ACIT, New Delhi V. M/s R.T. Paper Board Ltd., New Delhi

ITA 2946/DEL/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61717 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-06-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 28-05-2012
• Assessment Year: 2004-2005
• Appeal Filed On: 03-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K UPADHYAYA
• Assessee Lawyers: ASHWANI TANEJA
• Keywords: Depreciation; Rectification of order; Unabsorbed depreciation
• Section: 43B; 143(3); 147; 54; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: F NEW DELHI BEFORE SHRI I.C. SUDHIR, HONBLE JUDICIAL MEMBER AN D SHRI T.S.KAPOOR, ACCOUNTANT MEMBER I.T.A .NO. 2946/DEL/2011 ASSESSMENT YEAR: 2004-05 ASSTT. CIT, M/S R.T. PAPER BOA RD LTD., CIRCLE-15(1) 407-408, C.R.BLDG., VS. DEEPALI, 92, NEHRU PLACE, I.P. ESTATE, NEW DELHI NEW DELHI. PAN AABCR9393R (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI S.K.UPADHYAYA, SR. DR RESPONDENT BY: SHRI ASHWAN I TANEJA, FCA ORDER PER I.C.SUDHIR, JM: THE REVENUE HAS QUESTIONED FIRST APPELLATE ORDER ON THE GROUND THAT THE LD, CIT (A) HAS ERRED IN DELETING THE ADDITION OF R S.1,94,51222/- MADE BY THE A.O. UNDER SECTION 43 B OF THE IT ACT, 1961 AS THE ASSESSEE HAD NOT PAID INTEREST BUT THE AMOUNT WAS WAIVED OFF IN TERMS OF RESTRUCTURING PROPOSAL SANCTIONED BY CDR CELL. 2. THE RELEVANT FACTS ARE THAT THE RETURN OF INCOME FILED ON 1.11.2004 DECLARING A LOSS OF RS.8,42,64,680/- WAS PROCESSED UNDER SECTION 143 (1) OF ITA NO.2946/DEL/2011 2 THE ACT ON 23.2.2005. THEREAFTER, ASSESSMENT UNDER SECTION 143 (3) WAS FRAMED ON 29.12.2006, ASSESSING THE LOSS AT RS.4,91 ,41,878/- AFTER ALLOWING NOT BUSINESS LOSS AND UNABSORBED DEPRECIATION. THE A.O. NOTED THAT THE ASSESSEE HAD CLAIMED DEDUCTION OF RS.1,94,51,222/- AS ALLOWANCE OF SECTION 43 B OF EARLIER YEARS IN THE 3CD REPORT, THE AMOUNT WAS SHOWN AS INTEREST PAID BEING THE AMOUNT WAIVED OFF, IN TERMS OF RESTR UCTURING PROPOSAL SANCTIONED BY CDR CELL. HE ACCORDINGLY ISSUED NOTICE UNDER SECTION 154 OF T HE ACT, AND IN ABSENCE OF RESPONSE FROM THE ASSESSEE HE DISALLOWED THE AMOUNT OF RS.1,94,51,222/- AND REDUCED THE ASSESSED LOSS AT RS.2,96,90,656/- T HE LD, CIT (A) HAS DELETED THE DISALLOWANCE ON THE BASIS THAT WITHOUT POINTING OUT THE MISTAKE APPARENT FROM RECORD IN THE ASSESSMENT ORDER, THE A .O. WAS NOT JUSTIFIED IN INVOKING THE PROVISIONS OF SECTION 154 OF THE ACT, TO RECTIFY THE ALLEGED