M/s. Surya Air Products (P) Ltd, New Delhi V. ACIT, New Delhi

ITA 3626/DEL/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 3453 (ITAT-DELHI)
• Duration Of Justice: 11 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-07-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 30-06-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 24-08-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R P SINGH
• Assessee Lawyers: B N GOSWAMY
• Keywords: Depreciation
• Section: 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH G DELHI) BEFORE SHRI G.E. VEERABHADRAPPA, VICE PRESIDENT AND SHRI A.D. JAIN, JUDICIAL MEMBER ITA NO. 3626(DEL)2009 ASSESSMENT YEAR: 2006-07 M/S. SURYA AIR PRODUCTS(P) LTD. ASSTT.COMMISS IONER OF INCOME TAX, 461, KHARI BAOLI. DELHI. V. CIRCLE 9( 1), NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI B.N. GOSWAMY, ADVOCATE RESPONDENT BY: SHRI R.P . SINGH, SR. DR ORDER PER A.D. JAIN, J.M . THIS IS ASSESSEES APPEAL FOR THE ASSESSMENT YEAR 2 006-07, TAKING THE FOLLOWING GROUNDS:- 1. THAT THE ORDERS OF THE AUTHORITIES BELOW ARE RE PLETE WITH PREJUDICIAL OBSERVATIONS WHICH ARE EITHER UNFOUNDED OR THE SAME ARE NOT SUSCEPTIBLE OF GIVING RISE TO ANY ADVERSE CONCLUSION. 2. THAT THE LD. CIT(A) HAS GROSSLY ERRED IN SUSTAIN ING THE ADDITION OF RS. 11,13,738/- REPRESENTING DEPRECIATION DISALLOWED ON PURCHASE OF GAS CYLINDERS. 3. THAT THE APPELLANT HAS FILED CONCLUSIVE EVIDENCE TO SHOW THAT THE PURCHASE OF GAS CYLINDER WAS GENUINE, THE PAYMENT W AS MADE BY ACCOUNT PAYEE CHEQUE AND COLLECTED BY THE SELLER IN HIS BAN K ACCOUNT WITH PUNJAB NATIONAL BANK, BHAVNAGAR. ITA 3626(DEL)09 2 4. THAT THE SALE MEMO WAS ADMITTEDLY FROM THE SALE MEMO BOOK OF THE SELLER AND THE STATEMENT ALLEGED TO HAVE BEEN MADE BY MR. ABID HUSSAIN IS CONTRARY TO THE FACTS PROVED ON RECORD. 5. THAT THE STATEMENT OF MR. ABID HUSSAIN, STATED TO BE PROPRIETOR OF M/S. KIRAN SALES CORPORATION HAS WRONGLY BEEN RELIED UPO N EVEN AFTER SERIOUS DISCREPANCIES WERE FOUND THEREIN. 6. THAT NEITHER THE COPY OF THE REPORT SENT BY ADI T, BHAVNAGAR NOR THE STATEMENT OF MR. ABID HUSSAIN WAS EVER FURNISHED TO THE APPELLANT. 7. THAT THE LD. CIT(A) HAS ERRONEOUSLY HELD THAT E NCASHMENT OF CHEQUE BY M/S. KIRAN SALES CORPORATION HAS NOT BEEN PROVED IN SPITE OF APPELLANT HAVING BEEN FILED CERTIFIED COPIES OF THE PAYEES AC COUNT CHEQUE WITH ENCASHMENT, SIGNATURE AND SEAL OF THE RECEIVING BAN K. 8. THAT IN ANY CASE THE APPELLANT HAD CLAIMED DEPR ECIATION OF RS. 5,56,869/- @ 30%, THE CYLINDERS HAVING BEEN PURCHAS ED IN THE SECOND HALF OF THE PREVIOUS YEAR AS SHOWN IN SCHEDULE-I, ANNEXE D TO THE STATUTORY AUDIT REPORT UNDER SECTION 44AB OF THE ACT AND THE DISALL OWANCE OF RS. 11,13,738/- IS CONSEQUENTIALLY UNTENABLE. THE ORDER AS MADE IS AGAINST THE LAW AND FACTS OF THE CASE. 2. THE ISSUE PERTAINS TO THE ACTION OF THE LEARNED CIT(A) IN SUSTAINING THE ADDITION OF RS. 11,13,738/- REPRESENTING DEPRECIATI ON DISALLOWED ON PURCHASE OF GAS CYLINDERS. 