The ACIT, 3(1), V. M/s Western Tobacco Ltd.,

ITA 468/IND/2006

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 2708 (ITAT-INDORE)
• Duration Of Justice: 4 year(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-07-2010
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 19-07-2010
• Assessment Year: misc
• Appeal Filed On: 23-06-2006
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: APARNA KARAN
• Assessee Lawyers: M C MEHTA
• Keywords: Depreciation; Opportunity of being heard; Non compliance
• Section: 142(1); 144

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI B.R. KAUSHIK, ACCOUNTANT MEMBER ITA NO.468/IND/2006 A.YS. 2002-03 ASSTT. COMMISSIONER OF INCOME TAX 3(1), BHOPAL APPELLANT VS M/S WESTERN TOBACCO LIMITED BHOPAL PAN AAACW-2791-H RESPONDENT C.O. NO. 88/IND/06 (ARISING OUT OF ITA NO. 468/IND/06) M/S WESTERN TOBACCO LIMITED BHOPAL OBJECTOR VS ASSTT. COMMISSIONER OF INCOME TAX 3(1), BHOPAL RESPONDENT DEPTT. BY : SMT. APARNA KARAN, SR. DR ASSESSEE BY : SHRI M.C. MEHTA AND SHRI HITESH CHIMNANI O R D E R PER JOGINDER SINGH, JM THE REVENUE HAS PREFERRED THIS APPEAL AND CROSS OBJ ECTION BY THE ASSESSEE AGAINST THE ORDER OF THE LEARNED CIT(A) DA TED 28.3.2006. 2 FIRSTLY, WE SHALL TAKE UP THE APPEAL OF THE REVENUE WHEREIN THE FOLLOWING GROUNDS HAVE BEEN TAKEN :- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN 1. DELETING THE ADDITION OF RS.70,81,634/- RIGHTLY MADE BY THE ON ACCOUNT OF U/S 80IA OF THE INCOME TAX ACT, 1961. 2. DIRECTING THE AO TO VERIFY THE PURCHASE BILLS OF THE MACHINERIES USED DURING THE PERIOD UNDER APPEAL AND THEREFORE A LLOW DEDUCTION WHICH IS BEYOND THE POWER OF THE CIT(A) W .R.T. SECTION 251(1)(A) OF THE INCOME TAX ACT, 1961. 3. DIRECTING THE ASSESSING OFFICER TO VERIFY THE PA YMENTS MADE U/S 43)B) THE ALLOWED DEDUCTION SUBJECT TO VERIFICATION BEYOND THE POWER OF THE CIT(A) W.R.T. SEC. 251(1)(A) OF THE IN COME TAX ACT, 1961. 4. DELETING THE ADDITION OF RS.5,10,968/- RIGHTLY M ADE BY THE ASSESSING OFFICER ON ACCOUNT LATE PAYMENT OF EPF. 5. DELETING THE ADDITION OF RS. 1,69,935/- RIGHTLY MADE BY THE ASSESSING OFFICER ON ACCOUNT LATE PAYMENT OF PROVID ENT FUND. 6. DELETING THE ADDITION OF RS. 10,000/- RIGHTLY MA DE BY THE ASSESSING OFFICER ON ACCOUNT RAW MATERIAL CONSUMPTI ON 7. DELETING THE ADDITION OF RS. 5,00,000/-RIGHTLY M ADE BY THE ASSESSING OFFICER ON ACCOUNT OF CONVERSION CHARGES. 8. DELETING THE ADDITION OF RS. 3,50,682/- RIGHTLY MADE BY THE ASSESSING OFFICER ON ACCOUNT BALANCES WRITTEN OFF. 9. GRANTING THE RELIEF OF RS. 84,215/- OUT OF TOTAL ADDITION OF RS.1,68,430/- RIGHTLY MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DEPRECIATION ON CAR AND VEHICLE. THE ASSESSEE IN ITS CROSS OBJECTION HAS RAISED THE FOLLOWING GROUNDS :- 1. THAT THE LD. CIT(A) ERRED IN HOLDING THAT THE EX -PARTE ASSESSMENT ORDER PASSED BY THE LD. A.O. U/S 144 IS LEGAL AND PROPER, WITHOUT APPRECIATING : I. THAT NO NOTICE U/S 143(2) AND/OR U/S 142(1) WAS SERVED ON THE ASSESSEE. 