ACIT, Cir. 1(1), Kolkata V. Dozco (India) (P) Ltd , Kolkata

ITA 48/KOL/2021

AI Insights

The case involves appeals by the Assistant Commissioner of Income Tax, Circle-1(1), Kolkata against Dozco (India) Pvt. Ltd., concerning the assessment year 2012-13. The primary issues revolved around the timeliness of the assessment order and the validity of certain additions made under sections 68 and 14A of the Income Tax Act. The CIT(A) had ruled that the assessment was barred by limitation and had deleted the additions made by the Assessing Officer. The Tribunal examined the legal and factual aspects presented, including the timing of the service of the assessment order and the nature of the additions made.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 127353 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 6 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-08-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 01-08-2023
• Assessment Year: 2012-2013
• Appeal Filed On: 11-02-2021
• Other Referred Cases: Jute Corporation of India Ltd. Vs CIT, National Thermal Power Co. Ltd v. CIT, ACIT vs. Sunil Agarwal, Vidyasagar Himghar vs. ACIT, Government Wood Works Vs. State of Kerala, CIT Vs NRA Iron and Steel Pvt Ltd.
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Depreciation; Earning of tax free income; Period of limitation; Time period of passing order
• Section: 143(3); 14A; 48; 153

Judgement Text

आयकर अपील य अ धकरण, कोलकाता पीठ “ए’’, कोलकाता IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH: KOLKATA ी राजेश क ु मार, लेखा सद य एवं ी संजय शमा या यक सद य के सम [Before Shri Rajesh Kumar, Accountant Member & Shri Sonjoy Sarma, Judicial Member] I.T.A. Nos. 48 & 52/Kol/2021 Assessment Year: 2012-13 ACIT, Circle-1(1), Kolkata Vs. Dozco (India) Pvt. Ltd. (PAN: AACCD 3819 M) Appellant / (अपीलाथ ) Respondent / ( !यथ ) Date of Hearing / स ु नवाई क$ त&थ 17.04.2023&02.08.2023 Date of Pronouncement/ आदेश उ)घोषणा क$ त&थ 22.08.2023 For the Appellant/ नधा /रती क$ ओर से Shri A. K. Tibrewal, FCA Shri Amit Agarwal, Advocate For the Respondent/ राज व क$ ओर से Shri Subhrajyoti Bhattacharjee, CITDR Shri Sunil Kumar Aggarwala CITDR ORDER / आदेश Per Rajesh Kumar, AM: These are the appeals preferred by the assessee against the separate orders of the Ld. Commissioner of Income Tax (Appeals)-7, Kolkata (hereinafter referred to as the Ld. CIT(A)”] dated 14.09.2020 for the AY 2012-13. 2. Though the Registry has pointed out that the appeal is time barred by 35 days, however, in view of the decision of the Hon’ble Supreme Court in the case of Miscellaneous Application No. 665 of 2021 in SMW(C ) No. 3 of 2020, the period of filing appeal during the COVID-19 pandemic is to be excluded for the purpose of counting the limitation period. In view of this, the appeal is treated as filed within the 2 I.T.A. Nos.48 & 52/Kol/2021 Assessment Year: 2012-13 Dozco India Pvt. Ltd. limitation period. We find that there was no delay in filing the appeal as per the Hon’ble Supreme Court’s order (supra), therefore the appeal is taken for adjudication. 3. At the outset, we would like to mention that the revenue has raised additional ground assailing the order of Ld. CIT(A) wherein the ld CIT(A) has held that the assessment is barred by limitation by ignoring the fact that the order was uploaded on 29.03.2015 but by default date of service reflected as 03.04.2015 which did not prove that the order was served to the assessee on that date as it was system generated default date. 4. The Ld. D.R submitted that since this is a legal issue which does not require further verification of facts and therefore this may kindly be admitted for adjudication. In defense of argument the Ld. D.R relied on the decision of Hon’ble Supreme Court in the case of Jute Corporation of India Ltd. Vs CIT in 187 ITR 688 and National Thermal Power Co. Ltd v. CIT [1998] 229 ITR 383. 5. The Ld. A.R submitted that this is a legal issue which has also been challenged and agitated before the First Appellate Authority. The Ld. CIT(A) dismissed the same by holding that the order passed by AO is barred by limitation in terms of provisions of Section 153 of the Act which provide a specific time limit of passing the order and effecting the service on the assessee.The Ld. A.R on the other hand left the admission of additional grounds to the wisdom of the Bench. 6. After hearing the rival contentions and perusing the material on record, we find that the issue is purely legal and all the facts qua the issue are available in the appeal folder. Accordingly we are inclined to admit the same for adjudication by relying the decision of Hon’ble Supreme Court in the case of Jute Corporation of India Ltd. Vs CIT in 187 ITR 688 and National Thermal Power Co. Ltd v. CIT [1998] 229 ITR 383. 7. Facts in brief are that the assessment was framed vide order dated 29.03.2015 u/s 143(3) of the Act while the said assessment was required not be made on or 3 I.T.A. Nos.48 & 52/Kol/2021 Assessment Year: 2012-13 Dozco India Pvt. Ltd. before 31.3.2015 pursuant to provisions of section 153 of the Act. However as per computation sheet attached with the assessment order copy of which is filed at Page 152 of the PB, the date on which the service was effected was stated as 3.4.2015 which is beyond the period of limitation as prescribed u/s 153 of the Act. 8. The assessee challenged the order before the ld CIT(A) as being barred by limitation u/s 153 of the Act and the Ld. CIT(A) allowed the appeal of the assessee on this issue by observing and holding as under: “4.1. I have considered the submission filed by the AR of the appellant and taken note of the documentary evidences on record pertinent to the issue at hand. The, issue here lies on a narrow compass plane that the AO had not adhered to the statutory provisions of section 153 of the Act in passing the impugned order u/s 143(3) which makes it void ab initio. I find substance in the arguments put forth by + he AR of the appellant in this respect backed by cogent evidentiary material evidence. The Appellant Company has also filed an affidavit of its Director Shri Om Prakash Bangur who had solemnly affirmed in the said Affidavit that the aforesaid Computation Sheet was served upon the Appellant Company on 7th April, 2015 along with and as part of the assessment order dated 29th March, 2015 passed in the case of the Appellant Company for the AY 2012-13, In the said Affidavit it has also been affirmed that the said Computation Sheet is the only Tax ComputationSheet to be served upon the Appellant Company along with the said assessment order. On the other hand the AO had not submitted his rebuttal/remand report to the submissions of the Appellant Company despite being granted sufficient time and opportunity to give his comments on the said detailed submissions of the Appellant Company. The aforesaid set of facts and the documentary evidence in the form of the computation sheet before me supports the contention of the Appellant Company that the assessment order passed in the case of the Appellant Company for the Assessment Year 2012-13 left the control of the AO only on or after 3rd April, 2015 . i.e. beyond 3 days from the last date of limitation period ending on 31st March, 2015. The Appellant Company relied on the judgment of Jurisdictional Tribunal in the case of ACIT vs. Sunil Agarwal in ITA No.1194/Kol/2017, Order delivered on 28th February, 2019 wherein the Hon’ble Tribunal" dismissed the appeal filed by the department and confirmed the Order passed on 28th March, 2017 by the: Commissioner of Income Tax (Appeals) -15, Kolkata in the case of Sunil Agarwal in Appeal No. 112/CIT(A)-15/15-16/DCJT,CC-4(3)/R&T/Kol. In the course of final hearing the Appellant Company also made reference to the recent order passed in the case of Vidyasagar Himghar vs. ACIT in ITA No.1131/Kol/2017, Order delivered on 9th August, 2019 wherein Hon’ble Tribunal had relied on the judgment of the Hon’ble Kerala High Court in the case of Government Wood Works Vs. State of Kerala reported in 1988 69 STC 62 (Ker), wherein the Hon'ble Court observed that in order to make an order complete effective it has to be some way pronounced or published or communicated to the effected party and it should have been done or completed within the prescribed period/limitation period, I have examined the judicial precedents, and documentary evidence placed before me and after consideration of the same I am constrained to agree with the contention of the Appellant Company that the assessment order purported to be passed on 29th March, 2015 in its case for the AY 2012-13 is barred by limitation as the said, assessment order had left the control of the AO on or after 3rd April, 2015 i.e. beyond the last date of the limitation period prescribed for passing a valid order under section 153 of the Act. In such view of the matter, I have no hesitation in treating the impugned assessment order as being barred by limitation of time 4 I.T.A. Nos.48 & 52/Kol/2021 Assessment Year: 2012-13 Dozco India Pvt. Ltd. and therefore considered to be an ultra vires order and hence liable to be quashed. The appeal of the appellant succeeds on this ground.” 9. The Ld. D.R submitted before the Bench that it has been stated in first page of the order that the assessment order was framed u/s 143(3) of the Act on 29.03.2015 with notice of demand attached therewith. The Ld. D.R stated that the order was uploaded on the system on 29.03.2015 which was within the prescribed limitation period u/s 153 of the Act however by default date of service on the assessee was stated as 03.04.2015. The Ld. D.R submitted that order was not served on the assessee on 03.04.2015 since it is a default date and can not be taken as date of service on the assessee. The Ld. D.R therefore prayed that the order passed by the Ld. CIT(A) holding that assessment was barred by limitation is incorrect and therefore same may kindly be reversed. 10. The Ld. A.R on the other hand vehemently submitted that the assessment order was passed on 29.03.2015 which was served on the assessee on 7.4.2015. the assessee has filed a sworn affidavit to this effect. The ld AR submitted that even the date of service as per the computation sheet is stated to be 03.04.2015 which is amply clear from the computation sheet itself . The ld AR referred to the letter No. DCIT, Cir- 1(1)/Kol/ITAT/2022-23/1096 dated 27.01.2023 , wherein the DCIT, Circle-1(1), Kolkata has admitted that it is a system generated default date. Therefore the order of Ld. CIT(A) may kindly be upheld by dismissing the additional ground raised by the revenue. 11. After hearing the rival contentions and perusing the material on record, undisputed facts are that the date as mentioned in the assessment is 29.03.2015 whereas the date of service mentioned in the computer generated sheet is 03.04.2015 and as per the assessee the date on which the order was actually served on the assessee was 7.4.2015. We have also perused the provisions of Section 153 of the Act and observed that the assessment order should have been framed and served on the assessee on or before 31.3.2015 whereas as a matter of fact it was served on 5 I.T.A. Nos.48 & 52/Kol/2021 Assessment Year: 2012-13 Dozco India Pvt. Ltd. 03.04.2015 as per computation sheet and as per the assessee it was served on 7.4.2015 and for this reason the Ld. CIT(A) has held that the order to be barred by limitation in terms of provision of Section 153 of the Act. The Ld. CIT(A) has sent the documents filed by the assessee supporting its case to the AO whether the assessment was barred by limitation to the AO for verification and submitting a report thereon. However the AO did not furnish any report as called for by the ld CIT(A) despite ample time given for furnishing the same. On the other hand we note that the director of the assessee company has filed an Affidavit duly swearing and solemnly affirming therein that the computation sheet dated 3.4.2015 was served upon the assessee along with the assessment order on 07.04.2015 which the Ld. CIT(A) has accepted and held accordingly. After perusing the order of Ld. CIT(A) and the facts on record, we are of the view that the assessment framed by the AO is barred by limitation as we do not find any merit in the letter filed by the AO dated 27.01.2023 wherein it was stated that the date of service as per computation sheet is 03.04.2015 which is a default date and further submitted that it is only system generated default date and not the actual date of service. Since the revenue has failed to prove the service of assessment order within the prescribed time limit, consequently additional ground raised by the revenue is dismissed by upholding the order of Ld. CIT(A). 12. Even on the grounds on merit challenging the deletion of addition of Rs. 7,95,00,000/- by the Ld. CIT(A) which was added by AO as unexplained cash credit u/s 68 of the Act, we note that the Ld. CIT(A) has given finding of fact that share application money was received from existing share holders/ sister concerns of the assessee. The Ld. CIT(A) has noted that the existing share holder company M/s Silkinia Commodeal Pvt. Ltd. and Singh Finvest Pvt. Ltd. made investments which was accepted in the hands of assessee in AY 2011-12. We note that during the year, the assessee has raised money from existing share holders and sister concerns and therefore the ingredients as provided u/s 68 of the Act were fully proved as has been held by the Ld. CIT(A). The reliance on the decision of the Hon’ble Apex court in the case of CIT Vs NRA Iron and Steel Pvt Ltd. (2019) 412 ITR 161(SC) would also not 6 I.T.A. Nos.48 & 52/Kol/2021 Assessment Year: 2012-13 Dozco India Pvt. Ltd. come to the rescue of the revnenue as the facts are clearly distinguishable as in the said case the share subscribers companies were found to be not traceable whereas in the present case the money is raised from the existing shareholder/sister concern.Therefore we do not find any infirmity in the order of Ld. CIT(A) on this issue and accordingly ground no. 1 raised on merit by the revenue is dismissed by upholding the appellate order on this issue. 