3. AS PER THE ASSESSMENT ORDER, THE ASSESSEE CLAIME D TO HAVE PURCHASED OLD AND USED EMPTY CYLINDERS FROM M/S. KIRAN SALES CORP ORATION, BHAVNAGAR. THE COST OF THE SAME ALONG WITH FREIGHT WAS DISCLOSED A T RS. 18,56,230/-. ON THIS, THE ASSESSEE CLAIMED DEPRECIATION @ 60%, AMOUNTING TO R S. 11,13,738/-. ITA 3626(DEL)09 3 4. ON ENQUIRY AT BHAVNAGAR, IT WAS NOTICED BY THE A O THAT M/S. KIRAN SALES CORPORATION WAS A PROPRIETORY CONCERN OF MR.ABID HU SSAIN; THAT THE SALE OF CYLINDER BOTTLES WAS DENIED BY M/S. KIRAN SALES COR PORATION; THAT AT M/S. KIRAN SALES CORPORATION, INVOICE NUMBERS WERE PUT IN HAND WRITING, WHEREAS THE ASSESSEE HAD PRODUCED INVOICES HAVING PRINTED NUMB ER; AND THAT THE HANDWRITING ON THE INVOICE OF M/S. KIRAN SALES CORPORATION WAS DIFFERENT FROM THAT ON THE INVOICE PRODUCED BY THE ASSESSEE TO SUBSTANTIATE TH E PURCHASE. 5. ON QUERY BY THE AO, THE ASSESSEE SUBMITTED THAT THE PAYMENT HAD BEEN MADE THROUGH CHEQUE BY AN EMPLOYEE. IT WAS SUBMITT ED THAT PROOF OF TOUR UNDERTAKEN BY THEIR EMPLOYER TO BHAVNAGAR FOR THE P URCHASE OF THE CYLINDERS, ALONG WITH HOTEL BILLS FOR STAY, FOOD AND LAUNDRY W ERE ON RECORD. THE ASSESSEE FILED PHOTOCOPY OF BOTH THE SIDES OF THE CHEQUE ISS UED TO M/S. KIRAN SALES CORPORATION, PROOF THAT THE SAID CHEQUE WAS CLEARED BY THE BANK AT BHAVNAGAR, CHEQUE BEING CROSSED ACCOUNT PAYEE CHEQUE IN THE NA ME OF M/S. KIRAN SALES CORPORATION AND A LETTER FROM THEIR BANKER STATING THAT THE CHEQUE WAS CLEARED AT BHAVNAGAR, THAT IT WAS ISSUED BY M/S. SURYA AIR PRO DUCTS LTD., THAT THE CHEQUE NO. 253539, THAT THE AMOUNT WAS RS. 18,17,400/- AND THAT THE CHEQUE WAS IN FAVOUR OF M/S. KIRAN SALES CORPORATION. THE ASSES SEE ALSO FILED A TESTING REPORT OF EXPLOSIVE DEPARTMENT CONCERNING THE CYLINDERS. ITA 3626(DEL)09 4 6. THE AO, HOWEVER, DID NOT AGREE WITH THE CONTENTI ONS OF THE ASSESSEE FOR THE REASON THAT THE CHEQUE WAS CLEARED IN THE ACCOU NT OF M/S. KIRAN SALES CORPORATION AND IT COULD NOT BE VERIFIED FROM ANY O F THE DETAILS OR DOCUMENTS SUBMITTED; THAT THE TESTING REPORT WAS ESSENTIAL AS PER LAW, BUT IT DID NOT POINT TO THE FACT THAT IT PERTAINED TO THE OLD CYLINDERS PUR CHASED FROM M/S. KIRAN SALES CORPORATION; AND THAT THE REPORT OF THE INSPECTOR, WHEREIN THE PROPRIETOR OF M/S. KIRAN SALES CORPORATION HAD DENIED HAVING ANY TRANS ACTION WITH THE COMPANY, WAS DIRECTLY IN CONTRA DISTINCTION TO THE CLAIM MAD E. 7. IT WAS, THEREFORE, THAT THE AO DISALLOWED THE CL AIM OF DEPRECIATION OF RS. 11,13,738/- MADE BY THE ASSESSEE. 8. BEFORE THE LD. CIT(A), THE ASSESSEE SUPPLEMENTED ITS STAND TAKEN BEFORE THE AO BY STATING THAT THE PAYMENT HAD BEEN MADE THROUG H A CHEQUE BY AN EMPLOYEE; AND THAT THE EMPLOYEE/AGENT WAS CARRYING AN OPEN BE ARER CHEQUE AND HE MADE THE PAYMENT TO M/S. KIRAN SALES CORPORATION BY MAKING I T A CROSSED CHEQUE AND FILLING THE AMOUNT ON THE DATE ON WHICH HE MADE THE PURCHASE. 