BEENA MALPANI, BEAWAR V. ITO, BEAWAR

ITA 313/JPR/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 5114 (ITAT-JAIPUR)
• Duration Of Justice: 5 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-09-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2004-2005
• Appeal Filed On: 04-04-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Keywords: Rejection of books of accounts; Depreciation
• Section: 32; 148

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES (SMC), JAIPUR JH ,-MH- TSU U;KF;D LNL; DS LE{K BEFORE: SHRI A.D. JAIN, JUDICIAL MEMBER VK;DJ VIHY LA- @ ITA NOS. 312 TO 314/JP/2016 FU/KZKJ.K O'K Z @ ASSESSMENT YEARS : 2003-04 TO 2005-06 BEENA MALPANI, W/O- SHRI YOGESH MALPANI, M/S MALPANI BROTHERS, MEWARI BAZAR, BEAWAR. CUKE VS. INCOME TAX OFFICER, WARD-1, BEAWAR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/TAN NO.: ABHPM 2587 L VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPOND ENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI MAHENDRA GARGIEYA (ADV) JKTLO DH VKSJ LS @ REVENUE BY : SHRI R.A. VERMA (ADDL.CIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 08/09/2016 MN?KKS'K .KK DH RKJH[ K@ DATE OF PRONOUNCEMENT : 14/09/2016 VKNS'K@ ORDER PER: A.D. JAIN, J.M. THESE ARE ASSESSEES APPEALS FOR A.Y. 2003-04 TO 20 05-06 FILED AGAINST THE ORDER DATED 29/01/2016 PASSED BY THE LD . CIT(A), AJMER, WHEREIN COMMON GROUNDS HAVE BEEN RAISED. (FOR CONVEN IENCE, THE FACTS ARE TAKEN FROM ITA NO. 312/JP/2016): 1.1 ON THE FACTS AND CIRCUMSTANCES OF THE CASE, TH E AUTHORITY BELOW GROSSLY ERRED IN LAW IN ISSUE OF NOTI CE U/S 148 I.T. ACT, 1961 WITHOUT REFERRING THE QUESTION ITA 312 TO 314/JP/2016_ BEENA MALPANI VS ITO 2 OF JURISDICTION FOR DETERMINATION U/S 124(2) OF THE ACT TO THE LEARNED COMMISSIONER OF INCOME TAX PARTICULARLY WHEN APPELLANT OBJECT THE JURISDICTION WELL IN TIME AND AS SUCH RE-ASSESSMENT FRAMED WAS WITHOUT JURISDICTION. 1.2 ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE AUTHORITY BELOW WERE NOT JUSTIFIED IN REJECTING THE OBJECTION REGARDING TRANSFER OF THE CASE RECORDS AN D WRONGFULLY ASSUMPTION OF JURISDICTION OVER THE APPELLANT FOR FRAMING THE RE-ASSESSMENT BY ISSUING NOTICE U/S 148 REQUIRING THE APPELLANT TO FURNISH T HE RETURN. 1.3 ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED ASSESSING OFFICER WAS NOT JUSTIFIED IN MAKIN G THOSE ADDITION FOR WHICH REASONS WERE NOT RECORDED BEFORE ISSUE OF NOTICE U/S 148 OF THE I.T. ACT, 1961 AND THEREFORE AGAINST THE PROVISIONS OF LAW. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE AUTHORITY BELOW WERE NOT JUSTIFIED IN TREATING RS. 13,60,000/- AS INCOME OF THE APPELLANT SHOWN AMOUNT PAYABLE TO CREDITOR UMESH MACHINERY, DAMAN IN BOOKS OF ACCOUNT WITHOUT SPECIFYING UNDER WHICH SECTION ADDITION WAS TREATED AS INCOME OF THE APPELLANT. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS NOT JUSTIFIED IN NOT CONSIDERING THE HOUSE HOLD EXPENSES OF RS. 60,000/- BORNE BY HER HUSBAND AND AS SUCH ADDITION OF RS. 50000/- WAS UNWARRANTED. SIMILAR GROUNDS HAVE BEEN TAKEN IN THE OTHER APPEAL S OF THE ASSESSEE AS WELL. ITA 312 TO 314/JP/2016_ BEENA MALPANI VS ITO 3 2. AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE STATES THAT HE DOES NOT WISH TO PRESS GROUND NO. 1.1. AND 1.2 IN AL L THE THREE APPEALS, AS SUCH, ARE REJECTED AS NOT PRESSED. 3. WITH REGARD TO THE ISSUE OF DISALLOWANCE OF DEPRE CIATION ON FACTORY BUILDING, PLANT AND MACHINERY, THE LD COUNS EL FOR THE ASSESSEE HAS SUBMITTED THAT THIS ISSUE STANDS COVERED IN FAV OUR OF THE ASSESSEE BY THE TRIBUNAL ORDER DATED 27/6/2016, PASSED IN ITA NO. 1090/JP/2011, BY THE SMC BENCH, FOR THE A.Y. 2007-0 8 IN THE ASSESSEES OWN CASE. 4. THE LD SR.DR, ON THE OTHER HAND, HAS PLACED STRON G RELIANCE ON THE IMPUGNED ORDER. IT HAS BEEN CONTENDED THAT THIS ORDER WAS NOT AVAILABLE AT THE TIME OF PASSING OF THE IMPUGNED OR DERS BY THE LD. CIT(A) AND THEREFORE, AT BEST, THE MATTER MAY BE REM ANDED TO THE LD. CIT(A) TO BE DECIDED AFTER TAKING INTO CONSIDERATION IN THE ASSESSEES OWN CASE IN AFORESAID TRIBUNAL ORDER FOR A.Y. 2007-08 . 5. I HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE P ARTIES AND HAVE PERUSED THE MATERIAL AVAILABLE ON THE RECORD. THE LD . CIT(A) HAS DECIDED THIS ISSUE AGAINST THE ASSESSEE IN ALL THE THREE APPEALS, BY OBSERVING AS FOLLOWS: ITA 312 TO 314/JP/2016_ BEENA MALPANI VS ITO 4 I HAVE GONE THROUGH THE ASSESSMENT ORDER, STATEMEN T OF FACTS, GROUNDS OF APPEAL AND WRITTEN SUBMISSION CAREFULLY. IT IS SEEN FROM PAGE NO. 16 OF THE ASSESSMENT ORDER THAT THE THEN C IT(A), AJMER VIDE HIS ORDER DATED 14/10/2011 (APPEAL NO. 97/2011-12), A.Y. 2007-08 HAS ALREADY DECIDED THE ISSUE AGAINST THE ASSESSEE. THEREFORE, FOLLOWING THE ORDER OF MY PREDECESSOR, THIS GROUND O F APPEAL IS DISMISSED. (PARA 9.3. OF THE CIT(A)S ORDER FOR A. Y. 2004-05 AND PARA 8.3. OF THE CIT(A)S ORDER FOR A.Y. 2005-06). 6. IN A.Y. 2004-05, THE LD. CIT(A) HAS ALSO HELD AS FOLLOWS:- AS THE CREDITOR APPEARING IN THE NAME OF M/S UME SH MACHINERY AS ALREADY HELD BY THE CIT(A) IN A.Y. 2007 -08 AS BOGUS, THEREFORE, THE ACTION OF THE ASSESSING OFFICER TREA TING THE CREDITOR APPEARING IN THE NAME OF M/S UMESH MACHINERY AS BOG US, IS HELD TO BE JUSTIFIED. THE DISALLOWANCE OF DEPRECIATION MADE BY T HE ASSESSING OFFICER IS ALSO CONFIRMED AS THE CIT(A) HAS ALREADY DECIDED THIS ISSUE AGAINST THE ASSESSEE IN A.Y. 2007-08 7. FOR A.Y. 2007-08, THIS VERY ISSUE TRAVELLED TO T HE ITAT AND THE ITAT, VIDE ITS SMC ORDER DATED 27/6/2016 (APB 149 TO 