Eagle Press, CHENNAI V. ACIT, CHENNAI

ITA 1248/CHNY/2015

• Counselvise Citation: 124821714 RSA 2015
• Duration Of Justice: 3 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2015
• Appeal Filed By: Assessee
• Bench Allotted: C
• Next Hearing Date: 12-08-2015
• Assessment Year: 2011-2012
• Appeal Filed On: 25-05-2015
• Court: TRIBUNAL
• Department Lawyers: ARUN C BHARAT
• Assessee Lawyers: N DEVANATHAN
• Keywords: Revision of order; Depreciation; Opportunity of being heard; Additional depreciation
• Section: 263

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : CHENNAI . . . , . ! , ' # $ [ BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ] S.P.NO.351/MDS/2015 & ./ I.T.A.NO1248/MDS/2015. / ASSESSMENT YEAR : 2011-12 M/S EAGLE PRESS NO.35, M.S.KOIL STREET ROYAPURAM CHENNAI 600 013 VS. THE ASSTT. COMM ISSIONER OF INCOME-TAX NON-CORPORATE CIRCLE 4(1) CHENNAI [PAN AABFE 9151 B] ( PETITIONER / APPELLANT) (RESPONDENT) / APPELLANT BY : SHRI N. DEVANATHAN, ADVOCATE /RESPONDENT BY : SHRI ARUN C. BHARAT, CI T / DATE OF HEARING : 12 - 08 - 2015 ! / DATE OF PRONOUNCEMENT : 28 - 0 8 - 2015 / O R D E R PER N.R.S.GANESAN, JUDICIAL MEMBER THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX, CHENNAI-IX, DATED 1 0.10.2014 PASSED U/S 263 OF INCOME-TAX ACT, 1961. 2. SHRI N. DEVANATHAN, LD. COUNSEL FOR THE ASSESSEE SU BMITTED THAT IN RESPECT OF THE MACHINERY PURCHASED BY THE ASSESSEE FROM SP 351/15 ITA NO.1248/15 :- 2 -: GERMANY, THE ADMINISTRATIVE COMMISSIONER FOUND THAT IT WAS PUT TO USE LESS THAN 180 DAYS, THEREFORE, THE ASSESSEE I S NOT ENTITLED FOR FULL DEPRECIATION. ACCORDING TO THE LD. COUNSEL, THE MA CHINERY WAS ACTUALLY INSTALLED AND PUT TO USE ON 25.9.2010. THE CUSTOMS DEPARTMENT INSPECTED THE MACHINERY ON 4.10.2010 IN RESPECT OF THE CLAIM MADE BY THE ASSESSEE FOR REFUND TO THE EXTENT OF ` 21,12,461/- FROM THE CUSTOMS DUTY PAID. THEREFORE, THE ASSESSEE IS ENT ITLED FOR FULL DEPRECIATION SINCE THE MACHINERY WAS ACTUALLY PUT T O USE FOR MORE THAN 180 DAYS. 3. THE NEXT GROUND OF REVISION BY THE CIT IS WITH REGA RD TO VARIATION IN THE TURNOVER AND CLOSING STOCK. 4. THE LD. COUNSEL SUBMITTED THAT WHILE GIVING EFFECT TO THE ORDER OF THE CIT, THE ASSESSING OFFICER HAS NOT MAD E ANY ADDITION WITH REGARD TO VARIATION IN TURNOVER AND CLOSING STOCK, THEREFORE, THE ISSUE MAY NOT SURVIVE FOR ADJUDICATION BEFORE THIS TRIBUN AL. 5. THE LD. COUNSEL FURTHER SUBMITTED THAT THE ASSESSE E MADE A CLAIM OF ` 53,61,645/- TOWARDS ADDITIONAL DEPRECIATION. HOWE VER, THE ASSESSEE REALIZED LATER ON THAT CLAIMING ADDITIONAL DEPRECIATION IS AN INADVERTENT MISTAKE, THEREFORE, IT WITHDREW THE CLA M OF ADDITIONAL DEPRECIATION. HOWEVER, THE CIT DIRECTED THE ASSESS ING OFFICER TO INITIATE PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT. REFERRING TO SP 351/15 ITA NO.1248/15 :- 3 -: SEC. 271(1)(C) OF THE ACT, THE LD. COUNSEL SUBMITT ED THAT PENALTY PROCEEDINGS CANNOT BE DIRECTED TO BE INITIATED BY H IGHER AUTHORITY. ACCORDING TO THE LD. COUNSEL, PENALTY U/S 271(1)( C) OF THE ACT CAN BE INITIATED EITHER BY THE ASSESSING OFFICER OR BY THE CIT IN THE COURSE OF ANY PROCEEDINGS IF THEY SATISFY THEMSELVES REGARDIN G FURNISHING OF INACCURATE PARTICULARS OR CONCEALING ANY PART OF TH E INCOME. IF THE CIT SATISFIES THAT THE ASSESSEE HAS CONCEALED ANY PART OF THE INCOME OR FURNISHED INACCURATE PARTICULARS, THEN HE HAS TO IN ITIATE PENALTY PROCEEDINGS. HOWEVER, HE HAS NO AUTHORITY TO DIREC T THE ASSESSING OFFICER TO INITIATE THE PENALTY PROCEEDINGS. THERE FORE, THE DIRECTION ISSUED BY THE CIT TO INITIATE PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT IS BEYOND HIS JURISDICTION. 6. REFERRING TO THE SHOW CAUSE NOTICE ISSUED BY THE C IT, THE LD. COUNSEL SUBMITTED THAT THE SHOW CAUSE NOTICE WAS I SSUED BY THE ITO AND NOT BY THE CIT HIMSELF. THE CIT OBSERVED THAT THE ASSESSEE PAID CENVAT ON 4.10.2010. IN FACT, THE ASSESSEE HAS NO T PAID ANY CENVAT ON 4.10.2010 OR ON ANY OTHER DATE. SINCE TH E BASIC DETAILS ARE NOT AVAILABLE IN THE SHOW CAUSE NOTICE, ACCORD ING TO THE LD. COUNSEL, THE SHOW CAUSE NOTICE ISSUED BY THE CIT I S DEFECTIVE. THEREFORE, THE CONSEQUENTIAL ORDER PASSED BY THE CI T CANNOT STAND IN THE EYE OF LAW. SP 351/15 ITA NO.1248/15 :- 4 -: 7. ON THE CONTRARY, SHRI ARUN C. BHARAT, LD. DEPARTMEN TAL REPRESENTATIVE SUBMITTED THAT THE CIT FOUND THAT TH E MACHINERY PURCHASED BY THE ASSESSEE FROM GERMANY WAS PUT TO USE LESS THAN 180 DAYS, THEREFORE, THE ASSESSEE IS ENTITLED FOR 50% DEPRECIATION. ACCORDINGLY, THE CIT DIRECTED THE ASSESSING OFFICER TO ALLOW ONLY 50% OF THE DEPRECIATION. REFERRING TO THE DIFFERENCE I N THE CLOSING STOCK AND TURNOVER, THE LD. DR SUBMITTED THAT THE ASSESSI NG OFFICER, AFTER VERIFICATION HAS MADE NO ADDITION, THEREFORE, NO F URTHER ADJUDICATION IS REQUIRED. REFERRING TO INITIATION OF PENALTY PROCE EDINGS, THE LD. DR SUBMITTED THAT THE CIT, BEING THE ADMINISTRATIVE AU THORITY, CAN VERY WELL DIRECT THE ASSESSING OFFICER TO INITIATE PROCE EDINGS U/S 271(1)(C) OF THE ACT. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. LET US FIRST TAKE UP THE DEFECT IN THE SHOW CAUSE NOTICE. THE CONTENTION O F THE ASSESSEE IS THAT THE CIT HAS NOT APPLIED HIS MIND AND THE SHOW CAUSE NOTICE WAS PREPARED ONLY BY THE ITO AND THE BASIC DETAILS AS R EQUIRED ARE NOT AVAILABLE IN THE SHOW CAUSE NOTICE. IN FACT, THE SHOW CAUSE NOTICE WAS ISSUED BY THE CIT AND NOT BY THE ASSESSING OFFI CER. WE HAVE GONE THROUGH THE PROVISIONS OF SEC. 263 OF THE ACT. SEC. 263 OF THE ACT ENABLES THE CIT TO CALL FOR AND EXAMINE THE REC ORDS OF ANY PROCEEDINGS UNDER THE INCOME-TAX ACT, 1961, IF HE C ONSIDERS THAT THE SP 351/15 ITA NO.1248/15 :- 5 -: ORDER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE, HE MAY, AFTER GIVING A N OPPORTUNITY TO THE ASSESSEE AND AFTER MAKING SUCH ENQUIRY AS HE DEEMS NECESSARY, PASS AN ORDER ENHANCING OR MODIFYING THE ASSESSMENT OR C ANCELLING THE ASSESSMENT. THEREFORE, WHAT IS REQUIRED U/S 263 I S AN OPPORTUNITY OF BEING HEARD. SEC. 263 DOES NOT REQUIRE THE CIT TO ISSUE ANY SHOW CAUSE NOTICE. THEREFORE, THIS TRIBUNAL IS OF THE C ONSIDERED OPINION THAT EVEN IF THERE WAS ANY DEFECT IN THE SHOW CAUSE NOT ICE THAT WILL NOT AFFECT THE CONSEQUENTIAL ORDER PASSED BY THE CIT. THIS VIEW OF OURS IS FORTIFIED BY THE JUDGMENT OF THE APEX COURT IN CIT VS ELECTRO HOUSE [1971] 82 ITR 824. 9. NOW COMING TO THE CLAIM OF DEPRECIATION IN RESPECT OF MACHINERY PURCHASED FROM GERMANY, FROM THE MATERIAL AVAILABLE ON RECORD, IT APPEARS THAT THE MACHINERY WAS INSTALLED AND PUT TO USE ON 25.9.2010. THE CUSTOMS AUTHORITIES INSPECTED THE U SAGE AND RUNNING OF THE MACHINERY ON 4.10.2010. WHEN THE CUSTOMS AU THORITIES INSPECTED THE MACHINERY ON 4.10.2010, IT IS OBVIOUS THAT THE MACHINERY SHOULD HAVE BEEN INSTALLED AND READY FOR USE BEFORE 4.10.2010. THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPIN ION THAT THE MACHINERY WAS IN FACT INSTALLED ON 25.9.2010 AND IT IS READY FOR USE. THEREFORE, MACHINERY WAS PUT TO USE FOR MORE THAN 1 80 DAYS AND THE ASSESSEE IS ENTITLED FOR FULL DEPRECIATION. HENCE, THE CIT IS NOT JUSTIFIED SP 351/15 ITA NO.1248/15 :- 6 -: IN DIRECTING THE ASSESSING OFFICER TO ALLOW ONLY 50 % DEPRECIATION. ACCORDINGLY, THE ORDER OF THE CIT IS SET ASIDE AND THE ASSESSING OFFICER IS DIRECTED TO ALLOW FULL DEPRECIATION IN RESPECT OF THE MACHINERY PURCHASED FROM GERMANY. 10. NOW COMING TO THE DIFFERENCE IN TURNOVER AND CLOSIN G STOCK, BOTH THE LD. COUNSEL AND THE LD. DR SUBMITTED THAT THE ASSESSING OFFICER HAS VERIFIED AND NO ADDITION WAS MADE. THE REFORE, AS RIGHTLY SUBMITTED BY THE LD. COUNSEL, THE ISSUE DOES NOT RE QUIRE ANY ADJUDICATION BY THIS TRIBUNAL. 11. NOW COMING TO THE DIRECTION OF THE CIT TO INITIATE PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT, THE AUTHORI TIES UNDER THE INCOME-TAX ACT ARE EMPOWERED TO PERFORM JUDICIAL FU NCTION. IN OTHER WORDS, THE AUTHORITY CONCERNED HAS TO TAKE AN INDEP ENDENT DECISION IN RESPECT OF THE CASE WHETHER TO INITIATE PENALTY U/ S 271(1)(C) OF THE ACT OR NOT? THOUGH THE ASSESSING OFFICER IS ESTAB LISHED UNDER THE PROVISIONS OF THE INCOME-TAX ACT, HE IS DISCHARGING A JUDICIAL FUNCTION WHILE INITIATING PROCEEDINGS FOR LEVY OF PENALTY. THEREFORE, NO AUTHORITY CAN DIRECT THE ASSESSING OFFICER TO INITIATE PENALT Y PROCEEDINGS U/S 271(1)(C) OF THE ACT. THE ASSESSING OFFICER IS EXP ECTED TO TAKE AN INDEPENDENT DECISION. IN THE COURSE OF ANY PROCEEDI NGS BEFORE THE CIT, HE MAY INITIATE PENALTY PROCEEDINGS AND DECIDE THE SAME ON HIS SP 351/15 ITA NO.1248/15 :- 7 -: OWN. HOWEVER, THE CIT HAS NO AUTHORITY TO DIRECT THE ASSESSING OFFICER TO INITIATE PENALTY PROCEEDINGS. THE DIREC TION OF THE ADMINISTRATIVE COMMISSIONER TO INITIATE PENALTY PRO CEEDINGS WOULD AMOUNT TO INTERFERENCE WITH JUDICIAL FUNCTION OF TH E ASSESSING OFFICER. THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPIN ION THAT THE CIT HAS EXCEEDED HIS JURISDICTION IN DIRECTING THE ASSESSIN G OFFICER TO INITIATE PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT. ACC ORDINGLY, THE ORDER OF THE CIT IS SET ASIDE AND DIRECTION ISSUED BY TH E CIT TO INITIATE PENALTY PROCEEDINGS IS QUASHED. 12. WITH THE ABOVE OBSERVATION, THE APPEAL OF THE A SSESSEE IS PARTLY ALLOWED. CONSEQUENTLY, THE STAY PETITION IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH OF AUGUST, 2015, AT CHENNAI. SD/- SD/- ( . ! ) (A. MOHAN ALANKAMONY) ' / ACCOUNTANT MEMBER ( . . . ' ) (N.R.S. GANESAN) / JUDICIAL MEMBER #$ / CHENNAI %& / DATED: 28 TH AUGUST, 2015 RD &' ()*) / COPY TO: 1 . / APPELLANT 4. + / CIT 2. / RESPONDENT 5. ),- . / DR 3. +/' / CIT(A) 6. -01 / GF