had to wait for the details from branches for finalizing accounts. | |
| 4. | The CIT has not appreciated the fact that rectification of mistakes is part of life and that the accounts are audited subsequent to last day of March of any year and any mistake pointed out by auditor needs to be recognized by the company and correct it's books accordingly. If everything is accepted as shown on a particular day, then there was no need for audit of accounts and other statutory obligations. | |
| 5. | The AO has not gone in to the substance and nature of entries. Instead simply gone by the form, letters and words mentioned. | |
| 6. | The CIT has not discussed the documents/evidences presented before him in the order and has not rejected the documents. CIT did not appreciate the fact that the AO has not considered the technical reports to establish when the work was started and when it was completed. The Director of the company was present in the hearing once to explain the details and the officer refused to hear him and get further details. | |
| 7. | Given an opportunity we can prove that the amount received from Aliens Group is an advance and an income. | |
| 8. | Regarding the travelling expenses AO has not verified the bills though the company in its letter to the AO that it is ready to furnish voucher/ documents and arbitrarily disallowed the expenses. It is a fact that the directors and other employees who take up foreign tours and pay the amount through the credit cards take about 1 to 1/ ½ months for submitting bills and can be paid only after they come to office. We are ready to submit all the bills for verification. | |
| 9. | The assessee submits that the disallowance made by the CIT(A) I be rejected and pass necessary orders to give relief from payment of Rs 29,85,090 and restore the justice. | |
| 10. | The assessee be allowed to produce proof of advance and travelling expenditure vouchers at the time of hearing. | |
| 11. | The assessee preys the tribunal to allow the assessee to file revised return for the assessment year 2009-10 as the income has been recognized in that year in case the appeal is dismissed. Otherwise the assessee will be made to pay tax twice on the same income, which is against the principles of Justice. | |
| 12. | The assessee be allowed to give any other grounds that may be available at the time of hearing. |
3.2 We have heard both the learned Authorised Representative and learned Departmental Representative and carefully perused and considered the material on record.
4. On perusal of the grounds raised, this appeal involves the following issues :
(i) Whether the document found in the course of survey carried out on 31.3.2008, depicting the net profit for the year ending 31.3.2008 at Rs.6,75,61,600 is conclusive evidence and can be relied upon, in preference to the audited final accounts as appended to the return of income for Assessment Year 2007-08.
(ii) Whether or not the reporting of Revenue of Rs.72 lakhs by the assessee is as per the mercantile system of accounting and
(iii) Whether the expenditure of Rs. 10 lakhs on travel of the Director has not been properly reported in the return of income for Assessment Year 2008-09.
5.1 A survey action under section 133A of the Act is conducted by the Assessing Officer in order to gather information for ascertaining the correct income exigible to tax in the case of an assessee. The findings that emerge from a survey action are a good indicator for understanding the real affairs of the business of an assessee. To that extent, the documents/information etc. found in the course of survey form an important part of evidence that can be utilsied by the Assessing Officer to determine the correct income of the assessee. However, it does not automatically follow that the evidence found/collected in the course of survey is absolutely conclusive and has to be followed without proper examination/verification. Further, it cannot be the case that solely on the basis of documents/information etc found in the course of survey action, the audited books of accounts can be totally disregarded. The assessee ought to be afforded adequate opportunity to explain the findings of the survey to reconcile the differences, if any, between the findings of the survey vis-Ã -vis the corresponding details in return of income.
5.2 In the instant case, it is a matter of record that the assessee had neither disputed nor disowned the veracity of the document reflecting the net profit of Rs. 6,75,61,800 for the year ending 31.3.2008. It is the contention of the assessee that -
| (i) | the amount of Rs. 72 lakhs which was shown as Revenue relating to one particular invoice and reflected in the net profit of Rs. 6,75,61,800 for the year ending 31.3.2008 in the document found in the course of survey, is in fact an "advance" received during this year and has been reflected/shown as "revenue" in the subsequent year and | |
| (ii) | that certain travel expenditure of Rs. 10 lakhs pertaining to the Directors travel relating to the relevant period ending on 31.3.2008 was not booked in the document found in the course of survey action. |
These changes, it is submitted, have been effected in the books of account of the assessee after the survey action on 31.3.2008 and the net profit of Rs. 5,96,22,132 declared in the return of income for Assessment Year 2008-09 filed on 24.9.2008 is as per the audited books of account after incorporating these two changes.
6.1 As regards the issue of revenue reporting, the assessee in the relevant period had raised an invoice bearing No.1130/239 dt.31.1.2008 for Rs. 72 lakhs on M/s. Alliance Group Infra Pvt Ltd., Hyderabad towards professional fees. This amount of Rs. 72 lakhs was reflected in the document found in the course of survey and formed part of the net profit of Rs. 6,75,61,800 reflected therein for the year ending 31.3.2008. It is however seen that this amount of Rs. 72 lakhs is shown as an "advance" in the return of income for Assessment Year 2007-08 filed on the basis of the audited books of account reportedly as per the advice of the statutory auditors. It is the submission of the assessee that this amount of Rs. 72 lakhs has been declared as income and applicable tax liability was discharged during the subsequent year viz. Assessment Year 2009-10.
6.2 The issue boils down to whether the amount has to be shown as income in the year under consideration viz. Assessment Year 2008-09 as held by the authorities below or as income of the subsequent year in 2009-10 as submitted by the assessee.
6.3 We find from the records that the Assessing Officer has relied on the document found during survey on 31.3.2008 to come to the conclusion that the entire amount of Rs. 72 lakhs has to be treated as income in the year under consideration, relevant to Assessment Year 2008-09 only. The learned CIT (Appeals) while aggreeing with the Assessing Officer's reliance on the document found during the survey, has also observed that the assessee has been consistently following the mercantile system of accounting and hence the entire amount of Rs. 72 lakhs has to be accounted as Revenue in the year of raising the invoice viz. Assessment Year 2008-09.
6.4 Per contra, the assessee's contention is that it is a regular trade practice to receive the advance amount at the time of signing the contract when the work has not even commenced and the Revenue is to be recognized only when the work has progressed to a specified percentage. It is also submitted that Revenue recognition is based on technical reports as to when the work commenced and when it was completed. In support of this proposition, the assessee submits that it has produced before the authorities below confirmation from the client evidencing that the payment of Rs. 72 lakhs received represented "advances". In written submission filed on 31.10.2012 the learned Authorised Representative has submitted as under :
"An amount of Rs 72,00,000 + service tax was billed on a customer Allians Group. This being 10% of advance on signing the document. It is an Industrial practice to collect 10% of the total project on signing the contract. This is just to make sure the client is serious enough to do business. In case for some reason the project is shelved before the beginning of the contract work, the Advance amount is subject to refund. Against 72,00,000 only 15,00,000 was received before 31/03/2008.
Please find attached in Annexure 1, the copy of the Invoice No 294 dated 31/01/2008 wherein it is clearly mentioned the amount is for Advances-confirmation of appointment.
It is practice of the company to treat such amounts as Advances till such time the actual work begins and then treat as income.
In the subsequent year on 30/09/2008, the said invoice for Rs 72,00,000 is reversed and an amount of Rs 14,15,023 is accounted as income, as the party did not agree to pay the balance. Please refer to Annexure II for the proof of cancellation and fresh accounting.
The Assessing officer has treated a transaction as income amount of which has not been received fully and subsequently the contract getting cancelled only on the basis that it was treated as income as on 31.03.20008 ie the day of Survey without actually going in to the merits and independently establishing whether it was an Advance or income. With this the assessee has lost an opportunity to reverse the income in subsequent year and the tax levied on this is unjustified.
The Appellant has mentioned that it was an error of accounting and the same was rectified at the time of Audit after the mistake was pointed by the Statutory Auditor based the accounting standard and practices for Revenue Recognition.
All the relevant documents have been produced before both the Assessing office and the Learned CIT appeals (1).
We request the Honourable Bench instill the justice by allowing the Appellant to treat the amount as Advance as on 31/03/2008."
6.5 It is not in dispute that the assessee is consistently following the mercantile system of accounting. The mercantile system of accounting requires the person to account for its income and expenses on an "accrual" basis rather than on actual basis. When the income accrues is a matter of fact that would depend upon the system of accounting regularly followed by the assessee. Merely because an invoice has been raised for a particular amount, it does not automatically become "income" in the year of rising of the invoice. Recognition of income/revenue recognition based on certain milestones of work completed is an accepted method of accounting and it would also fall within the realm of 'mercantile system of accounting.' Merely because a document found in the course of survey reflected the total invoice amount of Rs. 72 lakhs as part of 'revenue' for the year ending 31.3.2008, it would not be in the fitness of things to ignore or brush aside the audited books of accounts on the basis of which the return of income is filed only because the same amount is treated as an "advance". In these circumstances, the authorities below ought to have examined the claim of the assessee that the revenue recognition done in respect of this particular invoice is as per the system of accounting regularly followed by the assessee and whether the system of revenue recognition as a percentage of work completed is as per the accepted method of accounting. We find that the authorities below have neither examined this issue nor brought on record any evidence to show that the assessee's proposition is incorrect. It is also seen that the assessee has claimed that the amount in question of Rs. 72 lakhs has been offered to tax in the subsequent year i.e. the period relevant to Assessment Year 2008-09 which claim too, we find, has not been examined by the authorities below. In these circumstances, we are constrained, in the interest of equity and justice, to remand this issue back to the file of the Assessing Officer for examination of the claim of the assessee in the light of the facts on record, the views of the authorities below, submissions of the assessee and our observations in paras 6.1 to 6.5 above. It is ordered accordingly.
7. Disallowance of expenditure on travel
7.1 One of the explanations put forward by the assessee in its attempt to reconcile the difference between the net profit as on 31.3.2008 reflected as per the document found in the course of survey and the net profit as per the return of income filed on the basis of audited books of accounts was that certain travelling expenses amounting to approx. Rs. 10 lakhs incurred by the Director was not fully accounted as on the date of survey. It is contended by the assessee that though the Director had incurred the expenses in the F.Y. 2007-08 relevant to Assessment Year 2008-09, the bills thereof were submitted after 31.3.2008 and since they relate to the period under consideration, these expenses have been accordingly accounted in that year. It is also submitted that since the details/bills of these expenses were not available at the time of survey, these expenses did not find a place or mention in the document found during the survey. Before us, in written submission, it was submitted as under :
"An amount of Rs.9,39,668 representing the difference between expenses accounted as on the date of survey (which was on 31st morning March, 2008 and the audited figures, has been disallowed.
By doing this the Assessing Officer has ignored the audited balance sheet signed by a professional chartered accountant. The Assessing Officer should have rejected the entire books of account and made an independent assessment of the income. The Assessing Officer ought to have examined the genuineness of the transaction independently instead of relying on the survey report, the appellant has submitted all the vouchers, ledger extracts etc to prove the genuineness of the transaction. The Assessing Officer has ignored all these. In the case of travelling expenditure one of the Directors had incurred foreign travel expenses amounting to Rs. 10.49 lakhs. He had returned to office only on that day and hence had not submitted the bill. The payments for these expenses were made through his credit card. Hence there was no urgency of submitting the bill also.
It is quite natural and accepted accounting principle to make provision for expenses as on the year ending date based on the bills received subsequently and related to March or earlier period of the accounting year. As such on 31st March so many entries will be passed though the bills are received subsequently. It is surprising that the Assessing Officer expects all expenses including provision for expenses for which even the bills would not have been received to be accounted on morning of the day of closure of the accounting year. It is highly unjustified."
7.2 The Assessing Officer disallowed the Directors travel expenses on the ground that the assessee had merely filed the ledger account thereof and has not proved that the same were not fully accounted for at the time of survey. The learned CIT (Appeals) while sustaining the disallowance made by the Assessing Officer observed :-
" …. During the course of survey, the persons present did not give an iota of inkling about such travel by the director and it is strange that the director of such prompt company would fail to claim so belatedly. This is against the principle of preponderance of probability and a ploy to explain the balance deficiency."
7.3 From the discussion above and the material on record, we find that both the Assessing Officer and the learned CIT (Appeals) doubted the genuineness of the expenditure incurred on travel of Director. No clear finding has been given as to what was the expenditure that was accounted for at the time of the survey and after the end of the financial year; what were the supporting documents called for by the authorities; what documents were produced/submitted by the assessee and whether these documents support the claim of the assessee that these are business expenditure. Merely because the said expenditure was booked after the last date of the financial year, does not make the expenditure as not genuine. The Assessing Officer ought to have examined the veracity of the claim by verification of the supporting documents to determine whether they were allowable business expenditure; but did not do so and summarily rejected the assessee's claim which is unsustainable. In view of the facts and circumstances, as laid out above, we, in the interest of justice and equity remand this issue back to the file of the Assessing Officer for examination of the assessee's claim in the light of the facts on record, the submissions made and our observations in paras 7.1 to 7.3 above. It is ordered accordingly.
