M/s DB Axles P. Ltd., New Delhi V. ITO, New Delhi

ITA 4196/DEL/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 82180 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 4 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-12-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 29-10-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 10-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PARVINDER KAUR
• Keywords: Depreciation; Additional evidence; Unabsorbed depreciation
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: B NEW DELHI BEFORE SHRI J. S. REDDY , ACCOUNTANT MEMBER AND SHRI C. M. GARG, JUDICIAL MEMBER I.T.A .NO. - 4196 /DEL/2013 (ASSESSMENT YEAR - 200 7 - 0 8 ) D B AXLES P. LTD., VS. IT O 28, MOTIA KHAN, JHANDEWALAN ROAD, WARD - 10(2) NEW DELHI - 110055 NEW DELHI. PAN:AAAC D4074G (APPELLANT) (RESPONDENT) ASSESSEE BY: - SH. P. C. YADAV , ADV. & SH. RAJESH JAIN, CA . REVENUE BY: - S MT. PARVINDER , KAUR, SR . DR ORDER PER C. M. GARG, JM. THIS APPEAL OF THE ASSESSEE HAS BEEN PREFERRED AGAINST TH E ORDER OF CIT (APPEALS) - V , NEW DELHI, VIDE DATED 1 5 .0 1 .2013 IN APPEAL NO. 93/11 - 1 2 FOR THE ASSESSMENT YEAR 200 7 - 0 8 . 2. THE ASSESSEE RAISED FOLLOWING GROUNDS IN THIS APPEAL: - 1. THAT THE LD. CIT (APPEAL) HAS ERRED IN LAW AND ON FACTS IN SUSTAINING THE ADDITION OF RS.18,62,877/ - ON ACCOUNT OF SUNDRY CREDITORS AND RS.3,53,234/ - ON ACCOUNT OF OTHER LIABILITY. 2. THAT THE LD. CIT(APPEAL) HAS ERRED IN LAW AND ON FACTS IN SUSTAINING THE ADDITIO N OF RS.18,62,877/ - ON ACCOUNT OF SUNDRY CREDITORS AND RS.3,53,234/ - ON ACCOUNT OF OTHER LIABILITY DESPITE THE FACT THAT ALL THE BALANCES WERE QUITE OLD AND DOES NOT PERTAIN TO THE YEAR UNDER CONSIDERATION. 2 3. THAT THE LD. CIT(APPEAL) HAS ERRED IN LAW AND ON FACTS IN DISMISSING THE APPEAL SOLELY ON THE GROUND THAT THE APPELLANT HAS NOT MADE ANY APPLICATION UNDER RULE 46A FOR ADMISSION OF ADDITIONAL EVIDENCE, DESPITE THE FACT THAT NO ADDITIONAL EVIDENCE WERE SUBMITTED DURING THE APPELLANT PROCEEDINGS. 4. THAT THE LD. CIT(APPEAL) HAS ERRED IN LAW AND ON FACTS IN NOT ALLOWING THE SET OFF OF BROUGHT FORWARD BUSINESS LOSSES AND BROUGHT FORWARD DEPRECIATION. 5. THAT THE IMPUGNED APPELLATE ORDER IS ARBITRARY, ILLEGAL BAD IN LAW AND IN VIOLATION OF RUDIMENTARY PR INCIPLES OF CONTEMPORARY JURISPRUDENCE. 3. THE BRIEF FACTS OF THE CASE AS PER IMPUGNED ORDER OF THE CIT(A) ARE AS FOLLOWS: 1. RETURN OF INCOME WAS FILED ON 31.10.2007 DECLARING A LOSS OF RS.15,200/ - . 