Heavy Metal & Tubes Pvt. Ltd., Ahmedabad V. The ACIT., Circle-4, Ahmedabad

ITA 2401/AHD/2009

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 63316 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 4 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-12-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 22-10-2012
• Assessment Year: 1996-1997
• Appeal Filed On: 13-08-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B K
• Assessee Lawyers: N C AMIN
• Keywords: Reopening of assessment; Revenue expenditure; Capital expenditure
• Section: 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH AHMADABAD BEFORE SHRI D.K.TYAGI , JUDICIAL MEMBER AND SHRI T.R. MEENA, ACCOUNTANT MEMBER ITA NO. 2401/AHD/2009 ASSESSMENT YEAR :1996-97 HEAVY METAL & TUBES LTD. 201, ASHWARATH COMPLEX, USMANPURA, AHMADABAD. V/S . ACIT, CIRCLE-4, AHMADABAD. PAN NO. A A ACH3882Q (APPELLANT) .. (RESPONDENT) BY APPELLANT SHRI N.C. AMIN, A.R. /BY RESPONDENT SHRI B. K. S. PANDYA, CIT D.R. /DATE OF HEARING 2 2 . 1 0 .2012 /DATE OF PRONOUNCEMENT 21.12.2012 O R D E R PER : T.R.MEENA, ACCOUNTANT MEMBER THIS IS AN APPEAL AT THE BEHEST OF THE ASSESSEE WHI CH HAS EMANATED FROM THE ORDER OF CIT(A)-VIII, AHMEDABAD, ORDER DAT ED 01.05.2009 FOR A.Y. 1996-97. THE EFFECTIVE GROUNDS OF APPEAL ARE AS UN DER: 1. THAT THE APPELLANT HAS CHALLENGED THE VALIDITY OF REOPENING OF ASSESSMENT BEFORE THE LEARNED CIT(A) AS WELL AS HONBLE ITAT AND THIS GROUND WAS NOT ADJUDICATED WHILE DECIDING THE APPEAL BY HONBLE ITAT AND ONLY ON MERITS SET ASIDE THE ISSUE IN QUESTION. 2. THAT THE REOPENING OF ASSESSMENT IS MERELY A CHA NGE OF OPINION AND ORIGINAL ASSESSMENT WAS MADE U/S. 143(3 ) AND THERE IS NO NEW INFORMATION OR MATERIAL AND THE REOPENING WAS BEYOND FOUR YEARS OF ORIGINAL ASSESSMENT AND THEREFORE REO PENING / REASSESSMENT DESERVES TO BE CANCELLED. ITA NO. 2401/AHD/09 A.Y. 96-97 PAGE 2 3. THAT THE ORDER PASSED BY LEARNED A.O. IS NOT IN ACCORDANCE WITH THE PROVISIONS OF THE ACT AND LAW THEREFORE TH E SAME REQUIRES TO BE HELD AS WITHOUT JURISDICTION. WITHOUT PREJUDICE 4. THAT THE LEARNED A.O. HAS DISALLOWED REPAIRING, REPLACEMENT AND OTHER EXPENDITURE HOLDING IT AS MOR E THAN 20% VALUE OF MACHINERY IS AGAINST THE PROVISIONS OF THE ACT AND RULES, THEREFORE THE DISALLOWANCE MADE BY LEARNED A.O. HOL DING IT AS EXPENDITURE INCURRED AS MACHINERY REPAIRS, TOOLS DI ES OF RS.18,52,327/- DESERVES TO BE DELETED. 