M/s PP Automobiles, Berhampur V. ITO, Ganjam

ITA 499/CTK/2012

• Counselvise Citation: 49922114 RSA 2012
• Duration Of Justice: 1 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2012
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Assessment Year: 2003-2004
• Appeal Filed On: 15-10-2012
• Court: TRIBUNAL
• Department Lawyers: S C MOHANTY
• Assessee Lawyers: K KRUSHNA CH PRUSTY
• Keywords: Unexplained investment; Depreciation

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK ( ) BEFORE . . , , HONBLE SHRI K.K.GUPTA, ACCOUNTANT MEMBER. /AND . . . , H ONBLE SHRI K.S.S.PRASAD RAO, JUDICIAL MEMBER / I.T.A.NO. 499/CTK/2012 / ASSESSMENT YEAR 2003 - 04 M/S.P.P.AUTOMOBILES, GANDHINAGAR, BERHAMPUR, GANJAM PAN: AAGFP 4307 D - - - VERSUS - INCOME - TAX OFFICER, WARD II, BERHAMPUR C IRCLE, BERHAMPUR. ( /APPELLANT ) ( / RESPONDENT ) / FOR THE APPELLANT : / SHRI K.KRUSHNA CH.PRUSTY, AR / FOR THE RESPONDENT: / SHRI S.C.MOHANTY, DR / DATE OF HEARING: 27.11.2012 / DATE OF PRONOUNCEMENT: 30.11.2012 / ORDER . . , , SHRI K.K.GUPTA, ACCOUNTANT MEMBER. THIS APPEAL BY THE ASSESSEE IS ON A SOLITARY ISSUE THAT HAVING FILED THE RETURN IN PURSUANCE TO NOTICE U/S.147 THE ASSESSING OFFICER OUGHT NOT TO HAVE RECONSIDERED THE INCOME SO COMPUTED UNDER THE PROVISIONS OF SECTIONS 144/147 WHEN THE SAID COMPUTATION WAS ALREADY BEFORE THE TRIBUNAL AND WAS SET ASIDE TO BE CONSIDERED BY THE ASSESSING OFFICER DE NOVO WHEN THE ORDER U/SS.143(3)/144/25 4 RECOMPUTED THE INCOME BY GIVING A FINDING THAT THE INCOME HITHERTO RETURNED AS BELOW TAXABLE LIMIT WHETHER COULD BE CONSIDERED FOR THE PURPOSE OF FINDING THAT THE CAPITAL CONTRIBUTED BY THE PARTNERS WAS NOT SUFFICIENT FOR THE PURCHASE OF A MOTOR VEHICLE OF THE LIKE AMOUNT COULD BE TAXED IN THE HANDS OF THE ASSESSEE ON THE BASIS OF COMPUTATION OF INCOME UNDER THE PROVISIONS OF SECTION 44AF. I.T.A.NO. 499/CTK/2012 2 2. THE BRIEF FACTS AS HAVE BEEN BROUGHT ON RECORD ARE THAT T HE ASSESSEE FIRM ENGAGED IN THE BUSINESS OF SPARE PARTS A ND TAXI PLYING WAS ASSESSED INITIALLY U /S.144/147 OF THE ACT IN THE STATUS OF AN AOP ON A TOTAL INCOME OF RS,1,98,400. AS THE STATUS WAS TAKEN AS AOP, THE CLAIM OF INTEREST AND REMUNERATION PAID TO PARTNERS WERE NOT ALLOWED. THE ASSESSING OFFICER ALSO ADDE D IN THE ASSESSMENT AN AMOUNT OF 2,14,994 AS UNEXPLAINED INVESTMENT IN THE PURCHASE OF TOYOTA QUALIS VEHICLE. AGGRIEVED, THE ASSESSEE PREFERRED APPEAL AND THE LEARNED CIT(A) VIDE HIS ORDER DT .16 - 10 - 2009 CONFIRMED THE ADDITION OF 2,14,944 ON ACCOUNT OF UN EXPLAINED INVESTMENT. HE ALSO CONFIRMED THE AOS ACTION IN TREATING THE FIRM AS AN AOP. THE ASSESSEE CARRIED THE MATTER TO THE HONBLE TRIBUNAL WHO VIDE THEIR ORDER DT.11 - 02 - 2010 IN ITA NO.288/CTK/2009 RESTORED THE MATTER