USHDEV INTERNATIONAL LTD, MUMBAI V. JT CIT SP RG 53, MUMBAI

ITA 1905/MUM/2013

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 0739 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 4 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-07-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 02-07-2015
• Assessment Year: 1996-1997
• Appeal Filed On: 08-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: A V SONDE SHRI SUNIL NAHTA
• Keywords: Depreciation; Search and seizure; Principle of natural justice; Opportunity of cross examination; Block assessment; Onus to prove
• Section: 143(3)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI . . , , , BEFORE SHRI A.D. JAIN , JUDICIAL MEMBER AND SHRI N.K . BILLAIYA, A CCOUNTANT M EMBER / I .T.A. NO . 1905/MUM/2013 ( / ASSESSMENT YEAR : 1996 - 97 M/S. USHDEV INTERNATIONAL LTD., 6 TH FLOOR, NEW HARI LEELA HOUSE, MINT ROAD, MUMBAI - 400 001 / VS. THE JCIT, SPL. RANGE - 53, MUMBAI ./ ./ PAN/GIR NO. : AAACU 1672R ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY: SHRI A.V. SONDE SHRI SUNIL NAHTA / RESPONDENT BY : SHRI SUNIL KUMAR AGARWAL / DATE OF HEARING : 02 . 0 7 .2015 / DATE OF PRONOUNCEMENT : 10 .0 7 .2015 / O R D E R PER N.K. BILLAIYA, AM: WITH T HIS APPEAL THE ASSESSEE HAS CHALLENGED THE CORRECTNESS OF THE ORDER OF THE LD. CIT(A) - 6 , MUMBAI DT. 04.01. 2013 PERTAINING TO ASSESSMENT YEAR 1996 - 97. 2. THE SOLE GRIEVANCE OF THE ASSESSEE READS AS UNDER: ITA. NO. 1905/M/2013 2 ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN CONFIRMING THE ACTION OF THE LAO BY MAINLY REFERRING TO INSTANCES BEFORE THE SET ASIDE ORDER BY THE HONBLE ITAT AND WITHOUT PROVIDING CROSS EXAMINATION OF MR. D. SHIRAMALU AND MR. D.K. SANGHVI AS DIRECTED BY THE HONBLE MUMBAI APPELLATE TRIBUNAL IN THE ORDER PASSED ON 7.3.2006. THE APPELLATE ORDER PASSED BY THE LD. CIT(A) BEING BAD IN LAW, THE SAME NEEDS TO BE QUASHED AND THE CLAIM OF DEPRECIATION OF THE APPELLANT NEEDS TO BE ALLOWED. 3. THE ROOTS OF THIS APPEAL LIE IN THE ASSESSMENT ORDER MADE U/S. 143(3) OF THE ACT DT. 26.3.1999 . WHILE SCRUTINIZING THE RETURN OF INCOME, THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS LEASED ASSET TO MADRAS OXYGEN & ACCETELYENE LTD., PROTECH CIRCUIT BREAKERS LTD. IN THE CASE OF MADRAS OXYGEN & ACCETELYENE LTD., THE ASSESSEE HAS LEASED 1700 NOS OF HIGH PRESSURE SEAMLESS GAS CYLINDER HAVING WATER CAPACITY AS 49 LITRES AMOUNTING TO RS. 91.80 LAKHS ON WHICH THE ASSESSEE CLAIMED 100% DEPRECIATION. ON THE BASIS OF THE ENQUIRES CONDUCTED BY THE OFFICE OF THE JDIT (INVT.) COIMBATORE, IT HAS BEEN ASCERTAINED THAT MADRAS OXYGEN & ACCETELYENE LTD. , H AS CATEGORICALLY ADMITTED THAT THE LEASE TRANSACTION WAS MERELY A PAPER TRANSACTION . THE AO DISALLOWED THE CLAIM OF DEPRECIATION OF RS. 91.80 LAKHS. 3.1. S IMILARLY IN THE CASE OF PROTECH CIRCUIT BREAKERS LTD., ON THE ENQUIRIES MADE BY THE OFFICE OF THE DDI (INV) BARODA, IT HAS BEEN ASCERTAINED THAT MR. D.V. SANGHAVI, DIRECTOR HAS ADMITTED THAT THE LEASE TRANSACTION IS MERELY A PAPER TRANSACTION. THE AO DISA LLOWED THE CLAIM OF DEPRECIATION OF RS. 2.85 CRORES. 