5. THAT THE ORDER PASSED BY LEARNED CIT(A) IS WITHO UT CONSIDERING THE MATERIALS SUBMITTED BY THE APPELLA NT DURING THE COURSE OF APPELLATE PROCEEDINGS BE CONSIDERED IN PR OPER PERSPECTIVE AND APPEAL OF THE APPELLANT BE DECIDED ON MERITS. 6. ON PECULIAR FACTS & CIRCUMSTANCE OF THE CASE OF THE APPELLANT, THE DISALLOWANCE OF EXPENDITURE OF RS.18 ,52,327/- REQUIRES TO BE DELETED. 7. THAT THE APPELLANT HAS SUBMITTED ITS WRITTEN SUB MISSION AND PAPER BOOK RUNNING INTO PAGES 1 TO 22 AND 1 TO 60 H AS NOT BEEN PROPERLY APPRECIATED BEFORE DECIDING THE APPEAL OF THE APPELLANT. 2. GROUND NOS. 1 TO 3 ARE AGAINST THE REOPENING THE CASE BY THE A.O. U/S.147 OF THE IT ACT. THE A.O. OBSERVED THAT THE APPELLANT HAD DECLARED TOTAL INCOME OF RS.15,32,102/- IN THE RETURN WHICH WAS FI LED ON 26.11.1996 ORDER U/S. 143(3), WAS PASSED BY THE ACIT, CO.CIR.7(3), A HMADABAD, ON 24.09.1997 AT RS. 15,64,386/-. IN THIS CASE, NOTICE U/S 148 W AS ISSUED ON 24.08.2002 AFTER RECORDING THE REASONS AS ASSESSEE HAS CLAIMED THE EXPENDITURE OF RS.18.54 LACS UNDER THE HEAD MACHINERY REPAIRS, TOO LS & DIES. AS PER THE A.O., IT WAS A CAPITAL EXPENDITURE BUT CLAIMED BY T HE ASSESSEE AS REVENUE ITA NO. 2401/AHD/09 A.Y. 96-97 PAGE 3 EXPENDITURE IN THE P&L ACCOUNT. THEREFORE, THE A.O . MADE ADDITION OF RS. 18,52,327/- UNDER THIS HEAD. 3. BEING AGGRIEVED BY THE ORDER OF THE A.O., THE AS SESSEE CARRIED THE MATTER BEFORE CIT(A)-VIII, AHMADABAD, BY APPEAL NO. CIT(A)-VIII/AC- 4/1/2002-03, DATED 21.02.2003, WHO HAD DIRECTED THE A.O. TO TREAT RS.18,52,327/- AS REVENUE EXPENDITURE EXCEPT RS.73, 420/-. 4. AGAINST THE ORDER OF THE CIT(A), THE REVENUE FIL ED THE APPEAL BEFORE THE ITAT, AHMEDABAD. THE ASSESSEE ALSO FILED C.O. THE HONBLE B BENCH, BY ITS ORDER DATED 17.08.2007 IN ITA NO. 1956/AHD/2003 AND C.O. NO. 120/AHD/2004, HAD SET ASIDE THE ORDERS OF BOTH THE AUTHORITIES WITH BELOW MENTIONED DIRECTIONS: AFTER CAREFUL CONSIDERATION OF THE RIVAL SUBMISSIO N, FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE OPINION TH AT THE ASSESSING OFFICER HAVING PROCEEDED ON WRONG FOOTING . I.E. ON ASSUMPTION THAT THE EXPENDITURE INCURRED BY THE ASS ESSEE WAS IN EXCESS OF 20% OF THE VALUE OF ASSETS, THE ISSUE REQ UIRES RE- CONSIDERATION AT THE END OF THE ASSESSING OFFICER F IRST TO FIND OUT AS TO WHETHER THE EXPENDITURE INCURRED IN EXCESS OF 20% OF THE VALUE OF THE ASSETS OR NOT? IF IT IS LESS THAT 20% THEN ALLOW THE EXPENDITURE, AND IN CASE, IT IS MORE THEN 20%, THEN ALLOW THE EXPENDITURE IN EXCESS OF 20%. THE ORDERS OF BOTH T HE AUTHORITIES ARE, THEREFORE, SET ASIDE. THE LD. A.O. AGAIN RE-CONSIDERED THE ISSUE AS PER T HE DIRECTION OF THE ITAT. AS PER A.OS. FINDING, THE ASSESSEE HAD NOT APPEARE D BEFORE THE A.O. THEREFORE, HE HAD CALCULATED TOTAL EXPENDITURE AS P ER BALANCE SHEET OPENING BALANCE AND PLANT & MACHINERY AT RS. 10,19,50,557/- . THE 20% IS WORKED OUT AT RS.20,39,010/- WHEREAS THE ASSESSEE CLAIMED EXPE NDITURE ON MACHINERY ITA NO. 2401/AHD/09 A.Y. 96-97 PAGE 4 REPAIRS, TOOLS, DIES, STORE AND SPARE PARTS AT RS. 26,45,283/-. AS PER THE ITAT DIRECTION IN EXCESS TO 20% OF TOTAL PLANT AND MACHI NERY I.E. RS.6,06,273/-, WAS ADDED BACK BY THE A.O., IN THE INCOME OF THE ASSESS EE. 5. BEING AGGRIEVED BY THE ORDER OF THE A.O., THE AS SESSEE CARRIED THE MATTER BEFORE CIT(A)-VIII, AHMADABAD, WHO HAD DISMI SSED THE APPEAL BY OBSERVING AS UNDER: 5.5 I HAVE CONSIDERED THE FACTS OF THE CASE AND TH E SUBMISSIONS OF THE LD. A.R. CAREFULLY. THE CONTENTIONS RAISED BY HIM WITH REGARD TO ACCEPTANCE OF APPELLANTS CLAIM BY THE LD . CIT(A) AND REOPENING OF THE ASSESSMENT ARE NOT VALID AT THIS S TAGE AFTER THE DECISION OF HONBLE ITAT UNDER REFERENCE. THE HON BLE ITAT REFERRED THE MATTER BACK TO A.O. FOR FRESH ADJUDICA TION OF THE ISSUE AFTER CONSIDERING THE ARGUMENTS AND FACTS PRESENTED BEFORE IT BY THE APPELLANT THROUGH THE PAPER BOOK. THE RELEVANT EXTRACTS OF THE ORDER OF HONBLE ITAT ARE AS UNDER: 10. AFTER CAREFUL CONSIDERATION OF THE RIVAL SUBMISSIONS, FACTS AND CIRCUMSTANCES OF THE CASE, W E ARE OF THE OPINION THT THE ASSESSING OFFICER HAVING PROCEEDED ON A WRONG FOOTING, I.E. ON ASSUMPTION TH AT THE EXPENDITURE INCURRED BY THE ASSESSEE WAS IN EXC ESS OF 20% OF THE VALUE OF ASSETS, THE ISSUE REQUIRES R E- CONSIDERATION AT THE END OF THE ASSESS OFFICER AND AS AGREED TO Y BOTH THE PARTIES AT THE TIME OF HEARING , WE DIRECT THE ASSESSING OFFICER FIRST TO FIND OUT AS T O WHETHER THE EXPENDITURE INCURRED IN EXCESS OF 20% O F THE VALUE OF THE ASSETS OR NOT. IF IT IS LESS THAN 20%, THEN ALLOW THE EXPENDITURE AND, IT CASE, IT IS MORE THAN 20%, THEN DISALLOW ONLY THE EXPENDITURE IN EXCESS O F 20%. THE ORDER OF BOTH THE AUTHORITIES ARE, THEREF ORE, SET ASIDE. 5.6 THE LD. A.R. HAS NOT SUBSTANTIATED THE ALLEGATI ON THAT THE APPELLANT WAS NOT ALLOWED PROPER OPPORTUNITY OF BEI NG HEARD. FURTHER, HE WAS PROVIDED WITH THE COPY OF THE JUDGM ENT OF THE ITA NO. 2401/AHD/09 A.Y. 96-97 PAGE 5 HONBLE ITAT DURING THE APPELLATE PROCEEDINGS AND H E HAS FILED SUBMISSIONS AFTER THE RECEIPT OF THAT ORDER. 