ACIT, Bijapur V. M/s M.M. Bagawan & Brothers, Bijapur

CO 69/BANG/2009

• Counselvise Citation: [2010] 122 COUNSELVISE.COM (IT) 5224 (ITAT-BANGALORE)
• Duration Of Justice: 10 month(s) 19 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 29-10-2010
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 07-09-2010
• Assessment Year: 2002-2003
• Appeal Filed On: 10-12-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: GANESH RAO A K
• Assessee Lawyers: RADHESHYAM BHATTAD
• Keywords: Depreciation; Additional evidence; Competent authority; Ignorance of law
• Section: 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ITA NO. 1027/BANG/2009 ASSESSMENT YEAR : 2002-03 M.M. BAGAWAN AND BROTHERS, C/O. R.N. BHATT AND CO., CHARTERED ACCOUNTANTS, 643, WEST MANGALWAR PETH, SOLAPUR 413 002. : APPELLANT VS. THE ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE I, BIJAPUR. : RESPONDENT C.O. NO.69/BANG/2009 (ARISING OUT OF ITA NO. 1027/BANG/2009 ASSESSMENT YEAR : 2002-03 THE ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE I, BIJAPUR. : APPELLANT VS. M.M. BAGAWAN AND BROTHERS, C/O. R.N. BHATT AND CO., CHARTERED ACCOUNTANTS, 643, WEST MANGALWAR PETH, SOLAPUR 413 002. : RESPONDENT ITA NO.1027/B/09 & CO 69/B/09 PAGE 2 OF 8 ASSESSEE BY : SHRI RADHESHYAM BHATTAD, C.A. REVENUE BY : SHRI GANESH RAO, A.K., ADDL.CIT(DR) O R D E R PER A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER THESE ARE TWO APPEALS PREFERRED (I) BY THE ASSESS EE WHICH IS DIRECTED AGAINST THE ORDER OF THE LD. CIT (A), BELG AUM IN ITA NO: 8/BJP/07- 08 DATED: 27.8.2009 FOR THE ASSESSMENT YEAR 2002-03 AND (II) THE CROSS OBJECTION OF THE REVENUE AGAINST THE ASSESSEES APP EAL BEFORE THIS BENCH. I. ITA NO:1027/09 (BY THE ASSESSEE) : 2. THE ASSESSEE FIRM HAS RAISED THREE GROUNDS, OUT OF WHICH, GROUND NO.3 BEING GENERAL AND NO SPECIFIC ISSUE INV OLVED, IT DOESNT SURVIVE FOR ADJUDICATION. IN THE REMAINING GROUNDS, THE CR UXES OF THE ISSUES RAISED WERE THAT (I) THE DELAY OF FOUR DAYS IN FILING RECTIFICATION APPL ICATION U/S 154 OF THE ACT BEFORE THE AO BE CONDONED; & (II) THE AO ERRED IN DEDUCTING THE SUBSIDY FROM THE VALU E OF FACTORY BUILDING AND THE VALUE OF PLANT AND MACHINERY WHILE CALCULATING DEPRECIATION AS PER I.T. ACT. II. C.O NO:69/09 (BY THE REVENUE) : 3. IN ITS CROSS OBJECTION, THE REVENUES STAND WAS THAT SINCE THE ASSESSEES RECTIFICATION APPLICATION U/S 154 WAS B ARRED BY LIMITATION, THE SAME WAS REJECTED BY THE AO. THE STAND OF THE AO WAS RATIFIED BY THE CIT (A) WHICH REQUIRES TO BE SUSTAINED. ITA NO.1027/B/09 & CO 69/B/09 PAGE 3 OF 8 4. AS THE ISSUES RAISED BY THE RIVAL PARTIES PERTA IN TO THE SAME ASSESSMENT YEAR, FOR THE SAKE OF CONVENIENCE AND CL ARITY, THEY WERE HEARD, CONSIDERED AND DISPOSED OFF IN THIS COMMON ORDER. 