4. THE MATTER TRAVELLED UPTO THE TRIBUNAL. AFTER CONSIDERING THE FACTS AND THE SUBMISSIONS, THE TRIBUNAL IN ITA NO. 4938/M/2004 BY ITS ORDER DT. 7.3.2006 AT PARA - 6 OF ITS ORDER HELD AS UNDER: ITA. NO. 1905/M/2013 3 WE HA VE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS AND GONE THROUGH THE RECORD. IT IS THE CLAIM OF THE ASSESSEE THAT IT HAS LEASED THE ASSETS AND, THEREFORE, IT BECOMES NECESSARY FOR THEM TO SATISFY THAT THE ASSETS IN QUESTION WERE, IN FACT, IN EXISTENCE AND T HAT THEY WERE LEASED OUT AND NOT MERELY FILING THE DOCUMENTS EVIDENCING THE PURCHASE OR EVIDENCING THE LEASE NO TRANSACTION SHOULD BE ACCEPTED BLINDLY MERELY ON THE BASIS OF THE DOCUMENTS THAT ARE PRODUCED. IN THIS CASE, THE ASSESSEE IS ONLY A MANUFACTURE OF STEEL ANGLES AND A COMMISSION AGENT FOR IMPORTING STEEL ANGLES. IT CLAIMED TO HAVE PURCHASED CERTAIN TESTING LABORATORY EQUIPMENTS AND AUTOMATIC ELECTRICAL LOAD MONITORING SYSTEM PANEL AND HIGH PRESSURE SEAMLESS GAS CYLINDERS AND LEASED THEM OUT TO CERT AIN CONCERNS. THE LESSEES HAVE FLATLY DENIED THAT THEY HAVE TAKEN ANY OF THESE ASSETS ON LEASE. APART FROM ,THAT, SHRI D.V SANGHAVI, A DIRECTOR OF PCBL, WHO IS ONE OF THE CONCERNS WHICH HAS TAKEN AUTOMATIC ELECTRICAL LOAD MONITORING SYSTEM PANEL ON LEASE B ASIS, HAPPENED TO BE THE DIRECTOR OF PSGL, WHICH COMPANY HAS CLAIMED TO HAVE SOLD THE PANEL TO THE ASSESSEE. IN OTHER WORDS, THE SELLER OF THESE EQUIPMENTS IS THE LESSEE AND BOTH THE MANUFACTURE OF THE PANEL TO THE ASSESSEE ARE COMMON IN THIS CASE AND S UCH A PERSON HAS STATED BEFORE THE AUTHORITIES THAT IT IS ONLY A PAPER TRANSACTION AND NO SUCH ASSET HAS EVER OBTAINED ON LEASE FROM THE ASSESSEE AND NO SUCH ASSET WAS AVAILABLE IN THEIR PREMISES FOR MAKING ANY PHYSICAL VERIFICATION; IN THE LIGHT OF THE SE FACTS, IT CANNOT BE SAID THAT THE TRANSACTIONS AS SUPPORTED BY VOLUMINOUS DOCUMENTS IN SUPPORT OF THE PURCHASE, IN SUPPORT OF THE INSURANCE TAKEN, IN SUPPORT OF THE INSTALLATION AND THE CHARTERED ACCOUNTANT'S CERTIFICATE SHOULD BLINDLY BE ACCEPTED BY TH E REVENUE AUTHORITIES. AFTER ALL, THE BURDEN OF PROOF IS STILL UPON THE ASSESSEE TO SHOW THAT IT HAD PURCHASED THE ASSETS AND SUCH ASSETS WERE LEASED OUT TO THE LESSEES FROM WHOM IT CLAIMED TO HAVE COLLECTED LEASE RENTAL IN A SITUATION OF THIS NATURE, IT I S ALWAYS SUPPORTED BY CERTAIN BASIC DOCUMENTARY EVIDENCE IF THE REVENUE WERE ONLY TO LOOK INTO THOSE DOCUMENTS AND DECIDE THE ISSUE, PERHAPS THE COMMERCIAL REALITIES OF THE TRANSACTIONS WILL HAVE TO BE IGNORED. THE REVENUE HAS ' UNEARTHED SEVERAL CASES WH EREIN THE SO CALLED LEASE TRANSACTIONS HAVE COME FOR A CLOSE SCRUTINY AND FOUND THAT THEY WERE ALL BOGUS TRANSACTIONS OR MERELY FINANCE TRANSACTIONS. IT HAS BEEN DONE ADMITTEDLY TO CLAIM HUNDRED PER CENT DEPRECIATION ON THE ELIGIBLE ASSETS THE PROVISIONS O F RELIEF HAVE BEEN SEEN TO HAVE RESULTED IN MISCARRIAGE. BUT WE ARE UNABLE TO SAY THAT THE FACTS OF THIS CASE ARE ONE SUCH NATURE WITHOUT THE ASSESSEE BEING GIVEN FULL OPPORTUNITY OF CROSS EXAMINATION OF THE DIRECTOR OF PSGL WHO HAS .STATED THAT / THE ENT IRE TRANSACTIONS ARE BOGUS AND MERE PAPER TRANSACTIONS. IN THIS CASE, BOTH THE ASSESSING OFFICER AS WELL AS THE CIT(A) HAVE NOT GIVEN ANY OPPORTUNITY TO THE ASSESSEE TO CROSS EXAMINE THIS