Smt Bertha D'Costa, Cavelossim, Goa V. Income Tax Officer, Ward -2, Margao

ITA 159/PAN/2019

AI Insights

The appeals by Shri Julio D'costa and Smt. Bertha D'costa challenge the orders of the CIT(A) Panaji-1, which were passed under section 143(3) of the Income Tax Act, 1961. The primary issues in the appeals included the legality of the assessment orders, the claim for depreciation under section 44AD, and the disallowance of certain expenses. The Income Tax Officer had made additions to the income of the appellants, which were sustained by the CIT(A). The appellants contested these additions, arguing that the assessments were made without jurisdiction and violated principles of natural justice. The Tribunal found merit in re-evaluating the depreciation claim and partially allowed the appeals, remanding the matter back to the Assessing Officer.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 136994 (ITAT-PANAJI)
• Duration Of Justice: 3 year(s) 8 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-01-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowedPartlyAllowed
• Bench Allotted: SMC
• Next Hearing Date: 15-01-2023
• Assessment Year: 2015-2016
• Appeal Filed On: 28-04-2019
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Capital expenditure
• Section: 44AD; 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI ‘SMC’ BENCH : PANAJI (THROUGH VIRTUAL HEARING) BEFORE SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER ITA.No.158/PAN./2019 Assessment Year 2015-16 Shri Julio D’costa, H.No.337, Mobor, Cavelossim, Salcete, Goa PIN – 403 731 PAN AEWPD6709F vs., The Income Tax Officer, Ward-2, Income Tax Office, Pioneer Blessing Building, Margao, Goa. PIN – 403 601. (Appellant) (Respondent) ITA.No.159/PAN./2019 Assessment Year 2015-16 Smt. Bertha D’costa, H.No.337, Mobor, Cavelossim, Salcete, Goa PIN – 403 731 PAN AEWPD6748N vs., The Income Tax Officer, Ward-2, Income Tax Office, Pioneer Blessing Building, Margao, Goa. PIN – 403 601. (Appellant) (Respondent) For Assessee : -None- For Revenue : Shri N. Shrikanth Date of Hearing : 16.01.2023 Date of Pronouncement : 25.01.2023 ORDER These twin assessee’s as many appeals ITA.Nos.158 & 159/ PAN/ 2019 for assessment year 2015-16, arise against the CIT(A) Panaji-1, Panaji’s order dated 11.02.2019, passed in case ITA.No.CIT(A), PNJ-1/10232/2017-18 and ITA.No.CIT(A), PNJ-1/10235/2017-18, in proceedings u/s. 143(3) of the Income Tax Act, 1961 (in short "the Act"), respectively. 2 ITA.No.158 & 159/PAN./2019 2. The former assessee’s appeal ITA.No.158/PAN./ 2019 raises the following substantive grounds : 1) “The order of the learned CIT(A) is bad in law and is void- ab-initio. 2) The order of assessment made by the Id AO u/s 143(3) of the Income Tax Act’1961 and sustained by Id CIT(A), is passed without jurisdiction, suffers from infirmity, is bad in law and passed without following the principles of natural justice. 3) The Id. CIT(A) has erred in not appreciating the claim of the appellant for considering income of assessee u/s 44AD of the Income Tax Act. 4) The Id. CIT(A) has erred in sustaining the addition of Rs.12,00,000/- (50% Rs.6,00,000/-) made by the AO, by disallowing the depreciation claim of the appellant without considering the facts and also that the asset was duly put to use in the relevant assessment year. 5) The Id. CIT(A) has erred in sustaining the addition of Rs.10,71,948/- (50% Rs.5,35,974/-) made by the AO towards disallowance of expenses, inspite of the fact that the appellant has not claimed Rs.10,71,948/- as expense in the relevant assessment year. The amount of Rs.10,71,948/- disallowed pertains to the amount incurred towards the construction of new Trawler, which is 3 ITA.No.158 & 159/PAN./2019 a capital expenditure as claimed in the return of income by the appellant. 6) The appellant craves leave to add, amend, alter, delete or withdraw any or all the grounds of appeal. 7) With these and such other grounds that may be urged at the time of hearing the appellant prays for relief sought for.” 3. Suffice to say, the latter assessee’s appeal ITA.No.159/PAN./2019 also pleads the very substantive grounds this couple is covered u/s.5A of the Act since governed by the “Portuguese Civil Code”. 4. Coming to the first and foremost substantive ground of depreciation claim on the corresponding fixed asset i.e., Trawler in issue, Ld. DR vehemently argued in light of the CIT(A)'s detailed discussion that the same was registered only in the month of June, 2015 whereas the accounting period herein had ended on 31.03.2015. Mr. Shrikanth further invited my attention to the corresponding assessment discussion on the same lines. He could hardly dispute the clinching fact that both the learned lower authorities have nowhere examined the crucial issue as to when the assessee had actually put their Trawler to use i.e., on or before 31.03.2015 or not since they have gone by the date of 4 ITA.No.158 & 159/PAN./2019 registration only. Faced with the situation, I deem it appropriate to restore the assessees’ instant identical former substantive grievance back to Assessing Officer for his afresh appropriate adjudication as per law preferably within three effective opportunities of hearing. 5. Coming to the latter issue of expenditure disallowance of Rs.10,71,948/- [assessed @ 15% each] supra, the Revenue’s case all along is that these assessee’s could not file the corresponding bills before the lower authorities. The fact remains that involvement of cash expenditure per se in such business operation could not be altogether ruled out. Faced with the situation, I restrict the impugned disallowance of Rs.10,71,948/- to a lumpsum figure of Rs.5 lakhs only with a rider that the same shall not be treated as a precedent. Necessary computation shall follow in both these assessee’s hands in very terms. Ordered accordingly. 6. No other ground or argument has been pressed before me. 7. These twin assessee’s as many appeals are partly allowed for statistical purposes in above terms. A copy of this common order be placed in the respective case files. 5 ITA.No.158 & 159/PAN./2019 Order pronounced in the open court on 25.01.2023. Sd/- [SATBEER SINGH GODARA] JUDICIAL MEMBER Pune, Dated 25 th January, 2023 VBP/- Copy to 1. The appellant 2. The respondent 3. The Ld. CIT(A) concerned. 4. The CIT concerned 5. D.R. ITAT, Panaji ‘SMC’ Bench, Panaji 6. Guard File. //By Order// Assistant Registrar, ITAT, Pune Benches, Pune.