ACIT, Bhubaneswar V. Magala Timber Products Ltd,

ITA 488/CTK/2013

• Counselvise Citation: 48822114 RSA 2013
• Duration Of Justice: 1 year(s) 11 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-10-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 26-10-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 11-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K K NATH
• Assessee Lawyers: S N SAHU
• Keywords: Depreciation; Application of stay; Additional evidence; Unabsorbed depreciation

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH, CUTTACK . . , & , BEFORE S/SHRI P.M.JAGTAP, ACCOUNTANT M EMBER & PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER ' ./ ITA NO.488/CTK/2013 ( # # # # $% $% $% $% / ASSESSMENT YEAR :2008-09) ACIT, CIRCLE-2(1), BHUBANESWAR VS. M/S. MANGALAM TIMBER PRODUCTS LTD., KUSUMI, NAWARANGPUR, ODISHA ' ./ & ' ./PAN/GIR NO. AABCM 5187 C ( ' /APPELLANT ) .. ( ()' / RESPONDENT ) C.O..NO.01/CTK/2014 (ARISING OUT OF ( ' ./ ITA NO.488/CTK/2013) ( # # # # $% $% $% $% / ASSESSMENT YEAR :2008-09) M/S. MANGALAM TIMBER PRODUCTS LTD., KUSUMI, NAWARANGPUR, ODISHA VS. ACIT, CIRCLE-2(1), BHUBANESWAR ' ./ & ' ./PAN/GIR NO. AABCM 5187 C CROSS OBJECTOR .. ( ()' / RESPONDENT ) # , , , , /ASSESSEE BY : SHRI S.N.SAHU $ , , , , /REVENUE BY : SHRI K.K.NATH #$- / DATE OF HEARING : 26 TH OCT. 2015 ./% /DATE OF PRONOUNCEMENT 28 TH OCT. 2015 0 0 0 0 / O R D E R PER PARTHA SARATHI CHAUDHURY, JM ITA NO.488/CTK/2013 ASSESSMENT YEAR :2008-09 2 CHALLENGING THE ORDER OF THE LD CIT(A), THE DEPART MENT HAS PREFERRED THIS APPEAL BEFORE US ON THE FOLLOWING GROUNDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD CIT(A) IS NOT JUSTIFIED IN LAW AS WELL AS ON FACTS IN ALLOWING THE EARLIER YEARS LOSSES TO BE BROUGHT FORWARD FOR SET OFF, WHEN THE ASSESSEE HAD NOT CLAIMED IN ITS RETURN OF INCOME. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD CIT(A) WAS NOT JUSTIFIED IN ACCEPTING THE CONTENTION OF TH E ASSESSEE AND NOT ACCEPTING THE FINDINGS OF THE AO IN VIOLATION O F RULE 46A. 2. THE BRIEF FACTS OF THIS CASE ARE THAT FOR THE AS SESSMENT YEAR UNDER CONSIDERATION, THE ASSESSEE COMPANY WAS ENGAGED IN THE BUSINESS OF MANUFACTURE AND SALE OF MEDIUM DENSITY FIBER BOARD S AND FORMALDEHYDE. THE RETURN WAS PROCESSED UNDER SECTION 143(1) ON 13.3.2 010 ON A TOTAL INCOME OF RS.3,06,42,500/-. THEREAFTER, THE ASSESSEE DETECTE D A MISTAKE IN ITS RETURN AND FILED A RECTIFICATION PETITION BEFORE THE AO U/S.15 4 STATING THAT THERE WERE HUGE LOSSES WHICH HAD TO BE BROUGHT FORWARD FROM EARLIER YEARS TO BE SET OFF AGAINST THE AVAILABLE INCOME FOR THE ASSESSMENT YEAR 2008-0 9. IT WAS ALSO STATED THAT IN THE PROCESS OF FILING UP THE RELEVANT COLUMNS OF THE RETURN, THERE WAS A MINOR MISTAKE. ALTHOUGH, IN THE RETURN ITSELF THERE WAS PROPER MENTION REGARDING THE BROUGHT FORWARD LOSSES FROM THE ASSESSMENT YEARS 20 06-07 AND 2007-08, IN THE APPROPRIATE SPACE FOR THE RETURN OF ASSESSMENT YEAR 2008-09, THE AMOUNT COULD NOT BE MENTIONED. TO RECTIFY THE MISTAKE, A PETITI ON U/S.154 WAS FILED. IN ITS PETITION FILED BEFORE THE ASSESSING OFFICER, IT WAS STATED BY THE AR OF THE ASSESSEE THAT THE RETURN WAS FILED ON 30.10.2008 I. E. WITHIN THE DUE DATE. APPROPRIATE AMOUNTS OF CARRY FORWARD OF LOSSES HAD BEEN INDICATED IN THE CFL SCHEDULE OF ITR-6 BUT THE AMOUNT WAS INADVERTENTLY OMITTED TO BE MENTIONED IN ITA NO.488/CTK/2013 ASSESSMENT YEAR :2008-09 3 THE BFLA SCHEDULE. WHILE PROCESSING THE RETURN UN DER SECTION 143(1) OF THE ACT, NECESSARY ADJUSTMENT SHOULD HAVE BEEN MADE U/S .143(1)(A)(II) OF THE I.T.ACT. SINCE THE SOFTWARE USED FOR AUTOMATIC PRO CESSING OF RETURNS DID NOT TAKE CARE OF THE ADJUSTMENTS OF BROUGHT FORWARD LOS SES DUE TO OMISSION BY THE ASSESSEE, IT WAS REQUESTED THAT THE MATTER SHOULD B E RECTIFIED U/S.154 OF THE ACT. HOWEVER, THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAD NOT MENTIONED THE BROUGHT FORWARD LOSSES TO BE CARRIED FORWARD TO FUTURE YEARS IN THE RETURNS FILED FOR ASSESSMENT YEARS 2006-07, 2007-08 AND 200 8-09. THERE WAS NO PROOF IN THE RETURN ABOUT THE CLAIM OF LOSSES BROUGHT FOR WARD AND TO BE CARRIED FORWARD FOR BEING SET OFF AGAINST PROFIT OF SUBSEQU ENT YEARS. THE AO ALSO STATED THAT IT IS A SETTLED POSITION OF LAW THAT IF AN ASS ESSEE DOES NOT CLAIM BROUGHT FORWARD LOSS IN THE RETURN OF INCOME FILED BY DUE D ATE, THE LOSS WILL NOT BE ALLOWED TO BE CARRIED FORWARD TO FUTURE. IT WAS IN THIS BACKDROP THAT THE ASSESSING OFFICER DID NOT FIND ANY MERITS IN THE PE TITION U/S.154 AND, ACCORDINGLY, REJECTED THE SAME. 3. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN AP PEAL BEFORE THE LD CIT(A), WHEREBY, LD CIT(A) OBSERVED THAT THE LD A.R . OF THE ASSESSEE POINTED OUT A LETTER OF THE JURISDICTIONAL JOINT COMMISSION ER OF INCOME TAX, RANGE-2, BHUBANESWAR AND THE RELEVANT PORTION OF THAT LETTE R FINDS PLACE IN THE ORDER OF THE LD CIT(A) IS AS FOLLOWS: 'ON THE VERIFICATION OF CASE RECORD, THE. DEMAND HA S BEEN GENERATED BY PROCESSING. THE ASSESSE IS IN ARGUE TH AT DEMAND HAS BEEN ARISEN DUE TO: NOT GIVING CREDIT OF BROUGHT FO RWARD LOSSES OF THE ASSESSE OF EARLIER YEARS WHILE PROCESSING [THE RETU RN OF INCOME. THE ITA NO.488/CTK/2013 ASSESSMENT YEAR :2008-09 4 ASSESSE SUBMITTED COPIES OF EARLIER RETURNS AND COP Y OF RETURN OF INCOME FOR A.Y.2008-09 IN ITS SUPPORT. ACCORDING TO THE ASSESSE THE RETURN WAS FILED TIMELY AND PROPER BROUGHT FORWARD LOSSES HAS BEEN SHOWN IN THE RETURN. ACCORDING TO ASSESSE THERE IS NO FAULT ON ITS PART AND THE DEMAND IS RAISED DUE TO TECHNICAL ERRO R OR FAULTY PROCESSING. I HAVE GONE THROUGH THE CASE RECORDS, C OPIES OF RETURN OF INCOME SUBMITTED BY THE ASSESSEE, THE RETURN AVAILA BLE ON AST AND WRITTEN SUBMISSION FILED BY THE ASSESSEE. AFTER VE RIFICATION I FIND THAT THERE IS GENUINE AND LOGICAL BASIS IN THE ARGUMENT OF THE ASSESSEE AND DUE TO TECHNICAL ERRORS ASSESSEE SHOULD NOT BE HARA SSED FOR RECOVERY OF SUCH DEMAND TILL THE ISSUE DECIDED BY LD CIT(A) IN THIS MATTER. 4. THIS OBSERVATION BY THE JOINT COMMISSIONER OF IN COME TAX WAS MADE DURING STAY PROCEEDINGS. BEFORE THE LD CIT(A), THE ASSESSEE RELIED ON VARIOUS JUDICIAL PRONOUNCEMENTS TO SUPPORT ITS CASE, WHICH ARE ALREADY ON RECORD AND, THEREFORE, WE DO NOT AGAIN REITERATE THE SAME. ON THE BASIS OF THE SUBMISSIONS AND FACTS AND CIRCUMSTANCES OF THE CASE, THE LD CIT (A) IS OF THE OPINION THAT NO GOVERNMENT OR AN ARM OF THE GOVERNMENT WOULD LIKE TO PROFIT UNDULY ON CERTAIN TECHNICAL OMISSIONS OF AN INDIVIDUAL OR A CORPORATE TAX PAYER. TAXATION IS BASED ON THE THEORY OF REAL INCOME AND UNDER THE INDIAN I NCOME TAX ACT, PROVISIONS ARE INCLUDED TO ENSURE A FAIR PLAY IN DETERMINATION OF TAX PAYABLE BY THE TAX PAYERS. THE LD CIT(A) FURTHER OBSERVED THAT IT IS AN UNDISPUTED FACT THAT THE ASSESSEE COMPANY HAD GENUINELY ACCUMULATED LOSSES A ND THERE IS NO DISPUTE REGARDING THE AMOUNT OF UNABSORBED BUSINESS LOSS AN D UNABSORBED DEPRECIATION WHICH ARE TO BE BROUGHT FORWARD TO BE CONSIDERED IN ASSESSMENT YEAR 2008-09. SECONDLY, THERE IS NO DISPUTE REGARDING FULFILLMENT OF TECHNICAL CONTENTIONS FOR CLAIMING CARRIED FORWARD OF LOSS/DEPRECIATION SUCH AS FILING OF RETURN WITHIN THE PRESCRIBED DUE DATE. THE DISPUTE APPARENTLY RELATE S TO THE DATA WHICH WERE UPLINKED/FILED BY THE ASSESSE AND DATA WHICH ARE FO UND TO BE AVAILABLE ON THE ITA NO.488/CTK/2013 ASSESSMENT YEAR :2008-09 5 AST. THE LD CIT(A) EVEN MENTIONS ABOUT THE LETTER DATED 20.11.2012, WHEREIN, THE JURISDICTIONAL JOINT COMMISSIONER OF INCOME TAX HAS ALSO RECORDED THAT AFTER VERIFICATION OF CASE RECORDS AND RETURN SUBMITTED B Y THE ASSESSEE, THERE WAS GENUINE AND LOGICAL BASIS IN THE ARGUMENTS OF THE A SSESSEE AND DUE TO TECHNICAL ERROR IN THE AST, THE ASSESSEE SHOULD NOT BE HARASS ED BY THE RECOVERY OF THE IMPUGNED TAX DEMAND. THEREFORE, THE LD CIT(A) CONS IDERING THE SPIRIT OF JUDICIAL OPINIONS IN SOME OF THE CASES MENTIONED BY THE LD A .R., DIRECTED THE AO TO MODIFY THE ORDER U/S.154 AND ALLOW APPROPRIATE RELI EF TO THE ASSESSEE. HENCE, THE DEPARTMENT HAS PREFERRED THE APPEAL BEFORE US A GITATING THE ISSUE IN GROUND NO.1 OF APPEAL. 5. AT THE TIME OF HEARING, LD DEPARTMENTAL REPRESEN TATIVE VEHEMENTLY RELIED ON THE ORDER OF THE ASSESSING OFFICER U/S.154 AND T HE ORIGINAL ORDER PASSED U/S.143(3) OF THE ACT. ON THE OTHER HAND, LD A.R. OF THE ASSESSEE RELIED ON THE ORDER OF THE LD CIT(A) AS WELL AS JUDICIAL PRONOUNC EMENTS MENTIONED THEREIN. 6. WE HAVE CONSIDERED THE ARGUMENTS AND CONTENTIONS OF BOTH THE SIDES. ON THIS ISSUE, OUR VIEW IS THAT THE INCOME TAX LEGI SLATION IS WELFARE LEGISLATION. EVEN IN CASE OF ANY DOUBT, THE BENEFIT HAS TO ACCRU E TO THE ASSESSEE. THE ASSESSEE OR THE TAXPAYERS CONTRIBUTE TO THE DEVELOP MENT OF OUR ECONOMY AND THE ACT HELPS TO GUIDE THEM AND NOT TO PENALIZE THE M. IN THE PRESENT CASE, IT IS A FACT ON RECORD THAT THE ASSESSEE HAS FILED ITS RE TURN OF INCOME IN DUE TIME AND WHATEVER RELIEF AND RECTIFICATION THAT WERE CLAIMED BY THE ASSESSEE WAS A BONAFIDE ONE. THERE WAS A TECHNICAL FAULT BECAUSE OF WHICH, THE LEGAL CLAIM OF ITA NO.488/CTK/2013 ASSESSMENT YEAR :2008-09 6 THE ASSESSEE SHOULD NOT BE DENIED. THE LEGAL CLAIM STILL REMAINS GOOD. THEREFORE, IN OUR VIEW, THE ORDER OF THE LD CIT(A) DIRECTING THE AO TO MODIFY THE ORDER U/S.154 AND ALLOW PROPER RELIEF TO THE ASSESS EE STANDS GOOD AND PROPER. HENCE, WE REJECT GROUND NO.1 OF APPEAL FILED BY THE REVENUE. 7. THE NEXT GROUND RELATES TO VIOLATION OF RULE 46A OF ITAT RULES. THIS RULE CATEGORICALLY STATES THAT IF ANY ADDITIONAL EVIDENC E IS TAKEN UP BY THE LD CIT(A) WHICH WAS NOT PRODUCED BEFORE THE AO, THEN, THE LD CIT(A) MUST ALLOW PROPER OPPORTUNITY TO THE AO TO SUBMIT HIS VIEW REGARDING SUCH ADDITIONAL EVIDENCES WHICH ARE PRODUCED. IN THE INSTANT CASE, WE NOTED THAT IN THE APPEAL AGAINST THE ORDER U/S.154 OF THE ACT BEFORE THE LD CIT(A), NO ADDITIONAL EVIDENCE WAS PRODUCED BY THE ASSESSEE. AT THE OUTSET, THE BENCH HAS ASKED THE LD D.R TO DEMONSTRATE THE VIOLATION OF PROVISIONS OF RULE 46A OF I.T.RULES WHICH WAS MENTIONED IN THE GROUND OF APPEAL. NOTHING SPECIFI C WAS POINTED OUT BY HIM. IN SUCH SITUATION, IT IS NOT JUSTIFIABLE TO ALLEGE THA T THERE WAS ANY INFRINGEMENT OF RULE 46A OF I.T.RULES. THEREFORE, IN OUR VIEW, THERE WAS NO VIOLATION OF RULE 46A OF I.T.RULES, AS AGITATED BY THE REVENUE IN GRO UND NO.2. HENCE, WE DISMISS THIS GROUND. 8. THE CROSS OBJECTION OF THE ASSESSEE IS IN SUPPOR T OF THE ORDER OF LD CIT(A) IN RESPECT OF ALLOWING THE EARLIER YEARS LOSSES TO BE BROUGHT FORWARD FOR THE SET OFF. SINCE WE HAVE UPHOLD THE ORDER OF LD CIT(A) ON THIS ISSUE, THE CROSS OBJECTION IS RENDERED INFRUCTUOUS. ITA NO.488/CTK/2013 ASSESSMENT YEAR :2008-09 7 5 . IN THE RESULT, APPEAL OF THE REVENUE AS WELL AS C ROSS OBJECTION OF THE ASSESSEE IS DISMISSED. SD/- SD/- . . ,/P.M.JAGTAP ,PARTHA SARATHI CHAUDHURY / ACCOUNTANT MEMBER /JUDICIAL JUDICIAL MEMBER CUTTACK; #' DATED 30/10/2015 B.K.PARIDA, SPS 0 0 0 0 ( ( ( ( 3% 3% 3% 3% / COPY OF THE ORDER FORWARDED TO : 4 44 4 4 44 4 4 44 4 0# 0# 0# 0# / BY ORDER, SR. PRIVATE SECRETARY, , / ITAT, CUTTACK 1. ' / THE APPELLANT : THE ACIT, CIRCLE-2, BHUBNESWAR. 2. ()' / THE RESPONDENT. M/S. MANGALAM TIMBER PRODUCTS LTD., KUSUMI, NAWARANGPUR, ODISHA 3. 5 ( ) / THE CIT(A), BHUBANESWAR. 4. 5 / CIT , BHUBANESWAR 5. $6 (# , / DR, ITAT, CUTTACK 6. 7 8- / GUARD FILE. ) ( //TRUE COPY//