PERSON, WHICH IS A VERY IMPORTANT PIECE OF ITA. NO. 1905/M/2013 4 EVIDENCE WHICH CAN TUR N THE CASE EITHER IN FAVOUR OF THE ASSESSEE OR IN FAVOUR OF THE REVENUE. IT IS WRONG ON THE PART OF THE C!T(A) TO HAVE SIDE TRACKED THIS VERY IMPORTANT RIGHT OF THE ASSESSEE TO DEMAND A CROSS EXAMINATION OF WITNESS' ON WHOSE STATEMENT THE REVENUE IS FRAMI NG THE ASSESSMENT. WE ARE, THEREFORE, OF THE CONSIDERED OPINION THAT THERE HAS BEEN VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE. WITHOUT EXPRESSING ANY OPINION ON THE NATURE OF THE DOCUMENTS PRODUCED BY THE ASSESSEE, WE THINK IT FIT AND PROPER TO RESTOR E THE MATTER BACK TO THE FILE OF THE C!T(A) WITH A DIRECTION TO DECIDE THE ISSUE AFRESH AFTER ENSURING A PROPER OPPORTUNITY OF CROSS EXAMINATION TO THE ASSESSEE. THE LEARNED CIT(A) IS ALSO DIRECTED TO L CALL FOR A REMAND REPORT FROM THE ASSESSING OFFICER I F HE SO DESIRES FOR ENSURING THE CROSS EXAMINATION OF SHRI D.V SANGHAVI AND ALSO THE DIRECTORS OF MOAL WHO CLAIMS TO HAVE STATED BEFORE THE REVENUE AUTHORITIES THAT' THE TRANSACTIONS WITH THEM ALSO WERE MERELY PAPER TRANSACTION. THE LEARNED CIT(A) AFT ER ENSURING THAT THE PRINCIPLES OF NATURAL JUSTICE HAVE NOT BEEN VIOLATED, MAY DECIDE THE ISSUE AFRESH IN ACCORDANCE WITH LAW AND IN THE LIGHT OF THE PRINCIPLES LAID DOWN BY THE HONBLE SUPREME COURT VS. DURGA PRASAD MORE (82 ITR 540). 5. PURSUANT TO THE DIRECTIONS OF THE TRIBUNAL, THE LD. CIT(A) ISSUED LETTER TO AO TO GIVE OPPORTUNITY TO THE ASSESSEE FOR CROSS EXAMINATION. THE AO SUBMITTED HIS REPORT VIDE LETTER DT. 18.8.2010 . THE REPORT OF THE AO READ S AS UNDER: IN THIS CASE , SUMMONS WERE ISSUED U/S.131 ON 25.06.2010 TO THE WITNESSES REQUIRING THEM TO REPRESENT BEFORE THE UNDERSIGNED ON 02.08.2010 AT 11.45 AM THROUGH THE RESPECTIVE ADDL. DIRECTORS OF INCOME - TAX (INV), MUMBAI AS UNDER: S.NO. NAME OF THE WITNESSES THE ADDL. DITS THOROUGH WHOM THE SUMMONS WERE SENT. 1. SHRI D.SRIAMULU, FINANCE MANAGER, M/S. MADRAS OXYGEN AND ACETYLENE LTD., THEKKUPALAM, POST OFFICE PERIANAICKENPALAM, COIMBATORE 641 020 ADDL. DIT (INV), COIMBATORE. 2. SHRI D.V. SANGHVI, DIRECTOR, M/S. PROTECH CIRCUITBREAKERS LTD., , ADI DHABASE TALUKA, PADRA BARODA. ASSTT. DIT (INV) - I, BARODA ITA. NO. 1905/M/2013 5 THE ADDL.CIT, COIMBATORE HAD SERVED THE SUMMONS ON ONE MR.P.SRIRAMALU ON 12.07.2010. IN RESPONSE TO THE SAID SUMMONS, SHRI P.SRIRAMULU, VIDE HIS LETTER DATED 17.07.2010 HAS STATED AS UNDER (COPY ENCLOSED): 1. AS MENTIONED IN YOUR LETTER I AM NOT A DIRECTOR IN MADAN OXYGEN & ACETYLENE CO. LTD., I WAS ONLY AN EMPLOYEE OF THE COMPANY. . 2. THE COMPANY WAS CLOSED FROM MAY 2000 ONWARDS AND ALL THE EMPLOYEES HAD TO LEAVE AND SETTLE DOWN ELSEWH ERE. 3 . I ALSO LEFT COMPANY 4. DURING THE SEARCH AND SEIZURE DURING 1995 - 96 ASST. YEAR AL/ THE RECORDS FOR THE YEAR AND PREVIOUS YEAR WERE TAKEN BY THE DEPARTMENT AND EITHER ME OR THE COMPANY DO NOT HAVE ANY RECORDS. 5. DURING THE SEARCH AND SEIZURE AND SUBSEQUENT BLOCK ASSESSMENT PROCEEDINGS, THE DEPT. HAS TAKEN STATEMENTS FROM CONCERNED PERSONS AND ON THE BASIS THE ASSESSMENT WAS COMPLETED AS BLOCK ASSESSMENT. 6. MOREOVER I AM NOW 65 YEARS OLD AND A DIABETIC AND BP PATIENT. I CAN NOT TAKE TRAVELIN G SINCE I GEL FREQUENT GIDDINESS. 