Sh. Rajesh Kumar, New Delhi V. ITO, Gurgaon

CO 300/DEL/2009

• Counselvise Citation: [2010] 122 COUNSELVISE.COM (IT) 4903 (ITAT-DELHI)
• Duration Of Justice: 10 month(s) 25 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 30-07-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Next Hearing Date: 19-07-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 04-09-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: H K LAL
• Assessee Lawyers: RAJINDER MITTAL
• Keywords: Depreciation; Revised return
• Section: 43B; 145; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : F : NEW DELHI BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI R.C. SHARMA, ACCOUNTANT MEMBER ITA NO.2833/DEL/2009 ASSESSMENT YEAR : 2005-06 INCOME TAX OFFICER, WARD-3, GURGAON. VS. SHRI RAJESH KUMAR, PROP. R.K. FINISHING, 83 D, UDYOG VIHAR PHASE VI, GURGAON. PAN : AARPK9348L C.O. NO.300/DEL/09 (ITA NO.2833/D/2009) ASSESSMENT YEAR : 2005-06 SHRI RAJESH KUMAR, PROP. R.K. FINISHING, 83 D, UDYOG VIHAR PHASE VI, GURGAON. PAN : AARPK9348L VS. INCOME TAX OFFICER, WARD-3, GURGAON. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI RAJINDER MITTAL, CA REVENUE BY : SHRI H.K. LAL, SR. DR ORDER PER I.P. BANSAL, JUDICIAL MEMBER THE APPEAL IS FILED BY THE REVENUE AND THE CROSS O BJECTIONS BY THE ASSESSEE. BOTH ARE DIRECTED AGAINST THE ORDER OF T HE CIT (A) DATED 16 TH MARCH, 2009 FOR ASSESSMENT YEAR 2005-06. THE GROUNDS OF A PPEAL AND THE GROUNDS OF CROSS OBJECTIONS READ AS UNDER:- GROUNDS OF APPEAL 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT (A) HAS ERRED ON FACTS AND IN LAW IN DIRECTING THE ITA NO.2833/DEL/2009 C.O. NO.300/DEL/2009 2 ASSESSING OFFICER TO COMPUTE THE LONG TERM CAPITAL GAINS/LOSS IN RESPECT OF THE ASSET SOLD EVEN THOUGH THE ASSET IS A BUSINESS ASSET ON WHICH DURING THE EARLIER ASSTT. Y EAR 2004- 05, DEPRECIATION AT RS.8938 @ 5% HAS BEEN CLAIMED. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT (A) HAS ERRED ON FACTS AND IN LAW IN DELETING T HE ADDITION OF RS.1,38,638/- MADE BY THE ASSESSING OFFICER ON A CCOUNT OF EXCESS DEPRECIATION CLAIMED DISREGARDING THE FACT T HAT DEPRECIATION CAN BE ALLOWED TO SHED ONLY IN RESPECT OF COST OF SUPER STRUCTURE AND NOT IN RESPECT OF THE LAND OVER WHICH THE STRUCTURE STANDS. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT (A) HAS ERRED ON FACTS AND IN LAW IN DELETING T HE ADDITION OF RS.4,16,138/- MADE BY THE ASSESSING OFFICER ON A CCOUNT OF INFLATED CONSUMPTION OF CONSUMABLE AND OTHER STOCKS EVEN THOUGH THE SAME REMAINED UNSUBSTANTIATED. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT (A) HAS ERRED ON FACTS AND IN LAW IN DELETING T HE ADDITION OF RS.62,958/- MADE BY THE ASSESSING OFFICER ON ACC OUNT OF REPAIR AND MAINTENANCE EVEN THOUGH THE ASSESSEE HAD FAILED TO JUSTIFY THE CORRECTNESS OF THESE EXPENSES. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT (A) HAS ERRED ON FACTS AND IN LAW IN DELETING T HE ADDITION OF RS.39,106/- MADE BY THE ASSESSING OFFICER ON ACC OUNT OF LATE DEPOSIT OF EMPLOYEES CONTRIBUTION TOWARDS ESI DISREGARDING THE FACT THAT THE PAYMENTS WERE MADE B EYOND THE DUE DATES AND WERE, THEREFORE, NOT ALLOWABLE U/ S 36(1)(VA) AND WERE TO BE TREATED AS INCOME U/S 2(24 )(X) OF THE INCOME TAX ACT, 1961, IN CONTRAVENTION OF THE DECIS ION IN THE CASE OF CIT VS. PAMWI TISSUES LIMITED 215 CTR 150 ( BOM.)? 6. THAT THE APPELLANT CRAVES FOR THE PERMISSION TO ADD, DELETE OR AMEND THE GROUNDS OF APPEAL BEFORE OR AT THE TIM E OF HEARING OF APPEAL. GROUNDS OF CROSS OBJECTIONS 1. THAT THE DEPARTMENTAL APPEAL IS BAD IN LAW AS W ELL AS ON FACTS AND IS LIABLE TO BE DISMISSED. 2. THAT THE LEARNED LOWER AUTHORITIES HAVE ERRED I N CLAIMING A LONG TERM RESIDENTIAL HOUSE AS BUSINESS ASSET AND C LAIMING A SHORT TERM CAPITAL GAIN OF RS.41,229 ON THE SAME. THE LEARNED LOWER AUTHORITIES HAVE FAILED TO APPRECIATE IRREFUTABLE ITA NO.2833/DEL/2009 C.O. NO.300/DEL/2009 3 DOCUMENTARY EVIDENCE ON RECORD. 3. THAT THE LEARNED LOWER AUTHORITIES HAVE ERRED I N ALLEGING THAT THE DEPRECIATION OF RS.1,38,638/- CLAIMED BY T HE ASSESSEE IS NOT ALLOWABLE AND HAVE FAILED TO APPREC IATE IRREFUTABLE DOCUMENTARY EVIDENCE ON RECORD. 4. THAT THE LEARNED LOWER AUTHORITIES HAVE ERRED I N CHALLENGING THE RIGHTEOUS DELETION OF RS.4,16,138/- BY THE LD. CIT (A) UNJUSTIFIABLY ADDED BY THE LEARNED LOWER AU THORITIES ON ACCOUNT OF IMAGINARY INFLATED CONSUMPTION OF CONSUM ABLE AND OTHER STOCKS AND HAVE FAILED TO APPRECIATE THE NECE SSARY EXPLANATIONS AND DOCUMENTARY EVIDENCE ON RECORD. 5. THAT THE LEARNED LOWER AUTHORITIES HAVE ERRED I N UPHOLDING UNJUSTIFIABLE ADDITION OF RS.62,958/- ON ACCOUNT OF REPAIR AND MAINTENANCE EVEN THOUGH THE ASSESSEE HAS JUSTIFIED THE CORRECTNESS OF THESE EXPENSES. 