TO THE AO S FOR VERIFICATION AS TO WHETHER THE ASSESSE E IS FILING RETURN U/S.44AF OF THE ACT . PURSUANT TO SUCH ORDER OF THE ITAT, THE ASSESSING OFFICER PASSED THE IMPUGNED ORDER WHEREIN HE AGREED WITH THE CONTENTION OF THE ASSESSEE THAT IT IS COVERED BY SEC.44AF OF THE ACT AND ACCORDINGLY HE COMPLE TED THE ASSESSMENT U/S. 143(3)/ 147/254 TAKING THE ASSESSEE AS A FIRM AND ALLOWING DEDUCTION OF INTEREST AND REMUNERATION PAID TO THE PARTNERS SUBJECT TO PROVISIONS OF SEC.40( B ). HOWEVER, IN RESPECT OF THE ADD ITION OF 2,14,000 THE ASSESSING OFFICE R DID NOT EXAMINE THE CLAIM OF THE ASSESSEE BY STATING AS UNDER(AT PARA4 OF THE ASSESSMENT ORDER). I N THIS CASE ADDITION OF 2,1 4,000/ WAS MADE WHICH WAS AN UNEXPLAINED INVESTMENT IN THE PURCHASE OF THE VEHICLE. THIS ADDITION WAS CONFIRMED BY THE CI. CIT (A) VIDE PAQE5 OF HIS ORDERS. ACCORDINGLY, THE ISSUE REMAINS CLOSED FOR ANY FURTHER INTERFERENCE IN THE ABSENCE OF ANY SPECIFIC DIRECTION FROM THE HONBLE ITAT. I.T.A.NO. 499/CTK/2012 3 THE ASSESSING OFFICER REPEATED THE ADDITION OF 2,14,000 AND THE LEARNED CIT(A) CONFIRMED THE SAME, AGAINST WHICH THE ASSESSEE IS IN THE PRESENT APPEAL BEFORE THE TRIBUNAL. 3. THE LEARNED COUNSEL OF THE ASSESSEE POINTED OUT THAT THE TRIBUNAL HAD RIGHTLY OBSERVED THE IMPROBABILITY OF ACQUIRING THE ASSET FROM THE TURNOVER OF 4,24,837 WHEN THE ACCOU NTANT OF THE ASSESSEE ERRONEOUSLY FILED A LOSS RETURN BY CLAIMING SALARY AND INTEREST TO PARTNERS AGAINST THE ESTIMATED INCOME FOR PLYING TAXI FOR A PERIOD OF EIGHT MONTHS UNDER THE PROVISIONS OF SECTION 44AE. IN OTHER WORDS , IT WAS THE CASE OF THE ASSESS ING OFFICER AND THE LEARNED CIT(A) TO MAKE A STATEMENT OF AFFAIRS IN THEIR MINDS LEADING TO A FINDING WHETH ER THE ADDITION COULD BE MADE U /S.68 OR U/S.69. THE ITAT HAD NOT DIRECTED THE ASSESSEE TO FIND SOMETHING UNDISCLOSED BY DIGGING DEEP INTO IT INSOFAR AS THE ASSESSING OFFICER HAS TRIED TO MAKE AN IMPROBABILITY TO A CERTAINTY. HE SUBMITTED THAT THE IN THE IMPUGNED ORDER, THE LEARNED CIT(A) HAS NOTED AS UNDER : T HAT THE DISPUTE ADJUDICATED BY THE HONBLE TRIBUNAL RELATED TO DISALLOWANCE OF INTEREST AN D REMUNERATION TO THE PARTNERS. IN THE ABSENCE OF ANY SPECIFIC DIRECTION BY THE HONBLE TRIBUNAL, THE AO COULD NOT HAVE LOOKED IN TO THE ADDITION OF 2,14,000 , WHICH STANDS CONFIRMED BY THE CI T(A). IN VIEW OF THE SAME, I FIND NO INFIRMITY IN THE ACTION OF THE AO AND GIVEN THE FACT AS STATED ABOVE, I AM OF THE CONSIDERED VIEW THAT I HAVE NO JURISDICTION TO REVIEW THE ORDER OF MY LD. PREDECESSOR AND ACCO RDINGLY, THE GROUNDS CHALLENGING TH E SAID ADDITION OF 2,14,000 ARE DISMISSED. HAVING NOTED SO, THE LEARNED COUNSEL OF THE ASSESSEE SUBMITTED THAT THE LEARNED CIT(A) APPARS TO HAVE WASHED HIS HANDS OFF INSOFAR AS THE ASSESSING OFFICER HAS LEVIED TAX OF 43,383 ON A SUM OF 1,23,950 INCOME COMPUTED BY HIM IN THE STATUS OF FIRM . THIS CONFIRMS THAT NO INFIRMITY WAS FOUND BY THE I.T.A.NO. 499/CTK/2012 4 ASSESSING AUTHORITIES IN THE RETURN SO FILED BY THE ASSESSEE WHEN THE ASSESSING AUTHORITIES ON THEIR OWN TRIED TO FIND A MEANING I N THE ORDER WHICH HAD ALREADY BEEN RENDERED TO ADJUDICATION BY THE TRIBUNAL. THE ASSESSING OFFICER HAS INSISTED HIS COMPUTATION OF INCOME AS PER THE INCOME IN THE FIRST APPELLATE ORDER AND THE LEARNED CIT(A) IN THE IMPUGNED ORDER HAS HELD A VIEW THAT THE T RIBUNAL DID NOT DIRECT THE ASSESSING OFFICER TO RELOOK INTO THE ADDITION OF 2,14,000 WHICH AGAIN HAS BEEN ADDED BY THE ASSESSING OFFICER EVEN AFTER CONSIDERING THE APPELLATE ORDER OF THE FIRST APPELLATE AUTHORITY ALREADY ADJUDICATED. THE LEARNED COUNSEL OF THE ASSESSEE THEREFORE PRAYED FOR DELETION OF THE ADDITION OF 2,14,000. 4 . THE LEARNED DR OPPOSED THE CONTENTION OF THE LEARNED COUNSEL OF THE ASSESSEE INSOFAR AS A MISTAKE COMMITTED BY THE ASSESSEE IS BEING BLAMED ON THE ACCOUNTANT OF THE ASSESSEE WHICH COULD NOT BE PASSED TO THE ASSESSING OFFICER FOR COMPUTING AFRESH INSOFAR AS THE ASSESSING AUTHORITIES ARE LIABLE TO ACCEPT THE RETURN AS FILED BY THE ASSESSEE WHEN ON A PARTICULAR FINDING OF ESCAPEMENT OF INCOME HAS BEEN POINTED OUT TO THE ASSESSEE ON THE DIRECTION OF THE TRIBUNAL. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL AVAILABLE ON RECORD. IT WAS SUBMITTED THAT AS PER PARTNERS HIP DEED EACH PARTNER HAVE INVESTED 50,000 EACH X 4 = 2,00,000 AS CAPITAL IN THE ASST. YEAR 2001 - 02 AND IN THE SAID ASST. YEAR INCOME WAS ACQUIRED 20,565 FROM BUSINESS OUT OF WH ICH ONE PARTNER NAMED USHA RANI PANDA HAVE WITHDRAWN 3,000 , HENCE REMAIN 17,565 , ALSO IN THE ASST. YEAR 2002 - 03 INCOME ACQUIRED FROM THE BUSINESS 30,607, HENCE THE FIRMS OPENING CAPITAL STANDING AT 2,48,172 FOR THE ASST. YEAR 2003 - 04 OUT OF WHICH THE F IRM INVESTED 2,14, 000 FOR THE PURCHASE OF TOYOTA QUALIS . THE TRIBUNAL WAS PLEASED TO RESTORE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR I.T.A.NO. 499/CTK/2012 5 CONSIDERATION AFRESH INSOFAR AS IT WAS NOT THE CASE OF THE TRIBUNAL TO CONSIDER ACCEPTANCE OF A NIL OR LOSS RET URN WHICH HAS BEEN FILED U/S.44AF OR U/S.44AE.IN OTHER WORDS DEPRECIATION AND INTEREST AND SALARY TO PARTNERS IS DEEMED TO HAVE BEEN ALLOWED WHEN THE DETERMINATION OF INCOME U/S.44AF OR U/S.44AE IS TO BE CONSIDERED . THE ASSESSING OFFICER CHOSE TO ACCEPT TH E PAYMENT OF INTEREST AND SALARY TO PARTNERS RESULTING IN LOSS FROM TAXI PLYING AS PER THE ORIGINAL ORDER. SO FAR SO GOOD. THE ASSESSING OFFICER CHOSE TO AGAIN HOLD AN UNEXPLAINED INVESTMENT FOR THAT VERY TOYOTA QUALIS VEHICLE FOR WHICH HE ACCEPTED A LOSS FROM PLYING