Erode Annai Spinning Mills P Ltd., CHENNAI V. ACIT, Coimbatore

ITA 1389/CHNY/2015

• Counselvise Citation: 138921714 RSA 2015
• Duration Of Justice: 3 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2015
• Appeal Filed By: Assessee
• Bench Allotted: A
• Next Hearing Date: 16-09-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 08-06-2015
• Court: TRIBUNAL
• Department Lawyers: A B KOLI
• Assessee Lawyers: A S SRIRAMAN
• Keywords: Reopening of assessment; Recovery proceedings; Depreciation; Salary income; Deemed to accrue or arise in india; Tangible material; Bad and doubtful debts; Difference of opinion; Reason to believe; Unabsorbed depreciation; Change of opinion
• Section: 147; 68; 148; 15; 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI , ! ' , # $% BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ./ ITA NO. 1389/MDS/2015 / ASSESSMENT YEAR : 2008-09, M/S. ERODE ANNAI SPINNING MILLS P. LTD., 72, MUDALI THOTTAM, VEERAPPANCHATRAM, ERODE- 638 004. PAN AAACE4596N ( /APPELLANT) VS THE ASSISTANT COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-1, COIMBATORE. ( /RESPONDENT) / APPELLANT BY : SHRI A.S.SRIRAMAN, ADVOCATE / RESPONDENT BY : SHRI A.B. KOLI, JCIT / DATE OF HEARING : 16.09.2015 ! / DATE OF PRONOUNCEMENT : 30.09.2015 & / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX(APPEALS) DA TED - - ITA 1389/1 5 2 31.3.2015. 2. THE FACTS OF THE CASE ARE THAT THE ORIGINAL ASSE SSMENT IN THIS CASE WAS COMPLETED ON 31.12.2009 U/S.143(3) OF THE ACT DETERMINING THE INCOME AT 20 LAKHS. LATER ON IT WAS NOTICED THAT THE ASSESSEE COMPANY CLAIMED UNABSORBED DEPREC IATION LOSS OF ` 13,29,790/- FOR THE ASSESSMENT YEAR 1997-98 AND ` 7,06,511/- FOR THE ASSESSMENT YEAR 1998-99 AND ALLO WED TO BE SET OFF. SINCE THESE DEPRECIATION LOSSES CANNOT BE ALLOWED TO SET OFF BEYOND 8 YEARS OF CARRY FORWARD, EXCESS DEPRECI ATION HAS BEEN CLAIMED AND ALLOWED TO BE SET OFF. FURTHER IN THE ASSESSMENT, A SUM OF ` 20 LACS WAS TREATED AS INCOME U/S 68 AND DEPRECIATION OF EARLIER YEARS WAS NOT ALLOWED T O BE SET OFF. HOWEVER IT WAS NOTICED THAT UNABSORBED DEPRECIATION OF EARLIER YEARS WAS ALLOWED TO BE SET OFF AGAINST INCOME OF ` 1,22,50,000/- OFFERED AGAINST CASH DEPOSITS MADE IN THE ACCOUNT O F AXIS BANK ACCOUNT OF FRANCH GLOBUSUS. THIS AMOUNT OF ` 1,22,50,000/- IS TAXABLE U/S 68B AND THEREFORE THE EXCESS DEPRECIATI ON ALLOWED HAS NOT SUFFERED TAX. 2.1 THE ASSESSE HAS FILED THE FOLLOWING OBJECTIONS BEFORE THE AO: - - ITA 1389/1 5 3 A. THE ASSESSEE BY HIS REPLY DATED OCTOBER 24, 2012 HAS OBJECTED TO ASSUMPTION OF JURISDICTION U/S 147 OF THE ACT WITHOUT SHOWING TANGIBLE MATERIALS ON THE ESCAPEMENT OF INCOME. IT HAS REPLIED AS UNDER: B. WE HAVE RECEIVED A NOTICE U/S 148 OF THE ACT DA TED 11.09.2012 ON 13.09.2012 FOR THE ABOVE ASSESSMENT YEAR AND IN THIS REGARD WE STRONGLY OBJECT TO THE ASSUMPTION OF JURISDICTION U/S 147 OF THE ACT WITHO UT SHOWING TANGIBLE MATERIALS ON THE ESCAPEMENT OF INCOME. C. THE REOPENING OF THE PROCEEDINGS U/S 147 IN SUCH CIRCUMSTANCES ARE BAD IN LAW AND IN THIS REGARD THE DECISION OF THE (HONBLE) SUPREME COURT REPORTED IN 320 ITR 561 IS RELEVANT AND SUPPORT US. D. THE ASSESSMENT FOR THE ABOVE ASSESSMENT WAS COMPLETED AFTER THOROUGH SCRUTINY OF THE ENTIRE MAT ERIALS INCLUDING SEARCH MATERIALS AND THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT ON 31.12.2009. THEREFORE LACK OF FRESH/TANGIBLE MATERIALS WOULD VI TIATE THE ACTION TO REOPEN THE PROCEEDINGS AND FURTHER VI TIATE THE ATTEMPT TO RE-FRAME THE RE-ASSESSMENT FROM THE ASSESSMENT YEAR UNDER CONSIDERATION. HENCE WE REQUEST YOU TO DROP THE PROCEEDINGS INITIATED U/S 1 47 OF THE ACT ON THE ISSUANCE OF A NOTICE U/S 148 OF THE ACT DATED 11.09.2012 FOR THE AY 2008-09 AND THUS RENDER JUSTICE. E. IN ANY EVENT, THE RETURN FILED ORIGINALLY ON 28. 02.2009 MAY BE TREATED AS THE RETURN FILED IN RESPONSE TO N OTICE U/S 148 OF THE ACT. AS A CONSEQUENCE WE PLEAD YOU T O FURNISH THE REASONS RECORDED FOR REOPENING IMMEDIAT ELY FOR FILING DETAILED REPLY/OBJECTIONS. F. THE PARTICIPATION IN THIS PROCEEDINGS WOULD NOT CONFER AUTOMATIC JURISDICTION AS WELL AS WOULD NOT VALIDAT E THE RE-ASSESSMENT PROCEEDINGS IN AS MUCH AS WITH A VIEW TO PROTECT OUR INTEREST AND DISCHARGE OUR LEGAL OBLIGA TION WE - - ITA 1389/1 5 4 ARE RESPONDING TO THE NOTICES/LETTERS ISSUED IN THI S CONNECTION. THE AO REJECTED THE OBJECTIONS AND ADDED ` 1.22 LAKHS AND DEPRECIATION OF EARLIER YEAR WAS NOT LOWED TO BE SE T OFF AGAINST THE INCOME OF ` 1,22,50,000/-. AGAINST THIS, THE ASSESSEE WENT IN APPEAL BEFORE CIT(APPEALS), WHO DISMISSED THE AP PEAL OF THE ASSESSEE. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEF ORE US. 3. ACCORDING TO THE LD. AR, THERE WAS NO TANGIBLE F RESH MATERIAL TO REOPEN THE ASSESSMENT AND THE ORIGINAL ASSESSMENT WAS COMPLETED U/S.143(3) ON 31.3.2009. WHEN THE AS SESSMENT WAS REOPENED BY ISSUING NOTICE U/S.148 ON 13.9.2012 , THOUGH IT WAS WITHIN FOUR YEARS AT THE END OF THE RELEVANT AS SESSMENT YEAR, THE ASSESSING OFFICER CANNOT REOPEN THE ASSESSMENT WITHOUT ANY FRESH MATERIAL CAME TO HIS POSSESSION. ACCORDING T O THE LD. AR, REOPENING OF THE ASSESSMENT IS NOTHING BUT A REVIEW OF EARLIER ASSESSMENT . HE RELIED ON THE JUDGMENT OF THE SUPR EME COURT IN THE CASE OF KELVINATOR INDIA LTD. (320 ITR 561) AND ALSO DELHI HIGH COURT IN THE CASE OF CIT V. ORIENT CRAFT LTD. (215 TAXMAN 28). ACCORDING TO THE LD. AR, THE INFORMATION RELA TING TO SET OFF UNABSORBED DEPRECIATION OF EARLIER YEARS AGAINST TH E INCOME OF ` 1,22,50,000/- OFFERED AS INCOME IN RESPECT OF CASH DEPOSIT IN - - ITA 1389/1 5 5 THE ACCOUNT OF AXIS BANK OF FRANCH GLOBUSUS VERY MU CH WITH THE AO AND HE CANNOT REOPEN THE CONCLUDED ASSESSMENT TO WITHDRAW SET OFF OF DEPRECIATION, WHICH WAS ALLOWED IN EARLIER OCCASION. 