Shri Chhotubhai Vitthalbhai Patel, Ahmedabab V. The DCIT, CPC, Banglore

ITA 246/AHD/2021

• Counselvise Citation: [2021] 104 COUNSELVISE.COM (IT) 6417 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-12-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2017-2018
• Appeal Filed On: 07-10-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIDYUT TRIVEDI
• Keywords: Depreciation; Set aside
• Section: 139; 143(3); 142(1); 80IB; 143(1); 250; 251; 143(2); 191

Judgement Text

आयकर अपीलीय अिधकरण, अहमदाबाद ᭠यायपीठ IN THE INCOME TAX APPELLATE TRIBUNAL, ‘’ D’’ BENCH, AHMEDABAD (CONDUCTED THROUGH VIRTUAL COURT AT AHMEDABAD) BEFORE SHRI RAJPAL YADAV, VICE PRESIDENT And SHRI WASEEM AHMED, ACCOUNTANT MEMBER आयकर अपील सं./ITA No. 246/AHD/2021 िनधाᭅरण वषᭅ/Asstt. Year: 2017-18 Chhotubhai Vitthalbhai Patel, L/4132/1 Phase-4, Road 4S Vatva, GIDC, Behind Indo Ge Vatva, Ahmedabad. PAN: ACNPP1896J Vs. D.C.I.T., CPC, Bangalore. (Applicant) (Respondent) Assessee by : Ms Jyoti Rizwani, A.R Revenue by : Shri Vidyut Trivedi, Sr.D.R सुनवाई कᳱ तारीख/Date of Hearing : 09/12/2021 घोषणा कᳱ तारीख /Date of Pronouncement: 15/12/2021 आदेश/O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER: The captioned appeal has been filed at the instance of the Assessee against the order of the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, dated 26/09/2021 arising in the matter of assessment order passed under s. 250 of the Income Tax Act, 1961 (here-in-after referred to as "the Act") relevant to the Assessment Year 2017-18. ITA no.246/AHD/2021 A.Y. 2017-18 2 2. The only issue raised by the assessee is that the learned CIT (A) erred in confirming the disallowance made by the AO for Rs. 40,77,012/- on account of depreciation claimed by him. 3. Briefly stated facts are that the assessee in the present case is an individual and filed his return of income declaring an income of Rs. 39,34,910/- which was processed under section 143(1) of the Act vide dated 19 th March 2019. In the Intimation generated under section 143(1) of the Act, the amount of depreciation for Rs. 40,77,012/- claimed by the assessee was disallowed and accordingly, a demand was raised for ₹ 16,13,560/-. 3.1 The assessee against the intimation preferred an appeal to the learned CIT(A). 3.2 The assessee before the learned CIT (A) submitted that he has submitted all the details with respect to the assets and the depreciation claimed thereon in the schedule of income tax return which was also disclosed in the profit and loss account. But, all these factual details were ignored which were available on record and the amount of depreciation was for Rs. 40,77,012/- was disallowed. 3.3 The assessee, besides the above further contended that the adjustments in the intimation under section 143(1) of the Act can be made with respect to the arithmetical errors. Thus the depreciation claimed by the assessee for the year under consideration cannot be disturbed in the intimation under section 143(1) of the Act in view of the judgment of Hon’ble Gujarat High Court in the case of CIT vs. Mahesh kumar Rathod reported in 296 ITR 146. ITA no.246/AHD/2021 A.Y. 2017-18 3 3.4 The learned CIT (A) set aside the issue to the file of the AO for verification by observing as under: 2.4. There is very limited scope u/s.143(1) to undertake adjustments in the returned income as per provisions of IT Act, 1961, However, in instant case, the appellant has claimed the depreciation amounting to Rs.40,77,012/- as well as amount of Rs.56.033/-which has been disallowed under section 36 of I.T. Act by the CPC u/s 143(1} of the Act. The total disallowance is to the extent of Rs.41.33,045/-. The contention raised by the appellant required to be verified thoroughly by the AO and the AO is directed to allow claim of the appellant, if the contention of the appellant is found to be true and as per scheme of the I. T. Act The ground of the appeal is allowed for the statistical purposes. 3.5 The AO in pursuance to the direction of the learned CIT (A) vide order dated 1 st July 2019 observed that the learned CIT (A) had no power under the provisions of section 251 of the Act to set aside the issue to the file of the AO. Therefore, the AO did not consider the submission of the assessee and confirmed the demand raised in the intimation generated under section 143(1) of the Act dated 19 th March 2019. 