R B SETH SHREERAM NARSINGDAS, Nagpur V. CIT (CENTRAL), Nagpur

ITA 177/NAG/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 2226 (ITAT-NAGPUR)
• Duration Of Justice: 11 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-05-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2005-2006
• Appeal Filed On: 01-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S P G MUDLIAR
• Assessee Lawyers: SUDESH BANTHIA
• Keywords: Depreciation; Opportunity of being heard; Additional depreciation; Period of limitation; Assessment record; Time period of passing order
• Section: 143(3); 153A; 263

Judgement Text

1 ITA NOS. 177 TO 183/NAG/2015 IN THE INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR BEFORE SHRI MUKUL K. SHRAWAT, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER. S.NO. I.T.A. NO. ASSTT. YEAR. 1. 177/NAG/2015 2005 - 06. 2. 178/NAG/2015 2006 - 07. 3. 179/NAG/2015 2007 - 08. 4. 180/NAG/2015 2008 - 09. 5. 181/NAG/2015 2009 - 10. 6. 182/NAG/2 015 2010 - 11. 7. 183/NAG/2015 2011 - 12. R.B. SETH SHREERAM NARSINGHDAS, COMMISSIONER OF INCOME TAX, NAGPUR. VS. CENTRAL, NAGPUR. PAN AACFR0227N. APPELLANT. RESPONDENT. APPELLANT BY : SHRI SUDESH BANTHIA. RESPONDENT BY : SHRI S.P.G. MUDLIAR. DATE OF HEARING : 11 - 04 - 2016 DATE OF PRONOUNCEMENT : 5 TH MAY , 2016 O R D E R PER SHRI SHAMIM YAHYA, A.M. THE SE ARE APPEALS FILED BY THE ASSESSEE AGAINST THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (CENTRAL), NAGPUR. U/S 263 OF THE INCOME - TAX ACT, 1961 DATED 27 - 03 - 2015 FOR ASSESSMENT YEARS 200 6 - 07 TO 2011 - 12. 2. IN THE ORDER PASSED U/S 263 OF I.T. ACT, LEARNED CIT NOTED THAT ON EXAMINATION OF THE ASSESSMENT RECORDS PERTAINING TO THESE ASSESSMENT YEARS, IT IS SEEN THAT THE AO, DURING THE COURSE OF ASSESSMENT PR OCEEDINGS, ALLOWED ADDITIONAL DEPRECIATION CLAIMED UNDER CLAUSE (IIA) OF SECTION 32(1) ON THE NEW 2 ITA NOS. 177 TO 183/NAG/2015 PLANT AND MACHINERY EVEN THOUGH THE ASSESSEE IS NOT ELIGIBLE FOR ADDITIONAL DEPRECIATION AND FURTHER, THE AO HAS ALSO ALLOWED THE CLAIM OF DEDUCTION U/S 80G, 80GA, 80GGA & 35AC FOR ASSESSMENT YEARS 2008 - 09 TO 2011 - 12 WITHOUT VERIFYING THEIR GENUINENESS AND ALLOWABILITY. THESE MISTAKES OF THE AO HAVE MADE THE ASSESSMENT ORDERS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF REVENUE. THEREFORE, A SHOW CAUSE NOTICE U/S 263 WAS ISSUED FOR ALL THESE ASSESSMENT YEARS ON 05/03/2015. ASSESSEE SUBMITTED ELABORATE SUBMISSIONS. HOWEVER, LEARNED CIT WAS NOT CONVINCED. HE CONCLUDED AS UNDER : 9. IN VIEW OF THE ABOVE, IT IS CLEAR THAT THE AO, WHILE MAKING ASSESSM ENT IN THIS CASE FOR THE A.Y. 2005 - 06 TO 2011 - 12 ALLOWED THE ADDITIONAL DEPRECIATION ON ASSETS CLAIMED TO HAVE PURCHASED AND INSTALLED FOR THE PURPOSE OF IRON ORE BUSINESS WITHOUT VERIFYING THE FACT THAT THE ACTIVITY OF THE ASSESSEE FALLS WITHIN THE AMBIT OF MANUFACTURE OR PRODUCTION THOUGH HOLDING THAT THE ASSESSEE IS NOT ENGAGED IN THE ACTIVITY OF MANUFACTURE OR PRODUCTION OF ANY ARTICLE OR THING. THIS HAS RENDERED THE ASSESSMENTS FOR THESE ASSESSMENT YEARS PREJUDICIAL AND ERRONEOUS TO THE INTEREST OF REV ENUE. 10. IN THE LIGHT OF THE DISCUSSION MADE ABOVE, I AM OF THE CONSIDERED OPINION THAT THE ORDERS U/S 143(3) R.W.S. 153A PASSED ON 07/03/2013 FOR THE A.Y. 2005 - 06 TO 2010 - 11 & ORDER U/S 143(3) FOR THE A.Y. 2011 - 12 BY THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE - 2(2), NAGPUR ARE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE AND THE SAME ARE SET ASIDE FOR FRAMING FRESH ASSESSMENTS ON THE ISSUE DEALT ABOVE AND BY GIVING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE AO IS DIRECTED TO VERIFY THE SEIZED MATERIAL AND INSPECT THE BUSINESS PROCESSES OF THE ASSESSEE BEFORE FRAMING THE FRESH ASSESSMENTS. THE ASSESSMENTS TO BE COMPLETED WITHIN THE STIPULATED TIME FRAME BY CONDUCTING NECESSARY ENQUIRIES. FURTHER, THE AO IS DIRECTED TO INITIA TE PENALTY PROCEEDINGS AS PER THE AC, WHEREVER APPLICABLE. 3. AGAINST THE ABOVE ORDER, THE ASSESSEE IS IN APPEAL BEFORE US. 4. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. THE FIRST SUBMISSION OF THE ASSESSEES COUNSEL IS THAT THE ISSUE OF DEPR ECIATION HAS BEEN 3 ITA NOS. 177 TO 183/NAG/2015 ALLOWED TO THE ASSESSEE BY THE ITAT IN ASSESSEES OWN CASE FOR THE SAME ASSESSMENT YEARS EARLIER. UPON HEARING BOTH THE COUNSEL AND PERUS I NG THE RECORD ON THIS ISSUE WE FIND THAT EARLIER THE ISSUE RELATED TO DEPRECIATION ON WIND MILL. IT WAS WITH RESPECT TO THE ISSUE OF DEPRECIATION ON WINDMILL , T HAT T HE ITAT HELD THAT THE ASSESSEE WAS ELIGIBLE FOR DEPRECIATION ON WINDMILL. THE ITAT W A S NOT CONSIDERING THE ISSUE OF ADDITIONAL DEPRECIATION ON PLANT AND MACHINERY USED FOR IRON OR BUSINESS. H ENCE THE DECISION OF ITAT WAS NOT ON THIS ISSUE AND HENCE DOES NOT HELP THE CASE OF THE ASSESSEE. 5. ANOTHER ISSUE RAISED BY THE LEARNED COUNSEL OF THE ASSESSEE IS THAT THE ORDER OF THE LEARNED CIT HAS MERGED WITH THE ORDER OF THE AO HENCE LEARNED CIT CAN NOT EXERCISE HIS REVISIONARY JURISDICTION IN THIS CASE. UPON CAREFUL CONSIDERATION WE FIND THAT IT IS TRUE THAT LEARNED CIT(APPEALS) ALSO IN THIS CASE HAS PASSED AN ORDER ON ASSESSEES APPEAL AGAINST THE ORDER OF THE AO 2 7 - 03 - 20 15 . HOWEVER, T HERE IS NO EV IDENCE ON RECORD TO PROVE THAT LEARNED CIT HAS P A ASSED HIS ORDER UNDER SECTION 263 AFTER PASSING OF THE APPELLATE ORDER BY THE LEARNED CIT(APPEALS) ON 27 - 03 - 2015. 6. THE LEARNED COUNSEL OF THE ASSESSEE HAS FURTHER SUBMITTED THAT SINCE LEARNED CIT(APPEALS) WAS CEASED WITH THE ISSUE OF DEPRECIATION, REVISIONARY POWERS U/S 263 COULD NOT HAVE BEEN EXERCISED. 7. WE FIND THAT SECTION 263 EXPLANATION 1(C) READS AS UNDER : WHERE ANY ORDER REFERRED TO IN THIS SUB - SECTION AND PASSED BY THE ASSESSING OFFICER HAD BEEN THE SUBJECT MATTER OF ANY APPEAL [FILED ON OR BEFORE OR AFTER THE 1ST DAY OF JUNE, 1988], THE POWERS OF THE [ PRINCIPAL COMMISSIONER OR ] COMMISSIONER UNDER THIS SUB - SECTION SHALL EXTEND 31 [AND SHALL BE DEEMED ALWAYS TO HAVE EXTENDED] TO SUCH MATTERS AS HAD NOT BEEN CONSIDERED AND DECIDED IN SUCH APPEAL.] FROM THIS IT IS EVIDENT THAT THE ISSUE WHICH HAS BEE N CONSIDERED AND DECIDED IN APPEAL BY THE LEARNED CIT(APPEALS) FALLS BEYOND THE REVISIONARY JURISDICTION OF 4 ITA NOS. 177 TO 183/NAG/2015 THE LEARNED CIT. T HE MERE FACT THAT ANY ISSUE WAS UNDER CONSIDERATION BEFORE THE LEARNED CIT(APPEALS) WILL NOT DEN UDE THE LEARNED CIT OF HIS REVISI ONARY POWER, UNLESS THE SAME HAS BEEN DECIDED BY THE LEARNED CIT(APPEALS). HENCE THE SUBMISSION OF THE ASSESSEES COUNSEL IS DISMISSED. 8. ANOTHER SUBMISSION OF THE LEARNED COUNSEL OF THE ASSESSEE RELATES TO THE ORDER U/S 263 BEING TIME - BARRED. UPON CAREFUL CONSIDERATION WE FIND THAT LEARNED COUNSEL OF THE ASSESSEE IS REFERRING TO THE ORIGINAL ORDER WAS U/S 143 (3) OF THE I.T. ACT. WE FIND THAT THIS ORDER U/S 263 HAS BEEN PASSED WITH REFERENCE TO ORDER U/S 143 READ WITH SECTION 153A PASSED SUBSEQUENTLY WHICH IS WITHIN THE LIMITATION PERIOD. HENCE IT CANNOT BE SAID THAT REVISIONARY ORDER PASSED U/S 263 IS BARRED BY LIMITATION. 9. ANOTHER ISSUE RAISED BY THE LEARNED COUNSEL OF THE ASSESSEE BEFORE THE LEARNED CIT WAS THAT THE ISSUE WAS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF HONBLE APEX COURT IN THE CASE OF M/S SESA GOA LTD. 271 ITR 331 FOR THE PROPOSITION THAT THAT PROCESSING OF IRON ORE AMOUNTED TO PRODUCTION. WE FIND THAT THIS ISSUE HAS BEEN DEALT WITH BY THE LEARNED CIT IN PARAGRAPH 6 OF HIS ORDER. WE FIND THAT THE LEARNED CIT(APPEALS) HAS NOT MENTIONED AS TO HOW TH E DECISION OF HONBLE APEX COURT IN THE CASE OF SES GOA IS NOT APPLICABLE. IN OUR CONSIDERED OPINION ONCE A CASE LAW FROM HONBLE APEX COURT IS QUOTED B EFORE THE LEARNED CIT, IT WAS INCUMBENT UPON THE LEARNED CIT TO GIVE A FINDING AS TO HOW THE SAME IS NOT APPLICABLE. IN OUR CONSIDERED OPINION, LEARNED CIT SHOULD HAVE GIVEN A FINDING, WHEN THE ASSESSEE HAS SPECIFICALLY SUBMITTED THAT THE HONBLE APEX COUR T DECISION APPLIES TO THE FACTS OF THE CASE. 10. ANOTHER ISSUE RAISED BY THE LEARNED COUNSEL OF THE ASSESSEE IS THAT NO INCRIMINATING MATERIAL WAS FOUND DURING THE SEARCH AND PRIOR TO THIS THE ASSESSMENT S IN TH ESE CASE W ERE COMPLETE . HENCE DEHORSE ANY IN CRIMINATING 5 ITA NOS. 177 TO 183/NAG/2015 MATERIAL FOUND, ASSESSMENT U/S 153A IS NOT PERMISSIBLE. LEARD CIT HAS DEALT WITH THIS ISSUE IN PARA 7 OF HIS ORDER. THE SAME IS AS UNDER : THE ARGUMENT OF THE ASSESSEE THAT THE ASSESSMENTS U/S 143(3) CANNOT BE DISTURBED IN THE CASE OF ACTION 132, IF THERE IS NO INCRIMINATING MATERIAL, IS NOT ACCEPTABLE. AS PER PROVISIONS OF THE ACT, THE NOTICES U/S 153A ARE ISSUED TO ALL THE SIX ASSESSMENT YEARS IN THE CASE OF A PERSON WHO AGAINST WHOM THE WARRANT OF AUTHORIZATION IS ISSUED. ACCORDINGLY, ALL THE RELEVANT ISSUES ARE REQUIRED TO BE CONSIDERED WHILE ASSESSING THE INCOME U/S 153A FOR ALL THE YEARS. IN THIS CASE, THE AO BASED ON THE MATERIAL FOUND DURING THE COURSE OF SEARCH HELD THAT THE ASSESSEE IS NOT ENGAGED IN THE ACTIVITY OF MANUFACTURE OR P RODUCTION OF ANY ARTICLE OR THING AND ACCORDINGLY DISALLOWED THE CLAIM OF THE ADDITIONAL DEPRECIATION ON WIND MILLS. HOWEVER, THE AO HAS FAILED TO DISALLOW THE ADDITIONAL DEPRECIATION ON OTHER PLANT AND MACHINERY. AS THE ISSUES ARE COMMON TO ALL THE YEARS, THE SAME ARE REQUIRED TO BE CONSIDERED IN EACH OF THE YEAR WHILE COMPLETING THE ASSESSMENTS U/S 153A. THEREFORE THE ASSESSEES CONTENTION THAT THE ASSESSMENTS COMPLETED U/S 143(3) FOR THE ASSESSMENT YEARS 2005 - 06 TO 2008 - 09 CANNOT BE DISTURBED, IS NOT A CC EPTABL E . 11. WE HAVE GONE THROUGH THE ASSESSMENT ORDER OF THE A.O. W E FIND THAT THE A.O. HAS MENTIONED THAT ASSESSEE IS NOT ENGAGED IN THE ACTIVITY OF MANUFACTURE AND PRODUCTION. HOWEVER WE FIND THAT THERE IS NO MENTION OF ANY INCRIMINATING MATERIAL FOUND DURING SEARCH WHICH IS THE BASIS OF THIS FINDING ON THIS IMPUGNED ISSUE. IT IS SETTLED LAW FROM THE HONBLE JURISDICTIONAL HIGH COURT THAT DEHORSE ANY INCRIMINATING MATERIAL FOUND, ASSESSMENTS WHICH ARE COMPLETE CANNOT BE REOPENED UNDER SECTION 153A. HOWEVER, WE NOTE THAT THE ISSUE NEEDS EXAMINATION WITH REFERENCE TO THE ASSESSMENT RECORDS AS TO WHETHER ANY INCRIMINATING MATERIAL WERE PERFORMED IN THIS REGARD OR NOT . 12. ACCORDINGLY, IN OUR CONSIDERED OPINION THIS APPEAL NEEDS TO BE REMITTED TO THE FILE OF THE LD. CIT FOR THE FOLLOWING REASONS : - LEARNED CIT SHALL EXAMINE THE ISSUE AS TO WHETHER ANY INCRIMINATING MATERIAL WAS FOUND DURING SEARCH ON THE ISSUE OF ADDIT IONAL DEP RECIATION 6 ITA NOS. 177 TO 183/NAG/2015 AND THEREAFTER DECIDE THE CASE AS PER JURISDICTIONAL HIGH COURT DECISION IN THE CASE OF CIT S. CONTINENTAL WAREHOUSING CORPORATION 279 CTR 389 WHEREIN IT WAS HELD THAT THE SPECIAL BENCH UNDERSTANDING IN THE CASE ALL CARGO GLOBAL LOG OST ICS OF LEGAL PROVISION IS NOT PERVERSE NOR DOES IT SUFFER FROM ANY ERROR OF LAW APPARENT ON THE FACE OF THE RECORD. LEARNED CIT WILL ALSO EXAMINE THE ISSUE ON THE ANVIL OF APEX COURT DECISION IN THE CASE OF M/S SESA GOA LTD. 271 ITR 331 AND THEREAFTER DECIDE AS TO HOW THE SAME IS NOT APPLICABLE IN THE CASE OF THE ASSESSEE. 12. IN THE RESULT THESE APPEALS BY THE ASSESSEE STAND ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNC ED IN THE OPEN COURT ON THIS 5 TH DAY OF MAY , 2016. SD/ - SD/ - (MUKUL K. SHRAWAT) ( SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTANT MEM BER. NAGPUR, DATED: 5 TH MAY , 2016. COPY FORWARDED TO : 1. R.B. SETH SHREERAM NARSINGDAS, C/O AJAY SARAF, C - 2, YOGESHWAR GANGA APARTMENTS, RAMDASPETH, NAGPUR. 2. A.C.I.T., CIRCLE - 2(2) , NAGPUR. 3. C.I.T. (CENTRAL), NAGPUR. 4. D.R., ITAT, RAIPUR. 5. GUARD FILE TRUE COPY BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR WAKODE.