PERMESHWAR CREATIONS P. LTD, MUMBAI V. ASST CIT CIR 8(1), MUMBAI

ITA 2065/MUM/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 83509 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-08-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2006-2007
• Appeal Filed On: 14-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K KARDA M
• Assessee Lawyers: BHAVESH R MAJITHIA
• Keywords: Depreciation; Additional evidence
• Section: 143(3); 32

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI . , , , BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA , JUDI CIAL MEMBER . / ITA NO. 2065 /MUM./ 2013 ( / ASSESSMENT YEAR : 2006 07 ) M/S. PERMESHWAR CREATIONS PVT. LTD. PLOT NO.52, 7 TH ROAD, MIDC MAROL ANDHERI (E), MUMBAI 400 093 .. / APPELLANT V/S AS STT. COMMISSIONER OF INCOME TAX CIRCLE 8(1), MUMBAI .... / RESPONDENT ./ PERMANENT ACCOUNT NUMBER AADCP3517F / ASSESSEE BY : SHRI BHAVESH R. MAJITHIA / REVENUE BY : SHRI A.K . KARDAM / DATE OF HEARING 07. 08.2014 / DATE OF ORDE R 14.08.2014 / ORDER , / PER AMIT SHUKLA , J.M. THE PRESENT APPEAL IS PREFERRED BY THE ASSESSEE, CHALLENGING THE IMPUGNE D ORDER DATED 14 TH JANUARY 2013, PASSED BY THE LEARNED COMMISSIONER (APPEALS) XVII , MUMBAI, FOR THE QUANTUM OF ASSESSMENT PASSED UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 M/S. PERMESHWAR CREATIONS PVT. LTD. 2 (FOR SHORT 'THE ACT' ) FOR THE ASSESSMENT YEAR 2006 07 , ON THE FOLLOWING GROUND S: 1. THE COMMISSIONER OF INCOME TAX (APPEAL - 17) ERRED IN CONFIRMING THE ORDER OF ASSESSING OFFICER IN SPITE OF THE SUBMISSION OF ALL THE FIXED ASSETS BILLS INCLUDING REMAINING FIXED ASSETS PURCHASED BILLS WITH HON'BLE COMMISSIONER OF INCOME TAX (APPEAL ) WHICH ACCORDING TO ASSESSING OFFICER WERE MISSING IN THE SUBMISSION DATED 27.02.2008 BEFORE ASSESSING OFFICER. 2. THE COMMISSIONER OF INCOME TAX (APPEAL) ERRED IN NOT CONSIDERING THE ADDITIONAL EVIDENCE EVEN AFTER THE CONFIRMATION RECEIVED BY ASSESSING OFFICER IN HIS REMAND REPORT THAT THE BILLS SUBMITTED BY ASSESSEE BEFORE THE COMMISSIONER OF INCOME TAX (APPEAL) EXPLAINS THE DIFFERENCES OF RS.21,88,616/ - . 3. CONTENTION OF ASSESSING OFFICER IN HIS REMAND REPORT IN RESPECT OF ADMISSION OF ADDITIONAL EV IDENCE BEFORE COMMISSIONER OF INCOME TAX IN WHICH ASSESSING OFFICER WAS STATING THAT THE APPELLANT HAVE BEEN GIVEN VARIOUS OPPORTUNITY DURING THE ASSESSMENT PROCEEDING FOR THE SUBMISSION OF DETAILS WHICH IS FACTUALLY INCORRECT AS THE FIRST NOTICE ENCLOSED WITH QUESTIONNAIRE WAS ISSUED ON 28.01.2008 AND ASSESSMENT WAS COMPLETED ON 24.03.2008. 