M/s. Swati Minerals, Kolhapur V. DCIT, Cent. Cir., Kolhapur

ITA 398/PUN/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 56417 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 5 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 1998-1999
• Appeal Filed On: 17-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANN KAPTHUAMA
• Keywords: Depreciation; Difference of opinion; Change of opinion
• Section: 143(3); 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE BEFORE SHRI I.C. SUDHIR (JM) AND SHRI D.KARUNAKARA RAO (AM) ITA NOS. 398 TO 402/PN/2010 (ASSTT. YEAR: 1998-99 TO 2002-03)) M/S SWATI MINERALS , ... APPELLANT 23 K, A WARD, RANKALA CHOPTY, KOLHAPUR PAN :AAKFS4394P V. DY. COMMISSIONER OF INCOME-TAX RESPONDENT CENTRAL CIRCLE, KOLHAPUR APPELLANT BY : SHRI. M.K. KULKARNI RESPONDENT BY : MS. ANN KAPTHUAMA ORDER PER I.C. SUDHIR, JM IN ALL THESE APPEALS THE ASSESSEE HAS QUESTIONED T HE FIRST APPELLATE ORDER WHEREBY THE LD. CIT(A) HAS UPHELD THE ACTION OF TH E AO IN MAKING DISALLOWANCE OF 1/7 TH TO 1/10 TH OF THE ALLOWABLE DEPRECIATION @ 20% ON THE MOTOR V EHICLES ON ITS USE FOR OTHER THAN BUSINESS PURPOSE/PERSONAL USER, VIDE ORDER PASSED U/S. 154 OF THE ACT. 2. THE GRIEVANCE OF THE ASSESSEE IS THAT THE ASSESS MENTS WERE FRAMED U/S. 143(3) READ WITH SECTION 147 OF THE ACT AFTER APPLI CATION OF DUE MIND, HENCE DISALLOWANCE IN QUESTION MADE U/S. 154 IS NOTHING B UT CHANGE OF OPINION AND IT BEING A DEBATABLE ISSUE, THE AO WAS NOT JUSTIFIED I N MAKING THE DISALLOWANCE INVOKING THE PROVISIONS OF S.154 OF THE ACT (GROUN D NO.1). 3. THE LD. AR SUBMITTED FURTHER THAT IN VIEW OF THE ORY OF MERGER, WHEN THE MATTER WAS PENDING IN APPEAL BEFORE THE LD. CIT(A) , THE AO SHOULD NOT HAVE ITA . NOS. 398 TO 402/PN/2010 SWATI MINERALS A.Y. 1998-99 TO 2002-03 PAGE OF 4 2 INVOKED THE PROVISIONS OF S. 154 OF THE ACT AND TH AT THE LD. CIT(A) INSTEAD OF DISMISSING THE APPEALS FINALLY, HAS DISMISSED THE A PPEALS AS DISMISSED FOR STATISTICAL PURPOSES (GROUND NO. 2). 4. THE LD. DR ON THE OTHER HAND TRIED TO JUSTIFY TH E ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT MISTAKE IS APPARENT FROM T HE RECORD IN THE ASSESSMENT ORDER AS EXCESS DEPRECIATION THAT THE ALLOWABLE DE PRECIATIONS ON THE VEHICLES WAS CLAIMED AND ALLOWED. 5. HAVING GONE THROUGH THE ORDERS OF THE AUTHORITIE S BELOW, WE FIND THAT PROVISIONS OF S.154 OF THE ACT TO RECTIFY THE ASSES SMENT ORDERS HAVE BEEN INVOKED BY THE AO ON TWO ACCOUNTS, FIRSTLY DEPRECIATION ON VEH ICLES HAS BEEN ALLOWED @ 25% THOUGH ALLOWABLE DEPRECIATIONS ON THESE VEHICLES WA S 20% ONLY, AND SECONDLY IN THE A.Y. 1997-98 1/10 TH OF THE ALLOWABLE DEPRECIATION WAS DISALLOWED ON AC COUNT OF THE POSSIBLE USER FOR OTHER THAN BUSINESS PURPOSES. THE ASSESSEE/APPELLANT HAS NOT QUESTIONED THE FIRST ACTION OF RECTIFICATION WHEREB Y THE AO HAS RESTRICTED THE ALLOWANCE OF DEPRECIATIONS ON CERTAIN VEHICLES TO 20% FROM 25% BUT IN QUESTION IS THE SECOND ACTION OF THE AO WHEREBY HE HAS