DCIT, New Delhi V. M/s IFCI, New Delhi

ITA 2548/DEL/2010

• Counselvise Citation: [2011] 119 COUNSELVISE.COM (IT) 7035 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 5 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-11-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 21-11-2011
• Assessment Year: 1998-1999
• Appeal Filed On: 28-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SALIL MISHRA
• Assessee Lawyers: PI NKI KAPOOR; AJAY VOHRA SHRI AMIT SACHDEVA
• Keywords: Reopening of assessment; Depreciation; Reason to believe
• Section: 143(3); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL DELHI DELHI DELHI DELHI BENCH C BENCH C BENCH C BENCH C : NEW DELHI : NEW DELHI : NEW DELHI : NEW DELHI BEFORE SHRI G. BEFORE SHRI G. BEFORE SHRI G. BEFORE SHRI G.D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, VICE PRESIDENT AND VICE PRESIDENT AND VICE PRESIDENT AND VICE PRESIDENT AND SHRI SHRI SHRI SHRI C.L.SETHI C.L.SETHI C.L.SETHI C.L.SETHI, JUDICIAL MEMBER , JUDICIAL MEMBER , JUDICIAL MEMBER , JUDICIAL MEMBER ITA NO. ITA NO. ITA NO. ITA NO.2548/DEL/2010 2548/DEL/2010 2548/DEL/2010 2548/DEL/2010 ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR : : : : 1998 1998 1998 1998- -- -99 9999 99 DEPUTY COMMISSIONER OF DEPUTY COMMISSIONER OF DEPUTY COMMISSIONER OF DEPUTY COMMISSIONER OF INCOME TAX, INCOME TAX, INCOME TAX, INCOME TAX, CIRCLE CIRCLE CIRCLE CIRCLE- -- -11(1), 11(1), 11(1), 11(1), NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. VS. VS. VS. VS. M/S IFCI, M/S IFCI, M/S IFCI, M/S IFCI, IFCI TOWER, IFCI TOWER, IFCI TOWER, IFCI TOWER, 61, NEHRU PLACE, 61, NEHRU PLACE, 61, NEHRU PLACE, 61, NEHRU PLACE, NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. PAN : AAACT0668G. PAN : AAACT0668G. PAN : AAACT0668G. PAN : AAACT0668G. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SALIL MISHRA, SR.DR. RESPONDENT BY : SHRI AJAY VOHRA, SHRI AMIT SACHDEVA AND MS. PINKI KAPOOR, ADVOCATES. ORDER ORDER ORDER ORDER PER PER PER PER G. G.G. G.D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, VP VPVP VP : : : : THIS APPEAL IS FILED BY THE REVENUE AGAINST THE OR DER OF LEARNED CIT(A) DATED 26 TH FEBRUARY, 2010 FOR THE AY 1998-99. 2. GROUND NO.1 OF THE REVENUES APPEAL IS OF GENERA L NATURE AND NEEDS NO SPECIFIC ADJUDICATION. 3. GROUND NO.2 OF THE REVENUES APPEAL READS AS UND ER:- ON THE FACTS & CIRCUMSTANCES OF THE CASE AND IN LA W, LD.CIT(A) HAS ERRED IN HOLDING THAT ACTION U/S 147 IS INVALID. 4. THE FACTS OF THE CASE ARE THAT THE ASSESSEE FILE D RETURN OF INCOME DECLARING TOTAL INCOME OF `57,25,38,520/- WHICH WAS ASSESSED UNDER SECTION 143(3) AT THE INCOME OF `430,45,54,740/-. THE ASSESSING OFFICER ISSUED NOTICE UNDER SECTION 148 ON THE GROU ND THAT EXCESS DEPRECIATION OF `59.16 LAKHS WAS CLAIMED BY THE ASS ESSEE. IN THE ITA-2548/DEL/2010 2 REASSESSMENT COMPLETED UNDER SECTION 143(3)/148, TH E ASSESSING OFFICER DETERMINED THE INCOME DISALLOWING SUCH DEPR ECIATION OF `59,16,075/-. 5. ON APPEAL, LEARNED CIT(A) HELD THE REOPENING OF ASSESSMENT TO BE INVALID. THE REVENUE, AGGRIEVED WITH THE ORDER OF THE CIT(A), IS IN APPEAL BEFORE US VIDE GROUND NO.2 OF ITS APPEAL. 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL PLACED BEFORE US. THE LEARNED COUNSEL FOR THE ASSESSEE HA S POINTED OUT THAT IN THE RETURN OF INCOME, THE ASSESSEE HAD CLAIMED D EPRECIATION AMOUNTING TO `29,82,97,807/-. THE ASSESSING OFFICE R, IN HIS ORDER DATED 5 TH MARCH, 2001 PASSED UNDER SECTION 143(3), DISALLOWE D THE ENTIRE DEPRECIATION CLAIMED BY THE ASSESSEE. THE PR OCEEDINGS UNDER SECTION 147 ARE INITIATED BY THE ASSESSING OFFICER ON THE GROUND THAT THE ASSESSEE MADE THE EXCESS CLAIM OF DEPRECIATION AMOUNTING TO `59.16 LAKHS. HE STATED THAT WHEN NO DEPRECIATION WAS ALLOWED AT ALL, THERE IS NO QUESTION OF ANY EXCESS CLAIM OF DEPRECI ATION BEING ALLOWED TO THE ASSESSEE. WHEN NO DEPRECIATION IS ALLOWED I N THE ORDER PASSED UNDER SECTION 143(3), IT CANNOT BE SAID THAT THERE WAS ANY ESCAPEMENT OF INCOME IN THE ORDER PASSED UNDER SECTION 143(3). 7. THE LEARNED DR HAS TRIED TO CONTROVERT THE CLAIM OF THE ASSESSEE BY POINTING OUT THAT THE CIT(A) IN THE FIRST APPEAL HAS DIRECTED TO ALLOW THE DEPRECIATION AS CLAIMED BY THE ASSESSEE. THUS, THE ENTIRE DEPRECIATION AS CLAIMED BY THE ASSESSEE STOOD ALLOW ED TO THE ASSESSEE AND THE ASSESSING OFFICER HAS NOTICED THAT WHILE CL AIMING THE DEPRECIATION, THE ASSESSEE HAS INFLATED THE COST OF THE ASSET. THEREFORE, PART OF THE DEPRECIATION OUGHT TO HAVE B EEN DISALLOWED. 8. IN THE REJOINDER, IT WAS STATED BY THE LEARNED C OUNSEL THAT WHEN NO DEPRECIATION WAS ALLOWED BY THE ASSESSING OFFICE R, IT CANNOT BE SAID ITA-2548/DEL/2010 3 THAT THERE WAS ANY ESCAPEMENT OF ANY INCOME IN THE ASSESSMENT ORDER PASSED UNDER SECTION 143(3). IF REVENUE IS AGGRIEV ED BY THE ORDER OF THE CIT(A), THE REMEDY DOES NOT LIE IN THE REOPENIN G OF ASSESSMENT BUT IN FILING OF THE APPEAL BEFORE THE ITAT; THAT THE R EVENUE HAD FILED THE APPEAL AGAINST THE ORDER OF THE CIT(A) AND, THE ITA T, VIDE ITS ORDER DATED 31 ST MARCH, 2006 IN ITA NO.1261/DEL/2002, SET ASIDE THE ISSUE OF DEPRECIATION BACK TO THE FILE OF THE ASSESSING OFFI CER. THEREFORE, HE SUMMARIZED HIS ARGUMENTS AS UNDER:- (I) THERE WAS NO ESCAPEMENT OF INCOME IN THE ORDER PASS ED UNDER SECTION 143(3). (II) THE ISSUE OF ALLOWABILITY OF DEPRECIATION STILL REM AINS PENDING WITH THE ASSESSING OFFICER BY VIRTUE OF THE ORDER OF THE TRIBUNAL PASSED AGAINST THE ORIGINAL ORDER PASS ED UNDER SECTION 143(3). HE, THEREFORE, SUBMITTED THAT GROUND NO.2 OF THE RE VENUES APPEAL MAY BE REJECTED. 9. WE HAVE CAREFULLY CONSIDERED THE ARGUMENTS OF BO TH THE SIDES AND PERUSED THE MATERIAL PLACED BEFORE US. WE FIND THAT IN THE ASSESSMENT ORDER PASSED UNDER SECTION 143(3) DATED 5 TH MARCH, 2001, THE ASSESSING OFFICER HAS DISALLOWED THE ENTIRE CLA IM OF DEPRECIATION AMOUNTING TO `29,82,07,807/-. THUS, NO DEPRECIATIO N WAS ALLOWED IN THE ORDER PASSED UNDER SECTION 143(3). THE ASSESSI NG OFFICER HAS ISSUED NOTICE UNDER SECTION 148 ON THE GROUND THAT THERE WAS EXCESS CLAIM OF DEPRECIATION BY THE ASSESSEE AMOUNTING TO `59.16 LAKHS; THAT AS PER SECTION 147, THE ASSESSMENT CAN BE REOPENED PROVIDED THE ASSESSING OFFICER HAS REASON TO BELIEVE THAT ANY IN COME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. THEREFORE, ESCAPEMENT OF THE INCOME IS TO BE SEEN FROM THE ASSESSMENT COMPLETED UNDER SECT ION 143(3) WHICH IS SOUGHT TO BE REOPENED. IN THIS CASE, ADMITTEDLY , THERE WAS NO ITA-2548/DEL/2010 4 ESCAPEMENT OF INCOME AS PER ASSESSMENT ORDER PASSED UNDER SECTION 143(3). IF THE REVENUE IS AGGRIEVED AGAINST THE OR DER OF THE CIT(A) WHEREIN HE HAS ALLOWED THE CLAIM OF DEPRECIATION WH ICH WAS DISALLOWED BY THE ASSESSING OFFICER, THE PROPER REMEDY IS TO F ILE APPEAL BEFORE THE ITAT AND, WHICH HAS BEEN AVAILED OF BY THE REVENUE. BE THAT AS IT MAY, SINCE THERE IS NO ESCAPEMENT OF INCOME IN THE ASSESSMENT ORDER COMPLETED UNDER SECTION 143(3) DATED 5 TH MARCH, 2001, THE REOPENING THEREOF BY ISSUE OF NOTICE UNDER SECTION 148 WAS NO T VALID AND, CIT(A) RIGHTLY CANCELLED THE SAME. WE, THEREFORE, UPHOLD THE ORDER OF THE CIT(A) ON THIS POINT AND REJECT GROUND NO.2 OF THE REVENUES APPEAL. 10. GROUND NO.3 OF THE REVENUES APPEAL IS AGAINST THE DELETION OF DISALLOWANCE OF DEPRECIATION AMOUNTING TO `59,16,07 5/-. THIS DISALLOWANCE WAS MADE IN THE ORDER OF REASSESSMENT PASSED IN PURSUANCE TO NOTICE UNDER SECTION 148. SINCE THE R EOPENING OF ASSESSMENT ITSELF HAS BEEN HELD TO BE INVALID AND N OTICE UNDER SECTION 148 IS QUASHED, ANY ASSESSMENT ORDER PASSED IN PURS UANCE THERETO IS ALSO LIABLE TO BE QUASHED. ONCE THE ASSESSMENT ORD ER PASSED UNDER SECTION 143(3) READ WITH SECTION 148 DOES NOT SURVI VE, ANY ADDITION MADE IN THE SAID ORDER ALSO DOES NOT SURVIVE. THER EFORE, THERE IS NO MERIT IN GROUND NO.3 OF THE REVENUES APPEAL. THE SAME IS REJECTED. 11. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. DECISION PRONOUNCED IN THE OPEN COURT ON 25 TH NOVEMBER, 2011. SD/- SD/- ( (( (C.L.SETHI C.L.SETHI C.L.SETHI C.L.SETHI) )) ) (G.D.AGRAWAL) (G.D.AGRAWAL) (G.D.AGRAWAL) (G.D.AGRAWAL) JUDICIAL JUDICIAL JUDICIAL JUDICIAL MEMBER MEMBER MEMBER MEMBER VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT DATED : 25.11.2011 VK. COPY FORWARDED TO: - ITA-2548/DEL/2010 5 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT ASSISTANT REGISTRAR