4. Aggrieved assessee preferred an appeal to the learned CIT (A) who dismissed the appeal of the assessee by observing as under: 7.4. Further, the AO's observations in his order dated 01.07.2019 that earlier order of CIT(A) is not acceptable on the merits on account of provisions of s.251 is also taken note of, where AO has recorded his observations that in view of provisions of s.251 ,the CIT(A) may either confirm, reduce, enhance or annual the assessment, and apart from these four ways in which CIT(A) can decide the appeal, CIT(A) has no other way to decide any appeal filed before him and in any case, there are no provisions in the Income-Tax Act,1961 in relation to the power of Ld. CIT(A) for directing the AO to verify the issues for statistical purpose at the time of disposal of the appeal, though the Ld. CIT(A) may direct the AO to make further inquiry as he thinks fit, and report the result of the same to him before disposing of an appeal as per provisions of section 250(4) of the Income-tax Act, 1961. 7.6. Consequently, this appeal is also decided on merits. 7.7. On merits, the disallowances made u/s 143(1) amounting to Rs. 40,77,0127- , on account of disallowance of depreciation are upheld as assessee has failed to provide any supporting documents in support of Grounds of appeal raised by the assessee. The assessee has not even submitted the copy of the ITR filed by him and the copy of the order u/s 143(1) 19.03.2019 by the DCIT, CPC, Bengaluru where disallowance of depreciation amounting to Rs.40,77,012/- was made, against which the present appeal has been preferred by the assessee. In view of these basis documents, what to talk of written submissions, the very claim made by the assessee in the Ground of appeal that disallowance of depreciation amounting to Rs.40,77,012/- was made by CPC, is not possible to verify. ITA no.246/AHD/2021 A.Y. 2017-18 4 5. Being aggrieved by the order of the learned CIT (A) the assessee is in appeal before us. 6. The learned AR before us filed a paper book running from pages 1 to 88 and submitted that the adjustments/disallowance/additions can be made in the intimation under section 143(1) of the act which are representing the arithmetical errors. The error if any which is debatable in nature cannot be subject to adjustment under section 143(1) of the Act. The right course of action for the Revenue was to assess the income in the assessment under section 143(3) of the Act in the circumstances where the Revenue was not satisfied with the claim of the assessee on the debatable issue. 6.1 The learned AR also contended that there were additions in the block of assets on account of plant and machineries, building and the computers amounting to Rs. 46,13,795/- on which depreciation at the different rate was claimed. But the amount of depreciation on the additions of these fixed assets was roughly calculated at ₹5 Lacs only. In other words, the entire amount of depreciation claimed by the assessee for the year under consideration for Rs. 51,47,681/- was pertaining to the opening WDV except the minor amount of ₹5 Lacs which was claimed on the additions of the fixed assets. As such, the amount of depreciation on the opening WDV cannot be disturbed in the year under consideration and that too in the intimation under section 143(1) of the Act. The learned AR in support of his contention drew attention on page 52 of the paper book where the depreciation schedule was placed. 6.2 The learned AR further submitted that the amount of depreciation claimed by the assessee in the preceding and subsequent year i.e. assessment year 2016- 17 and 2018-19 was also allowed by the learned Commissioner of Income Tax Appeal. For this purpose, the learned AR filed the order of the learned CIT (A) for ITA no.246/AHD/2021 A.Y. 2017-18 5 the assessment year 2016-17 and 2018-19 which are placed on pages 74 to 87 of the paper book. 7. On the other hand, the learned DR vehemently supported the order of the authorities below. 