2 . FACTS IN BRIEF : THE ASSESSEE IS ENGAGED IN THE BUSINESS OF EXPORT OF GARMENTS. IN THE RETURN OF INCOME, IT HAS CLAIMED DEPRECIATION OF ` 8,28,707 , UNDER COMPANIES A CT, 1956, AND DEPRECIATION OF ` 45,50,134 UNDER SECTION 3 2 (1) , OF THE ACT. THE ASSESSING OFFICER, ON EXAMINATION OF PURCHASE BILLS OF THE FIXED ASSETS, NOTED THAT SOME OF THE BILLS / EVIDENCE HAVE NOT BEEN FILED IN RELATION TO THE ASSETS FORMING PART OF TH E BLOCK ASSETS WHICH HAVE BEEN ADDED UP TO SEPTEMBER 2005 AND AFTER OCTOBER 2005. HE CALCULATED THE DISALLOWANCE OF DEPRECIATION AT ` 1,77,702, ON SUCH ASSETS VALUATING ` M/S. PERMESHWAR CREATIONS PVT. LTD. 3 21,88,616, AS PER CHART GIVEN IN PARA 4.1 / PAGE 2 OF THE ASSESSMENT ORDER. 3 . BEFORE T HE LEARNED COMMISSIONER (APPEALS), THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS FILED MOST OF THE INVOICES, HOWEVER, SOME OF THE INVOICE S COULD NOT BE FILED BEFORE THE ASSESSING OFFICER AS THE SAME WERE MISSING. THE ASSESSING OFFICER, WITHOUT POINTING OUT SUCH MISSING BILLS, HAS PROCEEDED TO MAKE DISALLOWANCE AND ALSO WITHOUT CONFRONTING TO THE ASSESSEE. ACCORDINGLY, BEFORE THE LEARNED COMMISSIONER (APPEALS), THE ASSESSEE FILED ALL THE BILLS INCLUDING THE MISSING INVOICES WHICH WERE NOT FILED BEFORE THE ASS ESSING OFFICER AS ADDITION AL EVIDENCE. THE LEARNED COMMISSIONER (APPEALS) FORWARDED THESE BILLS TO THE ASSESSING OFFICER TO SUBMIT THE REMAND REPORT VIDE LETTER DATED 22 ND JUNE 2011, DIRECTING THE ASSESSING OFFICER TO VERIFY THE BILLS AND TO CONDUCT ENQUIRIE S. IN RESPONSE, THE ASSESSING OFFICER , VIDE REMAND REPORT DATED 19 TH JULY 2011, SUBMITTED THAT THE ASSESSEE WAS GIVEN ADEQUATE OPPORTUNITY ON VARIOUS OCCASIONS AND, THEREFORE, THE ASSESSEE CANNOT TAKE A PLEA THAT DUE OPPORTUNITY WAS NOT GIVEN AT THE TIME O F ASSESSMENT PROCEEDINGS. THUS, HE REQUESTED THE LEARNED COMMISSIONER (APPEALS) NOT TO ADMIT THE ADDITIONAL EVIDENCE. THE ASSESSEE STRONGLY OBJECTED TO SUCH A REMAND REPORT AS PER THE SUBMISSIONS INCORPORATED IN PARA 5.4 OF THE APPELLATE ORDER. HOWEVER, M/S. PERMESHWAR CREATIONS PVT. LTD. 4 T H E LEARNED COMMISSIONER (APPEALS) TOO REJECTED THE ASSESSEES CONTENTION AND DID NOT ADMIT THE ADDITION AL EVIDENCE. ACCORDINGLY, THE DISALLOWANCE OF DEPRECIATION WAS UPHELD. 4 . BEFORE US, THE LEARNED COUNSEL SUBMITTED THAT THE ASSESSEE HAS FILED MOST OF THE BILLS AND DUE TO OMISSION THE ENTIRE INVOICES COULD NOT BE FILED BEFORE THE ASSESSING OFFICER. THE ASSESSING OFFICER HAD NOT BROUGHT TO THE NOTICE OF THE ASSESSEE THAT SOME OF THE BILLS / PURCHASE INVOICES OF FIXED ASSETS WERE NOT AVAILABLE. HAD BEEN SO, T HE ASSESSEE WOULD HAVE PRODUCED THE SAME. IMMEDIATELY, AT THE FIRST INSTANCE BEFORE THE LEARNED COMMISSIONER (APPEALS), THE INVOICES WERE FILED AND WAS ALSO CONFRONTED TO THE ASSESSING OFFICER FOR VERIFYING THE SAME. HOWEVER, INSTEAD OF VERIFYING THE BILLS , BOTH THE AUTHORITIES HAVE REJECTED THE EVIDENCES / BILLS ON THE GROUND THAT THE SAME WERE NOT PRODUCED BEFORE THE ASSESSING OFFICER. HE SUBMITTED THAT THESE BILLS WHICH WERE PRODUCED BEFORE THE ASSESSING OFFICER / LEARNED COMMISSIONER (APPEALS) DURING TH E FIRST APPELLATE PROCEEDINGS , CAN BE VERIFIED AND, ACCORDINGLY, DEPRECIATION SHOULD BE ALLOWED. 5 . THE LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE OTHER HAND, STRONGLY RELIED UPON THE REASONS GIVEN BY THE ASSESSING OFFICER IN THE REMAND REPORT WHICH HAVE BEEN INCORPORATED IN PARA 5.3 OF THE M/S. PERMESHWAR CREATIONS PVT. LTD. 5 APPELLATE ORDER AND ALSO THE CONCLUSION DRAWN BY THE LEARNED COMMISSIONER (APPEALS). 6 . WE HAVE HEARD THE RIVAL CONTENTIONS AND HAVE PERUSED MATERIAL AVAILABLE ON RECORD. IT IS AN ADMITTED FACT THAT IN RESPONSE TO THE NOTICE / QUERY RAISED BY THE ASSESSING OFFICER TO SUBMIT THE DETAILS OF PURCHASE INVOICES FOR THE FIXED ASSETS ON WHO M DEPRECIATION HAS BEEN CLAIMED, THE ASSESSEE COULD NOT SUBMIT THE ENTIRE BILLS. THE ASSESSING OFFICER HAS NOTED THAT SOME OF THE PURCHASE INVOICE S WERE MISSING FROM THE DETAILS FILED BY THE ASSESSEE AND, ACCORDINGLY, HE DISALLOWED THE DEPRECIATION CLAIMED ON SUCH FIXED ASSETS. BEFORE THE LEARNED COMMISSIONER (APPEALS) ALL THE MISSING BILLS INCLUDING THE BILLS FURNISHED BEFORE THE ASSESSING OFFICER WERE SUBMITTED AND NOT ONLY THIS, THE LEARNED COMMISSIONER (APPEALS) HAS CALLED FOR THE REMAND REPORT GIVING A SPECIFIC DIRECTION AS UNDER: IN THIS REGARD, IT HAS BEEN SUBMITTED BY THE APPELLANT THAT ALL THE BILLS HAVE BEEN FILED ON WHICH DEPRECIATION H AS BEEN CLAIMED. HOWEVER, IN THE ASSESSMENT ORDER, IT HAS BEEN STATED THAT BILLS FOR ` 21,88,616, PERTAINING TO PLANT AND MACHINERY, HAVE NOT BEEN FILED. I AM ENCLOSING HEREWITH COPY OF SUBMISSIONS OF THE ASSESSEE ALONG WITH COPIES OF BILLS, WHEREIN HE HAS STATED THAT THE A.O. HAS NOT GIVEN THE ASSESSEE AN OPPORTUNITY TO EXPLAIN THE DIFFERENCE OF THE SAID AMOUNT. THE APPELLANT HAS ENCLOSED COPIES OF THE BILLS WITH REGARD TO ADDITION TO PLANT AND MACHINERY. IN THIS REGARD, YOU ARE HEREBY DIRECTED TO MAKE THE FOLLOWING ENQUIRIES. I) PLEASE VERIFY IF THE BILLS IN QUESTION WERE FILED DURING THE COURSE OF ASSESSMENT PROCEEDINGS; M/S. PERMESHWAR CREATIONS PVT. LTD. 6 II) PLEASE VERIFY IF THE BILLS EXPLAINS THE DIFFERENCE OF ` 21,88,616; III) PLEASE GIVE REASONS AS TO WHY THE ADDITIONAL EVIDENCE, IF ANY, SHOULD NOT BE ADMITTED. 7 . THUS, THE DIRECTION OF THE LEARNED COMMISSIONER (APPEALS) WAS VERY CATEGORICAL , NOT ONLY TO VERIFY THE BILLS RELATING TO THE PURCHASE OF FIXED ASSETS OF ` 21,88,616, BUT ALSO TO CONDUCT ENQUIRY. THE ASSESSING OFFICER INSTEAD OF VERIFYING THE BILLS OR CONDUCTING THE ENQUIRY HAS OBJECTED TO THE FILING OF ADDITIONAL EVIDENCE. THE LEARNED COMMISSIONER (APPEALS) TOO HAS IGNORED THESE EVIDENCES ON THE GROUND THAT SUFFICIENT OPPORTUNITY WAS GIVEN TO THE ASSESSEE AT THE TIME OF ASSESS MENT PROCEEDINGS. IT IS TRUE THAT THE ASSESSING OFFICER HAS GIVEN VARIOUS DATES OF HEARING, HOWEVER, WHEN CERTAIN BILLS WERE MISSING, THE ASSESSING OFFICER SHOULD HAVE REQUIRED THE ASSESSEE TO SUBSTANTIATE THE MISSING PURCHASE BILLS. IN ANY CASE, IF THE AS SESSEE HAS PRODUCED ALL THE EVIDENCES BEFORE THE FIRST APPELLATE PROCEEDINGS, WHICH IS A CONTINUATION OF ASSESSMENT PROCEEDINGS THEN THE SAME SHOULD HAVE BEEN ENQUIRED AND VERIFIED INSTEAD OF REJECTING THE EVIDENCES ON TECHNICAL GROUND , AND THE MATTER SHOU LD HAVE BEEN DECIDED ON THE BASIS OF MERITS OF THE EVIDENCE S. U NDER THESE FACTS AND CIRCUMSTANCES, WE ARE OF THE OPINION THAT THE ADDITIONAL EVIDENCE FILED IN THE FORM OF INVOICES FOR THE FIXED ASSETS AGGREGATING TO ` 21,88,616, SHOULD BE ADMITTED AND VERI FIED . TH US, THE MATTER IS REMANDED BACK TO THE FILE OF M/S. PERMESHWAR CREATIONS PVT. LTD. 7 THE ASSESSING OFFICER TO VERIFY THE BILLS AND ACCORDINGLY DECIDE THE ISSUE OF DISALLOWANCE OF DEPRECIATION IN ACCORDANCE WITH LAW AFTER GIVING DUE AND EFFECTIVE OPPORTUNITY TO THE ASSESSEE. 8 . 8 . IN THE RESULT, ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. 14 TH AUGUST 2014 ORDER PRONOUNCED IN THE OPEN COURT O N 14 TH AUGUST 2014 SD/ - . D. KARUNAKARA RAO ACCOUNTANT MEMBER SD/ - AMIT SHUKLA JUDICIAL MEMBER MUMBAI, DATED : 14 TH AUGUST 2014 / COPY OF THE ORDER FORWARDED TO : ( 1 ) / THE ASSESSEE ; ( 2 ) / THE REVENUE; ( 3 ) ( ) / THE CIT(A ) ; ( 4 ) / THE CIT, MUMBAI CITY CONCERNED ; ( 5 ) , , / THE DR, ITAT, MUMBAI ; ( 6 ) / GUARD FILE . / TRUE COPY / BY ORDER . / PRADEEP J. CHOWDHURY / SR. PRIVATE SECRETARY / / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI