COMMERCIAL AUTO SALES PVT.LTD, ALLAHABAD V. DEPUTY COMMISSIONER OF INCOME TAX CIRCLE-2, ALLAHABAD

ITA 17/ALLD/2020

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 3374 (ITAT-ALLAHABAD)
• Duration Of Justice: 1 year(s) 8 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-10-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2012-2013
• Appeal Filed On: 22-01-2020
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A K SINGHSR
• Keywords: Business income; Depreciation; Opportunity of being heard; Principle of natural justice; Additional evidence; Set aside
• Section: 143(3); 139(5); 143(2); 139(1); 64

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, ALLAHABAD BENCH, ALLAHABAD (THROUGH VIRTUAL COURT) BEFORE SHRI.VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ITA NO. 17/ALLD/2020 ASSESSMENT YEAR: 2012-13 COMMERCIAL AUTO SALES PRIVATE LIMITED, 18, KANPUR ROAD, ALLAHABAD- 211001 , UTTAR PRADESH (NOW 4-C, MAHARISHI DAYANAND MARG, ALLAHABAD, U.P. V. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-2, ALLAHABAD, U.P. PAN: AABCC3962F (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI ASHISH BANSAL, ADVOCATE RESPONDENT BY: SHRI A. K. SINGH,SR. DR DATE OF HEARING: 11. 10. 2021 DATE OF PRONOUNCEMENT: 14.10. 2021 O R D E R PER SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER: THIS APPEAL, FILED BY ASSESSEE, BEING ITA NO. 17/ALLD/2020, IS DIRECTED AGAINST AN APPELLATE ORDER DATED 19.11.2019 IN APPEAL NO. CIT(A), ALLAHABAD / 10883/ 2015-16 PASSED BY LEARNED COMMISSIONER OF INCOME TAX (APPEALS), ALLAHABAD(HEREINAFTER CALLED 'THE CIT(A)'),FOR ASSESSMENT YEAR(AY):2012-13, THE APPELLATE PROCEEDINGS HAD ARISEN BEFORE LEARNED CIT(A) FROM ASSESSMENT ORDER ITA NO.17/ALLD/2020 ASSESSMENT YEAR: 2012-13 COMMERCIAL AUTO SALES PRIVATE LIMITED 2 DATED 31.03.2015 PASSED BY LEARNED ASSESSING OFFICER (HEREINAFTER CALLED 'THE AO') U/S. 143(3) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER CALLED 'THE ACT') FOR AY: 2012- 13.WE HAVE HEARD BOTH THE PARTIES THROUGH VIDEO CONFERENCING MODE THROUGH VIRTUAL COURT. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADING OF COMMERCIAL VEHICLES. THE ASSESSEE FILED ITS RETURN OF INCOME ELECTRONICALLY U/S. 139(1) , ON 30.09.2012, DECLARING TOTAL INCOME OF RS. 2,06,57,338/-. THE RETURN OF INCOME WAS LATER REVISED BY ASSESSEE, U/S 139(5) OF THE 1961 ACT, ON 26.08.2013, DECLARING REVISED TOTAL INCOME OF RS. 1,51,92,317/-. THE CASE OF THE ASSESSEE WAS SELECTED BY REVENUE FOR FRAMING SCRUTINY ASSESSMENT , U/S 143(3) READ WITH SECTION 143(2) OF THE 1961 ACT. THE ASSESSEE