5.7 IT IS SEEN THAT THE ORDER UNDER REFERENCE HAS B EEN FRAMED IN PURSUANCE OF THE DIRECTIONS OF THE HONBLE ITAT. THE A.O. WHILE PASSING THE ORDER UNDER REFERENCE HAS WORKED OUT THE VALUE OF ASSETS ON THE BASIS OF THE BALANCE SHEET OF THE APPELLANT FOR THE RELEVANT PERIOD. HE HAS ALSO WORKED OUT THE DI SALLOWABLES AFTER CONSIDERING THE TOTALITY OF FACTS AND CIRCUMS TANCES OF THE CASE. THE LD. A.R. HAS NOT CONTROVERTED THE FINDIN GS OF THE A.O. SO FAR THE FACTS OF THE CASE ARE CONCERNED. HE HAS NOT CONTROVERTED THE VALUE OF ASSETS AND THE REPAIRING EXPENSES ELABORATED BY THE A.O. IN THE ORDER UNDER REFERENCE . THEREFORE, UNDER THESE CIRCUMSTANCES, I DO NOT FIND ANY REASON TO INTERFERE WITH THE FINDINGS OF THE A.O. IN VIEW OF THE ABOVE , THE GROUND TAKEN BY THE APPELLANT IS HEREBY REJECTED. 6. NOW, THE ASSESSEE IS BEFORE US AND AGAIN RAISED THE GROUNDS FROM SERIAL NO.1 TO 3 ON REOPENING WHICH WERE NOT ALLOWE D BY THE CO-ORDINATE BENCH IN THE ORDER OF FIRST ROUND OF APPEAL. THUS, THE ASSESSEE CANNOT TAKE TECHNICAL GROUNDS IN SECOND ROUND OF APPEAL BEFORE US. THEREFORE, GROUND NOS. 1 TO 3 ARE DISMISSED. 7. GROUND NOS. 4 TO 7 ARE RELATED TO DISALLOWANCE O F REPAIRING, REPLACEMENT AND OTHER EXPENDITURE HOLDING IT AS MORE THAN 20% V ALUE OF PLANT AND MACHINERY. THE REVENUE HAS ALSO CHALLENGED THE ITA T ORDER DATED 17 TH AUGUST, 2007 IN ITA NO. 1956/AHD/2003 & C.O. NO. 12 0/AHD/2004 FOR A.Y. 1996-97 BEFORE HONBLE GUJARAT HIGH COURT. HONBLE GUJARAT HIGH COURT VIDE ORDER DATED 04.07.2012 IN TAX APPEAL NO. 1438 OF 20 09 WITH TAX APPEAL NO. ITA NO. 2401/AHD/09 A.Y. 96-97 PAGE 6 1439 OF 2009 IN ASSESSEES OWN CASE HAS PASSED ORDE R AND HAS HELD AS UNDER: IN THE RESULT, THE OBSERVATIONS MADE IN PARAGRAPH 10 OF THE IMPUGNED JUDGMENT OF THE TRIBUNAL, WHICH IS ALREADY REPRODUCED HEREINABOVE, ARE SET ASIDE. IN SO FAR AS THE TRIBU NAL DIRECTS REMAND OF THE PROCEEDINGS BEFORE THE ASSESSING OFFI CER FOR FRESH CONSIDERATION, THE SAME IS NO DISTURBED. ASSESSING OFFICER FOR FRESH CONSIDERATION, THE SAME IS NOT DISTURBED. AS SESSING OFFICER SHALL RECONSIDER THE ENTIRE ISSUE AFTER HEARING BOT H THE SIDES IN ACCORDANCE WITH LAW, IGNORING THE OBSERVATIONS OF T HE TRIBUNAL MADE IN PARAGRAPH 10 OF THE JUDGMENT. LD. COUNSEL FOR THE APPELLANT CONTENDED THAT HE HAD FILED REQUISITE DETAILS BEFORE THE LOWER AUTHORITIES AND EXPENDITURE ON REP AIRS, TOOLS AND DIES WAS RS.18,52,327/-. HE ALSO FILED THE PAPER BOOK BEFOR E THE CIT(A), RUNNING PAGE 1 TO 22 AND 1 TO 60 WHO HAD NOT VERIFIED THE CLAIM OF THE APPELLANT. THEREFORE, HE REQUESTED TO ALLOW THE APPEAL IN FAVOUR OF THE A SSESSEE. FROM THE SIDE OF THE REVENUE, LD. CITDR VEHEMENTLY ARGUED THAT IN SE COND ROUND NO TECHNICAL OBJECTION ON REOPENING CAN BE RAISED FURTHER. THE ASSESSEE HAD NOT FURNISHED ANY DETAILS BEFORE THE A.O. AS REVEALED FROM THE OR DER OF THE ASSESSMENT. LD. CIT(A) HAD ADJUDICATED THE ISSUE BY CONSIDERING THE ASSESSEES REPLY AND CONFIRMED THE ADDITION. THUS, HE REQUESTED TO CONF IRM THE ORDER OF THE CIT(A). 8. WE HAVE HEARD THE RIVAL CONTENTIONS OF THE BOTH SIDES AND PERUSED THE MATERIAL ON RECORD. AS DISCUSSED ABOVE, THE HONBLE GUJARAT HIGH COURT IN ASSESSEES OWN CASE FOR SAME A.Y. HAS SET ASIDE THE ISSUE TO THE A.O. TO DECIDE THE ISSUE AFRESH. TO THAT EXTENT, ITATS OR DER HAS BEEN CONFIRMED BY IT BUT THE A.O. HAS BEEN DIRECTED BY THE HONBLE COUR T TO IGNORE THE OBSERVATION ITA NO. 2401/AHD/09 A.Y. 96-97 PAGE 7 OF TRIBUNAL VIDE ITS ORDER DATED 04.07.2011. THE L D. A.O. HAD GIVEN APPEAL EFFECT OF ITAT ORDER DATED 17.08.2007 ON 03.10.2008 AND FOLLOWED THE DIRECTION OF THE ITAT. FURTHER, THE HONBLE GUJARA T HIGH COURT HAS DIRECTED TO THE A.O. TO IGNORE THE OBSERVATION OF ITAT AND RE-C ONSIDER THE ENTIRE ISSUE AFTER HEARING BOTH THE SIDES IN ACCORDANCE WITH LAW . ACCORDINGLY, THE A.O. HAS TO FOLLOW THE DIRECTION GIVEN BY THE HONBLE HIGH C OURT ON THIS ISSUE. 9. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSE. THIS ORDER PRONOUNCED IN OPEN COURT ON 21.12.2012 SD/- SD/- ( D.K.TYAGI ) (T.R. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER TRUE COPY S.K.SINHA ! ! ! ! '! '! '! '! / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT 2. / RESPONDENT 3. '(' ) * / CONCERNED CIT 4. *- / CIT (A) 5. !./ ), ) , 12( / DR, ITAT, AHMEDABAD 6. /45 67 / GUARD FILE. BY ORDER/ , 8/ 1 ': ) , 12( ; STRENGTHEN PREPARATION & DELIVERY OF ORDERS IN THE ITAT 1) DATE OF TAKING DICTATION 18.12.2012 2) DIRECT DICTATION BY MEMBER STRAIGHT ON COMPUTER/LAPTOP/DRAGON DICTATE XXX 3) DATE OF TYPING & DRAFT ORDER PLACE BEFORE MEMBER 19.12.2012 4) DATE OF CORRECTION ,, ,, 5) DATE OF FURTHER CORRECTION XXX 6) DATE OF INITIAL SIGN BY MEMBERS 21.12.2012 7) ORDER UPLOADED ON ,, ,, 8) ORIGINAL DICTATION PAD HAS BEEN ENCLOSED IN THIS FILE YES 9) FINAL ORDER AND 2 ND COPY SEND TO BENCH CLERK ON 21.12.2012