Kabir Infra Private Limited, Ludhiana V. The ACIT, Circle -6, Ludhiana

ITA 358/CHANDI/2022

AI Insights

The case involves Kabir Infra Private Limited appealing against the order of the CIT(A), which confirmed the Assessing Officer's rejection of the company's application under section 154 for enhanced depreciation claim. The company argued that there was an oversight in the opening balance of WDV of fixed assets used for calculating depreciation, which was taken from the Companies Act instead of the Income Tax Act. The Tribunal found that the mistake was apparent from the record and directed the Assessing Officer to rectify the depreciation claim accordingly.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 127539 (ITAT-CHANDIGARH)
• Duration Of Justice: 11 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-03-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 14-03-2023
• Assessment Year: 2016-2017
• Appeal Filed On: 07-04-2022
• Other Referred Cases: Dattatraya Gopal Bhotte vs. CIT, Goetze (India) Ltd. vs. CIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Rectification of order; Principle of natural justice; Revised return
• Section: 154; 143(3); 139(5); 139(1)

Judgement Text

आयकर अपील य अ धकरण,च डीगढ़ यायपीठ “ए ” , च डीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH “ A ”, CHANDIGARH ी स ु धांश ु ीवा तव, या यक सद य, एवं ी "व#म %संह यादव, लेखा सद य BEFORE: SHRI. SUDHANSHU SRIVASTAVA, JM & SHRI. VIKRAM SINGH YADAV, AM ITA NO. 358 /Chd/ 2022 Assessment Year : 2016-17 Kabir Infra Private Limited 472-D, Model Town Extension Ludhiana-141002 (Punjab) The Asst. CIT Circle-6, Ludhiana PAN NO: AADCK9359G Appellant Respondent ! " Assessee by : None (Adj. Application Rejected) # ! " Revenue by : Smt. Tarundeep Kaur, Sr. DR $ % ! & Date of Hearing : 15/03/2023 '()* ! & Date of Pronouncement : 20/03/2023 आदेश/Order PER VIKRAM SINGH YADAV, A.M. : This is an appeal filed by the assessee against the order of the Ld. CIT(A), NFAC, Delhi dt. 23/11/2021 pertaining to Assessment Year 2016-17 wherein the sole ground of appeal reads as under: “That the Worthy Commissioner of Income Tax (Appeals),National Faceless Appeal Centre, Delhi has erred in confirming the action of the Assessing Officer by rejecting the application made by the assessee u/s 154 for allowing the enhanced claim of depreciation of Rs. 48,88,526/-. Instead of Rs. 41,44,887/-.” 2. At the outset, it is noted that there is a delay in filing the present appeal by 74 days as pointed out by the Registry. After taking into consideration the Affidavit filed by the assessee company as well as hearing the Ld. DR who had 2 not raised any specific objection, the delay on account of COVID-19 pandemic is hereby condoned and the appeal is admitted for adjudication on merits. 3. Briefly the facts of the case are that the assessee filed its return of income declaring total income of Rs. 1,28,30,090/- which was taken up for scrutiny and assessment was completed under section 143(3) by accepting the returned income. Subsequently the assessee filed a rectification application under section 154 dt. 08/05/2019 before the AO. In its application, the assessee submitted that during the course of assessment proceedings, the assessee vide its submission sent through e-mail on 10/12/2018 submitted that while filing its return of income for the impugned assessment year i.e; A.Y. 2016-17, on account of oversight, the opening balance of WDV of fixed asset as on 01/04/2015 was wrongly taken as per the Companies Act as against Income Tax Act. It was submitted that the correct WDV required to be taken as per the Income Tax Act is Rs. 2,70,39,004/- instead of Rs. 2,20,00,290/-. Accordingly, the depreciation for the F.Y. 2015-16 relevant to the impugned A.Y. 2016-17 comes to Rs. 48,88,526/- instead of Rs. 41,44,887/-. It was submitted that from the perusal of the assessment order as well as the attached computation sheet, no effect has been given for the enhanced depreciation for Rs. 48,88,526/- and it was accordingly requested that the same may be granted to the assessee with consequential refund of taxes. In support, the copy of the letter e-filled on 10/12/2018 during the course of assessment proceedings, copy of the assessment order passed under section 143(3) for A.Y. 2016-17, copy of the depreciation chart for A.Y. 2016-17 and copy of the depreciation chart for A.Y. 2015-16 were duly submitted before the AO. 4. As per the AO, the claim of the assessee does not fall within the ambit of provisions of Section 154 of the Income Tax Act, 1961. It was held by the AO that mistake was committed by the assessee while filing its return of income under section 139(1) of the Act and assessee had the option of filing the revised return 3 under section 139(5) to rectify its mistake and since the same has not happened the application of the assessee u/s 154 was rejected by the AO. 5. Being aggrieved, the assessee carried the matter in appeal before the Ld. CIT(A) and it was submitted that during the course of assessment proceedings, the assessee brought to the notice of the AO that while filing its return of income it had inadvertently and wrongly taken opening balance of WDV of fixed assets as per the Companies Act instead of Income Tax Act and the AO has not given effect to its bonafide error. It was further submitted that the same is clearly a mistake apparent from the record and does not require any long drawn process of reasoning or a matter where there could be any two opinions and following written submissions were filed during the appellate proceedings: “Since, all the grounds of appeal are linked to each other, hence we submit common submissions for all the grounds of appeal. 