THEREOF. HE ACCEPTED THE DIRECTION OF THE TRIBUNAL BUT PARTLY WHICH WAS UNFAIR INSOFAR AS THE TOYOTA QUALIS VEHICLE HAD BEEN PURCHASED FROM THE CONTRIBUTION OF THE PARTNERS WHEN NO OTHER CORROBORATING MATERIAL COULD BE ESTABLISHED AGAINST THE A SSESSEE EXCEPT THAT THE SALARY AND INTEREST TO THE PARTNERS WERE STILL PAYABLE TO THEM. IN OTHER WORDS, HE HIMSELF AGREED WITH THE AMOUNT AVAILABLE FOR THE INVESTMENT WAS FOR THE PURPOSE OF ACQUIRING THE ASSET FROM THE CAPITAL CONTRIBUTION AND NOT BECAUSE THE ASSESSEE HAD INCURRED LOSS WAS UTILIZING THAT ASSET. DEPRECIATION IS A NON - CASH LOSS CLAIMED WHICH CANNOT BE EQUATED WITH INVESTMENT ON AN ASSET FROM UNKNOWN SOURCE. IN OTHER WORDS HIS ACCEPTANCE OF THE TRIBUNALS DIRECTION FOR CONFIRMING THE INVESTMEN T IN TOYOTA QUALIS VEHICLE AMOUNTING TO 2,14,000 HAS BEEN INSCRIBED BY HIM IN THE ORDER ITSELF WHEN IT WAS APPEALED AGAINST BEFORE THE FIRST APPELLATE AUTHORITY CHOSE TO NOT ANALYZE THE SAME BUT UPHELD HIS PREDECESSORS CONFIRMATION OF THE SAID AMOUNT. W E ARE UNABLE TO SATISFY OURSELVES TO THE UNFAIR TREATMENT METED OUT TO THE ASSESSEE ON THE BASIS OF MIS - INTERPRETATION OF THE FACTS INSOFAR AS A TANGIBLE ASSET THE USE OF WHICH HAVE RESULTED IN ASSESSMENT CANNOT BE QUESTIONED WHEN THE VERY FACTS LEADING TO THE INVESTMENT HAVE BEEN DEALT WITH BY THE ASSESSING OFFICER ALREADY WHICH REQUIRED EXPLANATION FROM THE ASSESSEE AS PUT FORTH BY I.T.A.NO. 499/CTK/2012 6 THE LEARNED COUNSEL OF THE ASSESSEE AS MENTIONED ABOVE. IN VIEW OF THE ADDITION OF 2,14, 000 MADE BY THE ASSESSING OFFICER A ND SUSTAINED BY THE LEARNED CIT(A) IS NOT PROPER AND AS SUCH, WE DIRECT DELETION OF THE SAID ADDITION BY ALLOWING THE APPEAL OF THE ASSESSEE. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. S D/ - S D/ - ( . . . ) , (K.S .S.PRASAD RAO), JUDICIAL MEMBER ( . . ) , , (K.K.GUPTA), ACCOUNTANT MEMBER. ( ) DATE: 30.11.2012 - COPY OF TH E ORDER FORWARDED TO: 1 . / THE APPELLANT : M/S.P.P.AUTOMOBILES, GANDHINAGAR, BERHAMPUR, GANJAM 2 / THE RESPONDENT: INCOME - TAX OFFICER, WARD II,BERHAMPUR CIRCLE, BERHAMPUR 3 . / THE CIT, 4 . ( )/ THE CIT(A), 5 . / DR, CUTTACK BENCH 6 . GUARD FILE . / TRUE COPY, / BY ORDER, APPENDIX XVII SEAL TO BE AFFIXED ON TH E ORDER SHEET BY THE SR. P.S./P.S. AFTER DICTATION IS GIVEN 1. DATE OF DICTATION 27.11.2012 . 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 29.11.2012 OTHER MEMBER . 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT.... 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO T HE SR. P.S./P.S . 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 30.11.2012 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER ................ 9. DATE OF DESPATCH OF THE ORDER .. ( ), (H.K.PADHEE), SENIOR.PRIVATE SECRETARY.