7. I HUMBLY REQUEST YOUR GOOD SELVES TO TAKE THE STATEMENTS GIVEN TO THE INVESTIGATION DEPARTMENT 8S CORRECT FOR THE ASSESSMENT. ONCE AGAIN I WISH TO STATE THAT I DO NOT HAVE ANY PAPERS OR DO I REMEMBER THE DETAILS OF THE TRANSACTIONS. I REQUEST YOU 10 CONSIDER MY AGE FACTOR AND EXEMPT ME FROM APPEARING BEFORE YOUR GOODSELVES SINCE I CANNOT TAKE A TAKE A LONG TRAVEL. AS FAR AS THE SUMMONS ISSUED TO SHRI D. V.SANGHVI, THE ADIT(LNVESTIGATION) - , BARODA, HAS VIDE HIS ONFIDENTIAL LETTER NO.BRD/ADIT(LNV.) - I/COMMISSION/DVS/2010 - 11 DATED 22.07.2010 ITA. NO. 1905/M/2013 6 HAS DETAINED THE SUMMONS AS UNSERVED STATING THAT SHRI D. V.SANGHVI HAS NOT TR ACED AT THE GIVEN ADDRESS (COPY OF LETTER ENCLOSED). A COPY OF THE REPLY RECEIVED FROM SHRI P.SRIRAMULU WAS GIVEN TO THE ASSESSEE FOR ITS COMMENTS. IN RESPONSE THERETO, THE ASSESSEE VIDE LETTER DATED 02.08.2010 HAS STATED AS UNDER: 'WITH REFERENCE TO TH E REPLY MADE BY P.SRIRAMULU FINANCE MANAGER OF MADRAS OXYGEN & ACETYLENE COMPANY LIMITED, COIMBATORE, WE WOULD LIKE TO STATE THAT AGAIN THE SAID PARTY IS MAKING MERE STATEMENT I EXCUSES RATHER THAN ATTENDING THE CROSS EXAMINATION AS REQUIRED BY THE INCOME TAX AUTHORITY AGAINST THEIR SUMMONS/ NOTICES TO THEM. AS YOU CAN VERIFY OLD RECORDS WHERE SEVERAL TIMES WE HAVE MADE REQUEST {OR CROSS EXAMINATION, INCOME TAX AUTHORITY HAS ISSUED SUMMONS/ NOTICES BUT THEY HAVE NOT ATTENDED & ADJOURNED THE SAME BY GIVING S OME REASONS. NOW, TODAY ALSO THEY ARE STATING BAD HEALTH & NOT ATTENDED THE CROSS EXAMINATION. SO, IT IS VERY APPARENT THAT PARTIES ARE NOT INTERESTED IN CROSS VERIFICATION & HIDING THE TRUTH BY NOT ATTENDING OR REPLYING THE NOTICES/SUMMONS ISSUED BY THE INCOME TAX AUTHORITY. THIS ALL ARE JUST EXCUSES MADE BY THE PARTIES AS OUR MANAGING DIRECTOR LATE. MR. VIJAY GUPTA HAD BLOOD PRESSURE, HYPERTENSION ETC., MANY MORE INCURABLE DISEASES THAN P. SRIRAMULU THEN ALSO HE WAS ALWAYS READY TO ATTEND ALL THE HEA RING HELD AT THAT TIME. THE CRUX OF MATTER HERE IS HORDING CROSS VERIFICATION TO THE ASSESSEE, WHICH INCOME TAX DEPT. COULD NOT GIVE AS NONE OF THE BOTH PARTIES AS USUAL TURNED OUT FOR HEARING ON 2.8.2010 .. MERELY REPLYING AND I OR GIVING EXCUSES FOR N OT ATTENDING THE HEARING OF CROSS VERIFICATION GIVEN BY INCOME TAX AUTHORITY IS NOT THE REQUIREMENT OF THE CASE. SINCE SO MANY YEARS OF THE CASE HAVE PASSED BUT THE INCOME TAX AUTHORITY IS NOT ABLE TO GIVE US THE FUNDAMENTAL RIGHTS OF CROSS EXAMINATION. HENCE, WE ARE REQUESTING YOUR HONOR TO CONSIDER OUR TRANSACTION WITH THE ABOVE REFERRED PARTIES IS ACTUAL AND WITHDRAW THE DISALLOWANCE MADE IN THE INCOME TAX ORDER AND ALSO DROP THE DEMAND ACCORDINGLY. ITA. NO. 1905/M/2013 7 THE CIT(A) MAY, THEREFORE, DECIDE THE ISSUE ON MERITS. 6. THE LD. CIT(A) GAVE COPY OF THE REMAND REPORT TO THE ASSESSEE. THE ASSESSEE FILED A DETAILED REPLY TO THE REMAND REPORT. THE REPLY OF THE ASSESSEE HAS BEEN INCORPORATED BY THE LD. CIT(A) AT PAR A - 4 OF HIS ORDER. AFTER CONSIDERING THE REMAND REPORT OF THE AO AND THE SUBMISSIONS MADE BY THE ASSESSEE, THE LD. CIT(A) FINALLY CONCLUDED AS UNDER: A) ALL OUT EFFORTS WERE MADE TO ALLOW CROSS EXAMINATION BUT THE DIRECTORS THE COMPANY NEVER CAME OF FORWARD TO CONDUCT CROSS EXAMINATION OF SHRI SRIRAMULU, FINANCE MANAGER OF M/S. MADRAS OXYGEN ACETYLENE LIMITED, COIMBATORE AND SHRI D.V.SANGHVI, DIRECTOR OF M/S. PROTECH CIRCUITBREAKERS LTD., (B) THE EVIDENCES COLLECTED BY THE INCOME TAX DEPARTMENT WERE MADE AVAILABLE TO THE APPELLANT AT VARIOUS STAGES AND ADEQUATE OPPORTUNITY WAS GIVEN TO REBUT THE CLAIM IN COURSE OF ASSESSMENT PROCEEDINGS AND SUBSEQUENT APPEAL PROCEEDINGS AND PRINCIPLES OF N ATURAL JUSTICE HAVE BEEN FULLY ADHERED AS ANALYZED IN THE ARTICLE OF SHRI H P RANINA, ADVOCATE (QUOTED ABOVE AT PARA 11.4 OF THIS ORDER) AND IN ACCORDANCE WITH THE SUPREME COURT DECISION IN CASE OF KISHINCHAND CHELLARAM 125ITR 713. (C) THE APPELLANT HAS FA ILED TO ESTABLISH THAT THE LEASE TRANSACTIONS AND CLAIM OF 100% DEPRECIATION WAS GENUINE AND HAS MERELY PRODUCED VOLUMES OF PAPERS AND DOCUMENTS AS EVIDENCES AND THE RELIABLE EVIDENCE OF TRANSPORTATION OF ASSETS AND EXISTENCE OF AS SETS HAS NOT BEEN PRODUCED. AS HELD BY THE SUPREME COURT IN CASE OF CIT - VS - DURGA PRASAD 82 ITR 540, THE REVENUE AUTHORITIES ARE NOT REQUIRED TO 'PUT ON BLINKERS WHILE LOOKING AT THE DOCUMENTS PRODUCED BEFORE THEM' AND 'THEY ARE ENTITLED TO LOOK INTO SUR ROUNDING CIRCUMSTANCES IO FIND OUT REALITY OF RECITALS MADE IN THESE DOCUMENTS', THE REALITIES OF THE RECITALS WERE EXAMINED TWICE BY THE A0 IN THE ASSESSMENT PROCEEDINGS, TWICE IN THE APPEAL PROCEEDINGS BY CIT(A) AND ALSO BY IT AT AND IN ALL THESE PROCEED INGS NO AUTHORITY WAS SATISFIED WITH THE RECITALS MADE IN THE DOCUMENTS PRODUCED. ITA. NO. 1905/M/2013 8 11.11 . IN VIEW OF AFORESAID DETAILED DISCUSSION, THE ACTION OF THE AO TO DISALLOW THE APPELLANT'S CLAIM OF 100% DEPRECIATION OF RS. 91,80,0001 ON ASSETS CLAIMED TO BE LEA SED OUT TO M/S.MADRAS OXYGEN ACETYLENE LIMITED AND RS.2,85,00,000/ ON ASSETS CLAIMED TO BE LEASED OUT TO M/S PROTECH CIRCUITBREAKERS LTD IS CONFIRMED. 12. THE APPEAL IS DISMISSED. 7. AGGRIEVED BY THIS, THE ASSESSEE IS BEFORE US. 8. THE LD. COUNSEL FO R THE ASSESSEE VEHEMENTLY SUBMITTED THAT ONCE THE MATTER HAS BEEN TRAVELLED UPTO THE TRIBUNAL AND THE TRIBUNAL HAS SET ASIDE THE ISSUE BACK TO THE FILE OF THE LD. CIT(A) WITH SPECIFIC DIRECTIONS , I T WAS INCUMBENT TO THE LD. CIT(A) TO FOLLOW THE DIRECTIONS OF THE TRIBUNAL IN L ETTER AND SPIRIT . THE LD. CIT(A) HAS GROSSLY FAILED IN FOLLOWING THE DIRECTIONS OF THE TRIBUNAL. THEREFORE, THE ORDER OF THE LD. CIT(A) DESERVES TO BE SET ASIDE AND THE CLAIM OF DEPRECIATION SHOULD BE ALLOWED. 8.1. IN SUPPORT OF HIS CONTENTION, THE LD. COUNSEL RELIED UPON THE DECISION OF THE TRIBUNAL, CHENNAI BENCH IN THE CASE OF TATIA SKYLINE & HEALTH FARMS LTD. VS ACIT 70 ITD 387, DELHI BENCH IN THE CASE OF ACIT VS ANIMA INVESTMENT LTD. 73 ITD 125 AND ON THE DECI SION OF THE HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS GANI SILK PALACE 171 ITR 373. 9. PER CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE STRONGLY RELIED UPON THE FINDINGS OF THE LD. CIT(A). 10. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE ORDERS O F THE AUTHORITIES BELOW. WE HAVE ALSO CAREFULLY CONSIDERED THE DECISIONS RELIED ITA. NO. 1905/M/2013 9 UPON BY THE LD. COUNSEL. WE HAVE ALSO GONE THROUGH THE ORDERS MADE AT THE TIME OF FIRST ROUND OF LITIGATION. 