DCIT Circle 2 (1), V. Arihant Exports Ltd,

ITA 541/DEL/2007

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 8071 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 4 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2009
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 19-05-2009
• Assessment Year: 1994-1995
• Appeal Filed On: 05-02-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: B N GOSWAMI
• Keywords: Depreciation; Additional evidence; Set aside
• Section: 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A : NEW DELHI BEFORE SHRI C.L.SETHI, JM AND SHRI R.C.SHARMA, AM ITA NO.541/DEL/2007 ASSESSMENT YEAR : 1994-95 DY.COMMISSIONER OF INCOME TAX, CIRCLE-2(1), NEW DELHI. VS. M/S ARIHANT EXPORTS LIMITED, 102, AKASHDEEP BUILDING, 26A, BARAKHAMBA ROAD, NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI RAHUL GARG, SR.DR. RESPONDENT BY : SHRI B.N.GOSWAMI, ADVOCATE. ORDER PER R.C.SHARMA, AM : THE REVENUE IS IN APPEAL AGAINST THE ORDER DATED 3 0.11.2006 PASSED BY THE LEARNED CIT(A) FOR THE ASSESSMENT YEAR 1994-95 WHER EIN THE REVENUE IS AGGRIEVED FOR DELETING DISALLOWANCE OF DEPRECIATION ON GAS CY LINDERS. 2. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PER USED. FACTS IN BRIEF ARE THAT THE ASSESSEE COMPANY WAS IN THE BUSINESS OF FI NANCING AND LEASING. DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE HAD CLAIM ED TO HAVE PURCHASED GAS CYLINDERS FROM ONE M/S MODERN STEEL TRADING COMPANY BHAVNAGAR AND TRANSPORTED THE GOODS THROUGH M/S ORIENT TRANSPORT COMPANY, BHAVNAGAR TO M/S POOJA GAS, GHAZIABAD TO WHOM THE ASSESSEE COMPANY H AD LEASED OUT SUCH CYLINDERS. THE ASSESSEE COMPANY CLAIMED DEPRECIATI ON ON SUCH GAS CYLINDERS. HOWEVER, DURING THE ASSESSMENT PROCEEDINGS FROM THE INQUIRIES CONDUCTED BY THE THEN ASSESSING OFFICER THROUGH COMMISSION MADE TO D DI. RAJKOT, IT WAS FOUND THAT THE SAID M/S MODERN STEEL WAS NOT AVAILABLE AT THE GIVEN ADDRESS. FURTHER ITA-541/D/2007 2 INQUIRIES FROM THE SALES TAX DEPARTMENT BASED ON SA LES TAX NUMBER PRINTED ON INVOICES IT WAS REVEALED THAT NUMBER PRINTED ON SAL ES INVOICE PERTAINED TO ONE M/S PARAS MEDICAL STORES BORDIGATE BHAVNAGAR. THE AO T HEREFORE DISALLOWED THE CLAIM OF DEPRECIATION AND THE SAME WAS CONFIRMED BY THE CIT(A), AGAINST WHICH, THE ASSESSEE APPROACHED TO ITAT. 3. DURING THE COURSE OF HEARING BEFORE THE HONBLE ITAT, THE ASSESSEE HAD ASKED TO ADMIT CERTAIN VITAL EVIDENCES WHICH JUSTIF IED THE ASSESSEES AFORESAID CLAIM. THE ASSESSEE HAD ADMITTED BEFORE THE ITAT T HAT FOLLOWING THE ASSESSMENT ORDER IN THE ASSESSEES CASE THE REVENUE HAD INITIA TED PROCEEDINGS U/S 148 IN CASE OF ONE MR. VINOD KUMAR JAIN TO WHOM ALSO THE SAID M /S MODERN STEEL HAD SUPPLIED THE CYLINDERS AND THAT THOSE CYLINDERS WER E ALSO TRANSPORTED THROUGH THE SAME TRANSPORTERS. DURING THE ASSESSMENT PROCEEDIN GS IN CASE OF