2. THE APPELLANT COMPANY HAS BEEN RUNNING IN LOSSES F OR LAST SEVERAL YEARS AND THIS CONTINUED THIS YEAR ALSO. DURING THE RELEVANT PREVIOUS YEAR THE BUSINESS OF THE APPELLANT COMPANY WAS ADVERSELY AFFECTED DUE TO LACK OF LIQUIDITY AND WORKING CAPITAL. 3. DURING THE ASSESSMENT PROCEEDINGS, THE APPELLANT COMPA NY WAS ASKED TO FILE THE CONFIRMATIONS OF SUNDRY CREDITORS AMOUNTING TO RS.18,62,877/ - AND OTHER LIABILITIES AMOUNTING TO RS.3,53,234/ - . THE LD. AO HAS TREATED THESE AMOUNTS AS CEASES TO EXIST U/S 41(1) AND ADDED THE SAME TO THE RETURNED INCOME AND PASSED THE ORDER U/S 143(3) OF THE INCOME TAX ACT. 3 4. THERE WERE NO BROUGHT FORWARD LOSSES AND UNABSORBED DEPRECIATIONS. HOWEVER THE LD. AO ASSESSED THE TAXABLE INCOME AT RS.22,00,920/ - AFTER MAKING THE ABOVE SAID ADDITIONS BUT DID NOT SET OFF THE BROUGHT FORWARD LOSSES AND UNABSORBED DEPRECIATION OUT OF THE SAME. 4. THE ASSESSEE PREFERRED AN APPEAL AGAINST THE ORD ER OF THE AO BEFORE LD. CIT(A) WHICH WAS ALSO DISMISSED BY PASSING THE IMPUGNED ORDER. NOW THE EMPTY HANDED ASSESSEE IS BEFORE THIS TRIBUNAL WITH THE GROUNDS AS REPRODUCED HEREIN ABOVE. 5. WE HAVE HEARD ARGUME NT S OF BOTH THE SIDES AND CAREFULLY PERUSED THE RELEVANT ASSESSMENT ORDER, IMPUGNED ORDER AS WELL AS OTHER RELEVANT MATERIAL PLACED ON RECORD BEFORE US. THE LD. COUNSEL APPEARING FOR THE ASSESSEE SUBMITTED THAT ALL THE CREDITORS ARE VERY OLD AND BELONG TO THE PERIOD WHEN THE BUSINESS OF THE ASSESSEE WAS IN ITS BOON BUT DUE TO HUGE LOSSES AND FINANCIAL INSTABILITY THE ASSESSEE HAS FAILED TO DISCHARGE ITS LIABILITY TOWARDS CREDITORS AND REQUESTED THEM TO EXTEND THE PAYMENT OF THEIR DUES. DUE TO DELAY IN REPAY MENT THE CREDITORS BECAME ANNOYED AND THEY DID NOT COOPERATE WITH THE ASSESSEE DID NOT PROVIDE CONFIRMATION AND REQUIRE D DETAILS AS REQUIRED BY THE AO B UT THE ASSESSEE DULY ACKNOWLEDGED THE CREDITORS IN ITS AUDITED ACCOUNTS. THE LD. COUNSEL FURTHER CONTEND ED THAT THE AO REJECTED THE EXPLANATION OF THE ASSESSEE AT THRESHOLD AND WITHOUT AFFORDING DUE OPPORTUNITY TO EXPLAIN THE AMOUNTS OF SUNDRY CREDITORS AND OTHER LIABILITY FOR THE ASSESSEE AND ADDED THE SAME TO THE RETURNED INCOME OF THE ASSESSEE . 6. THE LD. COUNSEL FURTHER SUBMITTED THAT THE ASSESSEE COMPANY HAS INCURRED LOSSES DURING THE YEAR UNDER CONSIDERATION AND ALSO IN THE EARLIER YEARS. THE AO 4 ALLOWED THE SET OFF OF LOSS OF THE CURRENT YEAR BUT IGNORED THE CLAIM OF SET OFF OF BROUGHT FORWARD LO SSES AND UNABSORBED DEPRECIATION DESPITE THE FACT THAT THE ASSESSEE SUBMITTED ALL REQUIRED DETAILS ON RECORD DURING ASSESSMENT PROCEEDINGS IN THIS REGARD. HE ALSO DRAWN OUR ATTENTION TOWARDS PAPER BOOK SPREAD OVER 21 PAGES. 