5. LET US NOW PROCEED TO DEAL WITH THE ASSESSEES GRIEVANCES. BRIEFLY STATED, THE ASSESSEE FIRM [THE ASSESSEE I N SHORT] SUBMITTED AN APPLICATION U/S 154 OF THE ACT DATED: 4.4.2007 STAT ING THAT (I) WHILE CONCLUDING THE ASSESSMENT FOR THE AY 2002-03, THE SUBSIDY RECEIVED WAS DEDUCTED FROM THE VALUE OF PLANT AND M ACHINERY OF COLD STORAGE UNIT; (II) DEPRECIATION ON FACTORY BUILDING AND PLANT AND MACH INERY OF COLD STORAGE UNIT WERE CALCULATED AND ALLOWED AS DEDUCTI ON AFTER REDUCING WDV FOR THE AY 2002-03; (III) AS PER THE DECISION OF THE HONBLE GUJARAT HIGH COU RT IN THE CASE OF CIT V. AMOL DICALITE LTD. (2006) 205 CTR (GUJ) 5 21, THE AMOUNT OF SUBSIDY WAS NOT TO BE DEDUCTED FROM THE C OST OF ASSETS FOR THE PURPOSE OF CALCULATION OF DEPRECIATION. (IV) IN VIEW OF THE ABOVE, IT WAS REQUESTED TO RECTIFY T HE ORDER U/S 154 OF THE ACT FOR THE AY 2002-03. 5.1. THE ASSESSEES APPLICATION WAS REJECTED BY T HE AO VIDE HIS IMPUGNED ORDER [NO.154/ACIT/C I/BJP/07-08 DATED 22. 8.2007] WITH A REASONING THAT YOUR RECTIFICATION PETITION U/S 154 DATED 4.4.2007 HAS BEEN REJECTED AS I AM NOT INCLINED TO ENTERTAIN PETITION UNDER SEC.154 AS IT IS BARRED BY LIMITATION OF TIME. 6. AGITATED, THE ASSESSEE TOOK UP THE ISSUE WITH T HE LD. CIT (A) FOR RELIEF. THE LD. CIT (A) HAD, IN HIS IMPUGNED O RDER UNDER DISPUTE, OBSERVED THUS 3 .IN THIS CONNECTION, THE UNDERSIGNED HAS TO ST ATE THAT IF THERE IS A DELAY IN FILING OF APPEAL, IT CAN BE CONDONED. BUT, IF THERE IS DELAY IN FILING THE PETITION FOR RECTIFICATION, THE UNDER SIGNED IS NOT ITA NO.1027/B/09 & CO 69/B/09 PAGE 4 OF 8 EMPOWERED TO CONDONE THE DELAY AND HENCE, CANNOT DI RECT THE AO TO ENTERTAIN THE APPLICATION FOR RECTIFICATION WHERE I T HAS BEEN BARRED BY LIMITATION OF TIME. 7. AGGRIEVED, THE ASSESSEE HAS COME UP WITH THE PR ESENT APPEAL. IN THE MEANWHILE, THE ASSESSEE IN ITS APPL ICATION UNDER RULE 29 OF I.T.A.T. RULES SUBMITTED WITH A PRAYER FOR ADMISSIO N OF JUDICIAL PRONOUNCEMENTS OF THE HONBLE HIGH COURT AND HONB LE SUPREME COURT AS ADDITIONAL EVIDENCE TO STRENGTHEN ITS CASE. 7.1. AFTER HEARING THE RIVAL SUBMISSIONS, THE ASSE SSEES APPLICATION UNDER RULE 29 OF ITAT RULES WAS ADMITTE D AND THE REGISTRY WAS DIRECTED TO TAKE THE SAME ON RECORD. 7.2. DURING THE COURSE OF HEARING, THE SUBMISSIONS MADE BY THE LD. A R ARE SUMMARIZED AS UNDER: - THE DELAY CAUSED BY THE ASSESSEE DUE TO IGNORANCE O F LAW THAT THERE WAS 4 YEARS TIME TO FILE THE APPLICATION OF RECTIFI CATION U/S 154. NO SOONER THE ASSESSEE CAME TO KNOW OF THE FINDING OF THE GUJARAT HIGH COURT CITED SUPRA, THE ASSESSEE FILED ITS APPL ICATION U/S 154 WITHOUT FURTHER DELAY - RELIES ON CASE LAW FOR ALLOWABILITY OF DEPRECIATION ON COST/WDV WITHOUT DEDUCTING THE VALUE OF SUBSIDY RECEIVED-CIT V. P.J.CHEMICALS LTD.