Trimurti Dalal Pvt. Ltd., JAMNAGAR V. The Income Tax Officer, Ward-2(2), JAMNAGAR

ITA 1144/RJT/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 7329 (ITAT-RAJKOT)
• Duration Of Justice: 1 year(s) 3 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-03-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2005-2006
• Appeal Filed On: 09-12-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AVINASH KUMAR
• Assessee Lawyers: B R POPAT
• Keywords: Depreciation; Non compliance; Set aside
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT BEFORE SHRI A.L. GEHLOT (AM) AND SHRI N.R.S. GANESA N (JM) I.T.A. NO.37/RJT/2009 (ASSESSMENT YEAR 2005-06) ITO, WD.2(2) VS M/S TRIMURTI DALAL PVT LTD JAMNAGAR 118, INDRAPRASTHA COMPLEX PANEHESHWAR TOWER ROAD JAMNAGAR PAN : AABCT7410M (APPELLANT) (RESPONDENT) I.T.A. NO.1144/RJT/2009 (ASSESSMENT YEAR 2005-06) TRIMURTI DALAL PVT LTD VS THE ITO, WD.2(2) JAMNAGAR JAMNAGAR PAN:AABCT7410M (APPELLANT) (RESPONDENT) REVENUE BY : SHRI AVINASH KUMAR ASSESSEE BY : SHRI BR POPAT O R D E R PER N.R.S. GANESAN, JM THESE APPEALS BY ASSESSEE AND THE REVENUE ARE DIRE CTED AGAINST THE TWO INDEPENDENT ORDERS OF THE CIT(A) FOR THE ASSESSMENT YEAR 2005-06. ITA NO.37/RJT/2009 IS FILED BY THE REVENUE. HOWEVER, ITA NO.1144/RJT/ 2009 IS FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) CONFIRMING THE LEVY OF PENALTY U/S 271(1)(B) OF THE ACT. THEREFORE, WE HEARD BOTH THE APPEALS TOGETHER AND DISPOSE OFF THE SAME BY THIS COMMON ORDER. 2. LET US TAKE REVENUES APPEAL IN ITA NO.37/RJT/20 09 FIRST. SHRI AVINASH KUMAR, THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED T HAT FROM THE VERY BEGINNING THE ASSESSEE HAS NOT CO-OPERATED WITH THE ASSESSING OFF ICER FOR COMPLETING THE ASSESSMENT. IN FACT, NOTICE U/S 143(2) WAS ISSUED ON 17-10-2006 . AFTER SEVERAL HEARINGS, THE ASSESSEE FILED AN APPLICATION U/S 144A OF THE ACT O N 24-12-2007 BEFORE THE ADDL.CIT. HOWEVER, THE ADDL CIT HAS NOT PASSED ANY ORDER SINC E NO SUFFICIENT TIME WAS AVAILABLE TO HIM. HOWEVER, THE ADDL CIT DIRECTED THE ASSESSI NG OFFICER TO CONSIDER THE CONTENTIONS OF THE ASSESSEE AS RAISED IN THE APPLICATION U/S 14 4A OF THE ACT AND PASS A REASONABLE ITA NO.37 & 1144/RJT/2009 2 ORDER WITHOUT MAKING ANY UNNECESSARY ADDITION. AFT ER RECEIVING THE DIRECTION OF THE ADDL COMMISSIONER THE TIME LEFT TO THE ASSESSING OFFICER WAS ONLY FOUR DAYS. THE ASSESSING OFFICER, AFTER TAKING INTO CONSIDERATION ALL THE CO NTENTIONS RAISED BY THE ASSESSEE IN THE APPLICATION U/S 144A AND THE MATERIAL AVAILABLE ON RECORD HAS COMPUTED THE TOTAL INCOME AT RS.24,88,530. REFERRING TO THE ORDER OF CIT(A), THE LD.DR POINTED OUT THAT THE ASSESSING OFFICER, AFTER INSPECTING THE PREMISES OF THE ASSESSEE FOUND THAT THERE WAS NO COMPUTER SYSTEM AVAILABLE IN THE BUSINESS PREMISES OF THE ASSESSEE. ACCORDINGLY HE DISALLOWED THE CLAIM OF DEPRECIATION. THE CIT(A) F OUND THAT THE ASSESSMENT YEAR UNDER CONSIDERATION WAS IN RESPECT OF EARLIER FINANCIAL Y EAR AND THE VISIT MADE BY THE ASSESSING OFFICER WAS NOT SUPPORTED BY ANY PANCHANAMA AND EVE N IF THERE IS ANY PANCHANAMA THE ASSESSING OFFICER HAS NOT VERIFIED THE RETURN FILED BY THE ASSESSEE FOR THE EARLIER ASSESSMENT YEAR. ACCORDING TO THE LEARNED DEPARTME NTAL REPRESENTATIVE, THE CIT(A) HAS COMMITTED AN ERROR IN ALLOWING THE DEPRECIATION ESP ECIALLY WHEN NO ASSET WAS FOUND DURING PERSONAL INSPECTION OF THE PREMISES OF THE A SSESSEE. REFERRING TO GROUND NO.2 OF THE REVENUE, THE LEARNED DEPARTMENTAL REPRESENTATIV E POINTED OUT THAT THE ASSESSING OFFICER DISALLOWED RS. 52,252 TOWARDS ELECTRIC EXPE NSES. HOWEVER, THE CIT(A) FOUND THAT SHRI JITUBHAI IS A SMALL ELECTRICIAN AND IT WAS NOT POSSIBLE TO LIST OUT THE EXACT REPAIR AND REPLACEMENT CARRIED OUT BY HIM FOR WHICH THE PAYMEN T WAS MADE. ACCORDINGLY, THE CIT(A) ALLOWED THE CLAIM OF THE ASSESSEE WITHOUT AN Y VERIFICATION OF THE BILLS AND VOUCHERS. THE LD.DR FURTHER POINTED OUT THAT THE A SSESSING OFFICER HAS ALSO MADE ADDITION OF RS.15,92,000 U/S 68 OF THE I.T. ACT. A CCORDING TO THE LD.DR THE ASSESSEE HAS NOT PROVED THE IDENTITY OF THE CREDITOR, CREDITWORT HINESS OF THE CREDITORS AND GENUINENESS OF THE TRANSACTION. ACCORDING TO THE LD.DR THESE T HREE CONDITIONS ARE VERY ESSENTIAL FOR THE PURPOSE OF SECTION 68 OF THE INCOME-TAX ACT. H OWEVER, ON APPEAL BY THE ASSESSEE, THE CIT(A) DELETED THE ADDITION WITHOUT ANY PROPER REASONING. THE CIT(A) FOUND THAT THE ASSESSING OFFICER ACTED AGAINST THE SPIRIT OF THE D IRECTION GIVEN BY THE ADDL CIT. THE LD.DR FURTHER POINTED OUT THAT THE ADDL CIT DIRECTE D THE ASSESSING OFFICER TO CONSIDER THE CONTENTS RAISED BY THE ASSESSEE IN THE APPLICATION U/S 144A ON 24-12-2007. THE LAST DATE FOR COMPLETING THE ASSESSMENT WAS 31-12-2007. THEREFORE, WITHIN THE TIME AVAILABLE, THE ASSESSING OFFICER HAS TAKEN ALL EFFO RTS TO COMPLY WITH THE DIRECTION OF THE ADDL CIT. THEREFORE, THE CIT(A) COULD NOT HAVE DEL ETED THE ADDITION. 3. ON THE CONTRARY, SHRI BR POPAT, THE LEARNED REPR ESENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER HAS NOT COMPLI ED WITH DIRECTION OF THE ADDL CIT ITA NO.37 & 1144/RJT/2009 3 ISSUED U/S 144A OF THE ACT. THE LD.REPRESENTATIVE FURTHER SUBMITTED THAT IT IS NOT CORRECT TO SAY THAT THE ASSESSEE HAS NOT COOPERATED WITH TH E ASSESSING OFFICER. DUE TO THE INDIFFERENT BEHAVIOUR OF THE ASSESSING OFFICER THE ASSESSEE WAS FORCED TO APPROACH THE ADDL CIT FOR APPROPRIATE DIRECTION. UNFORTUNATELY , FOR WANT OF TIME, THE ADDL CIT DIRECTED THE ASSESSING OFFICER TO CONSIDER ALL THE CONTENTIO NS RAISED BY THE ASSESSEE IN THE APPLICATION U/S 144A OF THE ACT. IN SPITE OF THE S PECIFIC DIRECTION, THE ASSESSING OFFICER HAS NOT FOLLOWED THE DIRECTION OF THE ADDL CIT IN LETTER AND SPIRIT. THEREFORE, THE CIT(A), AFTER GOING THROUGH THE FACTUAL ASPECT DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. THE LEARNED REPRESENTATIVE SUBMITTED THAT THE CIT(A) HAS RIGHTLY DELETED THE ADDITION. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSION ON EITHE R SIDE AND HAVE ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. WE HAVE ALSO CAR EFULLY GONE THROUGH THE ORDERS OF LOWER AUTHORITIES. THE FACT REMAINS IS THAT THE AS SESSEE FILED AN APPLICATION U/S 144A OF THE ACT BEFORE THE ADDL COMMISSION ON 24-12-2007. DUE TO WANT OF TIME, THE ADDL COMMISSIONER COULD NOT GO THROUGH THE MATERIAL FILE D BY THE ASSESSEE AND THEREFORE, HE, IN TURN, DIRECTED THE ASSESSING OFFICER BY AN ORDER DATED 27-12-20007 TO CONSIDER THE MATERIAL FILED BY THE ASSESSEE INCLUDING THE CONTEN TIONS RAISED IN THE APPLICATION U/S 144A AND THEN TO COMPLETE THE ASSESSMENT. THE ADDL CIT HAS ALSO DIRECTED THE ASSESSING OFFICER NOT TO MAKE ANY HIGH PITCHED ASSE SSMENT BY MAKING UNNECESSARY ADDITIONS. IT IS NOT IN DISPUTE THAT THE TIME LIMI T FOR COMPLETING THE ASSESSMENT WAS 31- 12-2007. THE DIRECTION OF THE ADDL COMMISSIONER WA S ISSUED ON 27-12-2007. THEREFORE, THE ACTUAL TIME AVAILABLE WITH THE ASSES SING OFFICER WAS ONLY 4 DAYS, I.E. 28 TH DECEMBER, 29 TH DECEMBER, 30 TH DECEMBER, AND 31 ST DECEMBER, 2007. IN OUR OPINION, THE ASSESSING OFFICER WAS PREVENTED BY LACK OF TIME TO EXAMINE ALL THE MATERIALS FILED BY THE ASSESSEE BEFORE THE ADDL CIT. THIS IS ALSO APP ARENT FROM THE ORDER OF THE CIT(A). THE CIT(A) ALSO FOUND FAULT WITH THE ASSESSING OFFI CER IN NOT EXAMINING THE MATERIAL AVAILABLE ON RECORD INCLUDING THE RETURN FILED BY T HE ASSESSEE FOR THE EARLIER ASSESSMENT YEARS FOR THE PURPOSE OF ALLOWANCE OF DEPRECIATION. IN OUR OPINION, THE ASSESSING OFFICER COULD NOT HAVE DONE ALL THESE EXERCISES WITHIN THE AVAILABLE TIME OF FOUR DAYS, I.E. FROM 28-12-2007 TO 31-12-2007. IN OUR OPINION, THE CIT( A) OUGHT TO HAVE EXAMINED ALL THE MATERIALS HIMSELF IN EXERCISE OF HIS CO-TERMINUS PO WER FOR COMPLETING THE ASSESSMENT. IN OTHER WORDS, THE CIT(A) HAS CO-TERMINUS POWERS AS T HAT OF THE ASSESSING OFFICER. THEREFORE, HE OUGHT TO HAVE EXAMINED ALL THE MATERI AL BEFORE DELETING THE ADDITION MADE ITA NO.37 & 1144/RJT/2009 4 BY THE ASSESSING OFFICER. IT IS APPARENT FROM THE ORDER OF THE CIT(A) THAT THE CIT(A) HAS NOT EXAMINED THE MATERIAL AVAILABLE ON RECORDS INDE PENDENTLY. THE FACT REMAINS THAT NEITHER THE ASSESSING OFFICER NOR THE CIT(A) HAS EX AMINED ALL THE MATERIAL FILED BY THE ASSESSEE BEFORE THE ADDL CIT AND THE CONTENTIONS RA ISED BY THE ASSESSEE IN THE APPLICATION U/S 144A OF THE ACT. IN VIEW OF THESE FACTUAL CIRCUMSTANCES, IN OUR OPINION, THE MATTER NEEDS TO BE RE-EXAMINED BY THE ASSESSING OFFICER AFTER CONSIDERING ALL THE MATERIAL AVAILABLE ON RECORD INCLUDING THE CONTENTI ONS RAISED BY THE ASSESSEE IN THE APPLICATION FILED UNDER SECTION 144A BEFORE THE ADD L CIT. ACCORDINGLY WE SET ASIDE THE ORDER OF LOWER AUTHORITIES AND REMAND BACK THE ENTI RE ISSUE TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL RECONSIDER TH E ISSUE AFRESH AND THEREAFTER BRING ON RECORD ALL THE FACTUAL ASPECT AND DECIDE THE ISSUE AFRESH IN ACCORDANCE WITH LAW AFTER GIVING REASONABLE OPPORTUNITY TO THE ASSESSEE. 5. NOW COMING TO ASSESSEES APPEAL IN ITA NO.1144/R JT/2009, THE ASSESSING OFFICER LEVIED PENALTY OF RS.20,000 FOR NON APPEARANCE OF T HE ASSESSEE ON 08-11-2006 AND 10- 11-2006. 6. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF THE ASSESSEE AND THE LEARNED DEPARTMENTAL REPRESENTATIVE. WHILE DECIDING THE DE PARTMENTAL APPEAL WE HAVE SET ASIDE THE ORDER OF LOWER AUTHORITIES AND REMANDED THE MAT TER TO THE FILE OF THE ASSESSING OFFICER. NO DOUBT, THE ASSESSING OFFICER WAS EMPOW ERED TO LEVY PENALTY FOR NON COMPLIANCE OF THE NOTICES ISSUED. HOWEVER, ALL FAI LURES TO APPEAR DO NOT AUTOMATICALLY RESULT IN LEVY OF PENALTY. THE ASSESSING OFFICER H AS EVERY DISCRETION TO EXAMINE THE FACTUAL SITUATION AND TO DECIDE WHETHER THE NON APP EARANCE OF THE ASSESSEE WARRANTED LEVY OF PENALTY U/S 271(1)(B) OF THE ACT OR NOT. T HE ASSESSING OFFICER, AFTER REFERRING TO THE DATE OF HEARING, ACCEPTED THE EXPLANATION OF TH E ASSESSEE IN RESPECT OF MAJOR FAILURES. HOWEVER, IN RESPECT OF TWO OCCASIONS I.E . ON 08-11-2006 AND 10-11-2006 THE ASSESSING OFFICER FOUND THAT THE EXPLANATION OFFERE D BY THE ASSESSEE IS NOT SATISFACTORY. THE CIT(A) WITHOUT RECORDING ANY INDEPENDENT FINDIN G HAS SIMPLY FOUND THAT THE ASSESSEES APPEAL HAS NO MERIT. AS ALREADY OBSERVE D, SINCE WE HAVE REMANDED BACK THE MATTER ON MERIT, IN OUR OPINION, THIS MATTER AL SO NEEDS TO BE RECONSIDERED BY THE ASSESSING OFFICER. ACCORDINGLY WE SET ASIDE THE OR DER OF THE LOWER AUTHORITIES AND REMAND BACK THE MATTER TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL ITA NO.37 & 1144/RJT/2009 5 DECIDE THE ISSUE AFTER TAKING INTO CONSIDERATION TH E EXPLANATION OF THE ASSESSEE AND THEREAFTER DECIDE THE ISSUE AFRESH IN ACCORDANCE WI TH LAW. 7. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE A ND THE ASSESSEE ARE ALLOWED, FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 31-03-2011. SD/- SD/- (A.L. GEHLOT) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER RAJKOT, DT : 31 ST MARCH, 2011 PK/- COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A), JAMNAGAR 4. THE CIT, JAMNAGAR 5. THE DR (TRUE COPY) BY ORDER ASSTT.REGISTRAR, ITAT, RAJKOT