Tagros Chemicals India Ltd., CHENNAI V. ACIT, CHENNAI

ITA 457/CHNY/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 8769 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-07-2016
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 02-03-2016
• Court: TRIBUNAL
• Department Lawyers: SHIVA SRINIVAS
• Assessee Lawyers: VIJAYA KUMAR PUNNA
• Keywords: Depreciation; Rectification of order; Opportunity of being heard; Additional depreciation
• Section: 143(3); 142(1); 14A; 154

Judgement Text

, , IN THE INCOME - TAX APPELLATE TRIBUNAL A BENCH, CHENNAI . , . , BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER & SHRI DUVVURU RL REDDY , JUDICIAL MEMBER ./ I.T.A.NO. 457 /MDS/2016 / ASSESSMENT YEAR :20 09 - 1 0 M/S. TAGROS CHEMICALS INDIA LTD., JHAVER CENTRE, RAJA ANNAMALAI BUILDING, 72 (OLD NO. 19), MARSHALLS ROAD, EGMORE, CHENNAI 600 0 08 . [PAN: A A ACT2952K ] V S. THE ASSISTANT COMMISSIONER OF INCOME TAX , CORPORATE CIRCLE 3(1), 121, MAHATMA GANDHI ROAD, NUNGAMBAKKAM, CHENNAI 600 034 . ( / APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : SHRI VIJAYA KUMAR PUNNA, ADVOCATE / RESPONDENT BY : SHRI SHIVA SRINIVAS , J CIT / DATE OF HEARING : 1 2 . 0 7 .201 6 / DATE OF P RONOUNCEMENT : 27 . 0 7 .201 6 / O R D E R PER DUVVURU RL REDDY , JUDICIAL MEMBER : THIS APPEAL FILED B Y THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) 11 , CHENNAI , DATED 0 5 . 0 2 .20 1 6 RELEVANT TO THE ASSESSMENT YEAR 20 09 - 1 0 . THE ASSESSEE HAS RAISED TWO GROUNDS VIZ., (I) ASSUMPTION OF JURISDICTION UNDER SECTION 154 O F THE INCOME TAX ACT, 1961 [ ACT IN SHORT] AND (II) REJECTION OF THE CLAIM OF ADDITIONAL DEPRECIATION. I.T.A. NO . 457 /M/ 16 2 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A DOMESTIC COMPANY ENGAGED IN THE BUSINESS OF MANUFACTURING OF PESTICIDES AND CHEMICALS AND FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2009 - 10 ON 23.09.2009 BY ADMITTING TOTAL INCOME OF .8,88,13,270/ - . THE RETURN FILED BY THE ASSESSEE WAS PROCESSED UNDER SECTION 143(1) OF THE ACT. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND NOTICE U NDER SECTION 143(2) OF THE ACT WAS ISSUED ON 24.08.2010. SUBSEQUENTLY, THE CASE WAS NOTIFIED FOR THE PURPOSE OF FINALIZING THE PENDING SCRUTINY ASSESSMENT TO THE JCIT ON 14.10.2011. THEREFORE, NOTICE UNDER SECTION 142(1) OF THE ACT ALONG WITH QUESTIONNAIRE WAS ISSUED AFRESH TO THE ASSESSEE ON 14.11.2011. IN RESPONSE THERETO, THE ASSESSEE FILED ALL DETAILS. ON VERIFICATION OF DETAILS FILED BY THE ASSESSEE, THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF THE ACT ON 30.12.2011 BY ASSESSING TOTAL INCOME OF THE ASSESSEE AT .8,89,01,573/ - AFTER MAKING DISALLOWANCE OF .88,303/ - UNDER SECTION 14A R.W. RULE 8D OF THE ACT. 3. THEREAFTER, THE ASSESSING OFFICER PASSED RECTIFICATION ORDER UNDER SECTION 154 OF THE ACT BY DISALLOWING THE ADDITIONAL DEPRECIATION @ 10% CLAIMED IN RESPECT OF PLANT AND MACHINERY PURCHASED DURING THE PRECEDING YEAR TO THE TUNE OF .8,20,718/ - . 4. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) CHALLENGING THE ORDER PASSED UNDER SECTION 154 OF THE ACT BY THE ASSESSING OFFICER AND ALSO DISALLOWANCE OF ADDITIONAL DEPRECIATION CLAIMED BY THE I.T.A. NO . 457 /M/ 16 3 ASSESSEE. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE LD. CIT(A) DISMISSED THE APPEAL FILED BY THE ASSESSEE. 5. ON BEING AGGRIEVED, THE ASSESSEE IS IN APPEAL. THE LD. COU NSEL FOR THE ASSESSEE HAS STRONGLY CONTENDED THAT THE ASSESSEE WAS NOT GIVEN AN OPPORTUNITY OF BEING HEARD BEFORE PASSING RECTIFICATION ORDER UNDER SECTION 154 OF THE ACT. IT WAS ALSO SUBMITTED THAT THE SERVICE OF NOTICE UNDER SECTION 154(3) OF THE ACT IS MANDATORY BEFORE PASSING THE ORDER AND IT IS NOT A PROCEDURAL ERROR. THEREFORE, THE ORDER PASSED BY THE LD. CIT(A) SHOULD BE DISMISSED. 6. ON THE OTHER HAND, THE LD. DR RELIED ON THE ORDERS OF AUTHORITIES BELOW. 7. WE HAVE HEARD BOTH SIDES, PERUSED T HE MATERIALS ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. IN THIS CASE, THE RECTIFICATION ORDER DATED 24.07.2012 PASSED BY THE ASSESSING OFFICER READS AS UNDER: ORDER THE ASSESSEE FILED THE RETURN OF INCOME FOR THE A.Y.2009 - 10 ON 23.09.200 9 DECLARING AN INCOME OF .8,88,13,270/ - AND THE SAME WAS PROCESSED U/S 143(3) ON 30.12.2011 AND TOTAL INCOME WAS ASSESSED AT .8,89,01,573/ - AFTER MAKING SOME DISALLOWANCES. ON PROCESSING THE DEPRECIATION SCHEDULE, IT WAS FOUND THAT ADDITIONAL DEPRECIATIO N @ 10% WAS CLAIMED IN RESPECT OF PLANT & MACHINERY PURCHASED DURING THE PRECEDING YEAR TO THE TUNE OF .8,20,718/ - WAS WRONGLY ADMITTED. AS ADDITIONAL DEPRECIATION CAN BE CLAIMED ONLY DURING THE YEAR OF PURCHASE OF ASSET, THE CLAIM OF ADDITIONAL DEPRECIAT ION OF .8,20,718/ - IN THE SUBSEQUENT YEAR AHS TO BE WITHDRAWN. THIS MISTAKE NOW RECTIFIED AND THE ASSESSMENT REVISED AS UNDER: I.T.A. NO . 457 /M/ 16 4 8. ON PERUSAL OF THE ABOVE RECTIFICATION ORDER PASSED BY THE ASSESSING OFFICER, IT IS QUITE EVIDENT THAT THE ASSESSEE WAS NOT GIVEN AN OPPORTUNITY BY SERVING NOTICE UNDER SECTION 154(3) OF THE ACT. SECTION 154(3) OF THE ACT READS AS UNDER: 154(3) AN AMENDMENT, WHICH HAS THE EFFECT OF ENHANCING AN ASSESSMENT OR REDUCING A FUND OR OTHERWISE INCREASING THE LIABILITY OF THE ASSESSEE [OR THE DEDUCTOR], SHALL NOT BE MADE UNDER THIS SECTION UNLESS THE AUTHORITY CONCERNED HAS GIVEN NOTICE TO THE ASSESSEE [OR THE DEDUCTOR] OF ITS INTENTION SO TO DO AND HAS ALLOWED THE ASSESSEE [OR THE DEDUCTOR] A REASONABLE OPPORTUNITY OF BEING HEARD. IN VIEW OF THE ABOVE PROVISIONS OF SECTION 154(3) OF THE ACT, IT IS VERY CLEAR THAT ENHANCEMENT OF AN ASSESSMENT OR REDUCING A FUND OR OTHERWISE INCREASING THE LIABILITY OF THE ASSESSEE SHALL NOT BE MADE UNLESS THE AUTHORITY CONCERNED HAS GIVEN A NOTICE TO THE ASSESSEE AND ALLOWED THE ASSESSEE A REASONABLE OPPORTUNITY OF BEING HEARD. ADMITTEDLY, IN THIS CASE, THE ASSESSING OFFICER HAS NOT ISSUED NOTICE TO THE ASSESSEE UNDER SECTION 154(3) OF THE ACT AND THE ASSESSEE WAS NOT ALLOWED AN OPPORTUNITY OF BEING H EARD. THEREFORE, WE ARE OF THE CONSIDERED OPINION THAT THE RECTIFICATION ORDER PASSED BY THE ASSESSING OFFICER IS BAD IN LAW AND CANNOT BE SUSTAINED. THUS, THE ORDER PASSED BY THE LD. CIT(A) ON THIS ISSUE IS SET ASIDE AND THE GROUND RAISED BY THE ASSESSEE IS ALLOWED. 9. ON MERITS ALSO, BY FOLLOWING THE JUDGEMENT OF THE HON BLE KARNATAKA HIGH COURT IN THE CASE OF CIT V. RITTAL INDIA PVT. LTD. [2016] 380 ITR 423 I.T.A. NO . 457 /M/ 16 5 (KARN.) , THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF AUTOMOTIVE COACHES & COMPONENTS LT D. V. DCIT IN I.T.A. NO. 1789/MDS/2014 DATED 12.02.2016 DECIDED THE IDENTICAL ISSUE IN FAVOUR OF THE ASSESSEE. BY FOLLOWING THE ABOVE DECISION IN ASSESSEE S OWN CASE FOR THE ASSESSMENT YEAR 2005 - 06 IN I.T.A. NO. 703/MDS/2015 ORDER DATED 19.05.2016 , THE COO RDINATE BENCH OF THE TRIBUNAL DIRECTED THE ASSESSING OFFICER TO ALLOW THE BALANCE 10% ADDITIONAL DEPRECIATION, IN VIEW OF THE AMENDED PROVISIONS OF SECTION 32(1) OF THE ACT W.E.F. 01.04.2006 ENABLING THE ASSESSEE TO CARRY FORWARD THE DEPRECIATION TO THE IM MEDIATELY SUCCEEDING PREVIOUS YEAR IN RESPECT OF SUCH AN ASSET. THEREFORE, WE ARE OF THE OPINION THAT THE ASSESSING OFFICER WAS NOT LEGALLY JUSTIFIED TO DISALLOW THE CLAIM OF ADDITIONAL DEPRECIATION BY PASSING RECTIFICATION ORDER. ACCORDINGLY, THE GROUND R AISED BY THE ASSESSEE IS ALLOWED. 10 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED ON THE 27 TH JU LY , 201 6 AT CHENNAI. SD/ - SD/ - ( A. MOHAN ALANKAMONY ) ACCOUNTANT MEMBER ( DUVVURU RL REDDY ) JUDICIAL MEMBER CHENNAI, DATED, THE 27 . 0 7 .201 6 VM/ - / COPY TO: 1. / APPELLANT , 2. / RESPONDENT , 3. ( ) / CIT(A) , 4. / CIT , 5. / DR & 6. / GF.