6. THAT THE LEARNED LOWER AUTHORITIES HAVE ERRED I N ASSUMING DISALLOWANCE OF RS.39106/- IN RESPECT OF DELAY OF D EPOSIT OF ESI FOR RS.39,106/- AND HAVE FAILED TO APPRECIATE D ETAILED EXPLANATION AND DOCUMENTARY EVIDENCE ON RECORD. 7. THAT THE LEARNED CIT (A) HAS ERRED ON BOTH FACT S AND LAW IN SUSTAINING THE LOPSIDED AND FACTUALLY INCORRECT VER SION OF LEARNED ASSESSING OFFICER THAT THE PRIOR PERIOD INC OME OF RS.1,73,852.21 CANNOT BE CONSIDERED IN THE RELEVANT ASSESSMENT YEAR AND HAS TO BE CONSIDERED ONLY IN TH E YEAR TO WHICH IT PERTAINS. 8. THAT THE LEARNED CIT (A) SUSTAINING THE ADHOC DISALLOWANCE MADE BY THE LEARNED ASSESSING OFFICER, TO THE EXTENT OF RS.32,060/- ON THE CONTENTION THAT THE SA ME CAN BE ATTRIBUTED TO PERSONAL USE BY THE ASSESSEE IS CONTR ARY TO LAW AND FACTS OF THE CASE. 9. THAT THE ASSESSEE CRAVES LEAVE TO ADD/ALTER ANY OF THE GROUNDS OF CROSS OBJECTIONS BEFORE OR AT THE TIME O F HEARING. 2. THE APPEAL AND CROSS OBJECTIONS FILED HAVE SOME COMMON ISSUES. THEY WERE HEARD TOGETHER AND, FOR THE SAKE OF CONVENIENC E, THEY ARE BEING DECIDED BY THIS CONSOLIDATED ORDER. ITA NO.2833/DEL/2009 C.O. NO.300/DEL/2009 4 3. GROUND OF APPEAL NO.1 AND GROUND NO.2 OF CO RAIS E A COMMON ISSUE. THIS ISSUE HAS BEEN DISCUSSED BY THE ASSESSING OFFI CER IN PARA 3 OF HIS ORDER. THE FACTS RELATING TO THIS ISSUE ARE THAT RESIDENTI AL PLOT WAS OWNED BY THE ASSESSEE SINCE 24 TH AUGUST, 1982 ON WHICH THE SAID HOUSE IS BUILT. TH E PROPERTY IS KNOWN AS E-66, MOHAN GARDEN, NEAR UTTAM NAGAR, N EW DELHI AND THE SAID HOUSE WAS SOLD ON 31 ST MARCH, 2004 FOR A SUM OF RS.2 LAC. THE ASSESSEE CLAIMED LONG-TERM CAPITAL LOSS AMOUNTING TO RS.84,5 30/- BY TAKING THE COST AND THE COST OF CONSTRUCTION, ETC. INTO ACCOUNT. THE C ALCULATION IS GIVEN IN PARA 3.1 OF THE ORDER OF THE CIT (A). THE ASSESSEE ALSO CLAIME D DEPRECIATION UPON THE SAID ASSET AMOUNTING TO RS.7938.55 WHICH WAS SURRENDERED BY LETTER DATED 16 TH NOVEMBER, 2007. THE ASSESSING OFFICER DID NOT ACCE PT THE CLAIM OF THE ASSESSEE ON TWO GROUNDS, VIZ., (I) THE RESIDENTIAL HOUSE WAS SOLD IN FINANCIAL YEA R 2003-04 WHICH WAS RELEVANT TO ASSESSMENT YEAR 2004-05; AND (II) RECEIPT OF CONSIDERATION DID NOT CHANGE THE YE AR UNDER WHICH CAPITAL GAIN IS TAXABLE. 4. THE ASSESSING OFFICER FURTHER OBSERVED THAT ACCO RDING TO DEPRECIATION CHART FILED BY THE ASSESSEE DEPRECIATION WAS ALSO C LAIMED IN RESPECT OF THAT RESIDENTIAL HOUSE IN ASSESSMENT YEAR 2004-05. THUS , THE ASSESSING OFFICER OBSERVED THAT THE COMPUTATION OF LONG TERM CAPITAL GAIN WAS NOT IN ACCORDANCE WITH THE PROVISIONS OF THE ACT. THUS, HE ARRIVED A T A CALCULATION OF SHORT-TERM CAPITAL GAIN BY REDUCING THE BOOK VALUE FROM THE SA LE CONSIDERATION AND HE OBSERVED THAT THE SAID BALANCE OF RS.41,229/- WILL BE ASSESSED AS SHORT-TERM CAPITAL GAIN IN ASSESSMENT YEAR 2004-05 AND HE OBSE RVED THAT AN APPROPRIATE ACTION FOR THE SAME WILL BE TAKEN IN ACCORDANCE WIT H THE PROVISIONS OF THE INCOME- TAX ACT. 5. THIS ISSUE HAS BEEN DISCUSSED BY THE CIT (A) IN PARA 3 TO 3.3. IT WAS SUBMITTED BEFORE THE CIT (A) THAT THE SAID HOUSE WA S SHOWN AS PERSONAL ASSET IN THE BALANCE SHEET FILED BY THE ASSESSEE. THE DEPRE CIATION WAS INADVERTENTLY ITA NO.2833/DEL/2009 C.O. NO.300/DEL/2009 5 CLAIMED ON THE SAID RESIDENTIAL HOUSE WHICH WAS DUL Y SURRENDERED BEFORE THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT P ROCEEDINGS VIDE LETTER DATED 16 TH NOVEMBER, 2007. THE ASSESSING OFFICER DID NOT GIV E ANY REASON AND SUCH ADDITION IS AN AD HOC ADDITION WITHOUT ASSIGNING PR OPER REASONS. IT WAS SUBMITTED THAT EVEN AFTER DISALLOWING DEPRECIATION ON THE ASS ET, THE ASSESSING OFFICER DID NOT ALLOW LONG-TERM CAPITAL LOSS ON SALE OF THE SAM E FOR ASSESSMENT YEAR 2004- 05. CONSIDERING THESE SUBMISSIONS, THE CIT (A) HAS OBSERVED THAT AS ASSESSING OFFICER HAS DISALLOWED DEPRECIATION IN RESPECT OF H OUSE WHICH HAS BEEN SOLD AND FURTHER IN THE ABSENCE OF EVIDENCE THAT THE HOUSE W AS USED FOR BUSINESS PURPOSE, THE ASSESSING OFFICER WAS NOT JUSTIFIED IN COMPUTING THE SHORT-TERM CAPITAL GAIN ON SALE OF HOUSE AND UNDER THESE FACTS THE ASSESSING OFFICER WAS DIRECTED TO COMPUTE THE LONG-TERM CAPITAL GAIN IN R ESPECT OF THE ASSETS SOLD. 6. LD. DR, AFTER NARRATING THE FACTS SUBMITTED THAT THE ASSESSING OFFICER WAS RIGHT IN NOT CONSIDERING THE CLAIM OF THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION AS THE ASSET WAS NOT SOLD DURING THE YEAR. HE SUBMITTED THAT THE CIT (A) HAS NOT GIVEN ANY FINDING ON THIS ASPECT OF THE MATTER AND STRAIGHTAWAY DIRECTED THE ASSESSING OFFICER TO COMPUTE THE LONG- TERM CAPITAL GAIN/LOSS IN RESPECT OF THE ASSET SOLD. HE, THEREFORE, SUBMITTE D THAT DEPRECIATION HAVING CLAIMED IN ASSESSMENT YEAR 2004-05 ALSO THE SHORT-T ERM CAPITAL GAIN WAS TO BE COMPUTED AS THE SAME WAS BUSINESS ASSET. 