PRODUCED BOOKS OF ACCOUNTS AND SUBMITTED DETAILS BEFORE THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THE AO ASSESSED THE INCOME OF THE ASSESSEE AT RS. 1,56,71,370/- AS AGAINST RETURNED INCOME OF RS. 1,51,92,320/- , WHEREIN THREE ADDITIONS WERE MADE BY AO TO THE INCOME OF THE ASSESSEE, FIRSTLY BY DISALLOWING OF RENT OF RS. 3,00,000/- SHOWN TO HAVE BEEN INCURRED BY ASSESSEE TO MRS. MADHU GUPTA, DIRECTOR OF THE ASSESSEE COMPANY TOWARDS CAMP OFFICE-CUM-RESIDENCE OF THE DIRECTOR , SECONDLY BY DISALLOWING OF LOSS ON SALE OF VEHICLES ( DEPRECIABLE ASSET) AMOUNTING TO RS.1,40,689/- CLAIMED BY ASSESSEE, AND THIRDLY, DISALLOWANCE OF AN AMOUNT OF RS. 38,357/- ON AD-HOC BASIS OUT OF NEW VEHICLE EXPENSES TO THE TUNE OF RS. 28,66,739/- CLAIMED BY ASSESSEE, VIDE ASSESSMENT ORDER DATED 31.03.2015 PASSED BY AO U/S 143(3) OF THE 1961 ACT. 3. THE ASSESSEE BEING AGGRIEVED BY ASSESSMENT ORDER PASSED BY AO, FILED FIRST APPEAL WITH LD. CIT(A) AGITATING ALL THE THREE ISSUES ON WHICH ADDITIONS WERE MADE BY AO TO THE INCOME OF THE ASSESSEE. THE LD. CIT(A) ISSUED TO ASSESSEE SEVERAL NOTICES VIZ. NOTICES DATED 19.07.2019 16.09.2019 AND 09.11.2019, FIXING DATE FOR COMPLIANCE ON 30.07.2019, 26.09.2019 AND 18.11.2019 , BUT THE ASSESSEE DID NOT APPEAR BEFORE LD. CIT(A) ON THE DATE(S) FIXED FOR HEARING OF APPEAL BEFORE LD. CIT(A), EXCEPT ON ONE ITA NO.17/ALLD/2020 ASSESSMENT YEAR: 2012-13 COMMERCIAL AUTO SALES PRIVATE LIMITED 3 OCCASION WHEN AN ADJOURNMENT APPLICATION WAS MOVED BY LD. COUNSEL FOR THE ASSESSEE BEFORE LD. CIT(A). THE LD. CIT(A) WAS PLEASED TO PARTLY ALLOW THE APPEAL OF THE ASSESSEE, WHEREIN LD. CIT(A) UPHELD THE ADDITION OF RS. 3,00,000/- PAID TO MRS. MADHU GUPTA , DIRECTOR TOWARDS RENT FOR THE CAMP OFFICE CUM-RESIDENCE OF THE DIRECTOR , AND AS WELL LD. CIT(A) WAS PLEASED TO UPHELD ADDITION ON ACCOUNT OF DISALLOWANCE OF LOSS ON ACCOUNT OF SALE OF VEHICLE (DEPRECIABLE ) AMOUNTING TO RS. 1,40,689/- CLAIMED BY ASSESSEE , WHILE LD. CIT(A) WAS PLEASED TO DELETE AD-HOC ADDITION OF RS. 38,357/- TOWARDS LEAKAGE OF REVENUE ON ESTIMATE BASIS MADE BY AO OUT OF NEW VEHICLE EXPENSES AMOUNTING TO RS. 28,66,739/- CLAIMED BY ASSESSEE, VIDE APPELLATE ORDER DATED 19.11.2019 PASSED BY LD. CIT(A) . WHILE ADJUDICATING APPEAL FILED BY THE ASSESSEE, THE LD.CIT(A) NOTED THAT THE ASSESSEE HAS NOT COMPLIED WITH NOTICES ISSUED BY HIM FOR HEARING AND NO WRITTEN SUBMISSIONS/ARGUMENTS WERE ADVANCED BY ASSESSEE DURING APPELLATE PROCEEDINGS BEFORE LD. CIT(A). IT WAS ALSO NOTED BY LD. CIT(A) THAT NO PAPER BOOK WAS ALSO FILED BY ASSESSEE. THE LD. CIT(A) WAS PLEASED TO PASS THE AFORESAID APPELLATE ORDER EX-PARTE BASED ON MATERIAL ON RECORD VIZ. ASSESSMENT ORDER AND STATEMENT OF FACT FILED BY THE ASSESSEE ALONG WITH THE APPEAL MEMO FILED WITH LD. CIT(A). 