ALTRET BIOTECH LIMITED, SURAT V. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-1(1)(1), SURAT

ITA 438/SRT/2019

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 1682 (ITAT-SURAT)
• Duration Of Justice: 2 year(s) 11 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-09-2022
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: DB
• Next Hearing Date: 24-08-2022
• Assessment Year: 2013-2014
• Appeal Filed On: 23-09-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Condonation of delay; Unabsorbed depreciation
• Section: 154; 143(3); 44AB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JM & DR. A. L. SAINI, AM आयकर अपील सं./ITA No. 438/SRT/2019 Ǔनधा[रणवष[/Assessment Year: (2013-14) (Physical Court Hearing) Altret Biotech Ltd., ‘Altret House’ 12/2881, Saiyedpura Main Road, Surat. Vs. The ACIT, Circle-1(1)(1), Surat. (Assessee) (Respondent) èथायीलेखासं./जीआइआरसं./PAN/GIR No.: AAFCA9180P Assessee by Mehul Shah, CA Respondent by Shri Vinod Kumar, Sr. DR Date of Hearing 25/08/2022 Date of Pronouncement 16/09/2022 आदेश / O R D E R PER DR. A. L. SAINI, AM: Captioned appeal filed by the Assessee, pertaining to Assessment Year (AY) 2013-14, is directed against the order passed by the Learned Commissioner of Income Tax (Appeals)-1, [in short “the ld. CIT(A)”], in Appeal No. CAS- 1/861/2015-16 dated 28.10.2016, which in turn arises out of an assessment order passed by the Assessing Officer under section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as “the Act”), dated 29.03.2016. 2. The grounds of appeal raised by the assessee are as follows: “1. On the facts and circumstances of the case as well as law on the subject, the learned CIT(A) has erred in confirming the action of assessing officer in making addition of Rs.33,77,626/- by considering the exempt agriculture income as income from other sources. 2. On the facts and circumstances of the case as well as law on the subject, the learned assessing officer has erred in not allowing the claim of depreciation as per Income Tax Act, 1961 to assessee amounting to Rs.44,58,403/- although it is mandatory in terms of Explanation 5 to section 32(1) of the Act. Page | 2 ITA 438/SRT/2019/AY.2013-14 Altret Biotech Ltd. 3. On the facts and circumstances of the case as well as law on the subject, the learned assessing officer has erred in not allowing the set off of carry forwarded losses of proceeding years. 4. It is therefore prayed that the additions made by Assessing Officer and confirmed by CIT(Appeals) may please be deleted. 5. Assessee craves leave to add, alter or delete any ground(s) either before or in the course of hearing of the appeal.” 3. At the outset, Learned Counsel for the assessee, informs the Bench that appeal filed by the assessee for assessment year (AY) 2013-14 is barred by limitation by nine hundred ninety seven (997) days. The assessee moved a petition for condonation of delay. The contents of the petition is reproduced below: “1) The assessee begs to prefer this application for condonation of delay in relation to Appeal filed against the order of the Commissioner of Income Tax (Appeals) dated 28.10.2016. The date of service of order was 01.11.2016. There is a delay of approximate 997 days in filing the appeal before Honorable Tribunal against the order passed by CIT(A) – 1, Surat. 2) The delay was caused owing to the fact that the assessee's counsel CA Suhel F. Baxi who appeared before the CIT(A), however mistakenly he forgot to communicate the next course of action to assessee and the order remained in the file of the AR. Thereafter on inquiry about the case by assessee, the fact of non-filing of appeal against the said order came to the notice and he approached Shri Rasesh Shah & Co. for consultation and the counsel also observed that the Assessing Officer has failed to give an allowance of depreciation as per Income Tax Act,1961 amounting to Rs.44,58,403/- and has also failed to allow the set off and carry forward of losses of preceding years and the counsel had suggested to explore alternative remedy under rectification u/s 154 and hence the appeal before Honorable Tribunal was filed on 24.09.2019. 3) The issue in this appeal is that the learned Commissioner of Income Tax (Appeals) has erred in confirming the action of Assessing officer in making addition of Rs.33,77,626/- by considering the exempt agriculture income as income from other sources. 4) The assessee submits that the case is a meritorious one and requires consideration. If the delay is not condoned, it would cause irreparable loss to the applicant. 5) Therefore, in the facts and circumstances of the case, the applicant prays to this Honourable Income Tax Appellate Tribunal: (a) To condone the delay of approximate 997 days in filing the Appeal No.438/SRT/2019 and to extend the time for filing the same inclusive and upto the date of filing the appeal; (b) To grant such other and further relief as deemed fit by Honourable Income Tax Appellate Tribunal.” Page | 3 ITA 438/SRT/2019/AY.2013-14 Altret Biotech Ltd. 4. Learned Counsel argued that because of the mistake of the Authorized Representative of assessee, the appeal could not be filed on time, as the order of Ld.CIT(A) was kept in file by the Authorized Representative of the assessee. That is, Authorized Representative of the assessee, could not deliver the order of ld CIT(A), on time, therefore, as a result, the assessee could not file appeal on time. The Ld. Counsel also contended that assessee was seeking alternative remedy under section 154 of the Act for rectification therefore delay has occurred. Hence ld Counsel, prays the Bench that delay may be condoned. 5. On the other hand, Learned Departmental Representative (Ld. DR) for the Revenue opposed the prayer to condone the delay and stated that such delay should not be condoned. 6. We have heard both the parties on this preliminary issue. We observe that because of mistake committed by the assessee`s representative, the assessee could not file appeal on time. We are of the considered opinion that assessee was under a bona fide belief that his Authorized Representative was looking for the tax related matters, however, Authorized Representative kept the order of ld CIT(A) in his file and did not advise the assessee to file further appeal. Therefore, the delay caused. We note that because of the wrong advice of the Tax Professional or because of mistake committed by the Tax Consultant, the assessee cannot be penalized. Besides, the assessee was also seeking alternative remedy for rectification under section 154 of the Act, and this has resulted into delay. We are of the view that provisions of law have to be adhered strictly and that one cannot be allowed to act in leisure and make a mockery of enacted law, because law and provisions are laid down to benefit both sides of litigation. Be that as it may, we have to do justice and the Hon’ble Supreme Court in the case of Collector, Land Acquisition vs Mst. Katiji and others , reported in 167 ITR 471, (1988 SC 897) (7) has observed as follows: “4. When substantial justice and technical considerations are pitted against each other, cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of a non- deliberate delay.” Page | 4 ITA 438/SRT/2019/AY.2013-14 Altret Biotech Ltd. 7. When we weigh these two aspects then the side of justice becomes heavier and casts a duty on us to deliver justice. The reasons given in the affidavit for condonation of delay are convincing and these reasons would constitute reasonable and sufficient cause to condone delay. We, therefore, condone the delay and admit the appeal for hearing. 8. Succinct facts are that assessee before us is a limited company and filed its return of income for the assessment year (AY) 2013-14 on 02.09.2013, declaring total income at Rs. NIL. During the year, the assessee has claimed exempt agriculture income to the tune of Rs.41,27,626/-. The assessee company is engaged in the business of sale of agricultural products. The assessee`s case was selected for scrutiny assessment and, various details/evidences were called by assessing officer. In response, the assessee filed details/evidences. The assessing officer after taking into account all the facts and evidences submitted by the assessee, estimated the agricultural income to the tune of Rs.7,50,000/- and balance amount of Rs.33,77,626/- ( Rs.41,27,626- Rs.7,50,000) has been treated as “income from other sources”. Accordingly, assessment under section 143(3) of the Act was completed on 29.03.2016 making addition at Rs.33,77,626/-. 9. Aggrieved by the order of Assessing Officer, the assessee carried the matter in appeal before the ld. CIT(A), who has confirmed the action of the assessing officer. Aggrieved by the order of ld. CIT(A), the assessee is in appeal before us. 10. Shri Mehul Shah, Ld. Counsel for the assessee, pleaded that in past years the assessee`s agricultural income has been accepted by the Department. The ld. Counsel pointed out that assessee has earned agricultural income generated from selling of Jathropha seeds. The assessee filed all the necessary details vide letter dated 18.03.2016 before assessing officer, however, the assessing officer accepted part details only and made part addition based on surmise and conjecture, therefore ld Counsel prays the Bench that addition made by the assessing officer may be deleted. Page | 5 ITA 438/SRT/2019/AY.2013-14 Altret Biotech Ltd. 11. On the other hand, the Ld. DR for the Revenue has primarily reiterated the stand taken by the Assessing Officer, which we have already noted in our earlier para and is not being repeated for the sake of brevity. 12. We have heard both the parties and carefully gone through the submissions put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the facts of the case including the findings of the ld. CIT(A) and other material brought on record. Before us, Ld. Counsel submits the following documents and evidences to prove his claim: (i) Assessment Order u/s. 143(3) for AY.2012-13 (vide paper book page nos. 1 to 2) (ii) Audited Financial Statements for AY.2012-13 (vide paper book page nos. 3 to 13) (iii) Assessment Order u/s/ 143(3) for AY.2011-12 (vide paper book page nos. 14 to 17) (iv) Audited Report along with Audited Financial Statements for AY.2011-12 (vide paper book page nos.18 to 30) (v) Acknowledgment of Return of Income along with Computation of Total Income for AY.2013-14 (vide paper book page nos.31 to 32) (vi) Audit Report along with Audited Financial Statements for AY.2013- 14 (vide paper book page nos.33 to 39) (vii) Chart showing calculation of deprecation (vide paper book page nos. 50 to 56) (viii) Sample Invoices of Addition of Fixed Assets (vide paper book page nos.57 to 70) (ix) Technology Transfer Agreement with Altret Performance Chemicals Gujarat Pvt. Ltd. (vide paper book page nos.71 to 77) (x) Extract of ITR Form for AY.2020-21 evidencing brought forward unabsorbed depreciation (vide paper book page no. 78) We have gone through the past assessment order u/s 143(3) for assessment year 2012-13 and note that scrutiny assessment was framed under section 143(3) of the Act and assessing officer has not made and addition on account of agricultural Page | 6 ITA 438/SRT/2019/AY.2013-14 Altret Biotech Ltd. income. Besides, for assessment year 2011-12, the scrutiny assessment was framed under section 143(3) of the Act, however assessing officer has not made any addition on account of agricultural income. The finding of assessment order framed by the assessing officer for assessment year 2012-13 under section 143(3) of the Act is reproduced below: “3. The assessee company is engaged in the business of Trading growing of Jathropa Seeds and Agriculture product. During the assessment proceedings the question is raised that why the said income of Rs.21,17,173/-be treated as agriculture income. The Ld. A.R. a submitted that the assessee also relied on that the said income is exempt by insertion in section 2(1A) of Explanation (iii) is now provided that any income derived from sapling of seedlings grown in an industry shall be deemed to be agriculture income. The assessee has relied on judgment given by Ahmedabad Appellate Tribunal in the case of Best Roses Biotech Private limited V/s. Department of Income Tax ITA IM0.1975/AHD/2008 A.Y. 2005-06. The copy of said judgment is enclosed. As the matter of the case is same the contention of assessee is accepted. 4. The assessee company is engaged in the business of Trading growing of Jathropa Seeds and Agriculture product. The case is covered by section 44AB of Income tax Act, 1961. Audit report u/s. 44AB in form No. 3CB and been filed along with other details. On verification of the profit & loss account filed along with the return of income, it was noticed that the assessee has debited the following expenses: (i) Labour charges Rs.24,34,035/- Total Rs.24,34,035/- 5. During the course of assessment proceedings on examination of books of account and supporting bills and vouchers, it was seen that proper vouchers were not maintained in respect of certain expenses covered under this head. As such, the Id. Authorized Representative of the assessee company was asked to explain as to why Rs.2,00,000/- should not be disallowed out of the above expenses. The Id. Authorized Representative agreed to the proposed addition. These facts are duly recorded in the proceedings sheet dated 29.01.2014, duly read and signed by the Id. Authorized Representative of the assessee company. As such Rs.2,00,000/- disallowed out of above expenses. 6. After considering the above, total income of the assessee is computed as under;- Amount (Rs.) Total Agriculture Income as per return of income 21,17,173 Add Addition as per para-4.1 2,00,000 Total Agriculture Income 19,17,173 Rounded off u/s. 288A 19,17,170 Page | 7 ITA 438/SRT/2019/AY.2013-14 Altret Biotech Ltd. 7. Total disallowance of Rs.2,00,000/- made has been setoff against unabsorbed depreciation of AY.2008-09 of Rs.12,36,661/-. After setoff of Rs.2,00,000/- assessee has been allowed to carried forward unabsorbed depreciation of AY.2008-09 to the tune of Rs.10,36,661/-. 8. Assessed u/s 143(3) of the I.T. Act. Charge interest u/s. 234A/234B/234C of the IT Act. Give credit for prepaid taxes, if any, after due verification. Issue demand notice/challan accordingly.” 13. Therefore, it is evidently clear that assessment order was framed by assessing officer u/s 143(3) in assessee`s case, without making any addition on account of agricultural income. We have also examined the other assessment order framed by Assessing Officer for AY.2011-12 and noted that such kind of addition was not made by the Assessing Officer. It is a well settled legal position that factual matters which permeate through more than one assessment year, if the Revenue has accepted a particular's view or proposition in the past, it is not open for the Revenue to take a entirely contrary or different stand in a later year on the same issue, involving identical facts unless and until a cogent case is made out by the Assessing Officer on the basis of change in facts. For that we rely on the order of the Hon’ble Supreme Court in Radhasoami Satsang vs. CIT 193 ITR 321 (SC), wherein it was held as follows: "We are aware of the fact that, strictly speaking, res judicata does not apply to income tax proceedings. Again, each assessment year being a unit, what is decided in one year may not apply in the following year but where a fundamental aspect permeating through the different assessment years has been found as a fact one way or the other and parties have allowed that position to be sustained by not challenging the order, it would not be at all appropriate to allow the position to be changed in a subsequent year. On these reasoning, in the absence of any material change justifying the Revenue to take a different view of the matter - and, if there was no change, it was in support of the assessee – we do not think the question should have been reopened and contrary to what had been decided by the Commissioner of Income-tax in the earlier proceedings, a different and contradictory stand should have been taken." 14. We note that in assessee`s case under consideration, there is no change in facts, that is, facts in the assessment year 2012-13 and in the assessment year 2013-14 are same and identical, therefore we are of the view that the above cited precedent on principle of consistency are squarely applicable to the assessee Page | 8 ITA 438/SRT/2019/AY.2013-14 Altret Biotech Ltd. under consideration. Therefore, addition made by the assessing officer needs to be deleted. 15. We have also noted that for the assessment year 2013-14, under consideration, the assessee has submitted before assessing officer, various details and evidences in support of agricultural income, vide letter dated 28.03.2016. That is, during the assessment proceedings, assessee submitted sale bills, Vouchers, details of expenses. The books of accounts were also produced by assessee along with photographs of Crop before the assessing officer. We note that assessing officer has not refuted or discredited these evidences and documents. The assessing officer does not mention why he is not accepting these evidences. On the contrary, the assessing officer has just brushed aside these evidences without even a word on why they are not acceptable. It is a well settled Law that when an assessee has all the possible evidence in support of its claim, they cannot be brushed aside based on surmises. Hence, we are not inclined to accept the contention of the Assessing Officer in any manner and hence the addition so made is deleted. Hence this ground of the assessee is allowed. 16. In the result, ground No.1 raised by the assessee is allowed. 17. Coming to ground Nos. 2 and 3 raised by the assessee. Learned Counsel for the assessee argued that assessing officer has erred in not allowing the claim of depreciation as per Income Tax Act, 1961 to assessee amounting to Rs.44,58,403/- although it is mandatory in terms of Explanation 5 to section 32(1) of the Act. The ld Counsel also contended that assessing officer has erred in not allowing the set off of carry forwarded losses of proceeding years. On the other hand, Learned DR for the Revenue, pleaded that these issues were not raised by the assessee before the ld CIT(A), hence these grounds may be remitted back to the file of assessing officer for fresh adjudication. We have heard both the parties and noted that if the assessee is eligible to claim depreciation and set off of carry forwarded losses of proceeding years, it should be allowed to him as per law, therefore, we remit these issues back to the file of Page | 9 ITA 438/SRT/2019/AY.2013-14 Altret Biotech Ltd. the assessing officer with the direction to examine the eligibility of the assessee to claim depreciation and eligibility of assessee for set off of carry forwarded losses of proceeding years and then after adjudicate these issues in accordance with law. For statistical purposes, these two grounds raised by the assessee are treated to be allowed. 18. In the result, ground Nos. 2 and 3 raised by the assessee are allowed for statistical purposes. 19. In combined result, appeal filed by the assessee is partly allowed for statistical purposes. Order is pronounced in the open court on 16/09/2022 by placing the result on the Notice Board as per Rule 34(5) of the Income Tax (Appellate Tribunal) Rule 1963. Sd/- Sd/- (PAWAN SINGH) (Dr. A.L. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER lwjr /Surat Ǒदनांक/ Date: 16/09/2022 SAMANTA Copy of the Order forwarded to 1. The Assessee 2. The Respondent 3. The CIT(A) 4. CIT 5. DR/AR, ITAT, Surat 6. Guard File By Order // TRUE COPY // Assistant Registrar/Sr. PS/PS ITAT, Surat