161), IT HAS BEEN HELD AS FOLLOWS:- 2.5 IT IS FURTHER OBSERVED FROM THE RECORD THAT THE BASIC CONTENTION OF THE AUTHORITIES BELOW WHILE DISALLOWING THE CLAIM OF DEPRECIATION IN THE PRESENT CASE HAS BEEN THAT THE ASSESSEE HAS NOT ACTUALLY MADE ANY ITA 312 TO 314/JP/2016_ BEENA MALPANI VS ITO 5 INVESTMENT AND ONLY BOGUS BILLS WERE OBTAINED AND HAVE BEEN SHOWN IN THE BALANCE SHEET. THEREFORE, THE CLAIM OF THE DEPRECIATION OF RS.4,31,432/- ON BUILDING , PLANT & MACHINERY AS SHOWN IN THE BALANCE SHEET FOR THE YEAR ENDING 31.03.2007 PLACED AT PAGES 47 OF THE PAPER BOOK FILED BY THE ASSESSEE, IS NOT THE REAL INVESTMENT AND THEREFORE, THE DEPRECATION SO CLAIMED WAS DISALLOWED. HOWEVER, I FIND THAT THE ASSESSEE DISCLOSED JOB RECEIPTS ON ACCOUNT OF MANUFACTURING OF PLASTIC GRANULES OF RS.6,51,000/-, AS APPEARING IN THE TRADING A/C. COPY PLACED AT ASSESSEES PAPER BOOK PAGE 46. THE AO HOWEVER, REJECTED THE BOOKS OF ACCOUNT PRODUCED IN SUPPORT OF SUCH RECEIPTS AND FEELING DISSATISFIED ALSO MADE TRADING ADDITION OF RS.2,00,000/-. IN THE FIRST APPEAL, THE CIT(A) DISCUSSED THE ISSUE AT PAGE 4 PARA 4.2 AND OBSERVED AS UNDER:- 4.2 AS INTIMATED BY THE APPELLANT, DURING THE YEA R ONLY JOB WORK WAS CARRIED OUT AND TOTAL JOB WORK RECEIPTS OF RS. 6,51,000 WERE DECLARED. NO PURCHASES OR SALE WERE MADE DURING THE YEAR AND OPENING STOCK OF PLASTIC OF 30422 KG WAS ALSO DECLARED AS CLOSING STOCK. IN SUCH A SITUATION OBSERVATION OF AO THAT NO STOCK REGISTER WAS PRODUCED FOR VERIFICATION IS NOT RELEVANT. AO DID NOT MAKE ANY INDEPENDENT ENQUIRY TO PROVE THAT JOB WORK RECEIPTS DECLARED BY APPELLANT ARE NOT CORRECT. NO SPECIFIC DEFECTS HAVE BEEN POINTED OUT IN THE BOOKS OF ACCOUNTS OF APPELLANT. THEREFORE THERE IS NO JUSTIFICATION FOR REJECTION OF BOOKS OF ACCOUNTS BY INVOKING THE PROVISIONS OF SEC. 145. ADDITION OF RS. 2,00,000 IS ALSO WITHOUT ANY BASIS AND THE SAME IS ITA 312 TO 314/JP/2016_ BEENA MALPANI VS ITO 6 DIRECTED TO BE DELETED. GROUND NO. 2 AND 3 ARE THUS ALLOWED. IT IS NOTED THAT THE ABOVE FINDING RECORDED BY THE CIT(A) HAS BECOME FINAL IN ABSENCE OF ANY FURTHER CHALLENGE BY THE REVENUE. THUS, ON ONE HAND, THE REVENUE ACCEPTED THE FINDINGS OF THE CIT(A) WHEREBY HE HAS ALREADY QUASHED THE INVOKING OF SEC.145 ACCEPTING THE BOOKS OF ACCOUNT. HOWEVER, THE REVENUE IS DISBELIEVING THE BALANCE SHEET PREPARED FOR THE SUBJECTED YEAR BASED ON THE SAME BOOKS OF ACCOUNT BY DOUBTING THE INVESTMENT MADE IN THE BUILDING, PLANT & MACHINERY AS SHOWN BY THE ASSESSEE AT RS.24,40,162/- & RS.37,56,214/- RESPECTIVELY. THE AO CANNOT BE PERMITTED TO HAVE TWO DIFFERENT YARDSTICKS I.E. WHILE DEALING WITH THE TRADING ADDITION ACCEPTING THE BOOKS OF ACCOUNT HOWEVER, WHILE DEALING WITH THE CLAIM OF DEPRECIATION, DISBELIEVING