4. THE LD. DR RELIED ON THE ORDERS OF THE LOWER AUT HORITIES. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL ON RECORD. IN THIS CASE, THE CONTENTION OF THE ASS ESSEES COUNSEL IS THAT REASSESSMENT NOTICE HAS BEEN GIVEN TO THE A SSESSEE FOR THE PURPOSE OF REVIEWING OF EARLIER ASSESSMENT. AC CORDING TO THE ASSESSEES COUNSEL, THE ASSESSEE PROVIDED ALL INFOR MATIONS FOR THE PURPOSE OF ASSESSMENT AND THE REASSESSMENT WAS DONE ONLY ON THE BASIS OF SAME SET OF FACTS AND WITHOUT ANY FRESH MATERIAL AND IT IS NOTHING BUT A CHANGE OF OPINION. AFTER ARGUING ON THE REASONS RECORDED FOR THE REOPENING, TO SUBSTANTIATE HIS ARGUMENT, HE PLACED RELIANCE ON THE DECISION OF THE GUJARAT HIGH COURT IN THE CASE OF GENERAL MOTORS INDIA (P) LTD. (257 CTR 123), WHICH IS KEPT ON RECORD. 6. WE HAVE CAREFULLY GONE THROUGH THE REASONS RECO RDED FOR REOPENING I.E. TO WITHDRAW THE SET OFF UNABSORBED D EPRECIATION AGAINST THE INCOME OF ` 1,22,50,000/- OFFERED AS UNEXPLAINED - - ITA 1389/1 5 6 CASH DEPOSIT MADE IN THE ACCOUNT OF AXIS BANK . TH IS AMOUNT OF ` 1,22,50,000 IS TAXABLE U/S.69 OF THE ACT. THEREFO RE, THE EXCESS DEPRECIATION ALLOWED HAS NOT SUFFER TAXATION. 7. IT IS A SETTLED LAW THAT ON THE BASIS OF MATERIA L, PRIMA FACIE, AVAILABLE BEFORE THE ASSESSING OFFICER, OPIN ED THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT CAN BE FOR MED. THE WORD REASON IN THE PHRASE REASON TO BELIEVE WOU LD MEAN CAUSE OR JUSTIFICATION. IN CASE THE ASSESSING OFFIC ER HAS A CAUSE OR JUSTIFICATION TO KNOW OR SUPPOSE THAT INCOME HAS ESCAPED ASSESSMENT, ACTION U/S 148 CAN BE TAKEN. BUT OBVIOU SLY, THERE SHOULD BE RELEVANT MATERIAL ON WHICH A REASONABLE M AN COULD HAVE FORMED A REQUISITE BELIEF. WHETHER THIS MATERI AL(S) WOULD CONCLUSIVELY PROVE THE ESCAPEMENT OF INCOME IS NOT THE CONCERN AT THAT PARTICULAR STAGE. SO WHAT IS REQUIRED IS TH E SUBJECTIVE SATISFACTION OF THE ASSESSING OFFICER BASED ON OBJE CTIVE MATERIAL EVIDENCE. IN THE GIVEN CASE, THERE WAS NO ASSESSMEN T. THE ARGUMENT OF THE LD.AR IS THAT U/S 147 NO ACTION COU LD BE TAKEN UNLESS THE ASSESSEE HAS NOT DISCLOSED FULLY AND TRU LY ALL MATERIAL FACTS NECESSARY FOR THE ASSESSMENT FOR THAT ASSESSM ENT YEAR. - - ITA 1389/1 5 7 7.1 AS SEEN FROM THE REASONS RECORDED, GIVE A CLEAR PI CTURE THAT THE ASSESSING OFFICER HAS GOT MATERIAL EVIDENC E TO FORM HIS OPINION FOR TAKING RECOURSE TO SECTION 147 R.W.S 14 8 OF THE ACT. THERE CANNOT BE TWO OPINIONS. THE POINT OF TIME WHE N THE REASONS ARE RECORDED AFTER FORMING OPINION OF ESCA PEMENT OF INCOME IS ONLY RELEVANT. HENCE, THIS PLEA OF THE L D.AR IS NOT TENABLE IN THE EYES OF LAW. IT IS TRUE THAT U/S 147 , THE ASSESSING OFFICER CAN EITHER ASSESS OR RE-ASSESS BUT FOR TAKI NG ACTION THEREUNDER, HE HAS TO RECORD REASONS THAT INCOME CH ARGEABLE TO TAX HAS ESCAPED ASSESSMENT. IT IS ALSO MANDATED BY SECTION 148(2) TO RECORD REASONS IN WRITING. THE REASSESSME NT PROCEEDINGS