Taj Fireworks Industries, Sivakasi V. ACIT, Madurai

ITA 2754/CHNY/2014

• Counselvise Citation: 275421714 RSA 2014
• Duration Of Justice: 10 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-09-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 07-09-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 07-11-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR B NISCHAL
• Assessee Lawyers: K V RAMAN
• Section: 69

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI . . . , . !'# ! , % !& BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ ITA NO.2754/MDS/2014 ( )( / ASSESSMENT YEAR : 2004-05 M/S TAJ FIREWORKS INDUSTRIES, 5A, CHAIRMAN A. SHANMUGA NADAR STREET, SIVAKASI 626 123. PAN : AABFT 6936 D V. THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE II, MADURAI. (+,/ APPELLANT) (-.+,/ RESPONDENT) +, / 0 / APPELLANT BY : SHRI K.V. RAMAN, CA -.+, / 0 / RESPONDENT BY : DR. B. NISCHAL, JCIT 1 / 2% / DATE OF HEARING : 07.09.2015 3') / 2% / DATE OF PRONOUNCEMENT : 11.09.2015 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) II, MADU RAI, DATED 12.09.2014 AND PERTAINS TO ASSESSMENT YEAR 2004-05. 2 I.T.A. NO.2754/MDS/14 2. SHRI K.V. RAMAN, THE LD. REPRESENTATIVE FOR THE ASSESSEE, SUBMITTED THAT THE ASSESSEE CREDITED AN INVESTMENT ALLOWANCE RESERVE UNDER SECTION 32A OF THE INCOME-TAX ACT, 19 61 (IN SHORT 'THE ACT') AT 20% OF THE VALUE OF THE MACHINERY ACQUIRED DURING THE FINANCIAL YEAR 1998-99. IN THE FINANCIAL YEAR 1994 -95, THE SAID AMOUNT WAS TRANSFERRED TO INVESTMENT ALLOWANCE UTIL IZATION RESERVE, SINCE THE RESERVE WAS UTILIZED FOR ACQUIRING MACHIN ERY FOR THE BUSINESS. AFTER EIGHT YEARS OF CREATION OF RESERVE , ACCORDING TO THE LD. REPRESENTATIVE, THE RESERVE WAS TRANSFERRED TO PARTNERS CAPITAL ACCOUNT. HOWEVER, THE ASSESSING OFFICER MADE AN AD DITION UNDER SECTION 69 OF THE ACT AS UNDISCLOSED INVESTMENT. O N APPEAL BY THE ASSESSEE, THE CIT(APPEALS), AFTER SIMPLY REPRODUCIN G THE REMAND REPORT SUBMITTED BY THE ASSESSING OFFICER, CONFIRME D THE ADDITION WITHOUT ANY FURTHER DISCUSSION. 3. ON THE CONTRARY, DR. B. NISCHAL, THE LD. DEPARTM ENTAL REPRESENTATIVE, SUBMITTED THAT THE ASSESSING OFFICE R FOUND THAT THE ASSESSEE IS NOT ELIGIBLE FOR THE BENEFIT UNDER SECT ION 32AB OF THE ACT. THE ASSESSEE ALSO COULD NOT SUBSTANTIATE THE CLAIM UNDER SECTION 32A OF THE ACT. THE ASSESSING OFFICER FURT HER FOUND THAT NO PORTION OF INVESTMENT ALLOWANCE SHALL BE CARRIED FO RWARD FOR MORE 3 I.T.A. NO.2754/MDS/14 THAN EIGHT YEARS IMMEDIATELY SUCCEEDING THE ASSESSM ENT YEAR RELEVANT TO PREVIOUS YEAR IN WHICH THE MACHINERY WA S INSTALLED. THEREFORE, ACCORDING TO THE LD. D.R., THE CIT(APPEA LS) HAS RIGHTLY CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICE R. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL ON RECORD. WE HAVE C AREFULLY GONE THROUGH THE ORDER OF THE CIT(APPEALS). THE CIT(APP EALS), AFTER REPRODUCING THE OBSERVATION MADE BY THE ASSESSING O FFICER, WRITTEN SUBMISSION FILED BY THE ASSESSEE AND THE REMAND REP ORT OF THE ASSESSING OFFICER, HAS CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER WITHOUT ANY DISCUSSION AT ALL. T HE CIT(APPEALS), BEING THE FIRST APPELLATE AUTHORITY, IS EXPECTED TO APPRECIATE THE MATERIAL AVAILABLE ON RECORD AND RECORD HIS OWN CON CLUSION AND REASONS IN THE ORDER. UNFORTUNATELY, THE CIT(APPEA LS) IN ONE LINE HAS UPHELD THE ORDER OF THE ASSESSING OFFICER. THI S TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE CIT(APPEALS) HAS TO PASS A SPEAKING ORDER BY RE-APPRECIATING THE MATERIAL AVAI LABLE ON RECORD AND RECORDING HIS OWN REASONS IN THE CONCLUSION. S INCE SUCH AN EXERCISE HAS NOT BEEN DONE BY THE CIT(APPEALS), THE ORDER OF THE CIT(APPEALS) IS SET ASIDE AND THE ISSUE IS REMITTED BACK TO THE FILE OF 4 I.T.A. NO.2754/MDS/14 THE CIT(APPEALS). THE CIT(APPEALS) SHALL RECONSIDE R THE ISSUE AFRESH IN THE LIGHT OF THE MATERIAL AVAILABLE ON RE CORD AND THEREAFTER RECORD HIS OWN REASONING FOR THE CONCLUSION REACHED BY HIM. IN OTHER WORDS, THE CIT(APPEALS) SHALL APPLY HIS MIND AND PASS A SPEAKING ORDER. 5. WITH THE ABOVE OBSERVATION, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 11 TH SEPTEMBER, 2015 AT CHENNAI. SD/- SD/- (. !'# ! ) ( . . . ) (A. MOHAN ALANKAMONY) (N.R.S. GANESAN) % / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 5 /DATED, THE 11 TH SEPTEMBER, 2015. KRI. / -267 87)2 /COPY TO: 1. +, /APPELLANT 2. -.+, /RESPONDENT 3. 1 92 () /CIT(A)-I, MADURAI 4. 1 92 /CIT, CENTRAL-II, CHENNAI 5. 7: -2 /DR 6. ( ; /GF.