3 II. THAT NO SPECIFIC NOTICE FOR PASSING AN EX-PARTE ORDER WAS ISSUED AND SERVED ON THE ASSESSEE. III. THAT THE ASSESSMENT ORDER ALLEGED TO HAVE BEEN PASSED BY THE A.O. AS EARLY AS ON 25.01.05 BUT SERVED AS L ATE AS ON 18.04.05 WAS OUT OF DATE AS PER SECTION 153 OF T HE INCOME TAX ACT, 1961. IT IS, THEREFORE, PRAYED THAT THE ASSESSMENT ORDER SO PASSED BY THE LEARNED A.O. WAS ILLEGAL AND BAD IN L AW. 2. THAT THE LD. CIT(A) ERRED IN MAINTAINING ADDITIO N OFRS.4,00,000/- TOWARDS ESTIMATED AMOUNT OF SALE OF SCRAP, WHICH ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND AS PER REG ULAR AND PROPER BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE AND WHICH ARE ALSO SUBJECT TO CHECK BY EXCISE AUTHORITI ES IS UNCALLED FOR AND WRONG. 3. THAT THE LD. CIT(A) ERRED IN MAINTAINING AD-HOC DIS ALLOWANCE OF 10% OUT OF VEHICLE EXPENSES AND DEPRECIATION ON CA R AMOUNTING TO RS.84,215/-WHICH MORE PARTICULARLY IN THE CASE OF A COMPANY IS UNCALLED FOR AND WRONG. 2. DURING HEARING OF THIS APPEAL AND THE CROSS OBJE CTION, SINCE LEGAL GROUND HAS BEEN RAISED BY THE ASSESSEE IN ITS CROSS OBJECTION THAT NO NOTICE WAS SERVED UPON THE ASSESSEE, WE ARE SUPPOSE D TO DISPOSE OF THIS GROUND FIRST. 3. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE NOTICE U/S 142(1) OF THE ACT WAS NEVER SERVED UPON THE ASSESSE E AND AS SUCH THE ENTIRE PROCEEDINGS HAVE BECOME NULL AND VOID. ON TH E OTHER HAND, THE LEARNED SENIOR DR SHOWED THE RECORD AND SUBMITTED T HAT THE NOTICE WAS SENT THROUGH SPEED POST TO THE ASSESSEE. THIS FACT UAL MATRIX WAS ALSO CONSENTED BY THE LD. COUNSEL FOR THE ASSESSEE. HOW EVER, THE LD. COUNSEL FOR THE ASSESSEE ASSERTED THAT EVEN IF ISSU E, BUT IT WAS NEVER SERVED UPON THE ASSESSEE. 4 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF LD. REPRESENTATIVES OF BOTH SIDES AND PERUSED THE MATERIAL AVAILABLE ON RE CORD. THE LEARNED REPRESENTATIVES OF BOTH THE SIDES FAIRLY ASSERTED T HAT IN VIEW OF THE AFORESAID FACTS, THE APPEAL AS WELL AS THE CROSS OB JECTION MAY BE REMANDED BACK TO THE FILE OF THE LEARNED AO TO ASCE RTAIN THE TRUE FACT AS TO WHETHER THE NOTICE WAS SERVED UPON THE ASSESSEE OR NOT. WE, THEREFORE, KEEPING IN VIEW THE TOTALITY OF FACTS, F OLLOWING THE DECISION IN B.H.P.E. KINHILL JOINT VENTURE (304 ITR 285) (AT) ( DEL) WHEREIN IT WAS HELD THAT ONUS IS ON THE REVENUE TO PROVE THAT THE NOTICE WAS ACTUALLY SERVED UPON THE ASSESSEE/AUTHORIZED PERSON, BROADLY ARE OF THE VIEW THAT THIS MATTER MAY BE SET ASIDE. IT IS ALSO SEEN THAT IN FORM NO. 35, AT THE FIRST APPELLATE STAGE, VIDE GROUND NOS. 2 AND 3 THE ASSESSEE HAS SPECIFICALLY CHALLENGED THE