4. THE ASSESSEE BEING AGGRIEVED BY AFORESAID APPELLATE ORDER PASSED BY LEARNED CIT(A) EX-PARTE, HAS FILED SECOND APPEAL WITH INCOME-TAX APPELLATE TRIBUNAL, ALLAHABAD ( HEREINAFTER CALLED THE TRIBUNAL) AND AS MANY AS SEVEN GROUNDS OF APPEAL ARE RAISED BY ASSESSEE IN MEMO OF APPEAL FILED WITH THE TRIBUNAL, WHICH CONCERNS ITSELF WITH TWO EFFECTIVE ISSUES AGITATED BY ASSESSEE BEFORE TRIBUNAL , VIZ. FIRSTLY DISALLOWANCE OF CLAIM OF DEDUCTION OF RS. 3,00,000/- TOWARDS RENT PAID TO MRS. MADHU GUPTA, DIRECTOR TOWARDS CAMP OFFICE CUM RESIDENCE OF DIRECTOR AND SECONDLY DISALLOWANCE OF LOSS ON SALE OF VEHICLE(DEPRECIABLE) TO THE TUNE OF RS. 1,40,689/- CLAIMED BY ASSESSEE AS DEDUCTION FROM BUSINESS INCOME. ITA NO.17/ALLD/2020 ASSESSMENT YEAR: 2012-13 COMMERCIAL AUTO SALES PRIVATE LIMITED 4 5. THIS APPEAL WAS HEARD BY DIVISION BENCH OF THE TRIBUNAL THROUGH VIDEO CONFERENCING MODE THROUGH VIRTUAL COURT. THE LD. COUNSEL FOR THE ASSESSEE OPENED ARGUMENTS BEFORE THE BENCH AND AT THE OUTSET SUBMITTED THAT THE ASSESSEE DID NOT WISH TO PERUSE GROUND NUMBER 5 CONCERNING DISALLOWANCE OF LOSS OF RS. 1,40,689/- INCURRED ON SALE OF VEHICLE(DEPRECIABLE) AS DEDUCTION FROM BUSINESS INCOME , AND PRAYERS WERE MADE BY LD. COUNSEL FOR THE ASSESSEE TO DISMISS THIS GROUND OF APPEAL NUMBER 5 RAISED BY ASSESSEE IN MEMO OF APPEAL FILED WITH TRIBUNAL , MAINLY FOR THE REASONS THAT VEHICLE FORMED PART OF BLOCK OF ASSET AND EVEN AFTER REDUCING THE SALE PROCEED RECEIVED ON SALE OF VEHICLE, THE BLOCK OF ASSET HAS NOT YET BEEN EXHAUSTED AND THE ASSESSEE CLAIMED DEPRECIATION ON NET AMOUNT REMAINING IN BLOCK OF ASSET AFTER REDUCING THE SALE PROCEED OF VEHICLE SOLD , AND HENCE IT WAS FAIRLY SUBMITTED BY LD. COUNSEL FOR THE ASSESSEE THAT THIS CLAIM OF ALLOWING DEDUCTION TOWARDS LOSS ON SALE OF VEHICLE AS DEDUCTION FROM BUSINESS INCOME IS NOT LEGALLY TENABLE IN VIEW OF PROVISION OF SECTION 32(1)(III) OF THE 1961 ACT, AS THE ASSESSEE HAS ITSELF CLAIMED DEPRECIATION ON BALANCE BLOCK OF ASSET REMAINING AFTER REDUCING CONSIDERATION RECEIVED ON SALE OF VEHICLE. THE LD. DR DID NOT RAISED ANY OBJECTION TOWARDS DISMISSAL OF GROUND NUMBER 5 CONCERNING DISALLOWANCE OF LOSS OF RS. 1,40,689/- ON SALE OF VEHICLE(DEPRECIABLE). AFTER HEARING BOTH THE PARTIES , THE GROUND NUMBER 5 CONCERNING CLAIM OF DEDUCTION TOWARDS LOSS ON SALE OF VEHICLE STOOD DISMISSED. WE ORDER ACCORDINGLY. 