(1994) 210 ITR 830(SC) 7.3. ON THE OTHER HAND, THE LD. D R WAS VEHEMENT I N HIS URGE THAT THE AO WAS WITHIN HIS DOMAIN TO REJECT THE ASSESSEE S APPLICATION U/S 154 OF THE ACT AS IT WAS BARRED BY LIMITATION. THE ST AND OF THE AO WAS DULY ENDORSED BY THE LD. CIT (A) IN HIS IMPUGNED ORDER W HICH IS UNDER DISPUTE. IT WAS, THEREFORE, PRAYED THAT THERE WAS NO VALID S UBSTANCE IN THE ARGUMENT OF THE ASSESSEE WHICH REQUIRES TO BE SUMMARILY REJE CTED. ITA NO.1027/B/09 & CO 69/B/09 PAGE 5 OF 8 8. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS, DILIGENTLY PERUSED THE RELEVANT RECORDS AND ALSO THE FRESH EVI DENCE ADDUCED DURING THE COURSE OF HEARING UNDER RULE 29 OF I.T.A.T RULE S AS WELL AS THE PAPER BOOK FURNISHED BY THE LD. A R TO DRIVE HOME HIS POI NT. 8.1. BEFORE LOOKING INTO THE FACTS OF THE ISSUE, L ET US HAVE A GLANCE AT WHAT THE PROVISIONS OF S. 154 OF THE ACT SAY: 154. (1) WITH A VIEW TO RECTIFYING ANY MISTAKE APP ARENT FROM THE RECORD AN INCOME-TAX AUTHORITY REFERRED TO IN SECTION 116 MAY,- (A) AMEND ANY ORDER PASSED BY IT UNDER THE PROVISIONS O F THIS ACT; (B) AMEND ANY INTIMATION OR DEEMED INTIMATION UNDER SUB -SECTION (1) OF SECTION 143 (7) SAVE OTHERWISE PROVIDED IN SECTION 155 OR SUB-SECTI ON (4) OF SECTION 186 NO AMENDMENT UNDER THIS SECTION SHALL BE MADE AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE FINANC IAL YEAR IN WHICH THE ORDER SOUGHT TO BE AMENDED WAS PASSED. 8.2. THUS, THE PROVISIONS OF THE ACT MADE IT VERY IMPLICITLY CLEAR THAT AN INCOME-TAX AUTHORITY CAN AMEND AN ORDER PAS SED BY IT UNDER THE PROVISIONS OF THIS ACT WITHIN FOUR YEARS FROM THE E ND OF THE FINANCIAL YEAR IN WHICH THE ORDER SOUGHT TO BE AMENDED WAS PASSED. 8.3. REVERTING BACK TO THE ISSUE ON HAND, THE ORDE R PASSED SOUGHT TO BE AMENDED WAS DATED 29.1.2003 AND THE AO WAS WITHIN HIS REALM TO ACCEDE TO THE REQUEST OF THE ASSESSEE WITHIN FOUR Y EARS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE ORDER SOUGHT TO BE AMEN DED WAS PASSED, PROVIDED , THE RECTIFICATION APPLICATION WAS FURNISHED WITHIN 31.3.2007. HOWEVER, THE ASSESSEES RECTIFICATION APPLICATION D ATED: 4.4.2007 WAS FILED ITA NO.1027/B/09 & CO 69/B/09 PAGE 6 OF 8 IN THE OFFICE OF THE AO ONLY ON 8.5.2007 [ SOURCE : REVENUES GROUNDS OF CROSS OBJECTIONS] I.E., THERE WAS A CLEAR DELAY OF 37 DAYS AND NOT 4 DAYS OF DELAY AS VOUCHED BY THE ASSESSEE IN ITS GROUNDS OF APPEAL AS WELL AS THE ASSERTION OF THE LD. A R DURING COURSE OF HEARI NG BEFORE THIS BENCH. 8.4. FOR CONDONING THE DELAY EITHER IN SUBMISSION OF STATUTORY RETURNS OR CLAIMING OF RELIEF, DEDUCTION OR RECTIF ICATION OF MISTAKE CREPT IN THE ORDERS PASSED ETC., THE VALID REASON(S) FOR SUC H A DELAY IN CLAIMING FOR SUCH RELIEF SHOULD INVARIABLE BE CITED WHICH WOULD FACILITATE THE COMPETENT AUTHORITY TO DECIDE THE ISSUE ON MERITS. 