10.1. THE UNDISPUTED FACT IS THAT THE ASSESSMENT ORDER MADE U/S. 143(3) OF THE ACT DT. 31.3.1996 AND SUBSEQUENT FIRST APPELLATE AUTHORITY ORDER DT. 12.3.2004 HAS BEEN MERGED WITH THE ORDER OF THE TRIBUNAL DT. 7.3.2006. THEREFORE , THE ISSUE BEFORE US IS TO DECIDE WHETHER THE LD. CIT(A) HAS FOLLOWED THE DIRECTIONS OF THE TRIBUNAL IN LETTER AND SPIRIT AND WHETHER THE ADDITIONS CAN BE SUSTAINED. AS MENTIONED ELSEWHERE, THE DECISION OF THE TRIBUNAL IN THE FIRST ROUND OF LITIGATION WAS PRONOUNCED ON 7.3.2006. THE LD. CIT(A) ISSUED LETTER TO THE AO TO GIVE OPPORTUNITY TO THE ASSESSEE FOR CROSS EXAMINATION ON 25.6.2010. WE FAILED TO UNDERSTAND WHY THE LD. CIT(A) TOOK MORE THAN 4 YEARS TO DIRECT THE AO TO DO THE NEEDFUL. ALTHOUGH THE LD. CIT(A) TOOK MORE THAN 4 YEARS, THE AO IN LESS THAN 2 MONTHS I.E. ON 18.8.2010 SUBMITTED THE REPORT. WE ONCE AGAIN FAILED TO UNDERSTAND WHY THE AO WAS IN SUCH A HURRY WHEN THE LD. CIT(A) TOOK SO MANY YEARS. 10.2. COMING TO THE STATEMENT OF SHRI P. SRIRAMULU TO WHOM SUMMONS WERE SENT THROUGH THE ADIT (INV.) COIMBATORE, SHRI P. SRIRAMULU VIDE HIS LETTER DT.17.7.2010 HAS SHOWED HIS INABILITY FOR CROSS EXAMINATION STATING THAT HE WAS A 65 YEARS OLD AND A DIABETIC /BP PATIENT AND CANNOT TAKE TRAVELLING AS HE GETS FREQUENT GIDDINESS AND DIR ECTED THE AO TO ACCEPT THE STATEMENT GIVEN TO THE INVESTIGATION DEPARTMENT EARLIER. THE AO DID NOT MAKE EFFORT TO ALLOW CROSS EXAMINATION OF THIS PERSON. 10.3. EVEN IF MR. SRIRAMALU WAS NOT ABLE TO TRAVEL , THE FACT OF THE MATTER IS THAT THE SUMMONS WAS ISSUED BY ADIT (INV) COIMBATORE AND THEREFORE THERE WAS NO OCCASION FOR MR. SRIRAMALU TO TRAVEL , H E COULD HAVE BEEN VERY WELL CROSS EXAMINE D AT HIS RESIDENCE ONLY. IN SO FAR AS THE SUMMONS ITA. NO. 1905/M/2013 10 ISSUED TO SHRI D.V. SANGHVI OF M/S. PROTECH CIRCUIT BREAKERS LTD . , THE AO HAS SIMPLY STATED THAT THE ADIT (INV), BARODA COULD NOT SERVE THE SUMMONS AS SHRI D.V. SANGHVI WAS NOT TRACEABLE AT THE GIVEN ADDRESS. ONCE AGAIN THE AO DID NOT MAKE ANY EFFORT. 10.4. A PERUSAL OF THE ORDER OF THE LD. CIT(A) SHOWS THAT ALTHO UGH THE LD. CIT(A) DID NOT FOLLOW THE DIRECTIONS OF THE TRIBUNAL IN LETTER AND SPIRIT, HE DID NOT EVEN CARE TO EXAMINE THE DOCUMENTARY EVIDENCES IN RESPECT OF THE LEASED TRANSACTIONS. FOLLOWING DOCUMENTS WERE PLACED BEFORE THE REVENUE AUTHORITIES. PAPE RS RELATED TO PROTECH CIRCUIT BREAKERS LIMITED (PCBL) SR PARTICULARS 1. COPY OF LETTER DATED 17.09.95 FROM PCBL CERTIFYING THAT NO CHARGE/LIEN ON ASSETS IS CREATED (25 NOS.) 2. COPY OF LETTER DATED 17.09.95 FROM PCBL CERTIFYING THAT NO CHARGE/ LIEN ON ASSETS IS CREATED (5 NOS.) 3. COPY OF CERTIFICATE FROM CHARTERED ENGINEER, MR. P.T. SHAH DATED 17.09.95 FOR ASSET INSTALLATION ( 25 NOS.) 4. COPY OF CERTIFICATE FROM CHARTERED ENGINEER, MR. P.T. SHAH DATED 17.09.95 FOR ASSET INSTALLATION ( 5 NOS.) 5. COPY OF AFFIDAVIT BY CHARTERED ENGINEER, DR. P.T. SHAH DATED 20.02.02 6. COPY OF PROFILE / BIO DATA OF CHARTERED ENGINEER, DR.P.T. SHAH DATED 20.02.02 PROVING HIS IMPECCABLE RECORD 7. COPY OF LETTER DATED 30.09.95 FROM P CBL CERTIFYING THAT ASSETS