DISALLOW ED 1/7 TH IN A.Y. 1998-99 AND 1/10 TH IN THE REMAINING A.YS. OUT OF THE ALLOWABLE DEPREC IATION (I.E. @ 20%) ON ACCOUNT OF OTHER THAN BUSINESS USER OR PERSONAL USE R. SUCH DISALLOWANCE IS MADE ON ACCOUNT OF POSSIBLE OTHER THAN BUSINESS USE OR PERS ONAL USE IN ABSENCE OF MAINTENANCE OF PROPER LOG BOOKS/RECORD, WHICH IN O UR VIEW IS A DEBATABLE ISSUE DEPENDING UPON THE QUALITY OF MAINTENANCE OF RECORD OF TO & FRO OF THOSE VEHICLES IN EACH YEAR. DISALLOWANCE ON ACCOUNT OF POSSIBLE OTH ER THAN BUSINESS USER OR PERSONAL USER, THUS CAN NOT BE ALLOWED TO MAKE I NVOKING THE PROVISIONS OF S. 154 OF THE ACT, AS NON-ACTION ON THIS ACCOUNT TAKEN IN THE ASSESSMENT ORDER CAN NOT BE TERMED AS/RESULTED IN MISTAKE APPARENT FROM THE REC ORD U/S 154 IN THE ASSESSMENT ORDER. THE ACTION OF THE AO U/S. 154 TO THIS EXTEN T I.E. DISALLOWANCE MADE ON ACCOUNT OF POSSIBLE OTHER THAN BUSINESS USER OR PER SONAL USER, THEREFORE HELD AS ITA . NOS. 398 TO 402/PN/2010 SWATI MINERALS A.Y. 1998-99 TO 2002-03 PAGE OF 4 3 REVIEW OF ITS EARLIER ORDER BY THE AO WHICH IS NOT PERMITTED U/S. 154 OF THE ACT. WE THUS WHILE SETTING ASIDE THE ORDERS OF THE AUTHORIT IES BELOW DIRECT THE A.O TO DELETE THE DISALLOWANCE MADE IN ITS ORDER U/S. 154 ON ACC OUNT OF POSSIBLE OTHER THAN BUSINESS USER / PERSONAL USER OF THE VEHICLES IN TH E A.YS. IN QUESTION. THE GROUND NO. 1 IS THUS ALLOWED. 6. DISPOSAL OF THE APPEALS BY THE LD. CIT(A) AS DI SMISSED FOR STATISTICAL PURPOSES INSTEAD OF WITH THE WORDING DISMISSED FINALLY, IS A MISTAKE APPARENT FOR WHICH THE ASSESSEE IS ALWAYS AT LIBERTY TO MOVE APP LICATION U/S 154 OF THE ACT BEFORE THE LD. CIT(A), IF IT IS SO ADVISED. THE GROUND NO . 2 THUS DOES NOT NEED ADJUDICATION. 7. SO FAR AS CONTENTION OF THE LD. AR THAT THE PROV ISION OF S. 154 OF THE ACT CAN NOT BE INVOKED DUE TO THE PRINCIPLE OF MERGER AS TH E APPEAL AGAINST THE ASSESSMENT ORDER IN QUESTION WAS PENDING BEFORE THE APPELLATE AUTHORITY IS CONCERNED, IN OUR VIEW THERE IS NO SUBSTANCE THEREIN AS THE ISSUE OF VALIDITY OF THE CLAIMED DEPRECIATION OR ALLOWABLE DEPRECIATION, AS OBSERVE D BY THE LD. CIT(A) WAS NEW ISSUE AND SECONDLY EVEN IF PENDENCY OF THE APPEAL WILL N OT DETER THE AUTHORITY FROM RECTIFYING SUCH MISTAKES WHICH ARE APPARENT FROM R ECORD WITHIN THE MEANING OF S.154 OF ACT IN THE ORDER IN QUESTION, WHICH IN TUR N WILL ASSIST THE AUTHORITY TO MAKE JUST ASSESSMENT WHICH IS THE ULTIMATE OBJECT OF OUR LEGISLATURE. 8. CONSEQUENTLY, APPEALS ARE ALLOWED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 30TH AUGUST 2011. SD/- SD/- ( D. KARUNAKARA R AO ) ACCOUNTANT MEMBER ( I.C. SUDHIR ) JUDICIAL MEMBER PUNE, DATED THE 30TH AUGUST, 2011 ITA . NOS. 398 TO 402/PN/2010 SWATI MINERALS A.Y. 1998-99 TO 2002-03 PAGE OF 4 4 US COPY OF THE ORDER IS FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT I/II, KOLHAPUR / CIT (CENTRAL), PUNE 4. THE CIT(A)- KOLHAPUR 5. THE D.R. B BENCH, PUNE 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL PUNE