MISTAKE IN THE ASSESSMENT ORDER ON THE ISSUE FRAMED UNDER SECTION 143 (3) OF THE ACT. 3. IN SUPPORT OF THE GROUND, LD, DR HAS BASICALLY PLAC ED RELIANCE ON THE ORDER PASSED UNDER SECTION 154 OF THE ACT. HE SUBMI TTED THAT THE A.O. IN PARA NO. 2 OF THE ORDER PASSED UNDER SECTION 154 OF THE ACT HAS MENTIONED THE REASON FOR WHICH HE HAS INVOKED THE PROVISIONS OF SECTION 154 OF THE ITA NO.2946/DEL/2011 3 ACT. HE ACCORDINGLY ISSUED SHOW CAUSE NOTICE UNDER SECTION 154 TO THAT EFFECT BUT THE ASSESSEE DID NOT BOTHER TO APPEAR BE FORE THE A.O. NOR ANY REPLY WAS FILED BY IT. UNDER THE CIRCUMSTANCES THE A.O. W AS HAVING NO OPTION BUT TO PASS ORDER UNDER SECTION 154 RECTIFYING THE MIST AKE APPARENT. THE LD, DR POINTED OUT FURTHER THAT THE AMOUNT IN INTEREST WAS ACTUALLY NOT PAID. 4. THE LD, AR ON THE OTHER HAND TRIED TO JUSTIFY THE F IRST APPELLATE ORDER AND REITERATED THE SUBMISSIONS MADE BEFORE THE AUTH ORITIES BELOW. HE ALSO REFERRED THE CASE LAWS CITED BEFORE THE LD, CIT (A) . HE SUBMITTED THAT WHILE, FRAMING THE ASSESSMENT UNDER SECTION 143 (3) OF THE ACT, THE A.O. HAD ALREADY EXAMINED BOOKS OF ACCOUNTS AS IT IS EVIDENT FROM THE ASSESSMENT ORDER A COPY WHEREOF, HAS BEEN MADE AVAILABLE AT PA GE NO. 53 OF THE PAPER BOOK. HE SUBMITTED THAT THE INTEREST AMOUNT REMAINE D AN ARTIFICIAL INCOME ONLY AND REFERRED PAGE NO. 5 OF THE PAPER BOOK I.E. THE PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31 ST MARCH, 2004, WHEREIN THE INTEREST AMOUNT HAS BEEN SHOWN IN MINUS. THUS THERE IS NO MISTAKE APPARENT F ROM RECORD IN THE ASSESSMENT ORDER WHICH HAS BEEN WRONGLY INTERFERED BY THE A.O. UNDER SECTION 154 OF THE ACT. HE SUBMITTED THAT THE ISSUE RAISED WAS DEBATABLE, HENCE WITHOUT RECORDING THE REASON AS TO WHAT MISTA KE WAS THESE APPARENT ON RECORD IN THE ASSESSMENT ORDER, THE A.O. WAS NOT JU STIFIED IN INVOKING THE ITA NO.2946/DEL/2011 4 PROVISIONS OF SECTION 154 OF THE ACT. THE LD, AR SU BMITTED THAT EVEN ON MERITS THERE WAS NO MISTAKE IN THE ASSESSMENT ORDER AND REFERRED PAGE NO. 2 OF THE PAPER BOOK I.E. COMPUTATION OF TAXABLE INCOM E FOR THE YEAR SHOWING THAT A SUM OF RS.1,94,51,222/- WAS CLAIMED BY THE A SSESSEE IN THE COMPUTATION SHEET ON THE BASIS OF REPORTS AND RECOR DS GIVEN BY THE TAX AUDITOR BY WAY OF ANNEXURE VIII OF THE TAX AUDIT RE PORT. HE REFERRED PAGE NO. 43 OF THE PAPER BOOK I.E. ANNEXURE FORMING PART OF FORM 3CD SHOWING THAT THE AMOUNT OF INTEREST AND SALES TAX WAS CLAIM