1. The assessment proceedings u/s 143(3) of the Income Tax Act, 1961 in the case of assessee company was completed vide order dated 11.12.2018, whereby returned income was accepted. During the course of assessment proceedings, the assessee company brought to the notice of Ld. A.O that while Wing the ITR for the A.Y 2016-17, inadvertently and wrongly, the opening balance of WDV of fixed as at 01.04.2015 was wrongly taken from the depreciation chart as per companies Act instead of Income Tax Act. The correct WDV required to be taken as per Income Tax Act as on 01.04.2015 is Rs.27039004/ instead of Rs.22000290/-. Accordingly, depreciation for F.Y 2015-16 comes to Rs.4888526/- instead of Rs.4144887/- as wrongly considered by the assessee company while filing the ITR for the A.Y 2016-17. 2. The Ld. A.O has not given effect to this bonafide error of taking wrong WDV in the computation of income while computing the business income. Further, we wish to bring to your kind attention that after giving effect of enhanced depreciation of Rs.4888526/-, Income Tax refund for A.Y 2016-17 comes to Rs.319583/- instead of Rs.73710/-. We wish to submit following documents for your kind perusal: (a) Copy of assessment order for the A.Y 2016-17 dated 11.12.2018 u/s 143(3) of the Income Tax Act, 1961 alongwith computation sheet. (b) Copy of depreciation chart for the A.Y 2016-17 as per Income Tax Act, 1961 showing correct opening balance of WDV of fixed assets as at 01.U4.2015 at Rs.27039004/-. You will observe from the depreciation chart that correct depreciation as per Income Tax Act for A.Y. 2016-17 comes to Rs. 4888526/-. 4 (c) Copy of depreciation chart for the A.Y 2015-16 as per Income Tax Act showing WDV of fixed assets as on 31.03.2015 for Rs.27039004/ alongwith depreciation chart as per companies Act for the F.Y 2014-15. You will observe from the depreciation chart as per companies Act for the F.Y 2014-15 that closing balance of WDV as at 31.03.2015 is Rs.22000290/- and the same figure was wrongly taken in the ITR for the A.Y 2016-17 whilecalculating the depreciation as per Income Tax Act. (d) Statement showing computation of total income for the A.Y 2016-17 after considering depreciation for the A.Y 2016-17 for Rs.4888526/- and accordingly income tax refund for the A.Y2016-17 comes to Rs.319583/- instead of Rs.73710/-. 3. For the rectification of abovesaid bonafide error, the assessee company filed application for rectification dated 08.05.2019 u/s154 of the Income Tax Act, 1961 before the Assessing officer, however, the Ld. A.O rejected the rectification application abruptly and without even analyzing the facts of the case by simply giving text of section 154 in the rectification order and stating in last para of order that," After perusal of submission of the assessee, it is observed that the claim of the assessee does not fall within the ambit of provision of section 154 of the I.T. Act, 1961 for making rectification. The mistake was committed by the assessee while filing return of income u/s 139(1) and the assessee had the option of filing revised return u/s 139(5) to rectify the mistake. Keeping in view of the above application of the assessee is hereby rejected and stands disposed of." 4. It is further submitted that the income tax proceedings are not adversarial proceedings. As to who is responsible for the mistake is not material for the purpose of proceedings under section 154; what is material is that there is a mistake- a mistake which is clear, glaring and which is incapable of two views being taken. The fact that mistake has occurred is beyond doubt. The fact that it is attributed to the error of the assessee does not obliterate the fact of mistake or legal remedies for a mistake having crept in. It is only elementary that the income liable to be taxed has to be worked out in accordance with the law as in force. In this process, it is not open to the Revenue authorities to take advantage of mistakes committed by the assessee. Tax cannot be levied on an assessee at a higher amount or at a higher rate merely because the assessee, under a mistaken belief or due to an error, offered the income for taxation at that amount or that rate. It can only be levied when it is authorised by the law, as is the mandate of Art.265 of the Constitution of India. A sense of fair play by the /fe7d officers towards the taxpayers is not an act of benevolence by the field officers but it is call of duty in a socially accountable governance. In this respect, the reliance is placed on the following judgments: (a) Dattatraya Gopal Bhotte vs. CIT[1984] 150 ITR 460 In this case, it was held that,"Officers of the department must not take advantage of ignorance of an assessee as to his rights. It is one of their duties to assist a tax payer in every reasonable way, particularly in the matter of claiming and securing reliefs and in this regard the Officers should take the initiative in guiding a taxpayer where proceedings or other particulars before them indicate that some refund or relief is due to him. This attitude would, in the long run, benefit the 5 department, for it would inspire confidence in him thai he may be sure of getting a square deal from the department." Copy of said judgment is attached in Sr. No. ...... _ below for your ready reference. Something, which can be established by a long-drawn process of reasoning on points on which there may be conceivably two opinions. A decision on a debatable point of law is not a mistake apparent from the record. 