T.I. Steels Pvt. Ltd., New Delhi V. ITO, New Delhi

ITA 4382/DEL/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 6250 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 7 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-03-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Next Hearing Date: 10-03-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 11-08-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MOHIT SACHDEVA
• Assessee Lawyers: SHRIY R SONBHADRA
• Keywords: Reopening of assessment; Depreciation; Non passing of speaking order; Reassessment proceedings
• Section: 143(3); 147

Judgement Text

\IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH H NEW DELHI BEFORE SHRI S.V. MEHROTRA : ACCOUNTANT MEMBER AND SHRI KULDIP SINGH: JUDICIAL MEMBER ITA NO. 4382/DEL/2014 ASSTT. YR: 2007-08 T.I. STEELS PVT. LTD., VS. INCOME-TAX OFFICER, PLOT NO. 17-18, F.F., F-BLOCK, WARD-16(1), NEW DE LHI. COMMERCIAL SHOPPING COMPLEX-1, MANSAROVER GARDEN, NEW DELHI. PAN: AABCT 9896 R ( APPELLANT ) (RESPONDENT) REVENUE BY : SHRI MOHIT SACHDEVA ADV. ASSESSEE BY : SHRIY.R. SONBHADRA SR. DR DATE OF HEARING : 10/03/2016. DATE OF ORDER : 30/03/2016. O R D E R PER S.V. MEHROTRA, A.M: THIS IS ASSESSEES APPEAL ASSAILING THE CIT(A)S ORDER DATED 31.3.2014 IN APPEAL NO. 106/13-14, RELATING TO A.Y . 2007-08. 2. BRIEF FACTS OF THE CASE ARE THAT ASSESSMENT U/S 143(3) WAS COMPLETED AT A LOSS OF RS. 84,12,455/- AGAINST THE RETURNED LOSS OF RS. 1,54,07,709/-. THE AO INITIATED PROCEEDINGS U/S 147 ON 23.3.2012. THE PROCEEDINGS U/S 147 HAD BEEN INITIATED AS IT WAS NOTICED BY AO FROM THE PE RUSAL OF RECORD THAT ASSESSEE HAD CLAIMED DEPRECIATION AMOUNTING TO RS. 1,26,12,629/- ON PLANT 2 AND MACHINERY, WHICH WAS UNDER INSTALLATION. SINCE THE MACHINERY WAS NOT USED, SO DEPRECIATION SHOULD NOT HAVE BEEN ALLOWED. THE ASSESSEE FILED OBJECTIONS TO THE REASONS RECORDED. AFTER CONSIDERI NG THE ASSESSEES OBJECTIONS, THE AO DISALLOWED THE DEPRECIATION OF R S. 1,26,12,629/-, INTER ALIA, OBSERVING THAT ASSESSEE COULD NOT JUSTIFY ITS CLAIM DESPITE AMPLE OPPORTUNITIES PROVIDED. 3. BEFORE LD. CIT(A) THE ASSESSEE HAD CHALLENGED TH E REOPENING OF ASSESSMENT ON THE GROUND THAT IT WAS A CASE OF CHAN GE OF OPINION AND THIS ISSUE HAD ALREADY BEEN CONSIDERED IN THE ASSESSMENT ORDER U/S 143(3) DATED 24.11.2009. LD. CIT(A) OBSERVED THAT THE ASSESSMENT ORDER WAS A VERY SHORT ORDER AND THERE WAS NO DISCUSSION ON THE ISSUE ON W HICH THE ASSESSMENT HAD BEEN REOPENED. HE FURTHER OBSERVED THAT THE ASSESSE E HAD NOT BEEN ABLE TO SHOW THAT ANY QUERY ON THIS ISSUE WAS RAISED IN THE ORIGINAL ASSESSMENT PROCEEDINGS OR THAT HE ON HIS OWN MADE DISCLOSURE O F FACTS ON THIS ISSUE. HE, ACCORDINGLY, CONCLUDED THAT ASSESSEE FAILED TO SHOW THAT THIS ISSUE WAS CONSIDERED BY THE AO DURING THE ORIGINAL ASSESSMENT PROCEEDINGS. HE, ACCORDINGLY, UPHELD THE REASSESSMENT PROCEEDINGS. O N MERITS ALSO THE LD. CIT(A) DISMISSED THE ASSESSEES APPEAL. 4. BEING AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE US AND HAS TAKEN FOLLOWING GROUNDS OF APPEAL: 3 1. THAT THE ORDER OF LD. CIT(A) IS ERRONEOUS IN FA CTS AND IN LAW AND IS BASED ON EXTRANEOUS CONSIDERATION AND AG AINST THE PROVISION OF THE ACT 2. THAT LD. CIT (A) FAILED TO APPRECIATE THAT AO HA S ALREADY CONSIDERED ALL THE MATERIAL FACTS AND EVIDENCES DUR ING THE ORIGINAL ASSESSMENT PROCEEDING AND REASSESSMENT PRO CEEDINGS INITIATED BY TILE AO IS MERELY ON BASIS OF CHANGE O F OPINION, HENCE REASSESSMENT ORDER IS LIABLE TO BE QUASHED. 3. THAT THE LD. CIT(A) FAILED TO APPRECIATE THAT AO HAS DULY CONSIDERED THE ISSUE AS DURING THE ASSESSMENT PROCE EDING APPELLANT FILED COP) OF BILL FOR ADDITION MADE TO P LANT AND MACHINERY ON 09-11-2009 IN RESPONSE TO NOTICE U/S 1 42 (1I) DATED 08-09-2009. THE AO IN HIS ORDER HAS STATED 'T HAT THE ASSESSEE COMPANY WAS ENGAGED IN THE BUSINESS OF MANUFACTURING OF IRON & STEEL GOODS. FERROUS AND NO N FERROUS METALS AND THIS IS THE FIRST YEAR O~ THE CO MPANY WHICH REFLECTS THAT THE AO HAS DULY CONSIDERED THE ISSUE AND ACCEPTED THAT PLANT AND MACHINERY WAS PUT TO USE DURING THE YEAR UNDER CONSIDERATION. 4. THAT LD. CIT(A) FAILED TO FULL) TAKE INTO CONSID ERING THE SUBMISSIONS AND DOCUMENTS FILED DURING THE APPELLAN T PROCEEDING. THAT THE APPELLANT FILED VARIOUS DOCUME NTS AND EVIDENCE BEFORE THE LD. CIT(A) WHICH ARE AVAILABLE ON RECORD HAVE NOT BEEN PROPERLY CONSTRUED AND JUDICIOUSLY IN TERPRETED. HENCE THE ADDITION / DISALLOWANCE MADE IS UNCALLED. 5. THAT LD. CIT( ) DID NOT TAKE COGNIZANCE OF DOCUM ENT LIKE AUDIT REPORT ALONGWITH BALANCE SHEET AND OTHER ANNE XURE. COPY OF CERTIFICATE FROM MEMBER, SECRETARY SINGLE W INDOW CLEARANCE AGENCY AND CERTIFICATE FROM H.P.STATE ENV IRONMENT PROTECTION & POLLUTION CONTROL BOARD. PARYAVARN BHA WVAN, PHASE-III. SHIMLA WHICH WOULD WILL PROVE THAT THE P LANT & 4 MACHINERY WAS PUT TO USE AND APPELLANT HAS STARTED PRODUCTION DURING THE YEAR UNDER CONSIDERATION. 6. THAT THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN REJECTING THE APPLICATION OF THE APPELLANT FOR ADMISSION OF A DDITIONAL EVIDENCE UNDER RULE 46A. 7. THAT THE LD. CIT(A) FAILED TO APPRECIATE THAT T HE AO HAS DISPOSED OFF THE OBJECTION OR THE APPELLANT BY PASS ING A NON SPEAKING ORDER WITHOUT CONSIDERING THE OBJECTIONS R AISED BY THE COMPANY. 8. THAT THE LD. CIT(A) FAILED TO APPRECIATE THAT TH E APPELLANT WAS NOT AFFORDED PROPER AND SUFFICIENT TO PROD LICE THE RELEVANT DOCUMENTS. 9. THE APPELLANT CRAVES LEAVE OR RESERVING THE RIGH T TO AMEND. MODIFY, ALTER. ADD OR FORGO ANY GROUND(S) OF APPEAL AT ANY TIME BEFORE OR DURING THE HEARING OF THIS APPEA L. 5. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT AO H AS NOT BROUGHT ON RECORD ANY FRESH MATERIAL TO BRING THE CASE U/S 147 . HE REFERRED TO PAGE 56 OF THE PAPER BOOK, WHEREIN THE LIST OF FIXED ASSETS AS ON 31.3.2007 IS CONTAINED, IN WHICH, IN THE DETAIL OF MACHINERY, IT WAS MENTIO NED AS UNDER: NAME OF FIXED ASSETS RATE OF DEP.% WDV(AS ON 1.4.06 ADDITION DURING THE YR. SALE DURING THE YR. TOTAL DEP. CGGD DURING THE YR. WDV (UPTO 31.3.2007) BEFORE 30.09.06 AFTER 30.09.06 MACHINERY (UNDER INST.) 15.00 43861784.69 100398539.00 23904664.00 - 168164 987.69 12612374.00 155552613.69 6. LD. COUNSEL REFERRED TO THE WRITTEN SUBMISSIONS FILED BEFORE LD. CIT(A), CONTAINED IN THE APPEAL SET, AND SUBMITTED THAT DEPRECIATION CLAIMED DURING THE ASSESSMENT YEAR WAS DULY CONSIDERED BY T HE AO AT THE TIME OF 5 ORIGINAL ASSESSMENT PROCEEDINGS. HE POINTED OUT THA T THE PLANT & MACHINERY WHICH WAS UNDER INSTALLATION UNTIL FY 2005-06 WAS P UT TO USE IN FY 2006-07 ON 30.12.2006 FOR THE PURPOSE OF BUSINESS FOR A PER IOD OF LESS THAN 180 DAYS IN THE PREVIOUS YEAR AND, THEREFORE, DEPRECIATION A MOUNTING TO RS. 12607729/- CALCULATED @ 7.5% ON THE TOTAL VALUE OF MACHINERY HAD BEEN CLAIMED. THE AO ALLOWED THE ENTIRE DEPRECIATION IN THE ORIGINAL ASSESSMENT AND ALSO ALLOWED ALL EXPENSES, WHICH WERE DIRECTLY RELATED TO MANUFACTURING ACTIVITIES SUCH AS WAGES, ELECTRICITY EXPENSES, MAN UFACTURING EXPENSES ETC. LD. COUNSEL REFERRED TO PAGES 17 & 18 OF THE PB, WH EREIN THE QUESTIONNAIRE FOR ASSESSMENT PROCEEDINGS IN AY 2007-08 RAISED BY AO IS CONTAINED, IN WHICH AT SL. NO. 15, THE AO HAD REQUIRED THE ASSESS EE TO FURNISH THE DETAILS OF FIXED ASSETS, PURCHASE/ SALE DURING THE YEAR ALONG WITH DOCUMENTARY EVIDENCE. 7. LD. COUNSEL FURTHER POINTED OUT THAT THE ABOVE A DDITION HAS BEEN MADE ON THE BASIS OF TYPOGRAPHICAL ERROR IN THE FIXED AS SET SCHEDULE, EXTRACT FROM WHICH HAS BEEN REPRODUCED EARLIER. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAV E PERUSED THE RECORD OF THE CASE. THE SOLE BASIS FOR REOPENING THE ASSES SMENT WAS THE DESCRIPTION OF MACHINERY AS CONTAINED IN THE FIXED ASSET SCHEDU LE AS NOTED EARLIER. A MERE MENTION OF UNDER INSTALLATION IN THE FIXED ASSET SCHEDULE IN RESPECT 6 OF MACHINERY, CANNOT PARTAKE THE CHARACTER OF A TAN GIBLE MATERIAL IN POSSESSION OF AO, PARTICULARLY WHEN AO HAD, IN COUR SE OF ASSESSMENT PROCEEDINGS, MADE SPECIFIC QUERY ON THIS COUNT. AS A MATTER OF FACT, THE AO WANTED TO REVIEW HIS ORDER, WHICH IS NOT PERMISSIBL E UNDER PROCEEDINGS U/S 147, AS HAS BEEN HELD BY HONBLE SUPREME COURT IN T HE CASE OF CIT VS. KELVINATOR INDIA LTD. 320 ITR 561. AT PAGE 58 OF TH E PB, COMPLETE DETAILS HAVE BEEN GIVEN AS PART OF TAX AUDIT REPORT REGARDI NG QUANTITY OF RAW- MATERIAL AND FINISHED GOODS, WHICH HAVE NOT BEEN DO UBTED BY AO. IT IS WELL SETTLED LAW THAT REMISSNESS ON THE PART OF AO CANNO T BE THE BASIS FOR RE- OPENING AN ASSESSMENT. IN VIEW OF ABOVE DISCUSSION, WE QUASH THE REASSESSMENT PROCEEDINGS INITIATED BY AO. 9. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCEMENT IN OPEN COURT ON 30/03/2016. SD/- SD/- (KULDIP SINGH) (S.V. MEHROTRA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 30/03/2016. *MP* COPY OF ORDER TO: 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR, ITAT, NEW DELHI.