6. NOW, COMING TO THE NEXT EFFECTIVE GROUND CONCERNING CLAIM OF DEDUCTION TOWARDS RENT INCURRED TO MADHU GUPTA, DIRECTOR OF RS. 3,00,000/- TOWARDS CAMP OFFICE CUM RESIDENCE OF DIRECTOR. THE LD. COUNSEL DREW OUR ATTENTION TO PAPER BOOK CONTAINING 104 PAGES FILED BY ASSESSEE WITH TRIBUNAL . BOTH THE RIVAL PARTIES HAVE MADE DETAILED ARGUMENTS BEFORE THE BENCH. ON CONSIDERATION OF ENTIRE MATERIAL ON RECORD, IT IS OBSERVED THAT LD. CIT(A) ISSUED THREE NOTICES FIXING THE DATE FOR HEARING OF THE APPEAL BEFORE LD. CIT(A), VIZ. NOTICES DATED 19.07.2019 16.09.2019 AND 09.11.2019, FIXING ITA NO.17/ALLD/2020 ASSESSMENT YEAR: 2012-13 COMMERCIAL AUTO SALES PRIVATE LIMITED 5 DATE FOR COMPLIANCE ON 30.07.2019, 26.09.2019 AND 18.11.2019. THE ASSESSEE DID NOT APPEAR BEFORE LD. CIT(A) IN COMPLIANCES WITH AFORESAID NOTICES , EXCEPT ON ONE OCCASION WHEN ADJOURNMENT WAS SOUGHT BY LD. COUNSEL FOR THE ASSESSEE. THE LD. CIT(A) DISPOSED OF THE APPEAL , VIDE APPELLATE ORDER DATED 19.11.2019. WHILE DISPOSING OF THE APPEAL FILED BY THE ASSESSEE, LD. CIT(A) BASED HIS DECISION UPON ASSESSMENT ORDER PASSED BY THE AO AND THE STATEMENT OF FACT(SOF) FILED BY ASSESSEE ALONG WITH MEMO OF APPEAL FILED WITH LD. CIT(A). THERE WERE NO WRITTEN SUBMISSION AND/OR ORAL ARGUMENTS MADE BY ASSESSEE BEFORE LD. CIT(A), DURING THE COURSE OF APPELLATE PROCEEDINGS AS THE ASSESSEE EFFECTIVELY DID NOT APPEARED BEFORE LD. CIT(A) EXCEPT ON ONE OCCASION TO SEEK ADJOURNMENT WHEN THE ASSESSEE ENTERED APPEARANCE BEFORE LD. CIT(A) THROUGH ITS COUNSEL. IT IS SEEN THAT LD. CIT(A) HAD ISSUED FIRST NOTICE FOR HEARING TO ASSESSEE , ON 19 TH JULY 2019 AND THE APPEAL WAS FINALLY DISPOSED BY LD. CIT(A) ON 19.11.2019 I.E. WITHIN SPAN OF FOUR MONTHS, AND IN OUR CONSIDERED VIEW PRINCIPLE OF NATURAL JUSTICE WERE NOT EFFECTIVELY COMPLIED WITH BY LD. CIT(A). THE ASSESSEE IS ALSO EQUALLY RESPONSIBLE FOR ITS WOES, AS IT DID NOT COMPLIED WITH THE NOTICES ISSUED BY LD. CIT(A) FIXING THE DATE OF HEARING FOR APPEAL. THE LD. CIT(A) ISSUED THREE NOTICES FOR HEARING, AS DETAILED ABOVE BEFORE DISPOSING OF APPEAL OF THE ASSESSEE, BUT THE ASSESSEE ENTERED APPEARANCE THROUGH ITS COUNSEL ONLY ONCE AND THAT TOO FOR SEEKING ADJOURNMENT. NOW, THE ASSESSEE HAS FILED PAPER BOOK WITH TRIBUNAL, CONTAINING AS MANY AS 104 PAGES . THE CLAIM IS MADE BY THE ASSESSEE IN THE AFORESAID PAPER BOOK THAT ITEMS AT S.NO. 1 TO 6 (PAGE 01-63) IN PAPER BOOK WERE DOCUMENTS WHICH WERE PLACED BEFORE LD. AO AND CIT(A), WHICH , INTER-ALIA, CONTAINS REPLY FILED BY ASSESSEE BEFORE THE AO. THE LD. CIT(A) HAS RECORDED IN ITS APPELLATE ORDER THAT NO WRITTEN SUBMISSION NOR PAPER BOOK WAS FILED BY ASSESSEE BEFORE LD. CIT(A) DURING THE COURSE OF APPELLATE PROCEEDINGS. NO ORAL ARGUMENTS WERE ALSO ADVANCED BY ASSESSEE ON MERITS OF THE ISSUE BEFORE LD. CIT(A) , AS THE ASSESSEES COUNSEL APPEARED ONLY ONCE BEFORE LD. CIT(A) FOR SEEKING ADJOURNMENT. THE LD. CIT(A) HAS RECORDED IN ITS APPELLATE ORDER THAT HE IS COMPELLED TO BASE HIS DECISION , ITA NO.17/ALLD/2020 ASSESSMENT YEAR: 2012-13 COMMERCIAL AUTO SALES PRIVATE LIMITED 6 BASED ON ASSESSMENT ORDER AND STATEMENT OF FACT FILED BY THE ASSESSEE. FURTHER, IT IS OBSERVED THAT LARGE NUMBER OF ADDITIONAL EVIDENCES ARE FILED BY ASSESSEE IN ITS PAPER BOOK RUNNING FROM PAGE 64 TO 99. THESE ADDITIONAL EVIDENCES REQUIRES VERIFICATION BY AUTHORITIES BELOW. THUS, KEEPING IN VIEW THE ENTIRE MATERIAL ON RECORD AND IN FAIRNESS TO BOTH THE RIVAL PARTIES, IT IS CONSIDERED APPROPRIATE THAT THE MATTER BE SET ASIDE AND RESTORED TO THE FILE OF LD. CIT(A) FOR FRESH ADJUDICATION , ON MERITS IN ACCORDANCE WITH LAW. THE ASSESSEE DID NOT EFFECTIVELY APPEARED BEFORE LEARNED CIT(A) IN THE FIRST ROUND OF LITIGATION AND IF IN THE SET ASIDE REMAND PROCEEDINGS , IF THE ASSESSEE AGAIN DID NOT CO-OPERATE IN THE PROCEEDINGS , THE LEARNED CIT(A) SHALL BE FREE TO DECIDE THE ISSUES , ON MERITS IN ACCORDANCE WITH LAW. IT IS NOW SETTLED THAT POWERS OF LD. CIT(A) ARE CO-TERMINUS WITH POWERS OF THE AO . NEEDLESS TO SAY THAT THE LEARNED CIT(A) SHALL GIVE PROPER AND ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE IN ACCORDANCE WITH PRINCIPLES OF NATURAL JUSTICE IN THE SET ASIDE REMAND PROCEEDINGS. WE CLARIFY THAT WE HAVE NOT COMMENTED ON THE MERITS OF THE ISSUE AND ALL CONTENTION ARE KEPT OPEN. WE ORDER ACCORDINGLY. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE WITH TRIBUNAL IN ITA NO. 17/ALLD./2020 FOR AY: 2012-13 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES, AS INDICATED ABOVE. ORDER PRONOUNCED ON 14 /10/2021 AT ALLAHABAD SD/- SD/- [VIJAY PAL RAO] [RAMIT KOCHAR] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 14 /10/2021 COPY FORWARDED TO: 1. APPELLANT M/S COMMERCIAL AUTO SALES PRIVATE LIMITED, 18, KANPUR ROAD, ALLAHABAD-211001(NOW 4-C, MAHARISHI DAYANAND MARG, ALLAHABAD, U.P.) ITA NO.17/ALLD/2020 ASSESSMENT YEAR: 2012-13 COMMERCIAL AUTO SALES PRIVATE LIMITED 7 2. RESPONDENT THE DEPUTY COMMISSIONER OF INCOME TAX , CIRCLE-2, ALLAHABAD , U.P. 3. CIT(A) , ALLAHABAD, U.P. 4. CIT, ALLAHABAD, U.P. 5. SR. DR , ITAT, ALLAHABAD, U.P. BY ORDER ASSISTANT REGISTRAR ITA NO.17/ALLD/2020 ASSESSMENT YEAR: 2012-13 COMMERCIAL AUTO SALES PRIVATE LIMITED 8