Manisha Engineering, Bhubaneswar V. ACIT, Bhubaneswar

ITA 244/CTK/2012

• Counselvise Citation: 24422114 RSA 2012
• Duration Of Justice: 5 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-09-2012
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 12-04-2012
• Court: TRIBUNAL
• Keywords: Depreciation; Principle of natural justice; Assessment record; Unabsorbed depreciation
• Section: 144; 43B; 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK ( ) BEFORE . . , , HONBLE SHRI K.K.GUPTA, ACCOUNTANT MEMBER. /AND . . . , S HRI K.S.S.PRASAD RAO, JUDICIAL MEMBER / I.T.A.NO. 244/CTK/2012 / ASSESSMENT YEAR 2006 - 07 MANISHA ENGINEERING, PLOT NO.S - 2/99, SECTOR A, ZONE B,MANCHESWAR INDUSTRIAL ESTTE,BHUBANESWAR 751 010 (ODISHA) PAN: AAIFM 3366 K - - - VERSUS - ASST.COMMISSIONER OF INCOME - TAX, CIRCLE 2(1), AAYAKAR BHAWAN, RAJESWA VIHAR, BHUBANESWAR (ODISHA) ( /APPELLANT ) ( / RESPONDENT ) / FOR THE APPELLANT : / SHRI A.K.PADHY/P.PATTNAIK, ARS / F OR THE RESPONDENT: / SHRI A.BHATTACHARJEE, DR / DATE OF HEARING: 27.08.2012 / DATE OF PRONOUNCEMENT: 14.09.2012 / ORDER . . . , SHRI K.S.S.PRASAD RAO, JUDICIAL MEMBER . THIS APPEAL IS FILED BY THE REVENUE HAVING BEEN AGGRIEVED BY THE ORDER DT.13.01.2012 OF THE COMMISSIONER OF INCOME - TAX (APPEALS) FOR THE ASSESSMENT YEAR 2006 - 07 IN THE CASE OF THE ASSESSEE. 2. THE ASSESSEE HAS RAISED THE FOLLOWING ISSUES IN ITS APPEAL. 1. THAT THE AS SESSMENT ORDER PASSED U/S 144 READ WITH SECTION L43(3 ) OF THE I.T ACT,1961 FOR THE A.Y. 2006 - 07 IS ILLEGAL, ARBITRARY AND VITIATED IN LAW. 2. THAT THE DETERMINATION THE STATUS OF THE APPELLANT AS AOP IS ILLEGAL AND PREJUDICIAL TO THE PRINCIPLES OF NATURAL JUSTICE TO THE PARTICULAR OF FACTS AND CIRCUMSTANCES OF THE CASE. 3. THAT THE ADDITION ON ACCOUNT OF DISALLOWANCE OF EXPENSES U/S 43B OF 4,39,554/ IS ILLEGAL, ARBITRARY AND UN CALLED FOR TO THE PARTICULAR OF FACTS AND CIRCUMSTANCES OF THE CASE. 4. THAT THE DISALLOWANCE OF SALARY TO THE PARTNER 72,000 IS ILLEGAL, ARBITRARY AND UNJUSTIFIED IN LAW. I.T.A.NO. 244/CTK/2012 2 5. THAT THE DISALLOWANCE OF TRAVELLING EXPENSES 8,104 IS ILLEGAL, ARBITRARY AND UNCALLED FOR TO THE PARTICULAR OF FACTS AND CIRCUMSTANCES OF THE CASE. 6. THA T THE ADDITIONS ON ACCOUNT OF INTEREST ON SECURITY DEPOSIT OF 20,108 AND INTEREST OF FD OF 2,230 UNDER INCOME FROM OTHER SOURCES IS WITH OUT ANY BASIS, ILLEGAL AND UNJUSTIFIED TO THE PARTICULAR OF FACTS AND CIRCUMSTANCES OF THE CASE. 7. THAT THE DISALLO WANCE OF BROUGHT FORWARD OF UNABSORBED DEPRECIATION AND BUSINESS LOSS OF EARLIER YEARS 19.97,266.22 IS ILLEGAL AND UNJUSTIFIED IN LAW TO THE PARTICULAR OF FACTS AND CIRCUMSTANCES OF THE CASE. 8. THAT THE NET PROFIT AS PER PROFIT AND LOSS ACCOUNT WAS WRO NGLY TAKEN AT OF 4.6&2 14.56 INSTEAD OF 4,73,942.56. 9 . THAT THE CI T (APPEALS) IS UNJUSTIFIED IN DISMISSING THE APPEAL W ITHOUT CONSIDERIN G THE MATERIAL FACTS OF THE CASE . 3. BOTH THE PARTIES WERE HEARD REGARDING THE ISSUES RAISED BY THE ASSESSEE AND TH EIR LEGAL IMPLICATIONS. 4. ON CAREFUL CONSIDERATION OF THE MATERIAL MADE AVAILABLE TO THE TRIBUNAL IN THE LIGHT OF THE SUBMISSIONS OF BOTH THE PARTIES, THE UNDISPUTED FACTS RELATING TO THE ISSUE ARE THAT THE ASSESSEE DERIVES INCOME FROM MANUFACTURING OF SO FTWARE SERVICES. IT FILED ITS RETURN FOR THE ASSESSMENT YEAR UNDER CONSIDERATION ON 31.10.2006 MANUALLY DECLARING A GROSS LOSS OF 19,94,417.66. THE CASE WAS SELECTED FOR SCRUTINY AND THE ASSESSING OFFICER ISSUED NOTICE U/S.142(1) TO THE ASSESSEE. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE DID NOT APPEAR FOR HEARING ON THE STIPULATED DATES. SINCE THE ASSESSEE FIRM FAILED TO COM PLY WITH STATUTORY NOTICES, THE ASSESSING OFFICER COMPLETED THE ASSESSMENT U/S.144 R.W.S. 143(3) OF THE I.T.ACT,1961 IN THE STATUS OF THE ASSESSEE AS AOP. WHILE DOING SO, THE ASSESSING OFFICER MADE ADDITIONS U/S.43B ON ACCOUNT OF PRE - EXISTED EXPENSES 4, 28,922, INTEREST ON TERM LOAN 84,484, PROVIDENT FUND PAYABLE 10,632. HE ALSO DISALLOWED THE CLAIM OF REMUNERATION PAID TO PARTNERS 72,000, TRAVELLING EXPENSES 8,1045. BESIDES HE MADE ADDITION ON ACCOUNT OF INCOME FROM OTHER SOURCES I.T.A.NO. 244/CTK/2012 3 I.E., 20,108 BEING I NTEREST ON SECURITY DEPOSIT, 2,230 BEING INTEREST ON FIXED DEPOSITS. HOWEVER, HE ALLOWED EXPENSES OF 5,47,844 AS PER COL.21(1)(A)(A) OF T.A.R. AND DEPRECIATION OF 1,12,213.14 AND DETERMINED THE TOTAL INCOME AT 4,32,631.42. 5. HAVING BEEN AGGRIEVED BY T HIS ASSESSMENT ORDER, THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(A) . THE LEARNED CIT(A) OBSERVED THAT NEITHER THE ASSESSING OFFICER NOR THE ASSESSEE RESPONDED TO THE NOTICE U/S.250 ISSUED BY HIM. THEREFO RE, HE DECIDED THE CASE EXPARTE, AFTER CONSIDERING TH E MATERIAL MADE AVAILABLE IN THE ASSESSMENT RECORD HAS UPHELD THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER. HENCE, THE ASSESSEE IS IN THE PRESENT APPEAL BEFORE THE TRIBUNAL. 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE IMPUGNED ORDERS OF THE AUTHORITIES BELOW. BEFORE US, THE LEARNED AR OF THE ASSESSEE CONTENDED THAT THE ASSESSEE IS A FIRM AND ITS ACCOUNTS ARE DULY AUDITED. HOLDING THE ASSESSEES STATUS AS AOP AND THEREBY DISALLOWANCE OF REMUNERATION PAID TO PARTNERS AND THE ADDITIONS SO MADE BY THE ASSESSING OFFICER ARE WITHOUT VERIFICATION OF THE BOOKS OF ACCOUNTS BECAUSE OF COMPLETION OF ASSESSMENT U/S.144 OF THE I.T.ACT. THE LEARNED CIT(A) HAS UPHELD THE SAID ASSESSMENT ON THE GROUND OF NON - APPEARANCE OF THE ASSESSEE BEFORE HIM. THE LEARNED AR OF THE ASSESSEE FURNISHED A PAPER BOOK WHICH CONTAINED INTER ALIA THE STATEMENT OF ACCOUNT AND TAX AUDIT REPORT IN FORM 3CD AND COPY OF PARTNERSHIP DEED. HE CONTENDED THAT THE ASSESSEE HAS MAINTAINED ALL SORTS OF BO OKS OF ACCOUNT AND CAN ESTABLISH ITS VARIOUS CLAIMS MADE IN THE RETURN FILED BY IT, IF AN OPPORTUNITY IS GIVEN TO THE ASSESSEE. THE FACTS NARRATED ABOVE WERE NOT DISPUTED BY THE LEARNED DR. THEREFORE, CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE AND PARTICULARLY THE EXPARTE ORDERS PASSED BY BOTH THE AUTHORITIES, FOR THE ENDS OF JUSTICE, WE SET ASIDE THE IMPUGNED I.T.A.NO. 244/CTK/2012 4 ORDERS OF THE AUTHORITIES BELOW AND RESTORE THE SAME TO THE FILE OF THE ASSESSING OFFICER FOR COMPLETING THE ASSESSMENT DE NOVO AFTER GIVING REASONABLE OPPORTUNITY TO THE ASSESSEE OF BEING HEARD. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. SD/ - SD/ - ( . . ) , , (K.K.GUPTA), ACCOUNTANT MEMBER. ( . . . ) , (K.S.S.PRASAD RAO), JUDICIAL MEMBER ( ) DATE: 14.09.2012 - COPY OF THE ORDER FORWARDED TO: 1. / THE APPELLANT : MANISHA ENGINEERING, PLOT NO.S - 2/99, SECTOR A, ZONE B,MANCHESWAR INDUSTRIAL ESTTE,BHUBANESWAR 751 010 (ODISHA) 2 / THE RESPONDENT: ASST.COMMISSIONER OF INCOME - TAX, CIRCLE 2(1), AAYAKAR BHAWAN, RAJESWA VIHAR, BHUBANESWAR (ODISHA 3. / THE CIT, 4. ( ) / THE CIT(A), 5. / DR, CUTTACK BENCH 6. GUARD FILE . / TRUE COPY, / BY ORDER, APPENDIX XVII SEAL TO BE AFFIXED ON THE ORDER SHEET BY THE SR. P.S./P.S. AFTER DICTATION IS GIVEN 1. DATE OF DICTATION 05.09.2012 . 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BE FORE THE DICTATING MEMBER 06.09.2012 OTHER MEMBER . 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT.... 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S . 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER ................ 9. DATE OF DESPATCH OF THE ORDER .. ( ), (H.K.PADHEE), SENIOR.PRIVATE SECRETARY.