ARE INSTALLED (25 NOS) 8. COPY OF LETTER DATED 30.09.95 FROM PCBL CERTIFYING THAT ASSETS ARE INSTALLED (5 NOS) 9. COPY OF LETTER DATED 30.09.95 FROM PCBL CONFIRMING RECEIPT OF ASSETS (25 NOS.) ITA. NO. 1905/M/2013 11 10. COPY OF LETTER DATED 30.09.95 FROM PCBL CONFIRMING RECEIPT OF ASSETS 25 NOS.) 11. COPY OF CERTIFICATE FROM CHARTERED ACCOUNTANT, V.M BHASKER DATED 30.09.95 FOR ELIGIBILITY OF DEPRECIATION ON ASSETS (25 NOS.) 12. COPY OF CERTIFICATE FROM CHARTERED ACCOUNTANT, V.M BHASKER DATED 30.09. 95 FOR ELIGIBILITY OF DEPRECIATION ON ASSETS (25 NOS.) 13. COPY OF LETTER DATED 08.10.95 FROM PCBL TO UNITED INSURANCE TO AMEND POLICY 14. COPY OF UNITED INSURANCE POLICY DATED 18.09.95 15. COPY OF LETTER DATED 15.03.96 FROM PCBL CONFIRMING THAT ASSETS ARE WORKING SATISFACTORILY 16. COPY OF CERTIFICATE FROM CHARTERED ENGINEER DATED 29.03.96 VALUING ASSTS 17. COPY OF STATEMENT OF PRODUCTION AT PCBL FOR THE PERIOD APR 95 MAR 96 VIDE LETTER DATED 01.04.96 18. COPY OF LETTER DATED 02.04.96 FROM PCBL CERTIFYING THAT ASSETS ARE WORKING SATISFACTORILY ON SHIFT BASIS (25 NOS.) 19. COPY OF LETTER DATED 02.04.96 FROM PCBL CERTIFYING THAT ASSETS ARE INSURED AND WORKING IN GOOD CONDITION (25 NOS.) 20. COPY OF LETTER DATED 02.04.96 FROM PCBL CERTIFYING THAT ASSETS ARE WORKING SATISFACTORILY ON SHIFT BASIS (5 NOS.) 21. COPY OF LETTER DATED 02.04.96 FROM PCBL CERTIFYING THAT ASSETS ARE INSURED AND WORKING IN GOOD CONDITION (25 NOS.) 22. COPY OF LETTER DATED 09.04.96 FROM PCBL CONFIRMING THAT ASSETS ARE WORKIN G SATISFACTORILY (30 NOS.) 23. COPY OF DELIVERY NOTE OF PSL DATED 11.09.95(25 NOS.) 24. COPY OF DELIVERY NOTE OF PSL DATED 10.09.95(5 NOS.) 25. COPY OF LETTER DATED 11.09.95 FROM PSL CONFIRMING ITA. NO. 1905/M/2013 12 DELIVERY OF ASSETS (25 NOS.) 26. COPY OF LETTER DATED 10.09.95 FROM PSL CONFIRMING DELIVEYR OF ASSETS (5 NOS.) 27. COPY OF CRIMINAL COMPLAINT DATED 01/10.99 AGAINST PCBL PAPERS RELATED TO MADXRAS OXYGEN & ACETYLENE CO. LTD. (MOAL ) SR PARTICULARS 1. COPY OF CERTIFICATE FROM CHARTERED ENGINEER, MR. P.G. SRINIVAS DATED 22.09.95 CERTIFYING THAT ASSETS WERE PERSONALLY VERIFIED BY HIM. 2. COPY OF LETTER DATED 23.09.95 FROM MOAL CERTIFYING THAT NO CHARGE/ LIEN ON ASSETS IS CREATED 3. COPY OF CERTIFICATE FROM CHARTERED ACCOU NTANT, M/S. J SUNDAR & CO. DATED 30.09.95 CONFIRMING ASSETS PURCHASED BY US AND LEASE TO MOAL AND QUALIFY FOR 100% DEPRECIATION 4. COPY OF LETTER DATED 18.12.95 FROM MOAL THAT ASSETS ARE RECEIVED AND WORKING SATISFACTORILY 5. COPY OF LETTER DATED 03.04 .96 FROM MOAL CERTIFYING THAT ASSETS ARE INSURED AND WORKING IN GOOD CONDITION 6. COPY OF DELIVERY OF CHALLAN DATED 19.09.95 OF SPEC 7. COPY OF INVOICE NO.3569 DATED 21.09.95 OF SPEC 8. COPY OF CRIMINAL COMPLAINT AGAINST MOAL DATED 01.10.99 10.5. AT THIS JUNCTURE, IT WOULD NOT BE OUT OF PLACE TO CONSIDER THE FOLLOWING OBSERVATIONS MADE BY THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF KARNATAKA WAKF BOARD VS STATE OF KARNATAKA AIR 1996 KAR. 55 AT PAGES 63 & 64. ITA. NO. 1905/M/2013 13 'WHERE THE PARTY HAD AN OPPORTUNITY O F ADDUCING EVIDENCE IN THE CASE BUT WITH OPEN EYES FAILED TO ADDUCE THAT EVIDENCE, THE CASE SHOULD NOT BE REMANDED TO