ASSESSMENT ORDER ON THE GROUND THAT NOTICE U/S 143(2) OF THE ACT WAS NOT SERVED UPON THE ASSES SEE. THE LD. FIRST APPELLATE AUTHORITY ALSO AT PAGE 3 WHILE DISPOSING OF THE AFORESAID GROUND HAS QUOTED THAT THE ASSESSEE CLAIMED AS UNDE R :- IN THIS CONNECTION, IT IS SUBMITTED THAT NEITHER THE SO-CALLED QUESTIONNAIRE DT. 08.01.04 NOR THE LETTER DT. 10.01 .05 STATED TO HAVE BEEN ISSUED BY AO WERE SERVED ON THE ASSESSEE AT ALL. IT SHALL BE OF PARAMOUNT IMPORTANCE THAT WHILE REPLYIN G THE NOTICE U/S 271(1)(B) ISSUED BY THE AO, THE APPELLANT SUBMI TTED VIDE ITS LETTER DT. 9 TH MAY, 2005 THAT WE HAVE NOT BEEN SERVED WITH A NOTICE OR QUESTIONNAIRE U/S 142(1) AS CLAIMED BY HI M. THE AO WAS REQUESTED TO PROVIDE PROOF OF SERVICE OF NOTICE IN CASE THE AO HAS IT AND ZEROX COPY OF SUCH PROOF AND ALSO TO ALLOW US TO INSPECT THE ORIGINAL PERSONALLY. NEEDLESS TO SAY, N EITHER ANY PENALTY WAS IMPOSED ON US FOR NON COMPLIANCE OF THE SO CALLED NOTICE U/S 142 (1) NOR ANY REPLY WAS GIVEN FOR OUR SAID LETTER. 5 IN PURSUANCE TO THE CLAIM OF THE ASSESSEE, THE LD. FIRST APPELLATE AUTHORITY HAS OBSERVED AS UNDER :- THE LD AR HAS CHALLENGED THE LEGALITY OF THE ASS ESSMENT ORDER ON ACCOUNT OF AFORESAID SIX REASONS BUT NONE OF THE REASONS ARE COGENT ENOUGH SO AS TO STRIKE AT THE VE RY ROOT OF THE ASSESSMENT ORDER. THE REASONS STATED BY THE LD. AR ARE OF ROUTINE NATURE NOT CAPABLE OF VERIFICATION. THEREFO RE, THIS CONTENTION IS NOT ACCEPTABLE. IST GROUND OF APPEAL IS THEREFORE R EJECTED. IF THE CLAIM OF THE ASSESSEE, OBSERVATIONS MADE BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) AND THE ARGUME NTS ADVANCED BY THE LEARNED RESPECTIVE COUNSELS ARE KEPT IN JUXTAPO SITION AND ANALYSED, ONE CLEAR FACT IS OOZING OUT THAT THERE IS NO FACTU AL FINDING ON THE SERVICE OF NOTICE BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS). EVEN THE ASSESSMENT FRAMED BY THE LEARNED AO IS U/S 144 OF THE ACT. THEREFORE, TO AVOID MULTIPLICITY OF THE PROCEEDINGS , THE APPEAL OF THE REVENUE AS WELL AS CROSS OBJECTIONS RAISED BY THE A SSESSEE ARE REMANDED BACK TO THE FILE OF THE LEARNED AO FOR FRE SH ADJUDICATION IN ACCORDANCE WITH LAW. THE AO SHALL VERIFY FROM THE RECORD WHETHER THE NOTICE U/S 143(2) OR 142(1) OF THE ACT WAS ACTUALLY SERVED UPON THE ASSESSEE. NEEDLESS TO MENTION HERE THAT THE ASSESS EE BE PROVIDED DUE OPPORTUNITY OF BEING HEARD. THEREFORE, THE APPEAL OF THE REVENUE AS WELL AS THE CROSS OBJECTIONS OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES ONLY. 6 ORDER PRONOUNCED IN OPEN COURT IN THE PRESENCE OF L EARNED REPRESENTATIVES OF BOTH THE SIDES AT THE CONCLUSION OF HEARING ON 19 TH JULY, 2010. (B.R. KAUSHIK) (JOGINDER SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER JULY 19, 2010 COPY TO: APPELLANT, RESPONDENT, CIT, CIT(A), DR, G UARD FILE *DBN/