9. THE LD. CIT(A) REFUSED TO ACCEPT SUCH CONTENTION . IT WAS OBSERVED THAT THE CHEQUE PAYMENT WAS NOT VERIFIED ON THE BASIS OF THE DOCUMENTS PRODUCED; AND THAT THE COPY OF THE TESTING REPORT DID NOT ESTABLI SH THAT IT PERTAINED TO OLD CYLINDERS PURCHASED FROM M/S. KIRAN SALES CORPORATI ON. BESIDES, M/S. KIRAN ITA 3626(DEL)09 5 SALES CORPORATION HAD CATEGORICALLY DENIED ANY TRAN SACTION WHATSOEVER WITH THE ASSESSEE. THIS IS HOW THE LD. CIT(A) CONFIRMED TH E ASSESSMENT ORDER. 10. AGGRIEVED, THE ASSESSEE IS IN FURTHER APPEAL. 11. CHALLENGING THE IMPUGNED ORDER, THE LEARNED COU NSEL FOR THE ASSESSEE HAS CONTENDED THAT THE LD. CIT(A) HAS ERRED IN CONFIRMI NG THE ADDITION WRONGLY MADE BY THE AO; THAT IN MAKING THE ADDITION, THE ONLY ST ATEMENT OF THE SELLER WAS RELIED ON. HOWEVER, NO COPY WAS EVER PROVIDED TO THE ASSE SSEE AND IT WAS ONLY ORALLY CONFRONTED . OUR ATTENTION HAS BEEN DRAWN TO THE C ONTENTS OF ASSESSEES PAPER BOOK (APB, FOR SHORT). THESE ARE COPIES OF INV OICE (APB-7), GRN OF THE TRANSPORTER (APB-8), ACCOUNT PAYEE OF THE CHEQUE (A PB-10), ASSESSEES BANK STATEMENT WHEREIN THE DEBIT IS SHOWN (APB-11), CERT IFICATE OF THE SELLERS BANKER (APB-12), COPY OF E-MAIL (APB-13-14), COPY OF THE TEST REPORT UNDER THE EXPLOSIVES ACT QUA THE CYLINDER (APB 15-40), SERIAL NUMBERS OF ALL THE CYLINDERS PURCHASED (APB 41 TO 56), COPY OF TICKET AND BILLS (APB 57 TO 79), AFFIDAVIT OF MR. ARUN SINGHAL, MANAGING DIRECTOR (APB 80), COPY OF ORDER PASSED BY THE AO U/S 154 OF THE I.T. ACT ALLOWING 50% DEPRECIATION ( APB 81) AND COPY OF ASSESSEES LETTER TO THE AO REQUESTING COPY OF THE DOCUMENTS COLLECTED (WHICH REQUEST WAS REFUSED BY THE AO WITHOUT PASSING ANY O RDER) (APB 82 TO 84). ITA 3626(DEL)09 6 12. THE LEARNED COUNSEL HAS SUBMITTED THAT IN VIEW OF THE AFORESAID OVERWHELMING DOCUMENTARY EVIDENCE, THE LD. CIT(A) H AS CLEARLY ERRED IN SUSTAINING THE ASSESSMENT ORDER, WHICH ACTION OF TH E LD. CIT(A) BE UNDONE BY ALLOWING THE ASSESSEES APPEAL. 13. THE LEARNED DR, ON THE OTHER HAND, PLACING STRO NG RELIANCE ON THE CONCURRENCE FINDINGS OF THE AUTHORITIES BELOW, HAS CONTENDED THAT A PERUSAL OF THE FINDINGS RECORDED CLEARLY SHOWS THAT THE ASSESSEE M ISERABLY FAILED TO PROVE ITS CLAIM, WHICH WAS RIGHTLY DISALLOWED BY THE AO AND S UCH DISALLOWANCE WAS CORRECTLY UPHELD BY THE LD. CIT(A). IT HAS BEEN RE QUESTED THAT AS SUCH, THE ASSESSEES APPEAL, CARRYING NO MERIT WHATSOEVER, BE DISMISSED. 