THE SAME SETS OF ACCOUNT. SINCE THE INCOME GENERATED FROM THE USE OF THOSE ASSETS UNDER DISPUTE HAS BEEN ASSESSED BY THE AO, THERE IS NO REASON NOW TO DOUBT THE VERY EXISTENCE AND THE USER OF THE ASSETS. IN THIS VIEW OF THE MATTER, THE SUBJECTED ASSETS ARE NOT ONLY OWNED, POSSESSED BUT WERE ALSO USED BY THE ASSESSEE SO AS TO ALLOW HIM THE STATUTORY ALLOWANCE U/S 32 OF THE ACT. IT IS FURTHER NOTED FROM THE PERUSAL OF TRADING AND PROFIT & LOSS ACCOUNT FOR THIS YEAR PLACED AT PAGES AT PAGE 46 OF THE PAPER BOOK WHICH CLEARLY SHOWS THAT THE ASSESSEE ALSO MADE PAYMENT OF ELECTRICITY CHARGES TOTALING TO ITA 312 TO 314/JP/2016_ BEENA MALPANI VS ITO 7 RS.94,675/-, OUT OF WHICH RS.81,375/- WAS PAID TO M/S MANIYAR PLAST LTD. WHEREAS RS.13,310/- WERE PAID TO MAHARASTRA ELECTRICITY BOARD. COPIES OF ELECTRICITY BILL AND DEBIT NOTES ARE AVAILABLE IN THE ASSESSEES PAPER BOOK AT PAGES 112 TO 117. SIMILARLY WAGES OF RS.22,270/- WAS ALSO PAID THIS YEAR IN CONNECTION WITH THE JOB WORK DONE BY THE ASSESSEE AND THE SUPPORTING VOUCHERS WERE SUBMITTED WHICH ARE PLACED ON RECORD. IT IS OBSERVED THAT THE ASSESSEE ALSO SUBMITTED COPIES OF ALL THE BILLS AND VOUCHERS OF THE PLANT & MACHINERY AND OF THE BUILDING MATERIAL ETC. TOGETHER WITH THE COPIE S OF THE TRANSPORT RECEIPTS BEFORE THE AUTHORITIES BELOW WHICH ARE AVAILABLE IN THE ASSESSEES PAPER BOOK FROM PAGES 52 TO 95. IT IS NOTICED THAT THE FIRST BALANCE SHEE T WAS DRAWN BY THE ASSESSEE IN A.Y.2004-05 WHEN IT CAME IN PRODUCTION AND THEREAFTER THE BALANCE SHEET FOR A.Y.2005-06 & 2006-07 WERE ALSO PREPARED WHICH INCLUDED THE COST OF THE BUILDING AND PLANT & MACHINER Y AND THE CLAIM OF DEPRECIATION IN THOSE YEARS. CONSIDERING THE MATERIALS AND THE DOCUMENTS AVAILABLE ON RECORD, IT APPEARS THAT NOBODY VISITED THE SITE WH ERE THE FACTORY OF THE ASSESSEE WAS SITUATED WHICH INDICATES THAT THE AO MERELY PROCEEDED ON SUSPICION. HE FAILED TO BRING CONTRARY EVIDENCE ON RECORD. IT IS ALSO NOTED THAT AFTER A LAPSE OF A CONSIDERABLE PERIOD AND AFTER THE INSTALLATION AND THE COMMENCEMENT OF PRODUCTION, THE AO MADE ENQUIRY IN THE SUBJECTED YEAR AND MERELY PROCEEDING ON SUSPICION, DISALLOWED THE CLAIM OF ITA 312 TO 314/JP/2016_ BEENA MALPANI VS ITO 8 DEPRECIATION MADE BY THE ASSESSEE. I AM THEREFORE, OF A CONSIDERED VIEW THAT THE CLAIM OF THE DEPRECIATION DISALLOWED BY THE AO AND CONFIRMED BY LD. CIT(A) IS WITHOUT ANY BASIS AND DESERVES TO BE DELETED. IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ORDER OF THE LD. CIT(A) IS REVERSED ON THIS ISSUE. THE CLAIM OF DEPRECIATION OF RS.4,31,432/- IS ACCORDINGLY ALLOWED AND THUS THE GROUND OF APPEAL NO. 1 OF THE ASSESSEE ON THIS ISSUE IS ALLOWED. THE TRIBUNAL, THUS, HELD THAT THE SUBJECT ASSETS WERE NOT ONLY OWNED AND