7. ON THE OTHER HAND, RELYING UPON THE SUBMISSIONS MADE BEFORE THE ASSESSING OFFICER AND CIT (A) IT WAS SUBMITTED BY L D. AR THAT THE ASSESSEE HAS NEVER CLAIMED THE DEPRECIATION AND WHATEVER CLAIM M ADE BY THE ASSESSEE WAS INADVERTENT. HE SUBMITTED THAT FOR ASSESSMENT YEAR 2005-06 THE ASSESSEE SURRENDERED THE CLAIM DURING THE COURSE OF ASSESSME NT PROCEEDINGS AND FOR ASSESSMENT YEAR 2004-05 THE ASSESSING OFFICER DID N OT ALLOW SUCH CLAIM OF THE ASSESSEE FOR DEPRECIATION AND IN THE ABSENCE OF CLA IM OF DEPRECIATION, SHORT-TERM CAPITAL GAIN COULD NOT BE COMPUTED IN RESPECT OF AS SET EVEN FOR ASSESSMENT YEAR 2004-05. THUS, IT WAS SUBMITTED THAT THE ORDER OF T HE CIT (A) SHOULD BE UPHELD. ITA NO.2833/DEL/2009 C.O. NO.300/DEL/2009 6 8. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS IN THE LIGHT OF THE MATERIAL PLACED BEFORE US. THE FACT THAT THE RELEV ANT ASSET WAS SOLD DURING THE PRECEDING FINANCIAL YEAR I.E., FINANCIAL YEAR 2003- 04 RELEVANT TO ASSESSMENT YEAR 2004-05 HAS NOT BEEN CONTROVERTED BY LD. AR. THE A SSESSING OFFICER HAS CLEARLY OBSERVED THAT THE RECEIPT OF CONSIDERATION IN THE Y EAR UNDER CONSIDERATION HAS NO RELEVANCE ON THE ASSESSABILITY OF THE SAID SALE IN ASSESSMENT YEAR 2004-05. BESIDES, THE CLAIM THAT WHETHER OR NOT SHORT-TERM C APITAL GAIN COULD BE ASSESSED IN RESPECT OF THE ASSET, IT WAS REQUIRED TO BE DETE RMINED THAT IN WHICH YEAR SUCH GAIN COULD BE MADE TAXABLE. NO BASIS WHATSOEVER HA S BEEN SUGGESTED BY THE ASSESSEE ON THE BASIS OF WHICH IT CAN BE SAID THAT THE SAID GAIN FOR THE PROPERTY SOLD IN EARLIER YEAR COULD BE ASSESSED IN THE YEAR UNDER CONSIDERATION. THEREFORE, WE ARE OF THE OPINION THAT THE ASSESSING OFFICER WAS RIGHT IN COMING TO THE CONCLUSION THAT THE GAIN OR LOSS WHATEVER IT MA Y BE CANNOT BE ASSESSED IN THE YEAR UNDER CONSIDERATION AS PROPERTY WAS NOT SOLD D URING THE YEAR UNDER CONSIDERATION. THE ASSESSABILITY OF THE SAID SUM E ITHER AS SHORT-TERM CAPITAL GAIN OR LONG-TERM LOSS CAN BE EXAMINED ONLY IN T HE YEAR IN WHICH THE PROPERTY WAS SOLD. THEREFORE, IN OUR OPINION, THE CIT (A) W AS NOT RIGHT IN DIRECTING THE ASSESSING OFFICER TO COMPUTE THE LONG-TERM CAPITAL GAIN/LOSS IN RESPECT OF THE SAID ASSET WHICH WAS NOT SOLD DURING THE YEAR UNDER CONSIDERATION. LD. CIT (A) SHOULD HAVE RESTRICTED HIS FINDINGS ONLY TO THE YEA R UNDER CONSIDERATION. AS THE PROPERTY WAS NOT SOLD DURING THE YEAR, THIS ISSUE W AS NOT HAVING ANY RELEVANCE FOR THE YEAR UNDER CONSIDERATION. THE ASSESSING OF FICER HIMSELF HAS NOT MADE ANY ADDITION IN THE YEAR UNDER CONSIDERATION FOR TH E SAID SALE. THEREFORE, THE FINDINGS OF CIT (A) ON THIS ISSUE ARE SET ASIDE AND THAT OF ASSESSING OFFICER ARE RESTORED. THE LEVIABILITY EITHER OF SHORT-TERM CAP ITAL GAIN OR LONG-TERM CAPITAL LOSS IS SUBJECT MATTER OF DECISION IN ASSESSMENT YEAR 20 04-05 AND TO THAT YEAR THE ISSUE IS OPEN FOR BOTH THE PARTIES I.E., THE ASSESS EE AND THE REVENUE TO CONTEST THE SAME AS PER THE PROVISIONS OF LAW. WITH THESE OBSERVATIONS THE GROUND OF APPEAL NO.1 FILED BY THE REVENUE IS ALLOWED AND GRO UND NO.2 OF CROSS OBJECTIONS IS DISMISSED. ITA NO.2833/DEL/2009 C.O. NO.300/DEL/2009 7 9. GROUND NO.2 OF THE APPEAL AND GROUND NO.3 OF THE CROSS OBJECTIONS RAISE COMMON ISSUE. IT WAS SUBMITTED THAT SIMILAR ISSUE HAD COME UP FOR CONSIDERATION BEFORE THE TRIBUNAL IN ASSESSMENT YEAR 2006-07 AND VIDE ORDER DATED 29 TH JANUARY, 2010 IN ITA NO.4441/DEL/2009 THE MATTER WA S RESTORED BACK TO THE FILE OF ASSESSING OFFICER FOR RE-ADJUDICATION AND IT WAS SUBMITTED THAT FOLLOWING THE SAID ORDER THE MATTER MAYBE RESTORED BACK TO THE FI LE OF ASSESSING OFFICER TO DECIDE THE SAME AS PER THE DIRECTIONS GIVEN THEREIN . FOR THE SAKE OF CONVENIENCE THE RELEVANT PORTION OF THE SAID ORDER IS REPRODUCED BELOW:- 2. IN THIS APPEAL, IN GROUNDS NO.1(A) AND 2(A), THE ASSESSEE HAS CHALLENGED THE ACTION OF LD. CIT(A) IN UPHOLDIN G THE DISALLOWANCE OF DEPRECIATION ON THE INDUSTRIAL SHED ON THE ASSUMPTION THAT 90% OF THE COST OF SHED REPRESENTIN G THE COST OF LAND. IT WAS THE SUBMISSION BY THE LD. A.R. THAT T HE ASSESSEE HAD PURCHASED AN INDUSTRIAL SHED FORM M/S. HSIDC FOR A COST OF RS.21,54,829/- DURING THE ASSESSMENT YEAR 2002-03. THE ASSESSEE HAD CLAIMED DEPRECIATION THEREON. THE A.O . HAD DEMARCATED THE COST OF THE INDUSTRIAL SHED AND THE LAND ON WHICH THE SHED WAS BUILT. THE A.O. HAS DEMARCATED THE CO ST OF LAND TO THE 90% AND THE SHED FOR ONLY A VALUE OF 10% OF THE COST. CONSEQUENTLY, THE A.O. HAD DISALLOWED THE DEPRECIAT ION IN RESPECT OF 905 OF THE INDUSTRIAL SHED AS CLAIMED BY THE ASS ESSEE. IT WAS THE SUBMISSION BY