13. Second issue raised on merit is against the deletion of addition of Rs. 17,74,540/- by the Ld. CIT(A) which was added by the AO on account of disallowance u/s 14A of the Act. 14. On this issue also the Ld. CIT(A) recorded a finding that exempt income during the year was only Rs. 47,282/- which is also stated by the AO in the assessment order and the Ld. CIT(A) has directed the AO to restrict the disallowance to the extent of exempt income which in our opinion is in accordance with the several judicial pronouncements by several judicial forums. Accordingly we are on this issue also upheld the Ld. CIT(A)’s order by dismissing the grounds raised by the revenue. ITA No. 52/Kol/2021 for AY 2012-13 15. Issue raised by way of additional ground and in ground no. 1 are similar to ones as decided by us in ITA No. 48/Kol/2021. Therefore our decision in ITA NO. 48/Kol/2021 would mutatis mutandis apply to the additional ground as well as ground no. 1. Consequently additional ground as well as ground no. 1 are dismissed. 16. Issue raised in ground no. 2 by the revenue is against the deletion of addition of Rs. 4,24,55,462/- by the Ld. CIT(A) as disallowed and added by the AO on account of depreciation. 17. Facts in brief are that the AO during the assessment proceedings observed that the assessee has claimed depreciation @30% whereas according to the AO the said depreciation was allowable @ 15% and thus the AO computed the depreciation @ 7 I.T.A. Nos.48 & 52/Kol/2021 Assessment Year: 2012-13 Dozco India Pvt. Ltd. 15% and made addition to the tune of Rs. 4,24,55,462/-to the income of the assessee resulting from reduction of depreciation from @30% to @ 15%. 18. In the appellate proceedings, the Ld. CIT(A) allowed the appeal of the assessee by holding as under: “6.2. I have considered the submission of the A.R of the appellant in the backdrop of the assessment order. I have also gone through the materials on record in coming to a decision on the issue at hand. I find the issue is covered in favour of the appellant company by the order of my predecessor in office passed on 28.03.2018 in the appellant’s own case for the AY 2010-11 in Appeal NO. 232/CIT(A)-7/Kol/Ward-3(1)/17-18. In the said order the Ld. CIT(A) had not allowed higher depreciation on two assets viz. Rock Breaker and Motor Grader. On appeal before the jurisdictional ITAT by the appellant, the Tribunal allowed the claim of the appellant vide order dated 19.02.2020 in CO NO. 81/Kol/2018 . In view of the foregoing the depreciation @ 30% on the block of assets- “Plant & Machinery” should be allowed. The disallowance in this respect in an amount of Rs. 4,24,55,462/- cannot be upheld.” 19. After hearing the rival contentions and perusing the material on record, we find that the issue settled in favour of the assessee by the decision of Co-ordinate Bench in AY 2010-11 which has been challenged before the tribunal in CO No. 81/Kol/2018 dated 19.02.2020 by the assessee. After following the said decision of the coordinate bench ,the Ld. CIT(A) has allowed the appeal of the assessee. Consequently we do not find any infirmity in the order of Ld. CIT(A) and therefore the order of Ld. CIT(A) is upheld by dismissing the appeal of the revenue. 20. In the result, both the appeals of the revenue are dismissed. Order is pronounced in the open court on 22 nd August, 2023 Sd/- Sd/- (Sonjoy Sarma /संजय शमा ) (Rajesh Kumar/राजेश क ु मार) Judicial Member/ या यक सद य Accountant Member/लेखा सद य Dated: 22 nd August, 2023 SB, Sr. PS 8 I.T.A. Nos.48 & 52/Kol/2021 Assessment Year: 2012-13 Dozco India Pvt. Ltd. Copy of the order forwarded to: 1. Appellant- ACIT, Circle-1(1), Kolkata 2. Respondent – Dozco India Pvt. Ltd., 6, Waterloo Street, 3 rd Floor, Kolkata- 700069 3. Ld. CIT(A)-7,, Kolkata 4. Ld. Pr. CIT- , Kolkata 5. DR, Kolkata Benches, Kolkata (sent through e-mail) True Copy By Order Assistant Registrar ITAT, Kolkata Benches, Kolkata