8. The plain meaning of the word 'apparent' is that it must be something, which appears to be so ex facie and is incapable of argument or debate. It, therefore, follows that decision on debatable point of law or fact or failure to apply the law to a set of facts, which remained to be investigated, cannot be corrected by way of rectification. A mistake apparent from the record is one, to point out which no elaborate argument is required. It must be a glaring, obvious or self-evident mistake. 9. Therefore, in view of the above submissions and judicial pronouncements relied on and as a matter of natural justice, you are requested to pass order to allow assessee company to claim correct depreciation of Rs. 4888526/- and accordingly direct Ld. A.O to rectify the computation of income made while passing the assessment order u/s 143(3) of the Income Tax Act, 1961. We hope your honour will find the above submissions in order. In case any further information is needed, the same shall be submitted on hearing from your good office. 6. The submissions so filed by the assessee were considered but not found acceptable to the Ld. CIT(A) and it was held as under: 5.2 “The appellant has referred to the judgement in the case of Dattatraya Gopal Bhotte vs. CIT [1984] 150 ITR 460. However, the case of the appellant varies from the above referred judgement in respect of the particular issue of contention. The judgement in the case of Goetze (India) Ltd. vs. CIT (2006) of the Hon'ble Supreme Court of India may be looked into whereby the decision clearly spells out the restriction of the power of the Assessing Officer to entertain a claim of deduction otherwise than by filing a revised return. 5.3 In this particular case the appellant has neither filed a revised return rectifying its own mistake nor did it raise the issue at the time of scrutiny proceedings and assessment was completed u/s 143(3) by accepting the returned income. After completion of such assessment the rectification petition for allowing enhanced claim of depreciation and thereby reducing the returned income and increasing claim of refund has been filed. 5.4 On going through section 154 alongwith the judgement of the Apex Court in the case referred above [Goetz (India) Ltd. v. CIT (2006)] vis-a-vis the 6 appellant's case, I find no infirmity in the AO's order by rejecting the rectification petition. The order of the AO is upheld.” 7. Against the said findings and directions of the ld CIT(A), the assessee is in appeal before us. 8. The ld DR is heard and material available on record purused. Firstly, regarding the decision of Hon’ble Supreme Court in case of Goetze(India) Ltd. which has been relied by the Ld. CIT(A) NFAC, we find that the said decision is in the context of the power of the AO to admit any fresh claim during the course of assessment proceedings other than by way of filing a revised return of income. However the same does not restrict the power of the Appellate Authority in considering the claim so filed by the assessee and adjudicating the same based on facts and circumstances of the respective case. 9. In the present case, we find that the limited issue which has been raised by the assessee during the course of assessment proceedings relates to the claim of depreciation which has been wrongly claimed as per the provisions of Companies Act whereas the same have to be claimed as per the provisions of the Income Tax Act, and in support the copy of the depreciation chart for A.Y. 2015-16 and A.Y. 2016-17 is available on the record. As per the depreciation chart for A.Y. 2015-16, the closing WDV as on 31/03/2015 has been shown at Rs. 2,70,39,004/- and as per the depreciation chart for A.Y 2016-17, WDV on fixed assets as on 01/04/2015 has been taken at Rs. 2,20,00,290/- which clearly shows that there is some error which has crept in while taking the opening balance of WDV as on 01/04/2015 at Rs. 2,20,00,290/- instead of the closing WDV for the previous year which by default will become the opening WDV for the year under consideration at Rs. 2,70,39,004/-. None of the lower authorities have disputed the said factual matrix of the case in terms of both the computation of depreciation as per Income Tax Act and relates rules, and the quantum thereof so reflected in the tax returns of both the years and same being clearly a 7 mistake which is apparent from the record and in respect of which there could not be any two opinions, being purely a factual matter which is clearly emerging from the record, we hereby direct the AO to take into consideration the opening balance of WDV as Rs. 2,70,39,004/- and work out the claim of the depreciation and determine taxable income accordingly. 10. In light of aforesaid, the adjournment application filed by the assessee is hereby rejected. 11. In the result, appeal of the assessee is allowed. (Order pronounced in the open Court on 20/03/2023) Sd/- Sd/- स ु धांश ु ीवा तव "व#म %संह यादव (SUDHANSHU SRIVASTAVA) ( VIKRAM SINGH YADAV) या यक सद य / JUDICIAL MEMBER लेखा सद य/ ACCOUNTANT MEMBER AG Date: 20/03/2023 ( + ! , - . - Copy of the order forwarded to : 1. The Appellant 2. The Respondent 3. $ / CIT 4. - 0 ग 2 3 & 2 3 456 ग7 DR, ITAT, CHANDIGARH 5. ग 6 8 % Guard File ( + $ By order, 9 # Assistant Registrar