THE LD. A.R. THAT AFTER DENYING THE D EPRECIATION IN RESPECT OF 90% OF THE VALUE HOLDING THE SAME TO BE IN RELATION TO THE LAND AND WDV HAD BEEN REWORKED YEAR-WISE AND FOR TH E RELEVANT ASSESSMENT YEAR THE A.O. HAD REWORKED THE DEPRECIAT ION AND THE LD. CIT(A) HAS UPHELD SUCH DISALLOWANCE OF CLAIM OF DEPRECIATION AS MADE BY THE ASSESSEE AND HAD UPHELD THE DEPRECIA TION AS COMPUTED BY THE A.O. IN RESPECT OF THE INDUSTRIAL S HED ALONE. IT WAS AGREED BY THE LD. A.R. THAT THE INDUSTRIAL SHED PUR CHASED FROM HSIDC INCLUDED THE COST OF THE LAND. IT WAS ALSO A GREED BY THE LD. A.R. THAT THE ASSESSEE HAD UNDER THE BONA FIDE IMPR ESSION CLAIMED THE PURCHASE PRICE AS THE COST OF INDUSTRIAL SHED, AS THE INDUSTRIAL SHED COULD NOT HAVE SURVIVED WITHOUT THE LAND. IT WAS THE SUBMISSION THAT DUE TO THIS BONA FIDE BELIEF, THE A SSESSEE HAD CLAIMED DEPRECIATION BY TAKING THE TOTAL COST AS PA ID BY THE ASSESSEE TO BE IN RELATION TO THE INDUSTRIAL SHED. IT WAS FAIRLY AGREED BY THE LD. A.R. THAT THE GUIDELINE VALUE OF THE LAND WAS LIABLE TO BE EXCLUDED FROM THE PURCHASE PRICE AND O NLY THE BALANCE COULD BE HELD TO BE THE COST OF THE INDUSTRIAL SHED . ON THIS PROPOSITION, THE LD. D.R. DID NOT HAVE ANY OBJECTIO N. IT WAS THE SUBMISSION OF THE LD. D.R. THAT THE ASSESSMENT YEAR INVOLVED IN THE APPEAL BEFORE US WAS THE ASSESSMENT YEAR 2006-0 7 AND THATS ITA NO.2833/DEL/2009 C.O. NO.300/DEL/2009 8 CORRECTION IF ANY WOULD HAVE TO TAKE PLACE IN THE A SSESSMENT YEAR 2002-03. HERE, IT WAS THE SUBMISSION BY THE LD. A. R. THAT FOR THE YEAR IN WHICH THE INDUSTRIAL SHED WAS PURCHASED AND THE DEPRECIATION CLAIMED WAS ALSO IN APPEAL BEFORE THE LD. CIT(A) AND THE SAME WAS PENDING DISPOSAL. IT WAS THE SUBMISSI ON THAT HE HAD NO OBJECTION IF THE DIRECTION WAS GIVEN TO ASSESS T HE VALUE OF THE LAND ON WHICH THE INDUSTRIAL SHED WAS CONSTRUCTED A ND WHICH WAS PURCHASED BY THE ASSESSEE BY APPLYING THE GUIDELINE VALUE IN VIEW OF THE BONA FIDE BELIEF OF THE ASSESSEE. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. A PER USAL OF THE ASSESSMENT ORDER CLEARLY SHOWS THAT THE A.O. HAS RE WORKED THE DEPRECIATION ON THE INDUSTRIAL SHED BY TAKING INTO CONSIDERATION THE WDV. HOWEVER IT IS ALSO NOTICED THAT THE A.O. HAS TAKEN THE COST OF LAND AT 90% OF THE PURCHASE PRICE PAID BY THE ASSES SEE IN RESPECT OF THE INDUSTRIAL SHED PURCHASED FROM HSIDC. THERE IS NO BASIS FOR TAKING THE COST OF THE LAND ON WHICH THE INDUSTRIAL SHED IS SITUATED @ 90% OF THE PURCHASE PRICE. IN THESE CIRCUMSTANCE S, THIS ISSUE IS RESTORED TO THE FILE OF THE A.O. FOR RE-ADJUDICATIO N AND RECOMPILATION. IN THIS RECOMPILATION, THE A.O. SHALL TAKE INTO CON SIDERATION THE CLAIM OF THE ASSESSEE THAT THE COST OF THE LAND IN RESPECT OF THE INDUSTRIAL SHED IS TO BE TAKEN AT THE GUIDELINE VAL UE AS FIXED BY THE GOVERNMENT FOR THE PURPOSE OF REGISTRATION OF THE L AND IN THAT AREA. IN THESE CIRCUMSTANCES THIS ISSUE IS RESTORED TO TH E FILE OF THE A.O. FOR RE-ADJUDICATION. THIS CORRECTION WOULD HAVE TO BE DONE RIGHT FROM THE YEAR IN WHICH THE INDUSTRIAL SHAD HAS BEEN PURCHASED BY THE ASSESSEE AND PUT TO USE. 10. IN THIS VIEW OF THE SITUATION, AFTER HEARING BO TH THE PARTIES, RESPECTFULLY FOLLOWING THE AFOREMENTIONED ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE, WE RESTORE THIS ISSUE TO THE FILE OF ASSESSING OFFICER WITH THE SIMILAR DIRECTIONS. THUS, GROUND NOS.2 OF APPEAL AND GROUND NO.3 OF CO ARE CO NSIDERED TO BE ALLOWED FOR STATISTICAL PURPOSES. 11. GROUND NO.3 OF APPEAL AND GROUND NO.4 OF CROSS OBJECTIONS RAISE COMMON ISSUE. THE ASSESSEE IS ENGAGED IN THE JOB WORK UND ERTAKEN FOR STITCHING, EMBROIDERY OF VARIOUS MANUFACTURERS AND EXPORTERS, HAD HIS FACTORY FOR WHICH IT REQUIRED TO CONSUME THREAD, PAPER, NEEDLES AND OIL AND LUBRICANTS, ETC. WHICH WAS DEBITED UNDER THE HEAD CONSUMABLE STORES AMOU NTING TO RS.16,66,554/- AS AGAINST SIMILAR EXPENSES OF RS.1,45,241/-DURING THE IMMEDIATE PRECEDING YEAR. ITA NO.2833/DEL/2009 C.O. NO.300/DEL/2009 9 THE ASSESSING OFFICER REQUIRED THE EXPLANATION OF T HE ASSESSEE TO EXPLAIN THE SAME. IT WAS EXPLAINED THAT LAST YEAR WAS THE FIRS T YEAR OF OPERATION AND THE ASSESSEE WAS ABLE TO OBTAIN ORDER ONLY TO THE TUNE OF RS.38.78 LAC WHEREAS DURING THE YEAR UNDER CONSIDERATION THE TURNOVER WA S RS.177.56 LAC. IT WAS EXPLAINED THAT THE CONSUMPTION OF CHEMICALS AND OTH ER WASHING LUBRICANTS DEPENDS UPON THE ORDER AT PARTICULAR SITE AND, THUS , THE EXPENSES SHOWN ARE REASONABLE. THE ASSESSING OFFICER WENT THROUGH THE COPY OF STOCK REGISTER SUBMITTED BY THE ASSESSEE AND OBSERVED THAT THE ASS ESSEE HAS INFLATED THE CONSUMPTION OF CONSUMABLES AND STORES. HE FOUND TH AT IN SOME CASES THE QUANTITY CONSUMED IN THE WHOLE YEAR WAS EQUAL TO TH E QUANTITY CONSUMED ON 30 TH MARCH, 2005 AND 31 ST MARCH, 2005. HE HAS DRAWN A TABLE WHICH IS REPROD UCED BELOW:- S.NO. NAME OF THE PRODUCT QTY. CONSUMED IN WHOLE YEAR CONSUMPTION ON 30.3.05 & 31.3.05. VALUE OF CONSUMPTION ON 30.3.05 & 31.3.05. 