M/s. Alliance Engineers and Construction, Faridabad V. ACIT, Faridabad

ITA 3106/DEL/2015

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 3049 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 9 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-03-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: I
• Assessment Year: 2010-2011
• Appeal Filed On: 18-05-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Depreciation
• Section: 208; 68

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL, DELHI BENCH A, NEW DELHI BEFORE : SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI L.P. SAHU, ACCOUNTANT MEMBER ITA NO. 3106/DEL/2015 ASSESSMENT YEAR: 2010-11 ALLIANCE ENGINEERS AND CONSTRUCTION, 1645, SECTOR 29, FARIDABAD. PAN: AAKFA0810A (APPELLANT) VS. ACIT, CIRCLE 1, FARIDABAD. (RESPONDENT) APPELLANT BY SH. KAPIL GOEL, ADVOCATE RESPONDENT BY SH. AMIT KATOCH, SR. DR ORDER PER L.P. SAHU, A.M.: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF LD. CIT(A)- FARIDABAD DATED 27.02.2015 FOR THE ASSESSMENT YEAR 2010-11 ON THE FOLLOWING GROUNDS : 1. THAT THE APPELLANT DENIES ITS LIABILITY TO BE AS SESSED AT THE INCOME OF RS.1,49,63,355/- AND ACCORDINGLY DENIES HIS LIAB ILITY TO PAY TAX AND PENALTY THEREON. 2. THAT HAVING REGARD TO FACTS & CIRCUMSTANCES OF TH E CASE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE VAL IDITY OF ASSESSMENT EVEN THOUGH THE ORDER/ADDITION OF LD. A.O. WAS NOT ON TH E BASIS OF THE MATERIAL FACTS. DATE OF HEARING 14.02.2019 DATE OF PRONOUNCEMENT 06.03.2019 ITA NO. 3106/DEL/2015 2 3. THAT HAVING REGARD TO FACTS & CIRCUMSTANCES OF T HE CASE, AND IN ANY VIEW OF THE MATTER, THE ORDER OF LD. ASSESSING OFFI CER IS ANY HOW BAD IN LAW AND AGAINST THE FACTS BEING NON SPEAKING AND PASSED WITHOUT APPLYING OF JUDICIAL MIND. 4. THAT HAVING REGARD TO FACTS & CIRCUMSTANCES OF T HE CASE, AND IN ANY VIEW OF THE MATTER, THE ADDITION OF RS. 1,23,40,247 /- AS ON ACCOUNT OF DEPRECIATION. LD CIT (A) COULD NOT APPLY HIS JUDICI AL MIND ON THE RATE OF DEPRECIATION OF COMMERCIAL VEHICLE ON WHICH SEVERAL APEX COURTS PRONOUNCED HIS VERDICT, ACCORDINGLY THE ORDER OF LD . ASSESSING OFFICER IS ANY HOW BAD IN LAW AND AGAINST THE FACTS BEING NONE SPEAKING AND PASSED WITHOUT APPLYING OF JUDICIAL MIND. 5. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. A.O. WAS NOT JUSTIFIED IN DISALLOWING DEPRECIATION AMOUNTING TO RS.37, 843/- ON FURNITURE & FITTING, COMPUTER, MOBILE. 6. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) WAS NOT JUSTIFIED IN ADDITION OF THE INTEREST A SUM OF RS. 3,50,910/- ON THE ALLEGED GROUND OF INTEREST FREE ADVANCES MADE BY TH E APPELLANT TO ITS PLOT IN FARIDABAD, WHOSE USED FOR BUSINESS PURPOSE. 7. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. LD. CIT (A) WAS NOT JUSTIFIED IN DISALLOWING THE ADDITION OF PA RTNERS CAPITAL OF RS. 22, 69,000/- WITHOUT BRINGING ANY SPECIFIC MATERIAL ON RECORD AS TO WHY EACH OF THE ADDITION DURING THE RELEVANT PERIOD WAS NOT CONSIDERED, EXPLAINED BY HIM, WHEN THE SOURCE OF EACH ONE OF THE SAME WER E DULY EXPLAINED. 8. THAT THE ALLEGATION OF NONE PRESENTATION IS ALSO BASELESS BECAUSE ON THIS ISSUES I, CAN PRODUCE THE ATTENDANCE REGISTERE D OF THE DEPARTMENT RECEPTION. 