RITESH K.AGARWAL, MUMBAI V. ACIT, CIRCLE- 3(1)(2), MUMBAI

ITA 3271/MUM/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 6475 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-02-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2009-2010
• Appeal Filed On: 16-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JYOTHILAKSHMI NAYAK
• Keywords: Depreciation; Additional depreciation
• Section: 133A; 80IB; 32(1)(iia); 80IA; 80IC; 80IC; 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER AND SHRI G. MANJUNATH A , ACCOUNTANT MEMBER ITA NO. 3271 / MUM . /201 8 ( ASSESSMENT YEAR : 20 09 10 ) SHRI RITESH K. AGARWAL 501, EMBASSY CENTRE NARIMAN POINT, MUMBAI 400 021 PAN ABMPA1788L . APPELLANT V/S ASSTT. COMMISSIONER OF INCOME TAX CIRCLE 3(1)(2), MUMBAI . RESPONDENT ASSESSEE BY : SHRI S.L. JAIN REVENUE BY : S MT. JYOTHILAKSHMI NAYAK DATE OF HEARING 23 .01.2020 DATE OF ORDER 07.02.2020 O R D E R PER SAKTIJIT DEY. J.M. THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 27 TH APRIL 2018, PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 8, MUMBAI, PERTAINING TO THE ASSESSMENT YEAR 2009 10. 2. IN GROUNDS NO.1 AND 2, THE ASSESSEE HAS CHALLENGED THE VALIDITY OF RE OPENING OF ASSESSMENT UNDER SECTION 147 OF THE INCOME TAX ACT, 1961 (FOR SHORT 'THE ACT' ). 2 SHRI RITESH K. AGARWAL 3. BRIEF FACTS ARE, THE ASSESSEE , AN INDIVIDUAL , IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF P LASTIC PACKING MATERIAL. FOR THE ASSESSMENT YEAR UNDER DISPUTE, THE ASSESSEE FILED HIS RETURN OF INCOME ON 4 TH SEPTEMBER 2009, DECLARING TOTAL INCOME OF ` 6,35,372. DURING THE COURSE OF SURVEY CONDUCTED UNDER SECTION 133A OF THE ACT IN ASSESSEES BUSINESS PREMISES, IT WAS FOUND THAT THE ASSESSEE HAS NOT CLAIMED ADDITIONAL DEPRECIATION UNDER SECTION 32(1)(IIA) OF THE ACT DURING THE PERIOD WHERE IN HE WAS ELIG IBLE FOR DEDUCTION UNDER SECTION 80IC / 80IB / 80IA OF THE ACT. WHEREAS, HE STARTED CLAIMING ADDITIONAL DEPRECIATION THEREAFTER. IT WAS FOUND THAT ADDITIONAL DEPRECIATION ALLOWABLE TO THE ASSESSEE FOR THE IMPUGNED ASSESSMENT YEAR WAS TO THE TUNE OF ` 77,67 ,405. ON THE BASIS OF THE AFORESAID INFORMATION, THE ASSESSING OFFICER RE OPENED THE ASSESSMENT UNDER SECTION 147 OF THE ACT. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER CALLED UPON THE ASSESSEE TO EXPLAIN WHY ADDITIONAL DEPRECIATION ON NEW PL ANT AND MACHINERY SHOULD NOT BE COMPUTED AND ALLOWED IN THE IMPUGNED ASSESSMENT YEAR. IN RESPONSE, IT WAS SUBMITTED BY THE ASSESSEE THAT ADDITIONAL DEPRECIATION BEING IN THE NATURE OF AN INCENTIVE CAN BE CLAIMED BY THE ASSESSEE AT HIS OWN OPTION . THE ASSES SING OFFICER, HOWEVER, DID NOT ACCEPT THE SUBMISSIONS OF THE ASSESSEE AND PROCEEDED TO COMPUTE ADDITIONAL DEPRECIATION FOR THE YEAR UNDER CONSIDERATION AT ` 68,49,775, AND ALSO ALLOWED THE SAME WHILE COMPUTING THE INCOME. HOWEVER, HE REDUCED THE DEDUCTION CLAIMED 3 SHRI RITESH K. AGARWAL UNDER SECTION 80IC OF THE ACT TO THAT EXTENT. ULTIMATELY, HE DETERMINED THE INCOME OF THE ASSESSEE AT ` 6,35,370, EXACTLY THE SAME INCOME AS WAS RETURNED BY THE ASSESSEE IN THE RETURN OF INCOME. THOUGH, THE ASSESSEE CHALLENGED THE ASSESSMENT ORDER SO PASSED BEFORE THE FIRST APPELLATE AUTHORITY, INTER ALIA, ON THE GROUND THAT THE RE OPENING OF ASS ESSMENT IS INVALID, HOWEVER, LEARNED COMMISSIONER (APPEALS) DID NOT ENTERTAIN THE GROUNDS RAISED BY THE ASSESSEE AND THE APPEAL WAS ULTIMATELY DISMISSED. 4. T HE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED , THE RE OPENING OF THE ASSESSMENT HAS BEEN MADE SOLELY FOR THE REASON OF ALLOWING ADDITIONAL DEPRECIATION TO THE ASSESSEE. THEREFORE, THE RE OPENING IS NOT FOR THE BENEFIT OF THE DEPARTMENT BUT FOR THE BENEFIT OF THE ASSESSEE. HE SUBMITTED , ULTIMATELY THE ASSESSING OFFICER HAS ALLOWED THE ADDITIONAL DEPRECIATION AND HAS DETERMINED THE INCOME AT THE SAME FIGURE WHICH WAS RETURNED BY THE ASSESSEE IN THE RETURN OF INCOME. THEREFORE, VIRTUALLY, THERE IS NO ESCAPEME NT OF INCOME REQUIRING RE ASSESSMENT. IN SUPPORT OF SUCH SUBMISSIONS , THE LEARNED AUTHORISED REPRESENTATIVE RELIED UPON THE FOLLOWING DECISIONS: I) AMAR NATH AGARWAL V/S CIT, [2015] 371 ITR 183 (ALL.); II) CIT V/S RUCHIRA PAPERS LTD., [2013] 212 TAXMAN 009 (HP ); III) DULRAJ U. JAIN V/S ACIT & ORS, [2018] 102 CCH 198 (BOM.); 4 SHRI RITESH K. AGARWAL IV) SMT. USHA AGARWAL V/S ITO, ITA NO.167/AGRA/2018, DATED 19.06.2018; AND V) MOTTO TILES PVT. LTD. V/S ACIT, [2016] 386 ITR 280 (GUJ.). 5. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED , THOUGH , LEARNED COMMISSIONER (APPEALS) HAS DEALT WITH VARIOUS OTHER ASPECTS OF RE OPENING, HOWEVER, HE HAS NOT SPECIFICALLY DEALT WITH THE AFORESAID SUBMISSIONS OF THE ASSESSEE. THEREFORE, THE ISSUE MAY BE RESTORED BACK TO HIS FILE FOR FRESH ADJUDICATION. 6. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. UNDISPUTEDLY, THE ASSESSEE HAS FILED THE RETURN OF INCOME FOR THE IMPUGNED ASSESSMENT YEAR OFFERING THE INCOME OF ` 6,35,372. THE ASSESSING OFFICER HAS ALSO COMPLETED THE ASSESSMENT DETERMIN ING THE INCOME AT THE VERY SAME FIGURE. THEREFORE, TH ERE IS NO VARIATION TO THE INCOME RETURNED BY THE ASSESSEE. CONSEQUENTLY, THERE IS NO EXTRA TAX DEMAND BY VIRTUE OF THE ASSESSMENT ORDER. FURTHER, IT IS EVIDENT , THE ASSESSING OFFICER HAS RE OPENED THE A SSESSMENT ONLY FOR THE REASON THAT THE ASSESSEE HAS NOT CLAIMED ADDITIONAL DEPRECIATION IN THE YEAR UNDER CONSIDERATION. IN OUR VIEW, NON CLAIMING OF ADDITIONAL DEPRECIATION DOES NOT RESULT IN ESCAPEMENT OF INCOME. RATHER, THE ASS ESSEE HAS DEPRIVED HIMSELF OF A PARTICULAR BENEFIT PROVIDED UNDER THE STATUTE. WE FAIL TO UNDERSTAND HOW THIS CAN LEAD TO ESCAPEMENT OF INCOME. THIS VIEW OF OURS GETS FURTHER STRENGTHENED AS ULTIMATELY THE 5 SHRI RITESH K. AGARWAL ASSESSING OFFICER HAS DETERMINED THE TOTAL INCOME AT THE VERY SAME FIGURE AT WHICH THE ASSESSEE HAS FILED THE RETURN OF INCOME. THEREFORE, IT IS PROVED BEYOND ANY SHRED OF DOUBT THAT THERE IS NO ESCAPEMENT OF INCOME WHATSOEVER TO LEAD THE ASSESSING OFFICER TO FORM A BELIEF THAT RE OPENING OF ASSESSMENT HAS TO BE MADE ON ACCOUNT OF ESCAPEMENT OF INCOME. IT IS TRITE LAW THAT THE PROVISION OF SECTION 147 OF THE ACT IS ENSHRINED IN THE STATUTE TO ENABLE THE REVENUE TO ASSESSEE THE INCOME WHICH HAS ESCAPED ASSESSMENT , THEREBY , THE TAX DUE ON SUCH INCOME HAS NOT BEEN PAID BY THE ASSESSEE . WHEREAS, IN THE PRESENT CASE, IT IS THE REVERSE. BY RE OPENING THE ASSESSMENT, THE ASSESSING OFFICER WANT S TO CONFER CERTAIN BENEFIT WHICH THE ASSESSEE AT HIS OWN CHOICE HAS NOT AVAILED. THIS, IN OUR VIEW, CANNOT BE THE INTENT AND PURPOSE FOR WHICH PROVI SIONS OF SECTION 147 OF THE ACT IS PROVIDED IN THE STATUTE. THEREFORE, IN OUR CONSIDERED OPINION, THE RE OPENING OF ASSESSMENT UNDER SECTION 147 OF THE ACT IN THE PRESENT CASE HAS TO BE DECLARED AS INVALID. ACCORDINGLY, WE DO SO AND QUASH THE ASSESSMENT OR DER PASSED FOR THE IMPUGNED ASSESSMENT YEAR. THESE GROUNDS ARE ALLOWED. 7. IN VIEW OF OUR DECISION IN THE AFORESAID LEGAL GROUNDS, THE ISSUE RAISED ON MERIT S IN GROUND NO.3, HAS BECOME REDUNDANT, HENCE, NOT REQUIRED TO BE DECIDED AT THIS STAGE. HOWEVER, THE ISSUE IS LEFT OPEN FOR ADJUDICATION IF IT ARISES IN ANY OTHER ASSESSMENT YEAR IN FUTURE. 6 SHRI RITESH K. AGARWAL 8. IN THE RESULT, APPEAL IS ALLOWED AS INDICATED ABOVE. ORDER PRONOUNCED IN THE OPEN C OURT ON 07.02.2020 SD/ - G. MANJUNATH A ACCOUNTANT MEMBER SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMB AI, DATED: 07.02.2020 COPY OF THE ORDER FORWARDED TO : (1) THE ASSESSEE; (2) THE REVENUE; (3) THE CIT(A); (4) THE CIT, MUMBAI CITY CONCERNED; (5) THE DR, ITAT, MUMBAI; (6) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY ASSISTANT REGISTRAR ITAT, MUMBAI