The ITO, Ward-1(4), Surat V. M/s. Nangalia Fabrics Pvt.Ltd., Surat

ITA 2184/AHD/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 9828 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 3 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-01-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 19-01-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 03-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRADEEPKUMAR MAJMUDHAR
• Assessee Lawyers: SHAILESH VAIDYA
• Keywords: Depreciation; Reason to believe
• Section: 143(3); 147; 148

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ./ ITA.NO.2184/AHD/2012 WITH CO NO.221/AHD/2012 /BLOCK ASSTT. YEAR: 2005-2006 ITO, WARD-1(4) SURAT. VS M/S.NANGALIA FABRICS P.LTD. 2 ND FLOOR, CORPORATE BUILDING BOMBAY MARKET UMARWADA, SURAT 395 010. PAN : AAACN 7723 Q %& / (APPELLANT) '( %& / (RESPONDENT) REVENUE BY : SHRI PRADEEPKUMAR MAJMUDHAR, SR.DR ASSESSEE BY : SHRI SHAILESH VAIDYA / DATE OF HEARING : 19/01/2016 / DATE OF PRONOUNCEMENT: 19/01/2016 )*/ O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: THE REVENUE IS IN APPEAL BEFORE US AGAINST THE ORDE R OF LD.COMMISSIONER INCOME-TAX (APPEALS)-1, SURAT DATED 31.7.2012 PASSED FOR THE ASSTT.YEAR 2005-06. ITA NO.2184/AHD/2012 WITH CO 2 2. ON RECEIPT OF NOTICE IN REVENUES APPEAL, THE AS SESSEE HAS FILED CO BEARING NO.221/AHD/2012. THE REVENUE IN ITS GROUND S OF APPEAL HAS PLEADED THAT THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITI ON OF RS.64,32,982/- WHICH WAS ADDED BY THE AO WITH THE AID OF SECTION 145A OF THE INCOME TAX ACT ON ACCOUNT OF UNUTILIZED CENVAT CREDIT AVAILABLE. IN THE CO, THE ASSESSEE HAS CHALLENGED REOPENING O F THE ASSESSMENT BY ISSUANCE OF NOTICE UNDER SECTION 148 OF THE INCOME TAX ACT. SINCE THE ISSUE AGITATED IN THE CO IS OF JURISDICTIONAL, THEREFORE, WE FIRST TAKE THE GROUND RAISED IN THE CO. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HA S FILED ITS RETURN OF INCOME ON 31.3.2006 SHOWING TOTAL INCOME AT RS.21,47,440/- . THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSMENT AND N OTICE UNDER SECTION 143(2) OF THE INCOME TAX ACT WAS ISSUED ON 26.7.2006, WHIC H WAS SERVED ON THE ASSESSEE. THE LD.AO PASSED THE ASSESSMENT ORDER UN DER SECTION 143(3) OF THE ACT ON 24.12.2007. HE DETERMINED THE TAXABLE INCOM E OF THE ASSESSEE AT RS.1,88,72,644/- AS AGAINST THE INCOME OF RS.21,47, 440/- DISCLOSED BY THE ASSESSEE. THE AO, THEREAFTER, RECORDED REASONS FOR REOPENING OF THE ASSESSMENT. COPY OF THE REASONS RECORDED FOR REOPE NING OF THE ASSESSMENT HAS BEEN MADE AVAILABLE AT PAGE NO.1 OF THE PAPER B OOK. IT READS AS UNDER: OFFICE OF THE DY. COMMISSIONER OF INCOME-TAX, CIRCLE-1, ROOM NO. 108, AAYAKAR BHAVAN, MAJURA GATE, SURAT TEL. NO 0261-2878108 --------------------------------------------------- ----------------------------------- NO.SRT/DCIT/CIR.1/NANGALIA FABRICS /2011-12 DATE 08.11.2011 ITA NO.2184/AHD/2012 WITH CO 3 TO THE PRINCIPAL OFFICER, M/S. NANGALIA FABRICS PVT LTD 2ND FLOOR CORPORATE BUILDING, BOMBAY MARKET, UMARWADA. SURAT. SIR, SUB: REASON RECORDED FOR REOPENING THE ASSESSMENT IN FOR A.Y. 2005-06 AS REQUIRED BY YOU, THE REASONS RECORDED FOR RE-OPE NING THE ASSESSMENT FOR A.Y. 2005-06 IS FURNISHED AS UNDER:- 'AS PER THE PROVISIONS OF SECTION 32(1) OF THE ACT, DEPRECIATION ON ELECTRICAL FITTINGS IS ADMISSIBLE @ 15 % W.E.F. A.Y.2003-04 AND ONWARDS HOWEVER ON PERUSAL OF THE RECORDS, IT I S NOTICED THAT ON ELECTRIC INSTALLATIONS, ASSESSEE CLAIMED AN D ALLOWED DEPRECIATION OF RS.5,72,349/- @25% AGAINST THE ALLO WABLE DEPRECIATION OF RS.3,43,409 15%. THIS RESULTED EXC ESS GRANT OF DEPRECIATION OF RS.2,28,940 AND ALSO UNDER ASSESSME NT TO THAT EXTENT. IN VIEW OF THE' ABOVE, I HAVE REASON TO BELIEVE THA T THERE IS ESCAPEMENT OF INCOME OF MORE THAN RS 1 LAC IN THE H ANDS OF ASSESSEE WHICH IS REQUIRED TO BE TAXED BY REOPENING THE ASSESSMENT U/S. 147 OF THE INCOME-TAX ACT, 1961 THU S, IT IS A FIT CASE FOR ISSUING NOTICE U/S 148 OF THE INCOME-TAX A CT' OBJECTION, IF ANY MAY BE FILED WITHIN 7 DAYS FROM T HE RECEIPT OF THAT LETTER. YOURS FAITHFULLY SD/- DR.DARSI SUMAN RATNAM) DY.COMMISSIONER OF INCOME-TAX ITA NO.2184/AHD/2012 WITH CO 4 4. THE LD.COUNSEL FOR THE ASSESSEE, AT THE VERY OUT SET, CONTENDED THAT THE FACTS NARRATED IN THE REASONS, HAVE ALREADY BEEN DI SCLOSED BY THE ASSESSEE FULLY AND TRULY. THE ISSUE MUST HAVE BEEN SUBJECT MATTER OF SCRUTINY ASSESSMENT. THE AO HAS NOWHERE POINTED OUT THE FAILURE ON THE P ART OF THE ASSESSEE TO DISCLOSE ALL MATERIAL FACTS FULLY AND TRULY WHICH C AN AUTHORIZE THE AO TO REOPEN THE ASSESSMENT. ACCORDING TO THE LD. COUNSE L FOR THE ASSESSEE, THE REASSESSMENT ORDER IS NOT SUSTAINABLE. THE LD.CIT( A) HAS NOT APPRECIATED THIS ASPECT IN RIGHT PERSPECTIVE. 5. THE LD.CIT-DR, ON THE OTHER HAND, TOOK US THROUG H THE ORDER OF THE CIT(A) AND CONTENDED THAT THE LD.FIRST APPELLATE AU THORITY HAS CONSIDERED THIS ISSUE AND REJECTED. 6. WE HAVE DULY CONSIDERED RIVAL CONTENTIONS AND GO NE THROUGH THE RECORD CAREFULLY. NO DOUBT, ASSESSMENT UNDER SECTION 143( 3) WAS MADE IN THIS CASE BY THE AO ON 24.12.2007. NOTICE UNDER SECTION 148 H AS BEEN ISSUED AFTER EXPIRY OF FOUR YEARS FROM THE END OF THE ASSESSMENT YEAR. IN OTHER WORDS, IN ORDER TO DENY THE BENEFIT OF PROVISIO APPENDED TO S ECTION 147, THE NOTICE UNDER SECTION 148 OUGHT TO BE ISSUED BEFORE 31.3.2010, WH EREAS, IN THIS CASE, THIS NOTICE HAS BEEN ISSUED ON 29.3.2011. INTERDICTION PROVIDED IN THE PROVISO PUTS AN EMBARGO ON THE POWERS OF THE AO TO REOPEN AN ASS ESSMENT, WHERE, IN THE FIRST ROUND, THE ASSESSMENT WAS FRAMED UNDER SECTIO N 143(3) AND FOUR YEARS HAVE BEEN EXPIRED FROM THE END OF THE ASSESSMENT YE AR, NOTICE UNDER SECTION 148 CANNOT BE ISSUED IN SUCH CASE, UNLESS, LD. AO D EMONSTRATES ON RECORD THAT INCOME CHARGEABLE TO TAX HAS ESCAPED THE ASSESSMENT ON ACCOUNT OF FAILURE OF THE ASSESSEE TO DISCLOSE ALL MATERIAL FACTS TRULY A ND FULLY. A PERUSAL OF THE REASONS EXTRACTED SUPRA, NOWHERE INDICATES THAT THE ASSESSEE HAD EVER FAILED TO ITA NO.2184/AHD/2012 WITH CO 5 DISCLOSE ALL THE MATERIALS FACTS FULLY AND TRULY WI TH REGARD TO THE TAXABLE INCOME OF THE ASSESSEE IN THIS ASSESSMENT YEAR. NE ITHER THE LD.AO MADE ANY ALLEGATION ABOUT NON-DISCLOSURE OF FACTS FULLY AND TRULY, NOR MADE REFERENCE TO ANY INFORMATION WHICH CAME TO HIS POSSESSION AFTER PASSING OF ORDER U/S.143(3) AND EXHIBITS ESCAPEMENT OF INCOME CHARGE ABLE TO TAX ON ACCOUNT OF FAILURE OF ASSESSEE TO DISCLOSE ANY MATERIAL FACTS IN RESPECT OF ESCAPEMENT OF INCOME CHARGEABLE TO TAX. THIS ISSUE OF DEPRECIATI ON IS THE BASIC ISSUE AND THE ASSESSEE HAS SUBMITTED THE DETAILS OF DEPRECIABLE A SSETS. THE LD.CIT(A) HAS NOT TAKEN UP THE ISSUE WITH THIS ANGLE. WE HAVE GO NE THROUGH PARA-7 OF THE CIT(A) ORDER. THE LD.CIT(A) FAILED TO EXAMINE THE CONTROVERSY WITH RIGHT PERSPECTIVE. THEREFORE, IN OUR OPINION, THE LD.AO HAS ERRED IN REOPENING THE ASSESSMENT. ON THE STRENGTH OF THE ABOVE REASONS, WE ALLOW THE CO AND QUASH THE ASSESSMENT ORDER. 7. SINCE WE HAVE QUASHED THE ASSESSMENT ORDER, THER EFORE, WE DO NOT DEEM IT NECESSARY TO GO INTO THE ISSUE ON MERIT OF THE A DDITIONS OF RS.64,32,982/- AGITATED BY THE REVENUE IN ITS APPEAL. CONSEQUENTL Y, THE APPEAL OF THE REVENUE BECOMES INFRUCTOUS . 8. IN THE RESULT, CROSS-OBJECTION OF THE ASSESSEE I S ALLOWED AND THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE COURT ON 19 TH JANUARY, 2016 AT AHMEDABAD. SD/- SD/- ( MANISH BORAD ) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 19/01/2016