7. THE LD. COUNSEL FURTHER CONT ENDED THAT THE GRIEVANCE OF THE ASSESSEE COULD NOT BE REDRESSED AT CIT(A) LEVEL AS HE ALSO PASSED A CRYPTIC ORDER WITHOUT GIVING DETAILED FINDINGS AND ADJUDICATION ON ALL ISSUES RAISED BEFORE HIM IN THE FIRST APPEAL. 8. THE LD. DEPARTMENTAL REPRESENTATIV E (DR) CONTENDED THAT IF THE ASSESSEE FAILED TO SUBSTANTIATE ITS ENTRIES AS SHOWN IN THE BOOKS OF ACCOUNTS THEN THE AO HAS NO OPTION BUT TO DECIDE THE ISSUE ON THE BASIS OF MATERIAL AVAILABLE BEFORE HIM. THE DR FAIRLY ACCEPTED THAT THE REVENUE HAS NO SERIO US OBJECTION IF IT IS FOUND THAT THE ISSUES REQUIRE FURTHER EXAMINATION AND VERIFICATION AT THE END OF THE AO THEN THE CASE MAY BE RESTORED TO THE FILE OF AO. 9 . ON CAREFUL CONSIDERATION OF ABOVE SUBMISSIONS , WE NOTE THAT ON THE ISSUE OF SUNDRY CREDITOR S AND OTHER LIABILITIES THE AO NOT ALLOWED DUE OPPORTUNITY FOR THE ASSESSEE TO SUBMIT REQUIRED DETAILS AND CONFIRMATIONS AT THE SAME TIME. WE ALSO NOTE THAT THE ASSESSEE WAS ALSO FACING NON COOPERATION FROM THE RESPECTIVE CREDITORS DUE TO DELAY IN PAYMENT. ON THE ISSUE OF BROUGHT FORWARD LOSSES AND UNABSORBED DEPRECIATION, WE NOTE THAT THE AO IGNORED TO EXAMINE THIS ASPECT IN SPITE OF THE FACT THAT THE DETAILS PERTAINING TO THIS ISSUE WAS VERY WELL PLACED 5 BEFORE HIM ALONGWITH RETURN OF INCOME. THE CIT(A) ALSO PASSED A CRYPTIC ORDER WITHOUT ANY PROPER ADJUDICATION REQUIRED FROM A QUASI JUDICIAL AUTHORITY AS PER LAW AND THE ACT . 10. IN VIEW OF ABOVE FACTS AND CIRCUMSTANCES, WE REACH TO A CONCLUSION THAT THE BOTH ISSUE REQUIRE RE - EXAMINATION AND VERIFICATION AT THE END OF AO AND WE RESTORE THE SAME TO THE FILE OF THE AO FOR AFRESH ADJUDICATION. THE AO IS ALSO DIRECTED TO DECIDE THESE ISSUES AFTER AFFORDING DUE OPPORTUNITY OF HEARING FOR THE ASSESSEE AND WITHOUT BEING PREJUDICED BY THE EARLIER ASSESSMENT AND I MPUGNED ORDER. THUS, ASSESSMENT ORDER AS WELL AS IMPUGNED ORDER ARE SET ASIDE AND GROUND NO. 1 TO 5 OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. 11. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES AS INDICATED ABOVE. OR DER PRONOUNCED IN THE OPEN COURT ON 08 /1 2 /2014. SD/ - SD/ - ( J. S. REDDY ) (C. M. GARG) ACCOUNTANT MEMBER JU DICIAL MEMBER DATED/ 08/ 1 2 /2014 *AK VERMA* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR