M/s. Trans Air, New Delhi V. DCIT, New Delhi

ITA 2367/DEL/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 7175 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 4 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-09-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 3
• Next Hearing Date: 19-07-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 22-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANIMA BARNWAL
• Keywords: Depreciation; Business expenditure; Opportunity of being heard; Principle of natural justice
• Section: 143(3); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: SMC-3 NEW DELHI BEFORE SMT. DIVA SINGH, JUDICIAL MEMBER I.T.A .NO.-2 366 & 2367/DEL/2015 (ASSESSMENT YEAR-2004-05 & 2005-06) TRANS AIR, 118, ANSAL BHAWAN, KASTURBA GANDHI MARG, NEW DELHI-110001. PAN-AAAFT2744C (APPELLANT) VS DCIT, CENTRAL CIRCLE-12, NEW DELHI (RESPONDENT) ASSESSEE BY SH. ASHWANI KUMAR, CA REVENUE BY MS. ANIMA BARNWAL, SR.DR ORDER BOTH THESE APPEALS HAVE BEEN FILED BY THE ASSESSEE ASSAILING THE CORRECTNESS OF THE SEPARATE ORDERS DATED 16.03.2015 OF CIT(A)-24, NEW DELHI PERTAINING TO 2004-05 & 2005-06 ASSESSMENT YEARS ON THE IDENTICAL GROUNDS. 2. THE LD. AR SUBMITTED THAT THE ISSUES IN THE PRES ENT APPEALS ARE THE ALLOWANCE OF EXPENDITURE PERTAINING TO MERCEDES BEN Z CAR CLAIMED AS A BUSINESS EXPENDITURE. THE ASSESSING OFFICER IN THE PRESENT CASES FOLLOWING THE BASE YEAR I.E. 2003-04 A.Y HAS DISALLOWED THE CLAIM IN BOTH T HE YEARS. IN THE CIRCUMSTANCES, IT WAS HIS SUBMISSION THAT FOLLOWING THE PRECEDENT AVAILABLE IN 2003-04 AY I.E. THE BASE YEAR THE ISSUE MAY BE REST ORED TO THE AO. RELYING UPON ORDER DATED 11.12.2013 THE ITAT IN 2003-04 AY IN IT A NO.646/DEL/2013 IT WAS SUBMITTED THAT THE ITAT HAD RESTORED THE ISSUE DIRE CTING THE REVENUE TO CONFRONT THE EVIDENCES AND STATEMENTS OF THE PERSONS RELIED UPON AND PROVIDE THE ASSESSEE AN OPPORTUNITY TO CROSS-EXAMINE. REFERRIN G TO THE FACTS IT WAS DATE OF HEARING 19.07.2016 DATE OF PRONOUNCEMENT 19.09.2016 I.T.A .NO.-2366 & 2367/DEL/2015 PAGE 2 OF 4 SUBMITTED THAT CONSIDERING THE DOCUMENTARY EVIDENCE S ON RECORD IN REGARD TO USE OF THE VERY SAME MERCEDES BENZ CAR BEARING REGI STRATION NO-DL-3CA 1010 THE TAX AUTHORITIES HAVE HELD THAT IT WAS NOT USED FOR THE PURPOSES OF BUSINESS OF THE ASSESSEE. AS A RESULT OF THIS CONCLUSION THE C LAIM OF DEPRECIATION, INSURANCE, PETROL EXPENSES ETC. THEREOF WAS DISALLOWED INCLUDI NG THE CLAIM OF PAYMENT OF INTERESTS ON THE CAR LOAN. THE DEPARTMENTAL CASE H AS BEEN THAT THE CAR WAS ACTUALLY USED BY SH. JAGAT SINGH AND THE INVESTIGAT ION CONDUCTED BY THE ENFORCEMENT DIRECTORATE IN 2003-04 AY WHEREIN THE C ASE WAS RE-OPENED U/S 148 OF THE INCOME TAX ACT, 1961 HAS BEEN THE BASIS FOR RE-OPENING THE ASSESSMENTS IN THE PRESENT PROCEEDINGS ALSO. IT WAS SUBMITTED T HAT THE AO ON THE BASIS OF THE VERY SAME SATISFACTORY NOTE HAS RE-OPENED THE ORIGI NAL ASSESSMENT U/S 143(3) ON 24.03.2006 AND THE ASSESSED INCOME OF RS.34,72,010/ - IN 2004-05 AY AND 23,70,450/- PROCESSED U/S 143(1) ON 17.03.2006. IN VITING ATTENTION TO ITA NO.646/DEL/2013 IN THE CASE OF THE ASSESSEE FOR 200 3-04 AY, IT WAS SUBMITTED THAT ITAT VIDE DATED 11.12.2013 HAS RESTORED THE IS SUE BACK TO THE AO. 3. THE LD. SR. DR, MS. ANIMA BARNWAL ON A PERUSAL O F THE SAME HAD NO OBJECTION IF THE ISSUE IS RESTORED BACK. 4. I HAVE HEARD THE RIVAL SUBMISSION AND PERUSED TH E MATERIAL AVAILABLE ON RECORD. THE RELEVANT FACTS OF THE CASE HAVE BEEN S UMMED UP BY THE CO-ORDINATE BENCH IN THE FOLLOWING MANNER:- 2. IN THIS CASE, A NOTICE U/S 148 OF THE INCOME-TA X ACT, 1961 WAS ISSUED ON 31.03.2010 AFTER RECORDING THE SATISFACTION AS P ER THE REQUIREMENT OF LAW. THE INFORMATION RECEIVED FROM ENFORCEMENT DIRE CTORATE THAT A MERCEDES BENZ CAR BEARING REGISTRATION NO.DL-3CQ 10 10 WAS PURCHASED BY M/S. TRANS AIR. THE INVESTIGATION CONDUCTED BY T HE ENFORCEMENT DIRECTORATE REVEALED THAT THE CAR WAS ACTUALLY USED BY SHRI JAGAT SINGH, SON OF SHRI NATWAR SINGH AND IT WAS UNDER HIS ABSOL UTE CONTROL AND DOMINION. AS PER THE STATEMENT REPRODUCED IN THE RE ASONS RECORDED, WE I.T.A .NO.-2366 & 2367/DEL/2015 PAGE 3 OF 4 FIND THAT SHRI CHETAN GUPTA HAD STATED ON 05.05.200 6 THAT THE CAR WAS PURCHASED IN APRIL/MAY 2002 AND IT WAS USED FOR A S HORT WHILE AND AFTER WHICH SHRI JAGAT SINGH, S/O SHRI NATWAR SINGH , 19, TEEN MURTI LANE, NEW DELHI BORROWED IT FROM HIM AND THEN HE HA S BEEN USING THIS CAR UP TO SEPTEMBER / OCTOBER, 2005. THE ASSESSING OFFICER DISALLOWED THE DEPRECIATION AND PETROL EXPENSES ON THE CAR AS THE SAME WAS NOT BEING USED FOR BUSINESS PURPOSES OF THE ASSESSEE AN D AN ADDITION OF RS.7,30,294/- WAS MADE. THE CIT (A) HAS CONFIRMED T HIS ADDITION BY HOLDING AS UNDER :- 3.1.6 I HAVE CONSIDERED THE SUBMISSIONS OF THE AR AND FACTS OF THE CASE. IT IS NOT CORRECT TO SAY THAT DEPRECIATIO N IS ALLOWABLE MERELY ON THE GROUND OF OWNERSHIP OF THE ASSET. THE CAR MUST BE USED FOR THE PURPOSE OF ASSESSEE'S BUSINESS. THE AS SET IN QUESTION MAY BE IN THE NAME OF THE ASSESSEE FIRM. HOWEVER, I T HAS BEEN PROVED SUFFICIENTLY BEYOND DOUBT THAT THE SAID MERC EDES BENZ CAR WAS ONLY IN POSSESSION AND USE OF SHRI JAGAT SINGH WHO IS NOT CONNECTED TO THE ASSESSEE FIRM. I FIND THAT THERE I S NO MERIT IN THE AR'S ARGUMENT THAT HE WAS NOT CONFRONTED WITH THE F INDINGS OF THE ED. THE FACTS WERE MADE KNOWN TO THE ASSESSEE VERY MUCH IN THE BEGINNING OF THE ASSESSMENT PROCEEDINGS. THE ASSESS EE HAD REQUESTED FOR AND COLLECTED THE REASONS RECORDED WH ILE ISSUING NOTICE U/S 148. IN THESE REASONING, THE FACTS HAVE ALL BEEN MADE VERY CLEAR. FURTHER WHEN NOTICE UNDER 143(2) AND 14 2(1) WERE ISSUED CALLING FOR THE FIRM'S REPLY, AS TO WHY DEPR ECIATION SHOULD NOT BE DISALLOWED FOR THE SAID REASONS, THE FIRM HA S CHOSEN TO REMAIN SILENT. THEREFORE, THIS IS NOT A CASE OF NOT PROVIDING OPPORTUNITY OR NOT ALLOWING CROSS EXAMINATION BY TH E A.O. THE ASSESSEE NEVER DEMANDED IT NOR GAVE ANY EXPLANATION DURING THE ASSESSMENT PROCEEDINGS. IN FACT, IN THE REGULAR ASS ESSMENT FOR THE YEAR, ASSESSEE HAS CLAIMED THAT ALL BOOKS HAVE BEEN BURNT IN FIRE. HENCE THE ALLEGATION OF VIOLATION OF THE PRINCIPLE OF NATURAL JUSTICE IS NOT FOUND ACCEPTABLE. SUFFICIENT OPPORTUNITY HAS BEEN GIVEN TO THE APPELLANT TO PUT ACROSS HIS VIEWS OR LEAD EVIDE NCES IN SUPPORT OF ITS CLAIM DURING THE ASSESSMENT STAGE. THE FIRM NEVER ASKED FOR CROSS-EXAMINATION OF SHRI JAGAT SINGH DURING THE AS SESSMENT PROCEEDINGS. HENCE, MAKING IT ONE OF THE ISSUE BEFO RE APPELLATE AUTHORITY IS NOT ON PERMISSIBLE. 3.2 CONSIDERING ALL THE FACTS, I DO NOT, I DO NOT F IND ANY MERIT IN THE APPEAL. THE GROUND RAISED IS REJECTED. 4.1. CONSIDERING THE SUBMISSIONS OF THE PARTIES, TH E CO-ORDINATE BENCH RESTORED THE ISSUE BACK TO THE FILE OF THE AO HOLD ING AS UNDER:- 4. WE HAVE HEARD BOTH THE SIDES ON THE ISSUE AND A LSO PERUSED THE RECORD AVAILABLE. WE FIND THAT THE STATEMENT OF SHR I CHETAN GUPTA RECORDED BY THE ENFORCEMENT DIRECTORATE AND THE OTH ER EVIDENCES COLLECTED BY THE ENFORCEMENT DIRECTORATE HAVE NOT B EEN CONFRONTED WITH THE ASSESSEE WITH REGARD TO THE USE OF THE CAR. WE DO NOT AGREE WITH THE VIEW OF CIT (A) THAT ASSESSEE HAD NEVER ASKED FOR C ROSS EXAMINATION OF SHRI JAGAT SINGH. EVEN WHEN ASSESSEE DOES NOT ASK F OR THEN ALSO ALL I.T.A .NO.-2366 & 2367/DEL/2015 PAGE 4 OF 4 EVIDENCE USED AGAINST ASSESSEE MUST HAVE BEEN CONFR ONTED. THEREFORE, IN THE INTEREST OF JUSTICE AND EQUITY, WE FIND IT A PPROPRIATE TO RESTORE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER SO THAT ASSESSEE CAN BE PROVIDED WITH THE COPY OF STATEMENT RECORDED BY THE ENFORCEM ENT DIRECTORATE AS WELL AS WITH OTHER MATERIAL WHICH WAS USED WHILE MA KING SUCH ADDITION. THEREFORE, WE SET ASIDE THE ORDERS OF THE AUTHORITI ES BELOW AND RESTORE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER TO D ECIDE THE ISSUE DE NOVO AFTER PROVIDING AN OPPORTUNITY OF BEING HEARD TO TH E ASSESSEE. 4.2. IN THE LIGHT OF THE SUBMISSIONS BY THE PARTIES BEFORE THE BENCH AND CONSIDERING THE PRECEDENT AVAILABLE IN THE VERY SAM E SET OF FACTS, IT IS DEEMED APPROPRIATE TO SET ASIDE THE IMPUGNED ORDERS AND R ESTORE THE ISSUE BACK TO THE AO DIRECTING THE SAID AUTHORITY TO PROVIDE THE ASSE SSEE WITH THE COPY OF STATEMENT RECORDED BY THE ENFORCEMENT DIRECTORATE A S WELL AS WITH OTHER MATERIAL WHICH WAS USED WHILE MAKING THE ADDITIONS. ACCORDINGLY, FOLLOWING THE PRECEDENT THE AO IS DIRECTED TO PASS A SPEAKING ORD ER IN ACCORDANCE WITH LAW AFTER GIVING THE ASSESSEE A REASONABLE OPPORTUNITY OF BEING HEARD. 5. IN THE RESULT, THE APPEALS OF THE ASSESSEE ARE A LLOWED FOR STATISTICAL PURPOSES. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 19 TH OF SEPTEMBER, 2016. SD/- (DIVA SINGH) JUD ICIAL MEMBER *AMIT KUMAR* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR, ITAT NEW DELHI