ED IN THE IMPUGNED YEAR AS PART OF LIABILITY PRE-EXISTING ON FIRST DATE OF THE PREVIOUS YEAR. HE SUBMITTED THAT IN THE EARLIER YEARS THESE LIABILITI ES / EXPENSES WERE DISALLOWED. IN THIS YEAR SINCE THESE EXPENSES / LIA BILITIES HAVE BEEN SETTLED THEREFORE, DEDUCTION FOR THESE HAS BEEN CLAIMED IN THE CONCERNED YEAR. HE SUBMITTED THAT IN THE ASSESSMENT PROCEEDINGS DETAIL ED EXAMINATION WAS DONE BY THE A.O. OF PAST YEARS RECORD AS WELL AS IMPUGNE D YEAR RECORDS AND THEREFORE, A DECISION WAS TAKEN THAT ACCORDING TO T HE LAW AND FACTS, THIS DEDUCTION IS ALLOWABLE TO THE ASSESSEE AND ACCORDIN GLY IT WAS GRANTED. 5. CONSIDERING THE ABOVE SUBMISSIONS WE FIND SUBSTANCE IN THE CONTENTION OF THE LD, AR THAT BEFORE INVOKING THE P ROVISIONS OF SECTION 154 OF THE ACT, THE A.O. OUGHT TO HAVE POINTED OUT SPEC IFICALLY THAT THERE IS MISTAKE APPARENT FROM RECORD IN THE ASSESSMENT ORDE R WHICH THE A.O. ITA NO.2946/DEL/2011 5 PROPOSED TO RECTIFY AND HAS RECTIFIED THE SAME. IN OUR VIEW AFTER FRAMING AN ASSESSMENT THE A.O. CAN ACQUIRE JURISDICTION TO INT ERFERE WITH THE SAID ASSESSMENT ORDER ONLY AFTER RECORDING THAT THERE IS MISTAKE APPARENT FROM RECORD IN THE ASSESSMENT ORDER WHICH REQUIRE RECTIF ICATION UNDER SECTION 154 OF THE ACT. SINCE PROVISION LAID DOWN UNDER SECTION 154 OF THE ACT IS RESTRICTED TO BE INVOKED ONLY IN CASE OF RECTIFICAT ION OF MISTAKE APPARENT FROM THE RECORD IN AN ORDER ALREADY PASSED, THE A.O . IS REQUIRED TO CONFINE THE RECTIFICATION ONLY IN CASE OF ANY MISTAKE WHICH IS APPARENT FROM THE RECORD IN THE ORDER PASSED. AN ASSESSMENT ORDER FRA MED U/S 143(3) OF THE ACT REACHES ITS FINALITY SUBJECT TO RECTIFICATION U /S 154, REVISION U/S 263, REOPENING U/S 147 OR APPEAL, ETC., IF ANY PREFERRED WITHIN THE PRESCRIBED CONDITIONS AND TIME LIMIT. THE OBJECT OF THE LEGISL ATURE IS TO SETTLE AN ISSUE AT THE EARLIEST AND PREFERABLY WITHIN THE PRESCRIBED T IME LIMIT AND THUS INTERFERENCE WITH SUCH SETTLED POSITION HAS BEEN AL LOWED WITH SEVERAL RESTRICTIONS AND CONDITIONS, COMPLIANCE OF WHICH IS THUS REQUIRED TO BE STRICTLY ADHERED TO. THE HONBLE JURISDICTIONAL DEL HI HIGH COURT IN THE CASE OF CIT VS. FOOD SPECIALITIES LTD. (1985) 156 ITR- 7 90 (DELHI) HAS BEEN PLEASED TO HOLD THAT MISTAKE APPARENT FROM RECORD F OR THE PURPOSE OF SECTION 154 MEANS MISTAKE WHICH IS PATENT AND OBVIOUS AND N OT SOMETHING WHICH CAN BE ESTABLISHED BY A LONG PROCESS OF REASONING. THE HONBLE BOMBAY ITA