U/S 147 ARE FURTHER SUBJECT TO SECTIONS 148, 149, 150, 151, 152 AND 153. BUT IN THE PRESENT CASE , WE ARE REQUIRED TO DECIDE THE LIMITED ISSUE REGARDING THE VALIDITY OF PROCEEDINGS UNDERTAKEN WITHI N FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR IN QUESTION . IN CASE, (I) INCOME CHARGEABLE TO TAX HAS BEEN UNDER ASSESSED; O R (II) SUCH INCOME HAS BEEN ASSESSED AT TOO LOW RATE; OR (III) SUCH - - ITA 1389/1 5 8 INCOME HAS BEEN MADE THE SUBJECTIVE OF EXCESS RELIE F UNDER THIS ACT; OR (IV)EXCESSIVE LOSS OR DEPRECIATION ALLOWANC E OR ANY OTHER ALLOWANCE UNDER THIS ACT HAS BEEN COMPUTED, THE ASS ESSING OFFICER WOULD HAVE VALID COGNIZANCE U/S 147 OF THE ACT. THE REASONS RECORDED BY THE ASSESSING OFFICER CLEARLY S PEAK FOR THE UNDER ASSESSMENT OF TAX HENCE, THE CONDITIONS LAID ABOVE STAND FULFILLED IN SO FAR AS RE-ASSESSMENT PROCEEDINGS AR E CONCERNED. IN SO FAR AS THE REASONS RECORDED, WE ARE SATISFIED THAT THE ASSESSING OFFICER HAS REASON TO BELIEVE THAT INCO ME HAS ESCAPED ASSESSMENT. THIS FACT CONFERS JURISDICTION ON HIM TO REOPEN THE ASSESSMENT. THE POWER TO RE-ASSESS POST 1ST APRIL, 1989 ARE MUCH WIDER THAN THESE USED TO BE BEFORE. B UT STILL THE SCHEMATIC INTERPRETATION OF THE WORDS REASON TO BE LIEVE FAILING WHICH SECTION 147 WOULD GIVE ARBITRARILY POWERS TO THE ASSESSING OFFICER TO REOPEN THE ASSESSMENT ON THE BASIS OF ME RE CHANGE OF OPINION, WHICH CANNOT BE, PER SE A REASON TO REOPE N THE CASE. THE ACT HAS NOT GIVEN POWER TO THE ASSESSING OFFICE R TO REVIEW BUT HAS ONLY GIVEN POWER TO RE-ASSESS. THERE IS A C ONCEPTUAL DIFFERENCE BETWEEN THE TWO ASPECTS AS THE ASSESSING OFFICER HAS NO POWER AT ALL TO REVIEW THE ASSESSMENT. THE REASS ESSMENT, AS - - ITA 1389/1 5 9 STATED ABOVE, HAS TO BE BASED ON FULFILLMENT OF CER TAIN PRE- CONDITIONS BUT THE CONCEPT CHANGE OF OPINION HAS TO BE TAKEN INTO CONSIDERATION OTHERWISE IT MAY GIVE UNBRIDLED POWER TO AN ASSESSING OFFICER TO REOPEN ANY AND EVERY ASSESSMEN T ORDER WHICH WOULD SIMPLY AMOUNT TO A REVIEW. THE CONCEPT CHANGE OF OPINION IS AN IN-BUILT TEST TO CHECK THE ABUSE OF POWER BY THE ASSESSING OFFICER. SO, NOW ONLY WHEN THE ASSESSING OFFICER HAS A TANGIBLE MATERIAL TO BASE HIS CONCLUSION THAT THE RE IS AN ESCAPEMENT OF INCOME FROM ASSESSMENT AND THE REASON S RECORDED HAVE A LINK WITH THE FORMATION OF HIS BELI EF, HE HAS THE POWER U/S 147 OF THE ACT. 7.2 FURTHER, THE SUPREME COURT IN THE CASE OF ACIT V. RAJESH JHAVERI STOCK BROKERS P. LTD. (291 ITR 500) HELD AS UNDER: UNDER THE FIRST PROVISO TO THE NEWLY SUBSTITUTED S ECTION 143(1), WITH EFFECT FROM JUNE 1, 1999, EXCEPT AS PR OVIDED IN THE PROVISION ITSELF, THE ACKNOWLEDGMENT OF THE RETURN SHALL BE DEEMED TO BE AN INTIMATION UNDER SECTION 1 43(1) WHERE (A) EITHER NO SUM IS PAYABLE BY THE ASSESSEE, OR (B) NO REFUND IS DUE TO HIM. IT IS SIGNIFICANT THA T THE ACKNOWLEDGEMENT IS NOT DONE BY ANY ASSESSING OFFICE R, BUT MOSTLY BY MINISTERIAL STAFF. IT CANNOT THEREFO RE BE SAID THAT AN ASSESSMENT IS DONE BY THEM. THE INTIMATI ON UNDER SECTION 143(1)(A) WAS DEEMED TO BE A NOTICE O F DEMAND UNDER SECTION 156 FOR THE APPARENT PURPOSE O F MAKING MACHINERY PROVISIONS RELATING TO RECOVERY OF TAX APPLICABLE. BY SUCH APPLICATION ONLY RECOVERY INDI CATED TO BE PAYABLE IN THE INTIMATION BECAME PERMISSIBLE. - - ITA 1389/1 5 10 NOTHING MORE CAN BE INFERRED FROM THE DEEMING PROVISIONS. THEREFORE, THERE BEING NO ASSESSMENT U NDER SECTION 143(1)(A), THE QUESTION OF CHANGE OF OPINIO N DOES NOT ARISE. HELD ACCORDINGLY, THAT THE ASSESSING OFFICER HAD JURISDICTION TO ISSUE NOTICE UNDER SECTION 148 FOR BRINGING TO TAX INCOME ESCAPING ASSESSMENT IN AN INTIMATION UNDER SECTION 143(1)(A) ON THE GROUND THAT THE CLAI M FOR BAD DEBTS BY THE ASSESSEE WAS NOT ACCEPTABLE AS TH E CONDITIONS FOR ALLOWANCE SPECIFIED IN SECTION 36(1) (VII) AND (2) WERE NOT FULFILLED. 8. IN THE PRESENT CASE, THE ASSESSEE HAS CLAIMED SE T OFF OF UNABSORBED DEPRECIATION OF PREVIOUS YEARS AGAINST U NEXPLAINED CASH DEPOSITS, WHICH IS PRIMARILY CANNOT BE ALLOWED . TO CONSIDER THE SAME, THE ASSESSMENT WAS REOPENED. AS FAR AS EXPLANATION 2 TO SEC.147 IS CONCERNED, IT IS VERY C LEAR THAT IF EXCESS CLAIM OF THE ASSESSEE WAS ALLOWED, THE INCOM E CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. HENCE, T HE ACTION OF THE ASSESSING OFFICER IS FULLY COVERED BY THE EX PLANATION 1 TO SEC.147 WHICH READS AS UNDER: PRODUCTION BEFORE THE ASSESSING OFFICER OF ACCOUNT S BOOKS OR OTHER EVIDENCE FROM WHICH MATERIAL EVIDENC E COULD WITH DUE DILIGENCE HAVE BEEN DISCOVERED BY TH E ASSESSING OFFICER WILL NOT NECESSARILY AMOUNT TO DISCLOSURE WITHIN THE MEANING OF THE FOREGOING PROVISO. - - ITA 1389/1 5 11 ACCORDINGLY, WE ARE INCLINED TO REJECT THIS GROUND OF APPEAL RELATING TO REOPENING OF ASSESSMENT. 9. THE LD. AR RAISED ANOTHER GROUND THAT THE CIT(AP PEALS) ERRED IN CONFIRMING THE ASSESSMENT OF CASH DEPOSITS U/S.69B OF THE ACT SEPARATELY WITHOUT THE BENEFIT OF SET OFF O F CARRIED FORWARD UNABSORBED DEPRECIATION IN THE COMPUTATION OF TAXAB LE TOTAL INCOME WITHOUT ASSIGNING PROPER REASONS AND JUSTIFI CATION. 10. THE LD. AR SUBMITTED THAT THE JUDGMENT OF THE G UJARAT HIGH COURT IN THE CASE OF GENERAL MOTORS INDIA (P) LTD. V. DCIT (257 CTR 123) CANNOT BE APPLIED TO THE ASSESSEES C ASE. HE RELIED ON THE DECISION OF THE TRIBUNAL IN THE CASE OF SHRI P. SUBRAMANIAN V. ITO IN ITA NO.1363/MDS/2010 DATED 26 .7.2012, WHEREIN IT WAS HELD AS UNDER : 5. THE COUNSEL FOR THE ASSESSEE SUBMITS THAT THE ASSESSING OFFICER COMPUTED THE TOTAL INCOME OF THE ASSESSEE AT ` 31,98,212/- WITHOUT ALLOWING INTER-HEAD SET OFF CONTEMPLATED UNDER SECTION 71 OF THE ACT IN RES PECT OF LOSS FROM THE BUSINESS OF ` 32,24,020/- DETERMINED BY THE ASSESSING OFFICER HIMSELF IN THE ASSESSMENT ORDER R ELYING ON THE DECISION OF THE HONBLE GUJARAT HIGH COURT I N THE CASE OF FAKIR MOHAMMED HAJI HASAN V. CIT (SUPRA). T HE COUNSEL SUBMITS THAT THE RATIO OF THE DECISION OF T HE HONBLE GUJARAT HIGH COURT WAS RENDERED ON A PECULI AR FACTS INVOLVED IN THAT CASE AND THE SAID RATIO HAS NO BEARING ON THE FACTS OF THE ASSESSEES CASE. THE CO UNSEL SUBMITS THAT THE FACTS BEFORE THE HONBLE GUJARAT H IGH COURT WAS THAT THE ASSESSEE CLAIMED THE VALUE OF GO LD CONFISCATED, AS DEDUCTION FROM INCOME AS TRADING L OSS. - - ITA 1389/1 5 12 THE ASSESSEE DID NOT DERIVE ANY INCOME FROM THE BUS INESS OF SMUGGLING. THEREFORE, IT WAS HELD THAT THE CONFI SCATION OF GOLD DID NOT REPRESENT TRADING LOSS IN THE HANDS OF THE ASSESSEE. WHEREAS, IN THE CASE OF THE ASSESSEE, THE RE IS NO DISPUTE THAT THE ASSESSEE INCURRED LOSS UNDER TH E HEAD BUSINESS IN TRADING OF SHARES AND THE ASSESSEE MAD E CERTAIN CASH DEPOSITS INTO HIS SAVINGS BANK ACCOUNT FOR WHICH THE ASSESSEE COULD NOT EXPLAIN THE SOURCE. THEREFORE, SINCE THE ASSESSEE COULD NOT PROVE THE S OURCE FOR SUCH CASH DEPOSITS IN TO SAVINGS BANK ACCOUNT, THE SAME ARE ASSESSABLE UNDER THE HEAD INCOME FROM OTH ER SOURCES AND THE LOSSES FROM BUSINESS ARE TO BE ALL OWED AS SET OFF AGAINST THE INCOME FROM OTHER SOURCES IN ACCORDANCE WITH THE SECTION 71 OF THE ACT. THEREFOR E, THE COUNSEL FOR THE ASSESSEE SUBMITS THAT THE ADDITION OF ` 30.00 LAKHS MADE BY THE ASSESSING OFFICER IS ALSO A N INCOME AND CANNOT BE EXCLUDED FROM THE TOTAL INCOME OF THE ACT AND THEREFORE, SHALL BE CHARGEABLE UNDER TH E HEAD OTHER SOURCES. THE COUNSEL FURTHER SUBMITTED THAT AS PER SECTION 4 OF THE I.T. ACT, THE INCOME TAX IS PAYABL E ON THE TOTAL INCOME OF THE PREVIOUS YEAR OF EVERY PERSON. HE SUBMITTED THAT SECTION 5 DEFINES THE SCOPE OF TOTAL INCOME AND AS PER SECTION 14, ALL THE INCOME SHALL, FOR TH E PURPOSE OF CHARGE OF INCOME TAX AND COMPUTATION OF TOTAL IN COME BE CLASSIFIED UNDER THE FOLLOWING FIVE HEADS. I) SALARIES II) INCOME FROM HOUSE PROPERTY III) PROFITS AND GAINS OF BUSINESS OR PROFESSION IV) CAPITAL GAINS V) INCOME FROM OTHER SOURCES HE SUBMITTED THAT BY HARMONIOUS CONSTRUCTION OF SEC TION 4, 5 AND 14, ALL INCOME MUST BE BROUGHT UNDER ANY ONE OF THE FIVE HEADS ONLY. ACCORDING TO SECTION 56(1), INCOME WHICH IS NOT OTHERWISE CHARGEABLE UNDER HEADS SPECIFIED I N A TO E OF SECTION 14 SHALL BE CHARGEABLE UNDER THE HEAD INCOME FROM OTHER SOURCES. THE COUNSEL FOR THE AS SESSEE RELIED ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT V. D. P. SANDU BROS. CHEMBUR P. LTD.[27 3 ITR 1] IN SUPPORT HIS CONTENTION THAT INCOME ASSESSED U NDER SECTION 68/69 SHALL, FOR THE PURPOSE OF CHARGE OF I NCOME AND COMPUTATION SHALL FALL UNDER ANY ONE OF THE HEA DS OF INCOME AS SPECIFIED IN SECTION 14 OF THE ACT. THE C OUNSEL - - ITA 1389/1 5 13 SUBMITS THAT THE DECISION OF THE HONBLE GUJARAT HI GH COURT IN THE CASE OF FAKIR MOHAMMED HAJI HASAN VS. CIT (S UPRA) RELIED ON BY THE ASSESSING OFFICER/COMMISSIONER OF INCOME TAX (APPEALS) IS IMPLIEDLY OVERRULED BY THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. D.P. SANDU BRO S. CHEMBUR (P) LTD. (SUPRA). THE COUNSEL FURTHER SUBM ITTED THAT THE UNEXPLAINED CASH DEPOSITS INTO SB ACCOUNT DEEMED AS INCOME UNDER SECTION 68/69 IS ALSO INCOME CHARGEABLE TO TAX AND SHALL FORM PART OF TOTAL INCO ME. THEREFORE, HE SUBMITS THAT SUCH DEEMED INCOME ALSO SHALL BE ASSESSED UNDER ANY ONE OF THE FIVE HEADS SPECIFI ED UNDER SECTION 14 OF THE ACT. HE SUBMITS THAT IF THE ASSESSEE IS ABLE TO PROVE THAT THE CREDIT MUST FALL UNDER ANY PARTICULAR HEAD THEN THE DEEMED INCOME SHALL FA LL UNDER THAT PARTICULAR HEAD. IN CASE, THE ASSESSEE I S UNABLE TO PROVE SO, THEN THE DEEMED INCOME WOULD FALL UNDE R THE HEAD OTHER SOURCES. THE COUNSEL SUBMITS THAT IN C ASE OF ASSESSEE, WHICH IS CARRYING ON THE BUSINESS IN TRAD ING OF SHARES, INCOME IS CHARGEABLE TO TAX UNDER THE HEAD BUSINESS AND THE NORMAL INFERENCE IS THAT DEEMED IN COME ALSO FLOWS FROM BUSINESS ONLY. SINCE THE ASSESSEE W AS NOT ABLE TO PROVE THAT THE SAID CASH DEPOSITS OF ` .30.00 LAKHS MADE INTO HIS SB ACCOUNT, SUCH DEPOSITS ARE ASSESSA BLE AS INCOME FROM OTHER SOURCES. 10.1 THE LD. AR FURTHER SUBMITTED THAT UNEXPLAINED CASH DEPOSIT DEEMED AS INCOME U/S. 69B OF THE ACT IS ALS O INCOME CHARGEABLE TO TAX. THEREFORE, THE LD. AR SUBMITTED THAT THE DEEMED INCOME ALSO SHALL BE ASSESSABLE UNDER ANY ON E OF HEAD SPECIFIED U/S.14 OF THE ACT. IN THE CASE OF CIT V. SHILPA DYEING & PRINTING MILLS (P) LTD. 381 DTR (GUJ) 381 WHEREIN I T WAS HELD THAT: SECTION 71 PERMITS ASSESSE TO SET OFF LOSS OTHER T HAN THAT OF CAPITAL GAINS AGAINST INCOME FROM OTHER HEA D. THUS, STATUTORY PROVISIONS CONTAINED IN SECTION 71 WAS - - ITA 1389/1 5 14 APPLICABLE IN PRESENT CASE. REVENUES APPEAL DISMISSED. THE LD. AR ALSO RELIED ON THE JUDGMENT OF THE MADRA S HIGH CCOURT IN THE CASE OF CIT V. CHENSING VENTURES (291 ITR 258) 11. THE LD. DR RELIED ON THE ORDERS OF THE LOWER AU THORITIES AND THE JUDGMENT OF THE GUJARAT HIGH COURT IN THE C ASE OF FAKIR MOHMED HAJI HASAN V. CIT (SUPRA). 12. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. PLACING RELIANCE BY THE ASSESSEES COU NSEL ON THE JUDGMENT OF THE TRIBUNAL IN THE CASE OF SHRI P. SUB RAMANIAN V. ITO IN TA NO.1363/MDS/10 IS TOTALLY MISPLACED. IN THAT CASE, THE ISSUE BEFORE THE TRIBUNAL WAS THAT WHETHER THE BUSI NESS LOSS COMPUTED UNDER THE HEAD PROFIT AND LOSS ACCOUNT OF BUSINESS COULD BE SET OFF AGAINST THE INCOME ASSESSED AS UNE XPLAINED U/S.69 OF THE ACT. THE TRIBUNAL CONSIDERED THE FAC TS OF THE CASE AND OBSERVED AS BUSINESS LOSS OF THE ASSESSMENT YEA R UNDER CONSIDERATION COULD BE SET OFF AGAINST THE INCOME A SSESSED U/S.68 UNDER THE HEAD OTHER SOURCES. HOWEVER, TH E ISSUE ON HAND BEFORE US IN THIS APPEAL IS WHETHER UNABSORBED DEPRECIATION OF EARLIER YEARS COULD BE SET OFF AGAI NST DEEMED INCOME U/S.69 OF THE ACT OR NOT, WHICH IS TOTALLY DIFFERENT ISSUE. - - ITA 1389/1 5 15 SECTION 72 OF THE ACT DOES NOT PERMIT SET OFF OF AC CUMULATED LOSSES AND UNABSORBED DEPRECIATION AGAINST ANY OTHE R HEAD OF INCOME OTHER THAN THE INCOME FROM PROFITS AND GAIN S OF BUSINESS OR PROFESSION. BEING SO, THE ABOVE ORDER OF THE T RIBUNAL HAS NO APPLICATION TO THE FACTS OF THE PRESENT CASE. 13. IN THE CASE OF CHANDRA KUMAR V. ACIT (5 ITR (T RIB) 540) (CHENNAI), IT WAS HELD BY THE TRIBUNAL AS UNDER : SECTION 72 OF THE INCOME-TAX ACT, 1961, STIPULATE S CONDITIONS REGARDING CARRY FORWARD AND SET OFF OF BUSINESS LOSS YEAR TO YEAR. SECTION 71 OF THE ACT DEALS WITH INTER-HEAD SET OFF. SECTION 32(2) OF THE ACT, STIPULATES A SPECIAL TREATMENT TO BE GIVEN TO UNABSORBED DEPRECIATION WHERE IT IS NOT ABSORBED IN ANY GIVEN YEAR, BUT THIS WOULD NOT TAKE IT OUT OF T HE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION. SECTIONS 32(2), 71 AND 72 OF THE ACT DEAL WITH DIFFERENCE ASPECTS REGARDING SET OFF AND CARRY FORW ARD AND HAVE TO HARMONIOUSLY INTERPRETED SO THAT APPLICATION OF ONE OF SUCH SECTIONS WOULD NOT NEGAT E THE OTHER. ACCORDING TO SECTION 71(2A) OF THE ACT, IF THE NET RESULT OF COMPUTATION OF INCOME UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION IS A LOSS, THEN A SET-OFF OF SUCH LOSS CANNOT BE MADE AGAINST INCOME ASSESSABLE UNDER THE HEAD SALARIES. ONCE UNABSORBED DEPRECIATION US CONSIDERED AS PART OF CURRENT DEPRECIATION, THE NET RESULT OF COMPUTATION UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION FOR ANY GIVEN YEAR WOULD BE INCLUSIVE O F SUCH UNABSORBED DEPRECIATION. ANY LOSS AS A RESULT OF SUCH COMPUTATION WHETHER ON ACCOUNT OF UNABSORBED DEPRECIATION OR NOT WOULD NOT BE SUSCEPTIBLE TO SET OFF AGAINST INCOME UNDER THE HAD SALARIES ON ACCOUNT OF THE SPECIFIC BAR CONTAINED IN SUB-SECTION(2A) OF SE CTION - - ITA 1389/1 5 16 71 OF THE ACT. NEITHER SECTION 72 NOR SECTION 32(2 ) OF THE ACT WOULD IN ANY WAY AFFECT THE INTER-HEAD ADJUSTMENTS SPECIFIED UNDER SECTION 71 OF THE ACT N OR THE APPLICATION OF SPECIFIC BAR CONTAINED UNDER SUB - SECTION (2A) THEREOF. HELD ACCORDINGLY, DISMISSING THE APPEAL, TH AT THE ASSESSING OFFICER AS WELL AS THE COMMISSIONER(APPEALS) WERE JUSTIFIED IN DISALLOWING SET OFF OF UNABSORBED DEPRECIATION FROM EARLIER YEA RS AGAINST SALARY INCOME. ACCORDINGLY, WE ARE OF THE OPINION THAT THE CIT(A) IS JUSTIFIED IN DISALLOWING SET OFF OF UNABSORBED DEPRECIATION FROM EARLIER YEARS AGAINST INCOME FROM OTHER SOURCES. 14. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DI SMISSED. ORDER PRONOUNCED ON WEDNESDAY, TH E 30 TH OF SEPT., 2015 AT CHENNAI. SD/- SD/- ( '# $%& ' ) ( ' & ( ) ) *+,-..-/-01234-54-6-37 *+,-234-5889-4 :7 % '; /JUDICIAL MEMBER ';<=>>8?2@-2@A1BC14 '% /CHENNAI, D' /DATED, THE 30 TH SEPT., 2015. MPO* 'E FGHG /COPY TO: /APPELLANT / /RESPONDENT / I *7 /CIT(A) / I /CIT / GJ$ K /DR / $LM /GF.