14. WE HAVE HEARD BOTH THE PARTIES AND HAVE PERUSED THE MATERIAL ON RECORD. APROPOS THE ISSUE AS TO WHETHER THE REPORT UNDER TH E EXPLOSIVES ACT IS OF ANY CONSEQUENCE IN SUPPORTING THE ASSESSEES CLAIM, IT HAS BEEN MAINTAINED ON BEHALF OF THE ASSESSEE THAT THIS REPORT IS CLEARLY WITH RE GARD TO THE OLD CYLINDERS WHICH ARE PRESENTLY THE BONE OF CONTENTION. IT HAS BEEN STATED THAT A NEW CYLINDER, AS OF NOW, COMES ALONG WITH THE REPORT IN THE FIRST INSTA NCE AND IT IS ONLY THE OLD CYLINDERS WHICH ARE TO BE TESTED. THIS STAND OF T HE ASSESSEE APPEARS TO BE CORRECT. NOTHING CONTRARY THERETO HAS BEEN BROUGHT BEFORE US . THE REPORT MENTIONS, INTER ALIA, THE SERIAL NUMBER, THE OWNERS CYLINDER NUMBE R, AND THE MANUFACTURERS CYLINDER NUMBER AND IDENTIFICATION. AT THE BOTTOM OF EACH PAGE OF THE REPORT, IT ITA 3626(DEL)09 7 HAS BEEN CERTIFIED THAT THE ABOVE CYLINDERS HAVE BEEN SUBJECTED TO HYDRAULIC TEST AT PRESSURE NOTINGS AND IS FOUND TO BE SATISFACTORY , SUBJECT TO THE REMARK NOTED. IT HAS ALSO NOT BEEN DENIED THAT THE NEW CYLINDERS COME ALONG WITH SUCH A REPORT AND IT IS THE OLD CYLINDERS WHICH REQUIRE TESTING. 15. BESIDES, THE DOCUMENTARY EVIDENCE PLACED ON REC ORD BEFORE THE AO COMPRISES COPIES OF INVOICE, THE GRL OF THE TRANSPO RTER, THE ACCOUNT PAYEE CHEQUE, THE ASSESSEES BANK STATEMENT, WHEREIN THE AMOUNT IS SHOWN TO HAVE BEEN DEBITED, THE CERTIFICATE OF THE SELLERS BANKER, SE RIAL NUMBERS OF THE CYLINDERS PURCHASED, THE TICKETS AND BILLS CONCERNING THE VIS IT TO BHAVNAGAR. 16. THE ADDITION IS BASED ON THREE FACTS. FIRSTLY - THAT THE CHEQUE COULD NOT BE VERIFIED FROM THE DETAILS OR THE DOCUMENTS SUBMITTE D; THAT THE TEST REPORT DID NOT SHOW THAT IT PERTAINED TO THE OLD CYLINDERS PURCHA SED BY THE ASSESSEE FROM M/S. KIRAN SALES CORPORATION.; AND THAT IN ITS REPORT, M /S. KIRAN SALES CORPORATION HAD DENIED HAVING HAD ANY TRANSACTION WHATSOEVER WITH T HE ASSESSEE COMPANY. 17. APROPOS THE ISSUE CONCERNING THE CHEQUE BEING N OT VERIFIABLE, THE CERTIFICATE OF THE SELLERS BANKER IS TO BE FOUND A T APB 12, ALLAYING THIS DOUBT OF THE AO. ITA 3626(DEL)09 8 18. SOFAR AS REGARDS THE TEST REPORT, WE HAVE ALREA DY DEALT WITH THE SAME. THE TEST REPORT, TO REITERATE, IS CLEARLY REGARDING THE OLD CYLINDERS PURCHASED BY THE ASSESSEE. 19. APROPOS THE STATEMENT OF M/S. KIRAN SALES CORPO RATION, THIS STATEMENT CANNOT, BY ITSELF, BE CONCLUSIVE OF THE ADDITION. SUCH UNILATERAL STATEMENT, IN THE FACE OF THE AFOREDISCUSSED VOLUMINOUS DOCUMENTARY E VIDENCE PRODUCED BY THE ASSESSEE, CANNOT BE A HEAVIER PIECE OF EVIDENCE, PA RTICULARLY IN VIEW OF THE FACT THAT THE CERTIFICATE OF THE BANKER OF THE SELLER IS IN FAVOUR OF THE ASSESSEE. THE SELLERS STATEMENT COULD HAVE BEEN MADE FOR PURPOSE S BEST KNOWN TO THE SELLER ITSELF, WHICH HAVE NOT BEEN GONE INTO BY EITHER OF THE AUTHORITIES BELOW. 20. ALL CONSIDERED, THEREFORE, WE FIND THE GRIEVANC E OF THE ASSESSEE TO BE JUSTIFIED. THE SAME IS, AS SUCH, ACCEPTED. 21. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30.07.2010. SD/- SD/- (G.E. VEERABHADRAPPA) (A.D. JAIN) VICE PRESIDENT JUDICIAL MEMBER DATED: 30.07.2010 *RM ITA 3626(DEL)09 9 COPY FORWARDED TO: 1. M/S. SURYA AIR PRODUCTS(P) LTD. 46, KHARI BAOLI. DELHI. 2. ACIT, CIRCLE 9(1), NEW DELHI. 3. CIT 4. CIT(A) 5. DR TRUE COPY BY ORDER DEPUTY REGISTRAR