NO.2946/DEL/2011 6 HIGH COURT, IN THE CASE OF PARLE PRODUCTS (P) LTD. VS. CIT (1991) 191 ITR 510 (BOMBAY), HAS BEEN PLEASED TO HOLD THAT A MISTA KE WHICH IS NOT GLARING AND OBVIOUS FROM THE RECORDS CANNOT BE RECTIFIED UN DER SECTION 154 OF THE ACT. IN THIS CASE SCOPE AND VALIDITY OF THE PROVISI ONS UNDER SECTION 154 HAVE BEEN DISCUSSED. IN THE CASE OF BATA INDIA LTD. VS. IAC & OTHERS (2001) 249 ITR 491 (CALCUTTA), NOTICE UNDER SECTION 154 WAS IS SUED ON THE GROUND THAT THE DEDUCTION OF PAYMENT MADE TO WORKMAN SICKNESS B ENEFIT SOCIETY WAS WRONGLY ALLOWED. IT WAS HELD BY THE HONBLE CALCUTT A HIGH COURT THAT NOTICE ISSUED UNDER SECTION 154 WAS NOT VALID AS SECTION 1 54 CAN BE INVOKED ONLY FOR THE PURPOSE OF RECTIFYING ANY MISTAKE APPARENT FROM RECORD. IT WAS HELD THAT NOTICE NOWHERE MENTIONS WHAT WAS THE APPARENT AND PATENT MISTAKE IN THE ASSESSMENT ORDER. THE A.O. CANNOT SIT UPON THE JUDGMENT OF ASSESSMENT ORDER IN THE GARB OF RECTIFICATION OF MISTAKE. SIMI LAR ARE THE FACTS IN THE PRESENT CASE BEFORE US. NEITHER IN THE NOTICE ISSUE D UNDER SECTION 154 NOR IN THE ORDER PASSED UNDER SECTION 154 THE A.O. IT HAS BEEN POINTED OUT AS TO WHAT IS THE MISTAKE APPARENT FROM RECORD IN THE ASS ESSMENT ORDER / WHICH HE PROPOSED TO RECTIFY INVOKING THE PROVISIONS OF SECT ION 154 OF THE ACT. 6. FOR APPRECIATION OF THE FACT ORDER PASSED UNDER SEC TION 154 IS BEING REPRODUCED HEREUNDER: THE RETURN OF INCOME WAS FILED ON 01.11.2004, DECL ARING A LOSS OF RS.8,42,64,680/- WHICH WAS PROCESSED UNDE R SECTION ITA NO.2946/DEL/2011 7 143 (1) OF THE IT ACT, 1961 ON 23.02.2005. ASSESSME NT UNDER SECTION 143 (3) WAS COMPLETED ON 29.12.2006 ASSESSI NG THE RS.4,91,41,878/- AFTER ALLOWING NET BUSINESS LOSS A ND UNABSORBED DEPRECIATION. NOTICE UNDER SECTION 154 OF THE IT ACT, 1961 WAS I SSUED ON 18.3.2008 FIXING THE CASE FOR 25.3.2008 ON THE I SSUE THE ASSESSEE HAD CLAIMED DEDUCTION OF RS.1,94,51,222/- AS ALLOWANCE OF 43B OF EARLIER YEARS IN THE 3CD REPORT, THE AMOU NT WAS SHOWN AS INTEREST PAID BEING THE AMOUNT WAIVED OFF IN TER MS OF RESTRUCTURING PROPOSAL SANCTIONED BY CDR CELL. ON 25.3.2008 NEITHER ANYBODY ATTENDED NOR WAS REPL Y FILED BY THE ASSESSEE. HOWEVER A LETTER DATED 10.4. 2008, RECEIVED SEEKING ADJOURNMENT FOR TWENTY DAYS BUT TILL DATE N ONE COMPLIED WITH IN LIGHT OF THE SAME, IT IS PRESUMED THAT ASSE SSEE HAS NOTHING TO SAY ON THE MATTER. IN VIEW OF THE ABOVE RS.1,94,51,222/- IS DISALLOWE D AND ADDED BACK AND LOSS IS ASSESSED AT RS.2,96,90,656/- . 