Pankaj Jindal Contractor Vs DCIT (ITAT Amritsar)
Reopening After Four Years Quashed as Change of Opinion — Disallowance Under Section 40A(3) and Addition Under Section 68 Set Aside
The Amritsar Bench of the ITAT allowed the assessee’s appeal in full and quashed the reassessment proceedings initiated under Sections 147/148 for A.Y. 2014-15, holding them to be invalid as a mere change of opinion.
The assessee, a civil contractor, had originally been assessed under Section 143(3) after detailed scrutiny of cash expenses (machinery rent, carriage of material) and unsecured loans, with the AO making only ad hoc disallowances after examining books, vouchers, and ledger accounts. Subsequently, based on revenue audit objections, the case was reopened after four years and reassessed by making:
- Disallowance of ₹26.63 lakh under Section 40A(3) for alleged cash payments exceeding prescribed limits; and
- Addition of ₹16.76 lakh under Section 68 for an alleged difference in the account of M/s Ramesh Kumar & Co.
The Tribunal found that all primary facts and supporting records were fully disclosed and examined in the original assessment, including the very issues forming the basis of reopening. It held that no fresh or tangible material came to the AO’s possession post-assessment, and that reopening solely on audit objections amounted to impermissible review. Relying on CIT v. Kelvinator of India Ltd. (SC) and other precedents, the ITAT ruled the reopening to be bad in law.
On merits, the Tribunal also observed that the alleged ledger difference was a clerical accounting error (misposting of partner’s capital as unsecured loan), subsequently rectified, and that cash payments per person per day did not exceed statutory limits, as evidenced from ledger details.
Accordingly, the ITAT quashed the notice under Section 148, annulled the reassessment, and deleted all consequential additions, granting full relief to the assessee.
FULL TEXT OF THE ORDER OF ITAT AMRITSAR
