M/s. Surbhi Milkfood & Beverage Ltd., Ahmedabad V. The ACIT., Circle-8, Ahmedabad

ITA 1561/AHD/2007

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 6616 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 11 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-04-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 30-03-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 19-04-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KUMAR HRISHIKESH
• Assessee Lawyers: M J SHAH
• Keywords: Depreciation; Unabsorbed depreciation; TDS; Set aside
• Section: 143(1); 154; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH AHMEDABAD (BEFORE S/SHRI BHAVNESH SAINI, JM AND N. S. SAINI, AM) ITA NO.1561/AHD/2007 A. Y.: 2004-05 M/S. SURBHI MILKFOOD & BEVERAGES LTD., 6-ADITYA BUNGLOW, OPP. SAL HOSPITAL, THALTEJ, AHMEDABAD, PA NO. AAECS 8430 R VS THE INCOME TAX OFFICER, WARD- 8(2), AHMEDABAD (APPELLANT) (RESPONDENT) APPELLANT BY SHRI M. J. SHAH, AR RESPONDENT BY KUMAR HRISHIKESH, DR O R D E R PER BHAVNESH SAINI: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE CIT(A)-XIV, AHMEDABAD DATE D 23-01-2007 FOR ASSESSMENT YEAR 2004-05 ON THE FOLLOWING GROUNDS: 1. THE C.I..T. (APPEALS) ERRED IN NOT GRANTING AN OPPORTUNITY OF HEARING BEFORE DISPOSING OF TH4E APP EAL FILED BEFORE HIM. 3. THE C. I. T. (APPEALS) FURTHER ERRED IN UPHOLDIN G THE ORDER OF RECTIFICATION UNDER SEC. 154 OF THE I. T. ACT, 1961 AND IN THE PROCESS UPHELD THE WORKI0NG OF THE BOOK PROFITS AT RS.44.97,193/-. 4. THE C. I. T. (APPEALS) COMPLETELY OVERLOOKED THE FACT THAT ONLY MISTAKES WHICH ARE APPARENT FROM RECORD CAN BE RECTIFIED UNDER SEC. 154 OF THE I. T. ACT AND THIS WAS NOT ONE OF THOSE CASES. 2. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BOT H THE PARTIES, PERUSED THE FINDINGS OF THE AUTHORITIES BELOW AND C ONSIDERED THE MATERIAL ON RECORD. ITA NO.1561/AHD/2007 SURBHI MILKFOOD & BEVERAGES LTD. 2 3. THE FACTS OF THE CASE ARE THAT IN THE RETURN FIL ED ON 30 TH OCTOBER, 2004, THE ASSESSEE COMPANY HAS DEDUCTED BROUGHT FOR WARD LOSS/ UNABSORBED DEPRECIATION OF RS.43,52,000/- FROM BOOK PROFIT OF RS.44,97,193/-. THE ASSESSEE DOES NOT HAVE ANY UNAB SORBED DEPRECIATION AS PER BOOKS. SINCE LOWER OF UNABSORBE D LOSS AND UNABSORBED DEPRECIATION WAS NIL, NO AMOUNT COULD BE REDUCED FROM THE BOOK PROFIT. THE AO, THEREFORE, NOTED THAT ASSESSEE S STAND FOR REDUCING RS.43,52,000/- FROM BOOK PROFIT WAS NOT CORRECT. TH E RETURN U/S 143(1) OF THE IT ACT WAS PROCESSED ACCEPTING THE RETURN OF INCOME. THE AO, THEREFORE, NOTED THAT THERE IS A MISTAKE APPARENT O N RECORD AND ISSUED NOTICE U/S 154 OF THE IT ACT SEEKING EXPLANATION AS TO WHY BOOK PROFIT MAY NOT BE TAKEN AT RS.44,97,193/- BY RECTIFYING TH E MISTAKE. THE AO ACCORDINGLY PASSED ORDER U/S 154 OF THE IT ACT AND TREATED THE BOOK PROFIT AT RS.44,97,193/-. THE LEARNED CIT(A) DISMIS SED THE APPEAL OF THE ASSESSEE IN THE ABSENCE OF THE ASSESSEE. 4. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT PROVISIONS OF SECTION 143(1) OF THE IT ACT HAVE BEEN AMENDED AND THE AO HAS NO POWER OR AUTHORITY TO MAKE ANY ADJUSTMENT OR DISALLOW THE CLAIM OF THE ASSESSEE OF SIMILAR NATURE U/S 143(1) OF THE IT ACT , THEREFORE, HE CANNOT DO SO U/S 154(1) (B) OF THE IT ACT. THE LEARNED COU NSEL FOR THE ASSESSEE SUBMITTED THAT SINCE THE AO HAS NO POWER TO MAKE AN Y ADJUSTMENT U/S 143(1) OF THE IT ACT, THE SAME CANNOT BE DONE IN TH E INTIMATION U/S 143(1) OF THE IT ACT READ WITH SECTION 154 OF THE I T ACT. HE HAS RELIED UPON THE ORDER OF ITAT AMRITSAR SMC BENCH IN THE CA SE OF RACHHPAL SINGH VS ITO 94 ITD 79 IN WHICH IT WAS HELD THAT POWERS CONFERRED U/S 154(1) (B) FOR RECTIFICATION OF INTIMATION OR DEEME D INTIMATION HAS TO BE CONSIDERED IN THE LIGHT OF POWERS CONFERRED U /S 143(1). IT WAS FURTHER HELD THAT WHEN THE AO IS NOT VESTED WITH ANY AUTHORITY TO MAKE ADJUSTMENT OR DISALLOWING CLAIM OF ASSESSEE U/ S 143(1), HE CANNOT DO SO U/S 154(1) (B) OF THE ACT. THE LEARNED COUNSEL ALSO RELIED ITA NO.1561/AHD/2007 SURBHI MILKFOOD & BEVERAGES LTD. 3 UPON ORDER OF ITAT JODHPUR BENCH IN THE CASE OF LOT US GUMS & CHEMICALS VS ITO 116 TTJ (JD) 542 IN WHICH IT WAS H ELD CONCLUSION: AO WAS PRECLUDED FROM MAKING ANY AMENDMENT IN INTIM ATION UNDER S. 143(1) BY RECOURSE TO RECTIFICATION UNDER S. 154 EVEN THOUGH THERE WAS A MISTAKE OF LAW OR FACT IN CLAIMI NG DEDUCTION UNDER S. 80 HHC AS AMENDED RETROSPECTIVELY AS IN PR OCEEDING UNDER S. 143(1), AS IT EXISTED IN THE RELEVANT ASSE SSMENT YEAR, THERE WAS NO SCOPE FOR MAKING ANY AMENDMENT OR ADJUSTMENT IN THE RETURNED INCOME EVEN IF THE ASSESSEE HAD CLAIMED DE DUCTION CONTRARY TO THE PROVISIONS OF LAW. THE LEARNED COUNSEL FOR THE ASSESSEE, THEREFORE, SUBMITTED THAT THE AO HAD NO J URISDICTION TO PASS ORDER U/S 154 OF THE IT ACT IN THIS MATTER. THE LEA RNED DR ON THE OTHER HAND, RELIED UPON THE ORDERS OF THE AUTHORITIES BEL OW. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND MAT ERIALS AVAILABLE ON RECORD. THE PROVISIONS OF SECTION 143(1) OF THE IT ACT RELEVANT TO THE ASSESSMENT YEAR UNDER APPEAL READS AS UNDER: 143. [(1) WHERE A RETURN HAS BEEN MADE UNDER SECTION 13 9 , OR IN RESPONSE TO A NOTICE UNDER SUB-SECTION (1) OF SECTI ON 142 , (I) IF ANY TAX OR INTEREST IS FOUND DUE ON THE BASI S OF SUCH RETURN, AFTER ADJUSTMENT OF ANY TAX DEDUCTED AT SOURCE, ANY ADVANCE TAX PAID, ANY TAX PAID ON SELF-ASSESSMENT AND ANY AMOUN T PAID OTHERWISE BY WAY OF TAX OR INTEREST, THEN, WITHOUT PREJUDICE TO THE PROVISIONS OF SUB-SECTION (2), AN INTIMATION SHALL BE SENT TO THE ASSESSEE SPECIFYING THE SUM SO PAYABLE, AND SUCH IN TIMATION SHALL BE DEEMED TO BE A NOTICE OF DEMAND ISSUED UNDER SE CTION 156 AND ALL THE PROVISIONS OF THIS ACT SHALL APPLY ACCO RDINGLY; AND (II) IF ANY REFUND IS DUE ON THE BASIS OF SUCH RETU RN, IT SHALL BE GRANTED TO THE ASSESSEE AND AN INTIMATION TO THIS E FFECT SHALL BE SENT TO THE ASSESSEE : PROVIDED THAT EXCEPT AS OTHERWISE PROVIDED IN THIS SUB-SECTI ON, THE ACKNOW-LEDGEMENT OF THE RETURN SHALL BE DEEMED TO BE AN ITA NO.1561/AHD/2007 SURBHI MILKFOOD & BEVERAGES LTD. 4 INTIMATION UNDER THIS SUB-SECTION WHERE EITHER NO S UM IS PAYABLE BY THE ASSESSEE OR NO REFUND IS DUE TO HIM : PROVIDED FURTHER THAT NO INTIMATION UNDER THIS SUB-SECTION SHALL BE SENT AFTER THE EXPIRY OF [ONE YEAR FROM THE END OF THE FINANCIAL YEAR IN WHICH THE RETURN IS MADE:] [ PROVIDED ALSO THAT WHERE THE RETURN MADE IS IN RESPECT OF THE INCOME FIRST ASSESSABLE IN THE ASSESSMENT YEAR COMM ENCING ON THE 1ST DAY OF APRIL, 1999, SUCH INTIMATION MAY BE SENT AT ANY TIME UP TO THE 31ST DAY OF MARCH, 2002.]