1. TINOFIX 200 KG. 200 KG. RS.25000.00 2. DENICELE 200 KG. 200 KG. RS.65000.00 3. SODIUM 1000 KG. 1000 KG. RS.20000.00 4. CHEMICALS 9154 KG. 60 KG. RS.18600.00 TOTAL RS.128600.00 12. THUS, THE ASSESSING OFFICER OBSERVED THAT NON-P RODUCTION OF THE EVIDENCE BY THE ASSESSEE IN RESPECT OF CONSUMPTION OF MATERI AL, CHANGE IN CIRCUMSTANCES/CONTRACT LEADING TO HIGHER CONSUMPTIO N OF CONSUMABLE STORES, OF THE TOTAL EXPENSES AMOUNTING TO RS.4,16,132/- IS DISALLOWED AND HE HAS ASSIGNED THE FOLLOWING REASONS TO MAKE SUCH DISALLO WANCE:- (I) NON PRODUCTION OF ANY EVIDENCE IN RESPECT OF CO NSUMPTION OF THESE MATERIAL, PARTICULARLY WHEN COMPARED WITH PREVIOUS YEAR. (II) NON ACCOUNTING OF VALUE OF STORES REMAINING UN CONSUMED/UNBILLED AT END OF THE YEAR. ITA NO.2833/DEL/2009 C.O. NO.300/DEL/2009 10 (III) NON SUBMISSION OF MONTH WISE CONSUMPTION/MANU FACTURING ACCOUNT AS ASKED IN PARA (10) OF NOTICE DATED 16.11.2007, IN F ACT IN PARA (10) OF REPLY DATED 26.11.2007, ASSESSEE SUBMITTED AS UNDER :- IT IS RESPECTFULLY SUBMITTED IN THE ASSESSEE IS EN GAGED IN THE BUSINESS OF FABRICATION OF GARMENT ON JOB WORK ON BEHALF OF OTHER EXPORTERS AND MANUFACTURER, NOT AS MANUFACTURER OF THE GARMENTS AND THEREFORE MANUFACTURING ACCOUNT CANNOT PREPARED IN ACCORDANCE WITH PROVISO OF LAW. (IV) INFLATED CONSUMPTION OF CONSUMABLES/STORES AT END OF THE YEAR. (V) NON ACCOUNTING OF WORK-IN-PROGRESS AND UNBILLED COMPLETED JOB WORK. 13. ON SIMILAR REASONING THE ASSESSING OFFICER ALSO DISALLOWED 1/3 RD OF REPAIR AND MAINTENANCE AMOUNTING TO RS.62,958/- AND 50% OF DIWALI EXPENSES AMOUNTING TO RS.28000/- AND, THUS, ALL THESE THREE DISALLOWANCES PUT TOGETHER WERE COUNTED AT RS.5,07,096/-. THE DISALLOWANCE ON ACCOUNT OF REPAIR AND MAINTENANCE REFLECTS IN GROUND NO.4 OF DEPARTMENTAL APPEAL AND GROUND NO.5 OF CROSS OBJECTIONS. 14. ARGUING THE APPEAL OF THE REVENUE ON THIS ISSUE , IT WAS SUBMITTED BY LD. AR THAT THE ASSESSING OFFICER WAS RIGHT IN REJECTIN G THE CLAIM OF THE ASSESSEE REGARDING CONSUMABLES TO THE EXTENT OF FOR THE RE ASONS ASSIGNED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER. HE SUBM ITTED THAT THE LD. CIT (A) WITHOUT APPRECIATING THE FACTUAL POSITION NARRATED BY THE ASSESSING OFFICER HAS WRONGLY DELETED THE ADDITION. HE SUBMITTED THAT THE ASSESSING OFFICER HAS CLEARLY BROUGHT ON RECORD THAT THE CONSUMPTION OF TWO DAYS WAS EQUAL TO THE CONSUMPTION MADE IN WHOLE OF THE YEAR IN RESPECT OF THREE ITEMS AND LD. CIT (A) WITHOUT APPRECIATING THAT FACTUAL POSITION HAS DELE TED THE ADDITION. HE SUBMITTED THAT THE ORDER OF THE ASSESSING OFFICER ON THIS ISS UE SHOULD BE RESTORED AND THAT OF CIT (A) SHOULD BE SET ASIDE. 15. ON THE OTHER HAND, IT WAS SUBMITTED BY THE LD. AR THAT LD. CIT (A) HAS SPECIFICALLY FOUND THAT THREE ITEMS MENTIONED BY TH E ASSESSING OFFICER, NAMELY, TINOFIX, DENICELE AND SODIUM PURCHASED IN SMALL QUA NTITY DURING THE PERIOD OF ITA NO.2833/DEL/2009 C.O. NO.300/DEL/2009 11 FEBRUARY-MARCH AND, THUS, ITEMS WERE MOSTLY USED FO R WASHING AND FIXING THE COLOUR OF CLOTH AND ONCE IT IS DISSOLVED IN WATER, THE UNUSED STORE LEFT CANNOT BE USED AGAIN. HENCE, THE QUESTION OF VALUATION OF SU CH STOCK DOES NOT ARISE. MOST OF THE RAW MATERIAL AND CHEMICALS, ETC. WERE PROVID ED BY THE CLIENTS FOR WHOM THE ASSESSEE DID THE JOB WORK AND THERE WAS NO QUESTION OF VALUATION OF THE REMAINING CONSUMABLE IN RESPECT OF CONSUMABLE SUPPL IED BY THE CLIENTS AND, THUS, THE CIT (A) WAS RIGHT IN DELETING THE ADDITIO N. 16. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS IN THE LIGHT OF THE MATERIAL PLACED BEFORE US. IF THE CONSUMPTION OF C ONSUMABLE IS COMPARED WITH THE IMMEDIATE PRECEDING YEAR, THE POSITION WILL EME RGE AS FOLLOWS:- YEAR SALES CONSUMPTION % 2003-04 38.79 LACS 1.45 LACS 3.74 2004-05 177.56 LACS 16.67 LACS 9.39 17. IT IS THE CASE OF THE ASSESSEE THAT THERE CANNO T BE ANY RELATIONSHIP BETWEEN THE CONSUMPTION OF CONSUMABLE STORE AND SAL ES SINCE THE CONSUMABLE STORES ARE SUPPLIED BY THE CLIENTS THEMSELVES AND S OME TIMES PURCHASED BY THE ASSESSEE AS PER THE TERMS OF THE CONTRACT. THE VAR IATION IN THE CONSUMABLE IS HUGE AS THE SAME HAS RISEN TO 9.39% FROM 3.74%. IF IT IS THE CONTENTION OF THE ASSESSEE THAT THE VARIATION IS DUE TO THE FACT THAT SOME TIMES CONSUMABLE STORES ARE SUPPLIED BY THE CLIENTS AND SOME TIMES PURCHASE D BY THE ASSESSEE HIMSELF, THEN IT WAS OBLIGATORY ON THE ASSESSEE TO PLACE EVI DENCE ON RECORD TO SUPPORT SUCH CONTENTION WHICH HAS