POSSESSED BY THE ASSESSEE, BUT THEY WERE ALSO US ED BY HER, ENTITLING HER TO STATUTORY ALLOWANCE OF DEPRECIATION U/S 32 OF THE ACT. THE TRIBUNAL HAS HELD THAT FOR THAT YEAR, THE ASSESSE E HAD PAID ELECTRICITY CHARGES, COPIES OF THE BILLS AND DEBIT NOTES WITH REGARD TO WHICH WERE ON RECORD. WAGES IN CONNECTION WITH THE JOB WORK DONE STOOD PAID, SUPPORTING VOUCHERS CONCERNING WHICH WERE ON RECORD. COPIES OF ALL THE BILLS AND VOUCHERS OF THE PLANT A ND MACHINERY AND OF THE BUILDING MATERIAL, ETC., ALONGWITH COPIES OF TRA NSPORT RECEIPTS WERE ALSO FOUND TO HAVE BEEN FILED. IT WAS OBSERVED THAT DESPITE ALL THESE DOCUMENTARY EVIDENCES AVAILABLE ON RECORD, THE SITE OF THE ASSESSEE FACTORY WAS NOT VISITED BY ANY ONE FROM THE DEPARTME NT. FROM THIS, IT ITA 312 TO 314/JP/2016_ BEENA MALPANI VS ITO 9 WAS CONCLUDED THAT THE DISALLOWANCE OF DEPRECIATION C OULD NOT BE SUSTAINED. THE SAME WAS, AS SUCH, DELETED. 8. THE AFORESAID TRIBUNAL ORDER IS DATED 27/6/2016, W HEREAS THE LD. CIT(A)S ORDER IN ALL THE YEARS UNDER APPEAL WERE PA SSED ON 29/1/2016. THEREFORE, OBVIOUSLY, THE LD. CIT(A) AND T HE ASSESSING OFFICER DID NOT HAVE THE BENEFIT OF THE SAID TRIBUNA L ORDER. FACTS WITH REGARD TO THE CLAIM OF DEPRECIATION FOR ALL THESE Y EARS NEED TO BE VERIFIED IN THE LIGHT OF THE OBSERVATIONS MADE BY T HE TRIBUNAL IN A.Y. 2007-08. 9. THEREFORE, ALL THE APPEALS OF THE ASSESSEE ARE RE MITTED TO THE FILE OF THE ASSESSING OFFICER TO BE DECIDED AFRESH IN AC CORDANCE WITH LAW, IN THE LIGHT OF THE AFORESAID TRIBUNAL ORDER DATED 27/6 /2016 PASSED IN THE ASSESSEES OWN CASE IN A.Y. 2007-08. THE ASSESSEE, NO DOUBT, SHALL BE AFFORDED DUE AND ADEQUATE OPPORTUNITY OF HEARING AN D THE ASSESSEE SHALL COOPERATE IN THE FRESH PROCEEDINGS BEFORE THE ASSESSING OFFICER. 10. GROUND NO. 3 IN ALL THE APPEALS HAS NOT BEEN AR GUED BEFORE THIS BENCH. HOWEVER, SINCE THE MATTER PERTAINING TO THE D ISALLOWANCE OF DEPRECIATION HAS BEEN REMITTED TO THE ASSESSING OFF ICER, THIS ISSUE OF HOUSEHOLD EXPENSES FOR ALL THESE YEARS IS ALSO REMA NDED TO THE ITA 312 TO 314/JP/2016_ BEENA MALPANI VS ITO 10 ASSESSING OFFICER, TO BE DECIDED AFRESH IN ACCORDAN CE WITH LAW ON AFFORDING OPPORTUNITY OF HEARING TO THE ASSESSEE. 11. IN THE RESULT, ALL THE THREE APPEALS ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 14/09/2016. SD/- , - MH TSU (A.D. JAIN) U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 14 TH SEPTEMBER, 2016 * RANJAN VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SMT. BEENA MALPANI, BEAWAR. 2. IZR;FKHZ@ THE RESPONDENT- THE ITO, WARD-1, BEAWAR. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 312-314/JP/2016) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. 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