. 6. THERE IS NO DOUBT THAT POWERS HAVE BEEN CONFERRE D ON THE AO TO RECTIFY INTIMATION OR DEEMED INTIMATION U/S 143(1) OF THE IT ACT, HOWEVER, SUCH POWERS HAVE TO BE CONSIDERED IN THE LIGHT OF P OWERS CONFERRED U/S 143(1) OF THE IT ACT. ADMITTEDLY, RETURN WAS PROCE SSED U/S 143(1) OF THE IT ACT. THE RELEVANT PROVISIONS OF SECTION 143(1) O F THE IT ACT ARE REPRODUCED ABOVE AS ARE APPLICABLE TO THE ASSESSMEN T YEAR UNDER APPEAL. THE BARE READING OF THE ABOVE PROVISIONS WOULD SHOW THAT THE AO ON THE BASIS OF THE RETURN FILED CAN DETERMINE THE TAX AND INTEREST IF ANY PAYABLE BY THE ASSESSEE AFTER ALLOWING CREDIT FOR TDS AND P RE-PAID TAXES AND SEND THE INTIMATION SPECIFYING THEREIN THE SUM SO PAYABL E. IN CASE ANY REFUND IS DUE ON THE BASIS OF SUCH RETURN, AO SHALL GRANT THE REFUND AND SEND THE INTIMATION TO THE ASSESSEE. IT IS ONLY IF ANY T AX IS PAYABLE OR REFUND IS DUE TO THE ASSESSEE, INTIMATION U/S 143(1) WOULD NE ED BE SENT TO THE ASSESSEE. THE AO HAS NOT BEEN CONFERRED ANY OTHER P OWERS TO MAKE ANY ADJUSTMENT FOR DISALLOWING OR ALLOWING ANY CLAIM OF THE ASSESSEE. THUS, THE POWERS CONFERRED U/S 154(1) (B) OF THE IT ACT F OR RECTIFICATION OF INTIMATION OR DEEMED INTIMATION HAVE TO BE CONSIDER ED IN THE LIGHT OF POWERS CONFERRED U/S 143(1) OF THE IT ACT. WHEN THE AO HAS NOT BEEN VESTED WITH ANY AUTHORITY TO MAKE ADJUSTMENT OR DIS ALLOW THE CLAIM OF THE ASSESSEE U/S 143(1) OF THE IT ACT OF THE NATURE AS DISCUSSED IN THIS CASE, HE CANNOT DO SO U/S 154(1) (B) OF THE IT ACT. THEREFORE, THE ISSUE, WHETHER THERE IS A MISTAKE IN THE INTIMATION OR DEE MED INTIMATION SHALL HAVE TO BE CONSIDERED IN THE LIGHT OF POWERS CONFER RED U/S 143(1) OF THE ITA NO.1561/AHD/2007 SURBHI MILKFOOD & BEVERAGES LTD. 5 IT ACT. WHEN NO SUCH POWERS ARE VESTED WITH THE AO U/S 143 (1) OF THE ACT, HE CANNOT DO SO IN THE INTIMATION U/S 143(1) O F THE IT ACT WITH THE AID OF SECTION 154 OF THE IT ACT. SINCE IN THIS CAS E THE AO HAS EXERCISED HIS JURISDICTION U/S 154 OF THE IT ACT IN RESPECT O F THE MATTER WHICH IS NOT CONFERRED UPON HIM U/S 143(1) OF THE IT ACT, THE AO CANNOT BE ALLOWED TO DO SO SUCH A THING WHICH IS NOT UNDER HIS AUTHORITY . WHAT AO CANNOT DO U/S 143(1) OF THE IT ACT, CANNOT BE ALLOWED TO BE D ONE WITH THE AID OF SECTION 154 OF THE IT ACT. CONSIDERING THE ABOVE, T HE ORDER PASSED BY THE AO IS BAD IN LAW, VOID, AB-INITIO AND IS LIABLE TO BE QUASHED ON THIS REASONING ALONE. SAME VIEW IS TAKEN BY AMRITSAR BEN CH IN THE CASE OF RACHHPAL SINGH (SUPRA) AS WELL AS IN THE CASE OF LO TUS GUM & CHEMICALS (SUPRA) BY JODHPUR BENCH. 7. CONSIDERING THE ABOVE DISCUSSIONS, WE ARE OF THE VIEW THAT THE ORDERS OF THE AUTHORITIES BELOW ARE CLEARLY UNJUSTI FIED AND LIABLE TO BE QUASHED. WE ACCORDINGLY SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND QUASH THE SAME. 8. AS A RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON 09-04-2010. SD/- SD/- (N S. SAINI) ACCOUNTANT MEMBER (BHAVNESH SAINI) JUDICIAL MEMBER DATE : 09-04-2010 LAKSHMIKANT/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER D Y. REGISTRAR, ITAT, AHMEDABAD