GIVE A SECOND CHANCE TO THE PARTY TO ADDUCE THAT EVIDENCE. THE POLICY OF THE LAW IS THAT ONCE THAT MATTER HAS BEEN FAIRLY TRIED BETWEEN TH E PARTIES, IT SHOULD NOT, EXCEPT IN SPECIAL CIRCUMSTANCES, BE REOPENED AND RETIRED. IN A RECENT DECISION THEIR LORDSHIPS OF THE SUPREME COURT LAID DOWN THAT POWER TO ORDER RETRIAL AFTER REMAND, WHERE THERE HAS ALREADY BEEN A TRIAL ON EVIDENCE BEFORE THE CO URT OF FIRST INSTANCE, CANNOT BE EXERCISED MERELY BECAUSE THE APPELLATE COURT IS OF THE VIEW THAT THE PARTIES WHO COULD LEAD BETTER EVIDENCE IN THE COURT OF FIRST INSTANCE HAVE FAILED TO DO SO.' 10.6. ON SIMILAR SET OF FACTS, THE HONBLE MADRAS HIGH COURT IN THE CASE OF GANI SILK PALACE (SUPRA) HAS HELD AS UNDER: HELD, THAT WHEN THE ASSESSEE ON ITS PART HAD PRODUCED THE DISCHARGED HUNDIS AND ALSO VOUCHERS SHOWING PAYMENT OF INTEREST THAT WAS SUFFICIENT FOR THE ASSESSEE TO DISCHARGE ITS INITIAL BURDEN AND IT WAS FOR THE INCOME - TAX OFFICER TO HAVE EXAMINED THE BANKERS WHEN HE WANTED TO RELY ON THE STATEMENTS OBTAINED FROM THEM AND GIVEN AN OPPORTUNITY TO THE ASSESSEE TO CROSS EXAMINE THEM BEFORE TAKING INTO ACCOUNT THE CONTENTS OF THOSE STATEMENTS. WHEN THE APPELLATE ASSISTANT COMMISSIONER HAD GIVEN A SPECIFIC DIRECTION TO THE OFFICER TO EXAMINE THE BANKERS BEFORE MAKING USE OF THEIR STATEMENTS THE INCOME - TAX OFFICER COULD NOT, WITHOUT COMPLYING WITH THE SAID DIRECTION MAKE REASSESSMENT ON THE SAME BASIS AS W AS DONE ON THE PRIOR OCCASION. AS THE TRIBUNAL HAD POINTED OUT THAT THE ORDER OF REASSESSMENT MADE BY THE OFFICER WAS A VERBATIM REPRODUCTION OF THE ORIGINAL ORDER OF ASSESSMENT EXCEPT FOR THE PREAMBLE PORTION AND HAD COME TO THE CONCLUSION THAT THERE WAS NOTHING TO SHOW THAT THE CREDIT ENTRIES IN THE BOOKS OF ACCOUNT WERE FALSE, THIS FINDING OF THE TRIBUNAL BEING BASED ON THE FACTS AND CIRCUMSTANCES COULD NOT BE SAID TO BE UNREASONABLE OR PERVERSE. THE TRIBUNAL WAS, THEREFORE, RIGHT IN DELETING THE ADDITIO NS MADE BY THE OFFICER. 11. CONSIDERING THE ENTIRE FACTS IN TOTALITY IN THE LIGHT OF THE DIRECTION OF THE TRIBUNAL AND THE SUBSEQUENT CONDUCT OF THE LD. CIT(A) AND THE AO, IN OUR CONSIDERED OPINION, THE REVENUE AUTHORITIES HAVE FAILED TO DEMONSTRATE THAT THE CLAIM OF DEPRECIATION IS BOGUS. FURTHER, THE ITA. NO. 1905/M/2013 14 DOCUMENTARY EVIDENCES SUBMITTED BY THE ASSESSEE HAVE NOT BEEN REBUTTED BY THE LD. CIT(A). IN THE LIGHT OF THE DECISIONS DISCUSSED HEREINABOVE AND CONSIDERING THE FACT THAT THE MATTER PERTAINS TO A.Y. 199 6 - 97, WE FAILED TO PERSUADE OURSELVES TO GIVE ONE MORE OPPORTUNITY TO THE REVENUE AS IN OUR OPINION THAT WOULD CAUSE UNNECESSARY HARDSHIP ON THE ASSESSEE WHEN THE MAIN DIRECTOR HAS SINCE DECEASED. IN THE INTEREST OF JUSTICE AND FAIR PLAY, WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND DIRECT THE AO TO DELETE THE IMPUGNED ADDITION MADE ON ACCOUNT OF THE DISALLOWANCE OF DEPRECIATION. 12. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. OR DER PRONOUNCED IN THE OPEN COURT ON 10 TH JU LY , 2015 SD/ - SD/ - ( A.D. JAIN ) (N.K. BILLAIYA) /JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED : 10 TH JU LY , 2015 . . ./ RJ , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI