Bhagwati Sponge Private Limited, Burdwan V. C.I.T ,Asansol, Asansol

ITA 1283/KOL/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 4729 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 1 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-06-2016
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 03-05-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 15-05-2013
• Court: TRIBUNAL
• Department Lawyers: NIRAJ KUMAR
• Assessee Lawyers: S M SURANA
• Keywords: Depreciation; Opportunity of being heard; Unabsorbed depreciation
• Section: 143(3); 263

Judgement Text

I.T.A. NO. 1283/KOL./2013 ASSESSMENT YEAR: 2008-2009 PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA B BENCH, KOLKATA BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER I.T.A. NO. 1283 /KOL/ 2013 ASSESSMENT YEAR: 2008-2009 BHAGWATI SPONGE PVT. LIMITED,...................... ........................APPELLANT P.O. JAMURIA BAZAR, DIST. BURDWAN, W.B. PIN 713 336 [PAN : AACCB 3462 A] -VS.- COMMISSIONER OF INCOME TAX, ........... ..................................RESPONDENT ASANSOL, PARMAR BUILDING, 54, G.T. ROAD (WEST), P.O. ASANSOL-4, DIST. BURDWAN APPEARANCES BY: SHRI S.M. SURANA, ADVOCATE, FOR THE ASSESSEE SHRI NIRAJ KUMAR, CIT, D.R., FOR THE DEPARTMENT DATE OF CONCLUDING THE HEARING : MAY 03, 2016 DATE OF PRONOUNCING THE ORDER : JUNE 15, 2016 O R D E R PER SHRI P.M. JAGTAP :- THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF LD. COMMISSIONER OF INCOME TAX, ASANSOL DATED 22.03.201 3 PASSED UNDER SECTION 263 OF THE INCOME TAX ACT, 1961. 2. THE ASSESSEE IN THE PRESENT CASE IS A COMPANY, W HICH IS ENGAGED IN THE BUSINESS OF MANUFACTURING SPONGE IRON AS WELL A S ITS TRADING AND COMMISSION AGENT. THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED BY IT ON 30.09.2008 DECLARING TOTAL INCOM E AT NIL. IN THE ASSESSMENT COMPLETED UNDER SECTION 143(3) VIDE AN O RDER DATED 10.12.2010, THE TOTAL INCOME AS DECLARED BY THE ASS ESSEE IN THE RETURN OF INCOME AT NIL WAS ACCEPTED BY THE ASSESSING OFFIC ER. ACCORDING TO THE LD. I.T.A. NO. 1283/KOL./2013 ASSESSMENT YEAR: 2008-2009 PAGE 2 OF 5 CIT, THE SAID ORDER PASSED BY THE ASSESSING OFFICER WAS ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF THE REVENUE. HE, THEREFORE, ISSUED A NOTICE UNDER SECTION 263 POINTING OUT SUCH ERRORS T O THE ASSESSEE AS UNDER:- 'WHEREAS ASSESSMENT FOR THE ASSESSMENT YEAR 2008-09 WAS COMPLETED ON 10.12.2010 U/S 143(3) OF THE I. T. ACT , 61 ACCEPTING THE RETURNED INCOME BY THE AO, ACIT, CIRCLE-1, ASA NSOL. I AM OF THE OPINION THAT BECAUSE OF INADEQUATE INVESTIGATIO N AND INCORRECT APPLICATION OF LAW, ERROR HAS BEEN CREPT INTO THE BODY OF ASSESSMENT ORDER ON THE GROUND AS MENTIONED BELOW . - FROM THE ASSESSMENT FOLDER PERTAINING TO A. Y. 2008 -09, IT TRANSPIRED THAT THE UNABSORBED DEPRECIATION OF RS.3 ,69,31,973/- WAS ALLOWED TO BE SET OFF WITH THE TOTAL INCOME OF RS.95,30,373/- AND THUS THE TOTAL INCOME ARRIVED AT NIL, WHEREAS I N THE PREVIOUS ASSESSMENT YEAR OF 2007-08, THE WHOLE UNABSORBED DE PREDATION OF RS.2,82,37,847/- WAS SET OFF WITH THE BUSINESS INCO ME AND TAX WAS LEVIED U/S.115JB. ACCORDINGLY, THERE WAS NO UNABSOR BED DEPRECIATION EXISTED FOR SETTING OFF IN THE CURRENT ASSESSMENT OF A. Y. 2008-09, THEREBY RESULTED IN UNDERASSESSMENT OF INCOME OF RS.95,30,373/-. IT HAS BEEN FURTHER OBSERVED THAT ADDITIONAL DEPREC IATION OF RS.1,54,79,188/- WAS CLAIMED BY THE ASSESSE AND THE SAME WAS ALLOWED IN THE ASSESSMENT. THE ASSESSEE'S NATURE OF BUSINESS WAS TRADING & MANUFACTURING OF SPONGE IRON AND ADDITION AL DEPRECIATION IS ALLOWABLE ONLY ON NEW PLANT AND MAC HINERY ACQUIRED AND INSTALLED FOR THE PURPOSE OF MANUFACTU RING. WHILE GOING THROUGH THE RECORDS, IT WAS NOTICED THAT IN T HE RELEVANT FINANCIAL YEAR, THE ASSESSE HAS ACQUIRED A NEW PLAN T AND MACHINERY VALUED AT RS.34,79,670/- OUT OF WHICH, PL ANT & MACHINERY VALUED RS.5,64;490/- WAS PUT INTO USE AF TER 30.09.2007. ACCORDINGLY, ADDITIONAL DEPREDATION OF RS.4,04,422/- [RS.1,12,898 + RS.2,91,524/-] ONLY WAS ALLOWABLE. T HUS THE EXCESS DEPREDATION OF RS.1,50,74,766/- WAS ALLOWED WHICH N EEDED TO BE REVISED. IN VIEW OF THE ABOVE, IT HAS CAUSED THE ORDER PASSE D BY THE AO ON 10.12.2010 AS ERRONEOUS AND PREJUDICIAL TO THE INTE REST OF REVENUE. I, THEREFORE, PROPOSE TO REVISE THE ORDER ON THE ABOVE ISSUE. THEREFORE, PLEASE SHOW-CAUSE WHY THE ORDER W ILL NOT BE REVISED U/S.263 OF THE I. T. ACT, '61. YOU ARE THER EFORE REQUESTED TO APPEAR BEFORE THE UNDERSIGNED EITHER PERSONALLY OR THROUGH YOUR A.R. ON 22/03/2013 AT 3:00 P.M. FAILING WHICH YOUR ORDER WILL BE PASSED AS PER MERIT OF THE CASE WITHOUT GIVING YOU FURTHER OPPORTUNITY OF BEING HEARD.' 3. IN RESPONSE TO THE NOTICE ISSUED UNDER SECTION 2 63, A WRITTEN SUBMISSION DATED 21.03.2013 WAS FILED BY THE ASSESS EE OFFERING ITS I.T.A. NO. 1283/KOL./2013 ASSESSMENT YEAR: 2008-2009 PAGE 3 OF 5 EXPLANATION IN RESPECT OF ERRORS ALLEGEDLY POINTED OUT BY THE LD. CIT IN THE ORDER PASSED BY THE ASSESSING OFFICER UNDER SECTION 143(3). AFTER CONSIDERING THE SUBMISSION MADE BY THE ASSESSEE, TH E LD. CIT WAS OF THE VIEW THAT THE ASSESSING OFFICER HAD NOT MADE SUFFIC IENT ENQUIRY ON THE ISSUES POINTED OUT BY HIM IN THE NOTICE ISSUED UNDE R SECTION 263 AND SUCH LACK OF PROPER AND SUFFICIENT ENQUIRY RENDERED THE ASSESSMENT ORDER PASSED UNDER SECTION 143(3) ERRONEOUS AS WELL AS PR EJUDICIAL TO THE INTEREST OF THE REVENUE. HE, THEREFORE, SET ASIDE T HE ORDER OF THE ASSESSING OFFICER ON THE ISSUES MENTIONED IN THE 263 NOTICE W ITH A DIRECTION TO THE ASSESSING OFFICER TO MAKE THE ASSESSMENT AFRESH ON THE SAID ISSUES AFTER MAKING FURTHER INVESTIGATION AND ENQUIRY AS REQUIRE D IN THE FACTS AND CIRCUMSTANCES OF THE CASE. AGGRIEVED BY THE ORDER O F THE LD. CIT PASSED UNDER SECTION 263, THE ASSESSEE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. 4. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT IN REPLY TO THE NOTICE ISSUED BY THE LD. CIT UNDER SECTION 263 ON T HE BASIS OF THE OBJECTIONS OF THE AUDIT PARTY, A DETAILED REPLY WAS FILED BY THE ASSESSEE IN WRITING OFFERING ITS EXPLANATION IN RESPECT OF WHAT EVER ERRORS ALLEGEDLY POINTED OUT BY THE LD. CIT IN THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER. HE INVITED OUR ATTENTION TO THE IMPUGNED ORDER PASSED BY THE LD. CIT UNDER SECTION 263 AND POINTED OUT TH AT NO FINDING WHATSOEVER HAS BEEN GIVEN BY THE LD. CIT ON THE EXP LANATION OFFERED BY THE ASSESSEE ON MERIT AND HE FINALLY REVISED THE AS SESSMENT ORDER PASSED BY THE ASSESSING OFFICER ON THE GROUND THAT PROPER AND SUFFICIENT ENQUIRY WAS NOT CONDUCTED BY THE ASSESSEE ON THE ISSUES RAI SED IN THE NOTICE ISSUE UNDER SECTION 263. HE CONTENDED THAT THIS APPROACH ADOPTED BY THE LD. CIT IS NOT PERMISSIBLE IN LAW, ESPECIALLY WHEN HE H AS NOT EVEN POINTED OUT AS TO WHAT EXACTLY IS THE FURTHER ENQUIRY THAT THE ASSESSING OFFICER WAS EXPECTED TO DO. HE CONTENDED THAT THE ORDER PASSED BY THE LD. CIT UNDER SECTION 263, THEREFORE, IS NOT SUSTAINABLE AS HE HA S NOT GIVEN SPECIFICALLY ANY FINDING ABOUT THE ERRORS IN THE ASSESSMENT ORDE R PASSED BY THE ASSESSING OFFICER BEFORE EXERCISING HIS POWERS OF R EVISION. IN SUPPORT OF I.T.A. NO. 1283/KOL./2013 ASSESSMENT YEAR: 2008-2009 PAGE 4 OF 5 THIS CONTENTION, HE RELIED ON THE DECISION OF THE H ONBLE DELHI HIGH COURT IN THE CASE OF CIT VS.- LEISURE WEAR EXPORTS LIMIT ED REPORTED IN 341 ITR 166. 5. THE LD. D.R., ON THE OTHER HAND, STRONGLY SUPPOR TED THE IMPUGNED ORDER PASSED BY THE LD. CIT UNDER SECTION 263. HE S UBMITTED THAT THE ERRORS IN THE ORDER OF THE ASSESSING OFFICER WERE C LEARLY AND SPECIFICALLY POINTED OUT IN THE NOTICE UNDER SECTION 263 AND SIN CE THE ORDER OF THE ASSESSING OFFICER AS A RESULT OF SUCH ERRORS WAS PR EJUDICIAL TO THE INTEREST OF THE REVENUE, THE LD CIT WAS FULLY JUSTIFIED IN R EVISING THE SAME BY EXERCISING THE POWERS CONFERRED UPON HIM TO SECTION 263. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS OBSERVED THAT A SUBMISSION IN WRITING WAS FILED BY THE ASSESSEE IN REPLY TO THE NOTICE IS SUED BY THE LD. CIT UNDER SECTION 263 OFFERING ITS EXPLANATION IN RESPECT OF ERRORS ALLEGEDLY POINTED OUT BY THE LD. CIT IN THE ORDER PASSED BY THE ASSES SING OFFICER UNDER SECTION 143(3). ALTHOUGH IN THE IMPUGNED ORDER PASS ED UNDER SECTION 263, THE LD. CIT HAS MADE A REFERENCE