8. In the result, the appeal of the assessee is allowed for statistical purposes.
ESHA*In favour of assessee.
Audit by Service Tax Department - HC Orders Status Quo
TIOL-DDT 2122 07.06.2013
Friday
"IT is a general practice for Service Tax Department to conduct audit of service tax assessee for the last five years by deputing their own officers of the rank of inspector and Superintendent. Service Tax Department also seeks voluminous details and seeks information in self-specified format/annexures of about 32 pages, which are not prescribed under the law. On several occasions, the courts have held that the Department has to give the reason and opportunity of hearing before conducting an audit under the law even when the Parliament has given them the power to conduct special audit. However, Service Tax Department without assigning any reasons routinely conducts audit even when it is not prescribed under the law and not conducting special audit.", submitted an assessee before the Delhi High Court.
Recently in Delhi High Court in Writ Petition (C) No. 3774 of 2013 [M/s Travelite (India)], the action of the Department of conducting service tax audit for the last five years by their own officers has been challenged along with the Service Tax Rules empowering the Commissioner of Service Tax, to depute their own officers from Department for conducting audit.
The High Court by order dated 30.05.2013 has issued notice to the Ministry of Finance and the Commissioner Service Tax and also directed that status quo be maintained regarding audit.
In this matter, the assessee before approaching to the High Court had approached the Department for seeking reasons and under which law the Department has sent them the number of forms to be filled up; however, the Department did not respond and insisted for all such documents/information even by issuing summons. The assessee has then approached the High Court.
Now the Department will not be able to conduct audit of the said assessee and the matter has been posted for further hearing on 24.09.2013.
The High Court will examine the validity of the provisions of the Service Tax Rules,1994 as well as the action of the Department in conducting audit of service tax assessee by deputing the departmental officers.
There was a time when the Audit wings of the department were specialised units with senior inspectors. They even used to get a special pay. And many of the assessees happily welcomed these departmental audit officers who were very knowledgeable and could help the assessees in clarifying several doubts. Over the years greed and incompetent arrogance replaced decency and erudition and these officers became a big nuisance and most unwelcome in the premises of the assessees. They became an impediment for the normal work of the assessee's offices and it became prohibitively expensive to entertain these auditors. While Central Excise assessees accept Audit as an unavoidable evil, Service Tax assessees who are relatively new to the vagaries of Audit cannot understand why the Departmental auditors should come to their premises and audit their accounts when no other department does that.
It seems under the cadre review proposals, the CBEC will establish some exclusive Audit Commissionerates and maybe by that time more assessees will approach Courts and get audit stayed. This is what happens when you transform yourself from an advisor to an adversary.
IT Department (DG, Systems) publishes Handbook of Frequently Asked Questions
"WE are changing the Income Tax world with technology. Many people see technology as the problem; but we would like to see it as the solution, as the enabler. With the focus ontechnology-driven tax administration, the Department is now able to improve the delivery of its public services, offer multiple channels of communication, individually tailored services, stronger local accountability and greater efficiency. our officers often have many doubts and questions - which require immediate solutions and answers. There is a need to assist the field formations in addressing these, to enable them to take full benefit of the computerization efforts of the Department. It is in this context that the Directorate General of Systems has brought out this booklet titled "Systems Handbook of Frequently Asked Questions (FAQs)", as a single reference guide to the common problems faced by our field officers", says the Foreword to the Handbook published recently by the Directorate of Systems, Income Tax Department.
This answers several questions like:
1. How to resolve cases of One PAN allotted to two persons?2. How to issue Refund to Legal Heir?3. Whether the TDS claimed in the return of income can be increased u/s 154?4. How can AO re-issue the refund which was not paid to assessee?5. Can AO view the return filed through e-filing?6. Which return will be processed if Original & Revised returns are filed on the same date?7. What are the modes of giving refund in IT returns filed online?8. I am a not very tech savvy. Whether any guidelines have been issued for the users to enable them to have a safe and faster computing experience on the computers.9. My computer/desktop is very slow. How to remedy this?
Regards,
Pawan Singla
BA (Hon's), LLB
Audit Officer
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