8. We have heard the rival contentions of both the parties and perused the materials available on record. Before going into fact and circumstances of the case on hand, we deem necessary to discuss procedure of the assessment under section 143(1) of the Act. The Income Tax Act, 1961 as amended from time to time provides for summary procedure of processing the returns of income filed under various provisions of the Act i.e. under section 139 or 142(1) of the Act under the provisions of section 143(1) of the Act. Further, the provisions of section 143(1) of the Act also offer for making arithmetical/ non-arithmetical discrepancies in the income declared in the income tax return pertaining to computation/re-computation of figures shown by the assessee by way of adjustments in form of disallowing an incorrect claim which is apparent from any information provided by the taxpayer. These adjustment relate to the following: i. Disallowance of loss claimed in cases where returns have been filed beyond due date specified under sub-section (1) of section 139, ii. Disallowance indicated by the auditors in the audit report but fails to find a mention in the return of income, iii. Disallowance of deductions under section 10AA, 80IA, 80IAB, 80IB etc. of the Act. iv. If return is filed beyond the due date specified under sub-section (1) of section 139 of the Income Tax Act, 1961 apart from addition to the income returned for want of those particulars of income which though find a mention in Form No. 26AS/ Form No.16A or Form No.16 but have not been included subject to the inherent riders/limitations contained therein. ITA no.246/AHD/2021 A.Y. 2017-18 6 8.1 From the above, there remains no ambiguity to the fact that there can be adjustments limited to the extent as discussed above. In the event, the AO was not satisfied with the claim of the assessee, the same could have been verified by taking the case under scrutiny by issuing notice under section 143(2) of the Act. In holding so, we draw support and guidance from the judgment of The Hon'ble Orissa High Court in Tata Sponge Iron Ltd. v. CIT [2010] 191 Taxman 407 where it was held as under: A plain reading of the provisions of section 143(1)(a) makes it clear that the Assessing Officer is authorized to make prima facie adjustments to the return of income which is without prejudice to the provisions of sub-section (2) of section 143. The role of the Assessing Officer to proceed under section 143(2) is preserved despite intimation to the assessee under section 143(1). The Assessing Officer is under no obligation to accept the return filed by the assessee in case of any doubt. The Assessing Officer has an option to call upon the assessee to produce materials and evidence in support of his return. Notice under section 143(2) is issued with a view to ensure that the assessee has not understated income or has not computed the excessive loss or has not paid any tax in any manner. Once notice under section 143(2) is issued to make regular assessment under section 143(3), the Assessing Officer is bound to make assessment under section 143. 8.2 In the case on hand, the disallowance of depreciation was made in the intimation processed under section 143(1) of the Act which is not a kind of adjustment as discussed above. The issue of depreciation being debatable cannot be subject matter of disallowance in the intimation under section 143(1) of the Act. In holding so we draw support and guidance from the judgment of Hon’ble Jurisdictional High Court in case of CIT vs. Mahesh kumar Rathod (supra) where the Hon’ble bench held as under: 4. When the issue relating to deduction or disallowance of deductions is debatable, the Assessing Officer cannot make any adjustment in an order under section 143(1)(a). We, therefore, see no infirmity in the order of the Tribunal. Accordingly, we answer the question referred in favour of the assessee and against the revenue. 8.3 It is also a fact on record that all the details of the assets viz a viz depreciation were duly furnished in the income tax return. The major part of the depreciation claimed by the assessee in the year under consideration was pertaining to the opening written down value which cannot be disturbed in the year under consideration. ITA no.246/AHD/2021 A.Y. 2017-18 7 8.4 It is not also out of the place to mention that the learned CIT (A) in the immediate preceding A.Y. and immediate subsequent A.Y i.e. A.Y. 2016-17 and A.Y. 2018-19 has also allowed the depreciation claimed by the assessee with respect to the assets which were shown for the assessment year under consideration. In view of the above, and after considering the facts in totality, we are of the view that the order passed by the learned CIT (A) is not sustainable. Accordingly we set aside the same and direct the AO to delete the addition made by him. Hence, the ground of appeal raised by the assessee is allowed. 9. In the result, the appeal of the assessee is allowed. Order pronounced in the Court on 15/12/2021 at Ahmedabad. Sd/- Sd/- (RAJPAL YADAV) (WASEEM AHMED) VICE PRESIDENT ACCOUNTANT MEMBER (True Copy) Ahmedabad; Dated 15/12/2021 Manish