7. THUS WE CONCUR WITH THE FINDING OF THE LD, CIT(A) T HAT THE A.O. WAS NOT JUSTIFIED IN INVOKING PROVISIONS OF SECTION 154 OF THE ACT IN THE PRESENT CASE WITHOUT POINTING OUT THE MISTAKE APPARENT FROM RECORD IN THE ASSESSMENT ORDER. THE LD, CIT(A) HAS ALSO RECORDED IN HIS FIND ING IN PARA NO. 5.6 THAT ORDER UNDER SECTION 154 HAS BEEN PASSED IN A CASUAL MANNER AFTER A LONG LAPSE OF TIME WITHOUT PROVIDING ADEQUATE OPPORTUNIT Y OF BEING HEARD TO THE ASSESSEE. FOR A READY REFERENCE PARA NO. 5.6 OF TH E FIRST APPELLATE ORDER IS BEING REPRODUCED HERE UNDER: ON CAREFUL CONSIDERATION OF THE MATTER, I FIND THA T THE AO HAS PASSED THE RECTIFICATION ORDER U/S 154 IN A CASUAL MANNER AFTE R A LONG LAPSE OF TIME WITHOUT PROVIDING ADEQUATE OPPORTUNITY OF BEING HEA RD TO THE APPELLANT. THE AO HAS ALSO NOT DISCUSSED THE ISSUE IN THE SAID ORDER AND HAS MADE THE DISALLOWANCE IN A VERY PERFUNCTORY MANNER. THE PERU SAL OF THE ASSESSMENT ITA NO.2946/DEL/2011 8 RECORD AS DISCUSSED ABOVE ALSO SHOWS THAT THE AO HA S NOT RESPONDED TO THE ADJOURNMENT APPLICATION FIELD BY THE APPELLANTS AR SEEKING THE SHORT ADJOURNMENT AND HAS PROCEEDED TO PASS THE ORDER U/S 154 AFTER FOUR MONTHS WITHOUT AFFORDING THE APPELLANT AN OPPORTUNITY OF B EING HEARD. FURTHER, AS PER SETTLED LAW, THE POWER OF THE AO U/S 154 IS A L IMITED POWER TO RECTIFY ANY MISTAKE APPARENT FROM THE RECORD WHICH CAN ON LY MEAN ANY OBVIOUS OR PATENT MISTAKE. THE SAID POWER OF RECTIFICATION CANNOT BE EXERCISED TO DECIDE ANY ISSUE WHERE A LONG PROCESS OF REASONING IS REQUIRED OR AN ISSUE WHERE TWO OPINIONS ARE POSSIBLE. THE CASE LAWS CITE D BY THE LD. AR IN THIS REGARD, ARE ALSO VERY CLEAR ON THIS ISSUE. CONSIDER ING THE ABOVE, I FIND THAT THE LEGALITY OF THE IMPUGNED ORDER U/S 154 CANNOT B E SUSTAIN. ACCORDINGLY, THE IMPUGNED DISALLOWANCE OF RS.1,94,51,222/- U/S 4 3B MADE BY THE AO CANNOT STAND. THE SAME IS, THEREFORE, DELETED. 8. THE FIRST APPELLATE ORDER, AS DISCUSSED ABOVE, IS R EASONED ONE, HENCE WE ARE NOT INCLINED TO INTERFERE THEREWITH. THE SAM E IS UPHELD. THE GROUND IS ACCORDINGLY REJECTED. 9. CONSEQUENTLY APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 08 TH DAY OF JUNE, 2012. SD/- SD/- ( T.S.KAPOOR ) ( I.C. SUDHIR ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 08/06/2012 *AK VERMA* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI ITA NO.2946/DEL/2011 9