TO THE WRITTE N SUBMISSION FILED BY THE ASSESSEE, HE HAS NEITHER DISCUSSED THE SAME NOR GIVEN ANY FINDING THEREON SO AS TO POINT OUT AS TO WHAT EXACTLY ARE T HE ERRORS IN THE ORDER OF THE ASSESSING OFFICER, WHICH WERE PREJUDICIAL TO TH E INTEREST OF THE REVENUE. HE SIMPLY BRUSHED ASIDE THE SUBMISSION MAD E BY THE ASSESSEE AND HELD THE ORDER OF THE ASSESSING OFFICER TO BE E RRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE ON THE G ROUND THAT PROPER AND SUFFICIENT ENQUIRY ON THE ISSUES RAISED BY HIM IN T HE NOTICE ISSUED UNDER SECTION 263 WAS NOT CONDUCTED BY THE ASSESSEE. HE E VEN DID NOT POINT OUT AS TO HOW THE ENQUIRY MADE BY THE ASSESSING OFFICER WAS NOT SUFFICIENT AND PROPER AND EVEN FAILED TO POINT OUT AS TO WHAT FURTHER ENQUIRY THE ASSESSING OFFICER WAS EXPECTED TO DO ON THE RELEVAN T ISSUES. IN THE CASE OF LEISURE WEAR EXPORTS LIMITED (SUPRA) CITED BY THE L D. COUNSEL FOR THE ASSESSEE, THERE WAS NOTHING IN THE REVISIONAL ORDER PASSED BY THE LD. CIT UNDER SECTION 263 AS TO HOW THE ORDER OF THE ASSESS ING OFFICER WAS I.T.A. NO. 1283/KOL./2013 ASSESSMENT YEAR: 2008-2009 PAGE 5 OF 5 ERRONEOUS AND FURTHER AS TO HOW IT WAS PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE LD. COMMISSIONER ALSO HAD NOT DOUBTED THE STATEMENT OF FINISHED GOODS IN CLOSING STOCK FURNISHED BY THE AS SESSEE BUT ONLY REMARKED THAT THE ASSESSING OFFICER SHOULD HAVE MAD E FURTHER ENQUIRY BY CALLING FOR MORE DETAILS. IN THESE FACTS AND CIRCUM STANCES OF THE SAID CASE, WHICH ARE SIMILAR TO THE FACTS OF THE PRESENT CASE, THE HONBLE DELHI HIGH COURT UPHELD THE ORDER OF THE TRIBUNAL SETTING ASID E THE ORDER OF THE LD. CIT PASSED UNDER SECTION 263 OBSERVING THAT THE LD. COMMISSIONER HAD NOT TAKEN THE ORDER TO ITS LOGICALLY CONCLUSION, WH ICH WAS HIS PRIME DUTY IN ORDER TO JUSTIFY EXERCISE OF POWER UNDER SECTION 263. IN OUR OPINION, THE RATIO OF THIS DECISION OF THE HONBLE DELHI HIG H COURT IN THE CASE OF LEISURE WEAR EXPORTS LIMITED (SUPRA) IS SQUARELY AP PLICABLE TO THE FACTS INVOLVED IN THE PRESENT CASE AND RESPECTFULLY FOLLO WING THE SAME, WE SET ASIDE THE IMPUGNED ORDER PASSED BY THE LD. CIT UNDE R SECTION 263 AND RESTORE THAT THE ASSESSING OFFICER PASSED UNDER SEC TION 143(3). 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON JUNE 15, 2016 . SD/- SD/- (S.S. VISWANETHRA RAVI) (P.M. JAGTAP) JUDICIAL MEMBER ACCOUNTANT MEMBER KOLKATA, THE 15 TH DAY OF JUNE, 2016 COPIES TO : (1) M/S. BHAGWATI SPONGE PVT. LIMITED, P.O. JAMURIA BAZAR, DIST. BURDWAN, W.B. PIN 713 336 (2) COMMISSIONER OF INCOME TAX, ASANSOL, PARMAR BUILDING, 54, G.T. ROAD (WEST), P.O. ASANSOL-4, DIST. BURDWAN (3) COMMISSIONER OF INCOME TAX, ASANSOL (4) THE DEPARTMENTAL REPRESENTATIVE (5) GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.