9. THAT HAVING REGARD TO FACTS & CIRCUMSTANCES OF T HE CASE, AND IN ANY VIEW OF THE MATTER, THE PENALTY U/S 271 (1) (C) IS BAD IN LAW AND ON THE ORDER PASSED HIMSELF BY THE LD. CIT (A). ITA NO. 3106/DEL/2015 3 10. THAT THE ASSESSEE RESERVE HIS RIGHTS TO ADD, AL TER OR AMEND THE GROUND OF APPEAL AT ANY STAGE AND ALL THE GROUND AR E WITHOUT PREJUDICE TO EACH OTHER. 11. THAT ALL THE ADDITION MADE BY THE LD. A. 0. IS BAD IN LAW AND AGAINST THE FACTS OF THE CASE. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E FILED RETURN OF INCOME ON 02.10.2010 DECLARING INCOME OF RS.35,88,380/-. THE ASSESSEE IS A PARTNERSHIP FIRM AND ENGAGED IN THE BUSINESS OF STONE AGGREGATI ON AND OTHER CONTRACT WORK/JOB WORK. IN THE ASSESSMENT PROCEEDINGS, THE A SSESSING OFFICER NOTICED THAT THE ASSESSEE HAS CLAIMED 30% DEPRECIATION ON M ACHINERY IN THE PROFIT AND LOSS ACCOUNT AT RS.2,47,21,535/-, WHICH AS PER ASSESSING OFFICER WAS NOT IN ACCORDANCE WITH SECTION 32(2) OF THE IT ACT. HE, TH EREFORE, DISALLOWED THE DEPRECIATION AND GRANTED DEPRECIATION @ 15% AMOUNTI NG TO RS.1,23,78,090/- AND ACCORDINGLY DISALLOWED THE EXCESS DEPRECIATION CLAIM OF RS.1,23,43,445/-. 2.1 THE ASSESSING OFFICER FURTHER NOTICED THAT THE ASSESSEE HAD CLAIMED INTEREST TO THE TUNE OF RS. 45,48,369/-. ON THE O THER HAND, THE ASSESSEE HAD GIVEN INTEREST FREE ADVANCES OF RS.29,24,254/- (RS. 12,34,254 + 16,90,000) FOR PLOT AT SECTOR 29 AND CHARMWOOD VILLAGE. THE ASSESS ING OFFICER AFTER BEING DISSATISFIED WITH THE EXPLANATION OF THE ASSESSEE, ADDED INTEREST @ 12% OF ADVANCE TO THE INCOME OF THE ASSESSEE. 2.2. THE ASSESSING OFFICER FURTHER NOTICED THAT THE PARTNERS OF THE FIRM HAVE CONTRIBUTED TOWARDS CAPITAL IN CASH AS UNDER : ITA NO. 3106/DEL/2015 4 (I). P.K. WADHVA RS.4,50,000/- (II). BEGRAJ NAGAL RS.6,00,000/- (III). A.K. GARG RS.6,00,000/- (IV). V.K. PATHAK RS.6,19,000/- ------------------ RS.22,69,000/- ------------------- 2.3 THE ASSESSEE WAS ASKED TO PROVE SOURCE OF CAPIT AL INTRODUCTION BUT HE WAS UNABLE TO EXPLAIN THE SAME. THEREFORE, THE ASSE SSING OFFICER MADE ADDITION OF RS.22,69,000/- U/S. 69 AS INCOME FROM U NDISCLOSED SOURCES. AGGRIEVED FROM THE ABOVE ORDER, THE ASSESSEE APPEAL ED BEFORE THE LD. CIT(A) WHO CONFIRMED THE ACTION OF THE ASSESSING OFFICER. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. 3. THE LD. AR OF THE ASSESSEE SUBMITTED THAT WHILE FRAMING THE ASSESSMENT FOR THE ASSESSMENT YEAR 2011-12, THE ASSESSING OFFI CER HAD ALLOWED HIGHER DEPRECIATION ON THE SAME FIXED ASSETS, WHICH WERE C ARRIED FORWARD FROM LAST YEARS BALANCE SHEET. COPY OF ASSESSMENT ORDER IS P LACED ON RECORD. REGARDING DISALLOWANCE OF INTEREST, IT IS SUBMITTED THAT THE SAID PLOT WAS USED FOR THE BUSINESS PURPOSE SINCE 2009. REGARDING CAPITAL CONT RIBUTION BY THE PARTNERS INTO THE FIRM, HE RELIED ON SEVERAL JUDICIAL PRECED ENTS PLACED ON RECORD. ULTIMATELY, THE LD. AR PRAYED TO REMIT THE CASE BAC K TO THE FILE OF ASSESSING OFFICER FOR EXAMINATION OF ABOVE THREE ISSUES AFRES H. ITA NO. 3106/DEL/2015 5 4. ON THE OTHER HAND, THE LD. DR, THOUGH RELIED UPO N THE ORDERS OF AUTHORITIES BELOW, BUT HAD NO OBJECTION TO SEND THE CASE BACK TO THE FILE OF ASSESSING OFFICER. 5. AFTER HEARING BOTH THE SIDES AND PERUSING THE EN TIRE MATERIAL ON RECORD, WE NOTICE THAT THE HIGHER DEPRECIATION CLAIMED BY T HE ASSESSEE IN SUBSEQUENT ASSESSMENT YEAR 2011-12 WAS ALLOWED BY THE ASSESSIN G OFFICER AFTER CONSIDERING THE WRITTEN SUBMISSIONS OF THE ASSESSEE STATING THAT THE PLANTS AND MACHINERY ON WHICH DEPRECIATION WAS CLAIMED, RA IN IN THREE SHIFTS WHEREAS NO SUCH FACT IS DISCERNIBLE FROM THE ORDERS OF THE AUTHORITIES BELOW. WE, THEREFORE, RESTORE THE ISSUE BACK TO THE FILE O F ASSESSING OFFICER TO VERIFY THE TRUE FACTS AND DECIDE THIS ISSUE AFRESH ALSO AF TER CONSIDERING AS TO UNDER WHAT CIRCUMSTANCES, THE ASSESSEE IS NOT ELIGIBLE FO R HIGHER DEPRECIATION, PARTICULARLY WHEN HE HAS BEEN GRANTED HIGHER DEPREC IATION IN THE ASSESSMENT YEAR 2011-12 ON THE SAME MACHINERY. THE ASSESSEE IS DIRECTED TO SUBSTANTIATE ITS CLAIM BY WAY OF COGENT EVIDENCES BEFORE THE ASS ESSING OFFICER. 6. IN RESPECT TO SECOND ISSUE, WE FIND THAT THE CON TENTION OF THE ASSESSEE THAT THE IMPUGNED PLOTS WERE BEING USED FOR BUSINES S PURPOSE DURING THE YEAR UNDER CONSIDERATION TOO NEEDS VERIFICATION AT THE S TAGE OF ASSESSING OFFICER. THE ASSESSEE IS DIRECTED TO PLACE CREDIBLE EVIDENCE BEFORE THE ASSESSING OFFICER TO JUSTIFY ITS CLAIM OF PLOTS BEING USED FO R BUSINESS PURPOSE. THEREFORE, THIS ISSUE IS ALSO RESTORED TO THE FILE OF ASSESSIN G OFFICER FOR DECIDING THE SAME AFRESH AFTER DUE VERIFICATION. ITA NO. 3106/DEL/2015 6 7. IN RESPECT TO THIRD ISSUE, WE FIND THAT THE NATU RE OF CREDIT, AS ALSO STATED BY THE AO ITSELF IN THE ASSESSMENT ORDER IS CAPITAL CONTRIBUTION BY THE PARTNERS IN CASH. HOWEVER, THE ADDITION U/S. 68 OF THE ACT W AS MADE ON THE GROUND THAT THE ASSESSEE FAILED TO OFFER ANY EXPLANATION BEFORE THE AUTHORITIES BELOW. BEFORE US, THE ASSESSEE HAS SUBMITTED CAPITAL ACCOU NT, ITR, COMPUTATION OF INCOME AND BANK STATEMENTS OF THE PARTNERS WHO CONT RIBUTED IN THEIR CAPITAL ACCOUNT OF THE ASSESSEE FIRM. THE CONTENTION OF THE ASSESSEE BASED ON THESE EVIDENCES IS THAT THOUGH THE SOURCE OF CREDIT IS PR OVED BY THESE EVIDENCES, YET IN CASE IT IS CONSIDERED OTHERWISE, THE ADDITION CA NNOT BE MADE IN THE HANDS OF THE ASSESSEE FIRM AND THE SAME MAY BE CONSIDERED IN THE HANDS OF THE PARTNERS. FOR THIS PROPOSITION, THE LD. AR HAS RELI ED ON FOLLOWING CASE LAWS : (I). CIT VS. RAMESHWAR DASS URESH PAL CHEEKA, 208 ITR 459 (P & H) (II). TAJ BOREWELLS, 291 ITR 232 (MAD.) (III). CIT VS. JAISWAL GRAIN STORES, 272 ITR 136 ( ALL) (IV). CIT VS. M/S. PHOOL SINGH YADAV & CO. GURGAON (P&H). 8. WE, HOWEVER, NOTICE THAT ALL THE DOCUMENTARY EVI DENCE FILED BEFORE US, AS NOTED ABOVE, WERE FILED BEFORE THE LD. AUTHORITI ES BELOW FOR CONSIDERATION, IS NOT CLEAR FROM THE ORDERS OF THE AUTHORITIES BELOW. THE ASSESSEE HAS, HOWEVER, CERTIFIED THAT THESE DOCUMENTS WERE AVAILABLE BEFOR E THE AUTHORITIES BELOW. A PERUSAL OF THE ORDERS OF THE AUTHORITIES BELOW, HOW EVER, SHOWS THAT THE NATURE OF CREDIT, I.E., CAPITAL CONTRIBUTION BY THE PARTNE RS, IS NOT IN DISPUTE. IN PRESENCE OF THESE FACTS AND RESPECTFULLY FOLLOWING THE AFORESAID DECISIONS OF VARIOUS HIGH COURTS, RELIED BY THE ASSESSEE, WE FIN D NO JUSTIFICATION TO MAKE ADDITION OF SUCH CREDITS IN THE HANDS OF ASSESSEE F IRM. THE LD. CIT(A), WAS, ITA NO. 3106/DEL/2015 7 THEREFORE, NOT JUSTIFIED IN SUSTAINING THE SAME. AC CORDINGLY, THIS ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE. 9. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 06.03.2019. SD/- SD/- (BHAVNESH SAINI) (L.P. SAHU) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 06.03.2019 *AKS* COPY OF ORDER FORWARDED TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES, NEW DELHI