8.5. HOWEVER, IN THE CASE ON HAND, WE FIND THE ASS ESSEES SOLE REASONING WAS BEING IGNORANCE OF LAW. THE ASSESS EE CANNOT TAKE SANCTUARY UNDER THE PRETEXT OF IGNORANCE OF LAW WHICH PREVENTED IT FROM FILING AN APPLICATION U/S 154 OF THE ACT FOR RECTIF ICATION OF THE ORDER PASSED MORE THAN FOUR YEARS BACK. IN THIS CONNECTION, WE W OULD LIKE TO POINT OUT THAT AS A MATTER OF FACT THE LEGISLATURE WAS VERY M AGNANIMOUS AND CONSIDERATE IN ITS WISDOM TO PRESCRIBE FOUR LONG YE ARS TIME FOR SEEKING ANY RECTIFICATION IN THE EARLIER ORDER PASSED. HAD THE RE BEEN THE ASSESSEE AN INDIVIDUAL AND PLEADING FOR CLEMENCY CITING IGNORAN CE OF LAW, THERE WOULD BE SOME SORT OF JUSTIFICATION IN SUCH A CLAIM? EVEN T HOUGH IGNORANCE OF LAW IS NOT AN EXCUSE UNDER THE LAW. THE ASSESSEE BEING A PARTNERSHIP FIRM ABLY ASSISTED BY ITS SEASONED AUDITORS WHO WERE IN THE H ELM OF ITS TAX MATTERS FOR THE YEARS, THE ASSESSEES PLEA THAT IT WAS AN I GNORANCE OF LAW WHICH PREVENTED IT FROM SEEKING RECTIFICATION OF ITS ASSE SSMENT ORDER WITHIN THE TIME FRAME, IN OUR CONSIDERED VIEW, DOESNT CARRY A NY CONVICTION. FURTHER, IT ITA NO.1027/B/09 & CO 69/B/09 PAGE 7 OF 8 IS PERTINENT TO MENTION HERE THAT NO REASON WHATSOE VER ADDUCED AS TO HOW THE ASSESSEE WAS PREVENTED BY A REASONABLE AND JUST IFIABLE CAUSE TO BEAT THE TIME FRAME PRESCRIBED UNDER THE ACT FOR SEEKING RECTIFICATION OF THE ASSESSMENT EVEN THOUGH NO MISTAKE HAD CREPT IN THE ASSESSMENT ORDER CONCLUDED. EVEN OTHERWISE UNDER THE PROVISIONS OF SECTION 154, NO POWER IS CONFERRED ON ANY AUTHORITY TO CONDONE THE DELAY. 8.6. IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE ISSUE AS DELIBERATED UPON IN THE FORE-GOING PARAGRAPHS, WE A RE OF THE FIRM VIEW THAT THE AUTHORITIES BELOW WERE JUSTIFIED IN THEIR STAND WHICH WAS RATHER WITHIN THE PARAMETERS OF THE PROVISIONS OF THE ACT. IT IS ORDERED ACCORDINGLY. 8.7. WE HAVE SINCE UPHELD THE ACTION OF THE AO IN REJECTING THE ASSESSEES APPLICATION U/S 154 OF THE ACT, THE OTHE R GROUND RAISED BY THE ASSESSEE BECOMES REDUNDANT AND, THUS, IT HAS NOT BE EN ADDRESSED TO. 9. LOOKING INTO THE REVENUES CROSS OBJECTION, WE FIND THAT THE REVENUES SOLE PRAYER WAS THAT SINCE THE ASSESSEES RECTIFICATION APPLICATION WAS BARRED BY LIMITATION, THE AO HAD RE JECTED THE ASSESEEES APPLICATION WHICH MAY BE SUSTAINED. 9.1. WE HAVE SINCE UPHELD THE STAND OF THE REVENUE IN THE ASSESSEES APPEAL CITED SUPRA, THE CROSS OBJECTION OF THE REVENUE HAS BECOME SUPERFLUOUS AND, THUS, IT HAS NOT BEEN ADDR ESSED TO. 10. IN THE RESULT : (I) THE ASSESSEES APPEAL IS DISMISSED ; & (II) THE REVENUES CROSS OBJECTION IS ALLOWED . ITA NO.1027/B/09 & CO 69/B/09 PAGE 8 OF 8 PRONOUNCED IN THE OPEN COURT ON THIS 29 TH DAY OF OCTOBER, 2010. SD/- SD/- ( SMT. P. MADHAVI DEVI ) (A. MOHAN ALANKAMONY ) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED, THE 29 TH OCTOBER, 2010. DS/- COPY TO: 1. ASSESSEE 2. REVENUE 3. CIT 4. CIT( A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR ITAT, BANGALORE.