NOT BEEN DONE. RATHER, T HE ASSESSEE HAS TURNED THE TABLE UPON THE ASSESSING OFFICER TO CONTEND THAT TH E ASSESSING OFFICER HAS NOT DISALLOWED ANY SPECIFIC ITEM OF CONSUMABLE, BUT HE HAS MADE AD HOC ADDITION. IN OUR OPINION, IF EXPENSES ARE CLAIMED BY THE ASSESSE E, IT IS FOR HIM TO EXPLAIN THE SAME AND IF SOME CONTENTION IS TAKEN THAT IT IS RE QUIRED TO BE SUPPORTED BY SOME EVIDENCE. THE ASSESSING OFFICER HAS BROUGHT MATERI AL ON RECORD TO SUGGEST THAT THE CONSUMPTION SHOWN BY THE ASSESSEE ON THE LAST T WO DAYS OF THE ACCOUNTING YEAR WAS EQUAL TO THE CONSUMPTION DONE FOR THE SAME ITEMS DURING THE WHOLE OF THE YEARS. THAT FIGURE IS SUFFICIENT TO DRAW A PRE SUMPTION AGAINST THE ASSESSEE ITA NO.2833/DEL/2009 C.O. NO.300/DEL/2009 12 AND THE ASSESSEE WAS REQUIRED TO EXPLAIN THE SAME. THE CIT (A) HAS NOT GIVEN A SPECIFIC FINDING UPON THE SAME. KEEPING IN VIEW TH E FACT THAT THE ASSESSEE HAS MAINTAINED THE STOCK REGISTER AND THE ENTIRE PARTIC ULARS WERE AVAILABLE, WE ARE OF THE OPINION THAT IT WILL BE IN THE INTEREST OF JUST ICE IF THE MATTER IS RESTORED BACK TO THE FILE OF ASSESSING OFFICER FOR RE-CONSIDERATION. WHILE RESTORING THE ISSUE WE HAVE ALSO KEPT IN VIEW THE FACT THAT THE ASSESSEE H AD FILED AN AFFIDAVIT UNDER RULE 46A OF THE IT RULES, 1962, TO SUPPORT THE EVIDENCE FOR CONSUMPTION OF CONSUMABLE STORES, ETC. WE RESTORE THIS ISSUE TO T HE FILE OF ASSESSING OFFICER FOR PROPER VERIFICATION AND EXAMINATION THEREOF WITH A DIRECTION TO GIVE THE ASSESSEE A PROPER OPPORTUNITY OF HEARING AND TO FILE EVIDENC E. AFTER AFFORDING SUCH OPPORTUNITY, THE ASSESSING OFFICER WILL RE-ADJUDICA TE THE ISSUE AS PER THE PROVISIONS OF LAW. WE DIRECT ACCORDINGLY. GROUND OF APPEAL NO.3 OF THE DEPARTMENTAL APPEAL IS ALLOWED FOR STATISTICAL PURP OSES AND GROUND NO.4 OF CROSS OBJECTIONS IS DISMISSED. 18. NOW, COMING TO GROUND NO.4 OF THE DEPARTMENTAL APPEAL AND GROUND NO.5 OF CROSS OBJECTIONS WHICH IS WITH REGARD TO ADDITIO N MADE ON ACCOUNT OF REPAIR AND MAINTENANCE, THE FACTS HAVE ALREADY BEEN DISCUS SED WHILE DEALING WITH GROUND NO.3 OF DEPARTMENTAL APPEAL AND GROUND NO.4 OF CROSS OBJECTIONS. WE HAVE HEARD BOTH THE PARTIES ON THIS ISSUE. THE DET AILS OF REPAIR AND MAINTENANCE ARE FILED AT PAGES 140-144 OF THE PAPER BOOK. THE ITEMS PERTAINS TO REPAIRS, ETC. OF THE MACHINERY AND ALL THESE EXPENDITURE ARE SUPP ORTED BY THE BILL NOS. AS PER THE FINDINGS GIVEN BY THE CIT (A) ALSO, COPY OF REP AIR AND MAINTENANCE ACCOUNT ALONG WITH COPY OF ALL THE CORRESPONDENCE BILLS, WE RE SUBMITTED TO THE ASSESSING OFFICER IN RESPONSE TO NOTICE DATED 22 ND OCTOBER, 2007 AND NO SPECIFIC ITEM HAS BEEN DISALLOWED BY THE ASSESSING OFFICER. THE DISA LLOWANCE BEING 1/3 WAS AN AD HOC DISALLOWANCE. THEREFORE, WE FIND THAT LD. C IT (A) HAS RIGHTLY DELETED THE ADDITION. WE DECLINE TO INTERFERE. THIS GROUND OF THE REVENUE IS DISMISSED. AND GROUNDS OF CROSS OBJECTIONS BECOME INFRUCTUOUS AND THE SAME IS DISMISSED. 19. GROUND NO.5 OF THE DEPARTMENTAL APPEAL AND GROU ND NO.6 OF CROSS OBJECTIONS RAISE ONE ISSUE I.E., THE DISALLOWANCE M ADE ON ACCOUNT OF LATE DEPOSIT ITA NO.2833/DEL/2009 C.O. NO.300/DEL/2009 13 OF EMPLOYEES CONTRIBUTION TOWARDS ESI. IT HAS BEEN THE CONTENTION OF THE ASSESSEE THAT ALL THE PAYMENTS WERE MADE ALONG WITH INTEREST BEFORE THE DUE DATE OF FILING THE INCOME-TAX RETURN AND ON THESE F INDINGS THE CIT (A) HAS DELETED THE ADDITION. DURING THE COURSE OF HEARING NO MATE RIAL HAS BEEN BROUGHT ON RECORD BY THE REVENUE TO SHOW THAT SUCH CONTENTION OF THE ASSESSEE IS INCORRECT. IF THE PAYMENT HAS BEEN MADE BEFORE THE DUE DATE OF FILING THE INCOME-TAX RETURN, THEN, THE DISALLOWANCE HAS RIGHTLY BEEN DELETED BY THE CIT (A) WHICH IS AS PER THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CI T VS. ALOM EXTRUSIONS LTD. 319 ITR 306 (SC) WHEREIN IT HAS BEEN HELD THAT THE DELETION OF SECOND PROVISO TO SECTION 43B BY THE FINANCE ACT, 2003 IS RETROSPECTI VE AND IT WOULD OPERATE W.E.F. 1.4.88. IT MAY BE MENTIONED HERE THAT IN PARA 9 OF THE ASSESSMENT ORDER, THE DUE DATE AS WELL AS THE DATE OF BANK CLEARANCE IS ALSO GIVEN AND THE LATEST DATE OF PAYMENT IS 2 ND DECEMBER, 2004 WHICH FALLS WITHIN THE ACCOUNTING Y EAR ITSELF. THEREFORE, WE SEE NO REASON TO INTERFERE IN THE ORD ER OF THE CIT (A) VIDE WHICH THE IMPUGNED ADDITION HAS BEEN DELETED. THIS GROUN D OF APPEAL RAISED BY THE REVENUE IS DISMISSED. AS THE GROUND OF THE REVENUE IS DISMISSED, THE GROUND OF CROSS OBJECTION HAS BECOME INFRUCTUOUS, HENCE, THE SAME IS ALSO DISMISSED. 20. GROUND NO.7 OF THE ASSESSEE CROSS OBJECTION. T HIS ISSUE HAS BEEN DISCUSSED BY THE ASSESSING OFFICER IN PARA 6 OF HIS ORDER. A SUM OF RS.1,74,011.21 WAS SHOWN UNDER THE HEAD MISCELLANE OUS INCOME WHICH INCLUDED A SUM OF RS.1,73,852.21 RELATION TO PRIOR PERIOD INCOME. ACCORDING TO EXPLANATION GIVEN BY THE ASSESSEE THE AMOUNT OF BIL L NO.17 DATED 3 RD JANUARY, 2004 WAS RS.2,74,784/- WHICH WAS WRONGLY ENTERED IN THE BOOKS OF ACCOUNT AS RS.27,478.40 IN FINANCIAL YEAR 2003-04. IT WAS SUB MITTED BY THE ASSESSEE THAT THE CUSTOMER HAD DEBITED ON ACCOUNT OF RATE AND QUA LITY DIFFERENCE OF RS.73,453.39 DURING THE YEAR 2003-04, THEREFORE, TH E DIFFERENCE OF RS.1,73,852.21 WAS TAKEN AS INCOME FOR THE YEAR UND ER CONSIDERATION. FROM THE REPLY OF THE ASSESSEE THE ASSESSING OFFICER OBSERVE D THAT INCOME TO THE EXTENT OF RS.1,73,852.21 DID NOT RELATE TO THE YEAR OF ASSESS MENT, BUT RELATED TO ASSESSMENT YEAR 2004-05. AFTER DETECTION OF ERROR THE ASSESSEE WAS UNDER LEGAL OBLIGATION TO REVISE RETURN FOR THE RELEVANT ASSESS MENT YEAR AND, THEREFORE, THE ITA NO.2833/DEL/2009 C.O. NO.300/DEL/2009 14 ASSESSING OFFICER REDUCED THE SAID AMOUNT OF RS.1,7 3,852.21 FROM THE INCOME OF THE CURRENT YEAR WITH THE OBSERVATION TO TAKE APPRO PRIATE ACTION FOR THE RELEVANT ASSESSMENT YEAR IN ACCORDANCE WITH THE IT ACT, 1961 . 21. LD. CIT (A) HAS DISCUSSED THIS ISSUE IN PARA 5 TO 5.3. IT WAS SUBMITTED BEFORE HIM THAT THE ASSESSEE DID NOT BECOME AWARE O F THE MISTAKE TILL THE COMPLETION OF THE ASSESSMENT FOR ASSESSMENT YEAR 20 04-05 AND IT WAS ONLY DURING THE FINALISATION OF THE ACCOUNTS FOR THE ASS ESSMENT YEAR 2005-06 THE ASSESSEE BECAME AWARE OF SUCH MISTAKE AND HAD TRIED TO RECTIFY THE SAME BY INCLUDING IT IN THE INCOME OF THE ASSESSMENT YEAR 2 005-06 SINCE THE TIME LIMIT FOR THE FILING THE REVISED RETURN U/S 139 (5) HAD ALREA DY EXPIRED. IT WAS SUBMITTED THAT THE ASSESSEE IS A LAW ABIDING CITIZEN AND HAS ACTED BONAFIDELY IN DISCLOSING HIS INCOME AND HAD NO MALA FIDE INTENTION AS CAN BE SEE N FROM THE WILLFUL DISCLOSURE IN THE SUCCEEDING ASSESSMENT YEAR OF THE INCOME REL ATING TO ASSESSMENT YEAR FOR WHICH ASSESSMENT HAS ALREADY BEEN COMPLETED AND DEC IDED IN FAVOUR OF THE ASSESSEE. IT WAS STATED THAT RS.1,73,852.21 RELATE S TO PRIOR PERIOD INCOME BEING AN AMOUNT OF BILL NO.17 DATED 3 RD JANUARY, 2004 FOR RS.2,74,784/- WHICH WAS WRONGLY ENTERED AS RS.27,478.40 BY THE ASSESSEE IN FINANCIAL YEAR 2003-04, BUT THE CUSTOMER HAD DEBITED ON ACCOUNT OF RATE AND QUA LITY DIFFERENCE FOR RS.73,453.39 DURING THE YEAR 2003-04 AND, THEREFORE , THE DIFFERENCE OF RS.1,73,852.21 WAS TAKEN AS INCOME FOR THE YEAR UND ER CONSIDERATION. REFERENCE WAS MADE TO ACCOUNTING STANDARD II RELATI NG TO DISCLOSURE OF PRIOR PERIOD AND EXTRAORDINARY ITEMS AND CHANGE IN ACCOUN TING POLICIES NOTIFIED BY THE CENTRAL GOVERNMENT VIDE NOTIFICATION NO.9949 DATED 25 TH JANUARY, 1996 U/S 145 (2) WHICH DEFINES PRIOR PERIOD ITEMS AS MATERIAL CH ANGES OR CREDITS WHICH ARISE IN THE PREVIOUS YEAR AS A RESULT OF ERROR OR OMISSION IN THE PREPARATION OF FINANCIAL STATEMENT OF ONE OR MORE PREVIOUS YEAR AS MENTIONED IN PARA B (13) (E) OF THE AFORESAID NOTIFICATION. IT WAS CONTENDED THAT THE SAID NOTIFICATION ALLOW PRIOR PERIOD ITEMS TO BE INCLUDED IN THE DETERMINATION OF PROFIT AND LOSS FOR THE CURRENT PERIOD AS MENTIONED IN PARA B(7) OF THE AFORESAID N OTIFICATION AND, THUS, IT WAS REQUESTED THAT THE ASSESSING OFFICER WAS WRONG IN T AKING RS.1,73,852.21 FROM THE INCOME OF THE ASSESSMENT YEAR 2005-06. ITA NO.2833/DEL/2009 C.O. NO.300/DEL/2009 15 22. CONSIDERING THESE SUBMISSIONS, LD. CIT (A) HAS OBSERVED THAT THE INCOME OF THE ASSESSEE WAS REQUIRED TO BE COMPUTED IN ACCO RDANCE WITH THE PROVISIONS OF THE ACT. THE SCOPE OF INCOME HAS BEEN DEFINED U /S 5 OF THE ACT. LD CIT (A) HAS OBSERVED THAT ADMITTEDLY THE SUM OF RS.1,73,852 .21 DOES NOT PERTAIN TO THE YEAR UNDER CONSIDERATION AND HAS TO BE CONSIDERED I N THE YEAR TO WHICH IT PERTAINS. THUS, HE HAS UPHELD THE ACTION OF THE AS SESSING OFFICER ON THE GROUND THAT THERE WAS NO INFIRMITY IN SUCH ADJUSTMENT MADE BY THE ASSESSING OFFICER AND THE GROUND OF APPEAL OF THE ASSESSEE IN THAT REGARD WAS DISMISSED. THE ASSESSEE IS AGGRIEVED, HENCE, HAS FILED GROUND NO.7 OF CROSS OBJECTIONS. 23. AFTER NARRATING THE FACTS, IT WAS SUBMITTED BY LD. AR THAT BY THE TIME THE MISTAKE CAME TO THE NOTICE OF THE ASSESSEE, THE TIM E FOR FILING THE REVISED RETURN HAD EXPIRED. IT WAS SUBMITTED THAT EVEN ASSESSMENT FOR ASSESSMENT YEAR 2004- 05 HAD FINALIZED, THEREFORE, THE ASSESSEE HAD NO OP TION, BUT TO SHOW THE DIFFERENCE IN THE YEAR UNDER CONSIDERATION AND THIS WAS SO DONE BY THE ASSESSEE. IT WAS SUBMITTED THAT LD. CIT (A) HAS WRONGLY UPHEL D THE ACTION OF THE ASSESSING OFFICER. LD. AR WAS REQUIRED TO SUBMIT THE DETAILS OF THE ASSESSMENT ORDER FOR ASSESSMENT YEAR 2004-05 TO SUBSTANTIATE HIS CONTENT ION THAT ASSESSMENT FOR THAT YEAR WAS ALREADY FINALIZED WHEN THE MISTAKE CAME TO THE NOTICE OF THE ASSESSEE. THE LD. AR HAS SUBMITTED THE ASSESSMENT ORDER FOR A SSESSMENT YEAR 2004-05 WHICH IS DATED 28 TH DECEMBER, 2006 AND THE ORDER IS PASSED U/S 143 (3) OF THE ACT. 24. ON THE OTHER HAND, RELYING UPON THE ORDER OF TH E ASSESSING OFFICER AND CIT (A) IT WAS PLEADED BY LD. DR THAT LD. CIT (A) H AS RIGHTLY UPHELD THE ACTION OF THE ASSESSING OFFICER AND THIS GROUND OF THE CROSS OBJECTION OF THE ASSESSEE SHOULD BE DISMISSED. 25. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTI ONS IN THE LIGHT OF THE MATERIAL PLACED BEFORE US. FROM THE FACTS, IT IS C LEAR THAT THE AMOUNT WHICH IS SOUGHT TO BE SHOWN AS INCOME FOR THE YEAR UNDER CON SIDERATION PERTAINS TO ASSESSMENT YEAR 2004-05. THE ASSESSMENT IN THAT CA SE WAS COMPLETED VIDE ITA NO.2833/DEL/2009 C.O. NO.300/DEL/2009 16 ORDER DATED 28 TH DECEMBER, 2006. THE ACCOUNTS OF THE ASSESSEE WERE FINALIZED LATEST BY 31 ST OCTOBER, 2005 WHICH IS THE DATE OF FILING OF THE R ETURN FOR ASSESSMENT YEAR 2005-06. THEREFORE, THERE IS NO FO RCE IN THE CONTENTION OF THE ASSESSEE THAT BY THE TIME ASSESSEE BECAME AWARE OF THE MISTAKE, NO OPTION WAS AVAILABLE TO THE ASSESSEE TO INFORM ABOUT THE MISTA KE HAPPENED FOR ASSESSMENT YEAR 2004-05. AS THE ASSESSMENT FOR 2004-05 WAS FI NALIZED ONLY ON 28 TH DECEMBER, 2006, THE PROCESS OF ASSESSMENT YEAR 2004 -05 WAS GOING ON WHEN THE MISTAKE CAME TO THE NOTICE OF THE ASSESSEE. TH E ASSESSEE COULD WELL INFORM THE ASSESSING OFFICER THAT BY MISTAKE SUCH AMOUNT H AS BEEN LESS CREDITED AND, THEREFORE, INCOME TO THAT EXTENT CAN BE ASSESSED IN ASSESSMENT YEAR 2004-05. THIS HAVING NOT BEEN DONE, THE CONTENTION OF THE AS SESSEE IS REJECTED THAT THERE WAS NO OPTION AVAILABLE WITH THE ASSESSEE TO INFORM THE DEPARTMENT REGARDING THE MISTAKE ON THE BASIS OF WHICH THE INCOME HAS BEEN S HOWN IN THE YEAR UNDER CONSIDERATION. ACCORDING TO THE WELL ESTABLISHED L AW THE ASSESSEE IS UNDER AN OBLIGATION TO DISCLOSE THE FULL AND TRUE PARTICULAR S OF INCOME RELATING TO A PARTICULAR ASSESSMENT YEAR IN THAT VERY PARTICULAR ASSESSMENT YEAR. MERELY FOR THE REASON THAT IN EARLIER YEAR THE ASSESSEE BY MISTAKE COULD NOT SHOW THAT INCOME, THE SAID INCOME CANNOT BE ASSESSED IN ANOTHER YEAR. THEREFO RE, WE SEE NO INFIRMITY IN THE ORDER OF THE CIT (A) VIDE WHICH SUCH ACTION OF THE ASSESSING OFFICER WAS UPHELD. WE DISMISS THIS GROUND. 26. THE NEXT GROUND I.E., GROUND NO.8 RELATES TO PA RTIAL DISALLOWANCE IN RESPECT OF EXPENSES INCURRED ON VEHICLE WHICH HAVE BEEN SUS TAINED BY CIT (A) TO THE EXTENT OF RS.32,060/-. THE ASSESSING OFFICER MADE THE DISALLOWANCE OF 1/6 TH OF THE EXPENSES WHICH HAS BEEN UPHELD BY THE CIT (A) O N ACCOUNT OF ITS BEING REASONABLE. IT WAS SUBMITTED BEFORE US THAT FOR AS SESSMENT YEAR 2006-07 THE TRIBUNAL HAS CONSIDERED THIS ISSUE WHEREBY THE DISA LLOWANCE MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE CIT (A) AT 1 /6 TH WAS REDUCED TO 1/10 TH . HE HAS REFERRED TO THE AFOREMENTIONED ORDER OF THE TRIBUNAL DATED 29 TH JANUARY, 2010 FOR ASSESSMENT YEAR 2006-07 AND HE INVITED OUR ATTENTION TOWARDS PARA 4 OF THE SAID ORDER WHICH READ AS UNDER:- ITA NO.2833/DEL/2009 C.O. NO.300/DEL/2009 17 4. IN GROUNDS NO. 1(B) & 1(B) THE ASSESSEE HAS CHALLENGED THE ACTION OF LD. CIT(A) IN UPHOLDING THE AD HOC DI SALLOWANCE OF 1/6 TH OF THE TELEPHONE AND VEHICLE EXPENSES ON THE ASSUM PTION OF PERSONAL USE BY THE ASSESSEE AND HIS FAMILY MEMBERS . IT WAS FAIRLY AGREED BY BOTH THE SIDES THAT AD-HOC DISALLOWANCE S HOULD BE RESTRICTED TO 1/10 TH CONSIDERING THE FACT THAT THERE IS NO SPECIFIC IDENTIFICATION OF PERSONAL USE OF THE VEHICLE AS AL SO THE FACT THAT THERE IS NO LOG BOOK MAINTAINED IN RESPECT OF THE V EHICLE AND SIMILAR REGISTER IN RESPECT OF THE TELEPHONE. IN THESE CIR CUMSTANCES CONSIDERING THE SUBMISSION OF THE LD. A.R. AND THE LD. D.R., THE DISALLOWANCE OUT OF THE VEHICLE AND TELEPHONE EXPEN SES IS RESTRICTED TO 1/10 TH . IN THESE CIRCUMSTANCES THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES . 27. IN THIS VIEW OF THE SITUATION, AFTER HEARING BO TH THE PARTIES, WE RESTRICT THE DISALLOWANCE TO 1/10 TH OF EXPENSES. THE ASSESSING OFFICER WILL COMPUTE T HE DISALLOWANCE ACCORDINGLY. THIS GROUND OF THE CROSS OBJECTIONS OF THE ASSESSEE IS PARTLY ALLOWED. 28. IN THE RESULT, THE APPEAL OF THE REVENUE AND TH E CROSS OBJECTIONS FILED BY THE ASSESSEE, BOTH ARE PARTLY ALLOWED IN THE MANNER AFORESAID. 29. THE ORDER PRONOUNCED IN THE OPEN COURT ON 30.07 .2010. SD/- SD/- [R.C. SHARMA] [I.P. BANSAL] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED, 30.07.2010. DK ITA NO.2833/DEL/2009 C.O. NO.300/DEL/2009 18 COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BENCHES