MR. JAIN, THE ASSESSING OFFICER HAD DEPUTED THE INSPECTOR TO BHAV NAGAR TO MAKE INVESTIGATIONS. THE THEN INSPECTOR WITH THE HELP OF DIT(INV.) COULD LOCATE THE PARTY VIZ. MR. J.K. LATHIWALA PROP OF M/S MODERN STEEL. HIS STATEMENT WAS ALSO RECORDED AS ALSO HIS BOOKS OF ACCOUNTS WERE ALSO PRODUCED AND COPY OF TH E SAME WAS HOLDING SINCE 1987. SIMILARLY INSPECTOR WAS ALSO DEPUTED TO M/S RATHI SUPER STEEL LTD. FOR VERIFICATION OF CYLINDERS LEASED TO IT WHO WAS ABLE TO EXAMINE THE BOOKS OF ACCOUNTS AND STOCK REGISTER MAINTAINED BY THE SAID RATHI SUPER STEEL. FROM THE AFORESAID STOCK REGISTERS ENTRIES RELATING TO LEASI NG BY SAID MR. JAIN AS WELL AS THE ASSESSEE PARTY WAS ALSO EXTRACTED. FURTHER THE SAI D INSPECTOR COULD ALSO VERIFY THE PHYSICAL EXISTENCE OF SUCH GAS CYLINDERS LEASED BY THE ASSESSEE COMPANY AS WELL AS MR. JAIN. THUS, IN LIGHT OF SUCH EVIDENCES AND INQ UIRIES SO MADE TRANSACTIONS OF MR. VINOD KUMAR JAIN WERE HELD TO BE GENUINE BY THE THEN ASSESSING OFFICER. HOWEVER, LATER THE ORDER OF THE ASSESSING OFFICER W AS SET ASIDE BY THE LEARNED CIT U/S 263. AGGRIEVED BY THE ORDER OF CIT THE MATTER WAS REFERRED TO THE HONBLE ITAT AGAINST SUCH ACTION OF LEARNED CIT. CONSIDERI NG THE FACTS OF THE CASE HONBLE ITAT DELHI CANCELLED THE ORDER OF LEARNED C IT PASSED U/S 263. THUS, IT WAS SUBMITTED THAT ON SAME SET OF FACTS WHEN THE TR ANSACTIONS OF ONE PARTY WAS ITA-541/D/2007 3 TREATED AS GENUINE, THE SAME SHOULD ALSO BE HELD TO BE FACTS IN CASE OF MR. VINOD KUMAR JAIN THE DEPARTMENT HAD ACCEPTED THE TRANSACT IONS TO BE TRUE WHEREAS THE TRANSACTIONS OF THE ASSESSEE COMPANY WERE TREATED A S BOGUS, THE HONBLE ITAT RESTORE BACK THE MATTER TO THE CIT(A) TO DECIDE THE ISSUE AFRESH CONSIDERING THE ADDITIONAL EVIDENCE PRODUCED BY THE ASSESSEE. WHIL E DECIDING THE ISSUE AS PER THE DIRECTIONS OF THE TRIBUNAL, THE CIT(A) CALLED FOR A REMAND REPORT FROM THE AO, WHEREIN IT WAS ASKED TO CARRY OUT THE EXAMINATION O F FACTS. HOWEVER, THE AO DID NOT CARRY OUT ANY INSPECTION. THE CIT(A) AFTER REC ORDING HIS OBSERVATION AT PARA 9 & 10, DELETED THE DISALLOWANCE OF DEPRECIATION. 4. WE HAVE CONSIDERED THE RIVAL CONTENTIONS, CAREFU LLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOUND THAT TRIBUNAL HA D RESTORED THE MATTER BACK WITH THE FOLLOWING OBSERVATION:- HOWEVER, IN THE CASE OF ASSESSEE THE LEARNED ASSES SING OFFICER DID NOT MAKE DETAILED INQUIRIES ABOUT GENUINENESS OF TH E SELLER, I.E. MODERN STEEL TRADERS, AND THE TRANSPORTER VIZ. ORI ENT TRANSPORT CO. AS HAS BEEN MADE IN CASE OF M/S VINOD KUMAR JAIN, O THERWISE THE ASSESSING OFFICER IN THE ASSESSEES CASE WOULD NOT HAVE GIVEN DIFFERENT FINDINGS. SINCE THE PARTY FROM WHOM THE ASSESSEE HAS MADE PURCHASES AND GOT TRANSPORTED THE GAS CYLINDER S ARE THE SAME AS THAT IN CASE OF M/S VINOD KUMAR JAIN. WE ADMIT THE ADDITIONAL EVIDENCE NOW FILED BY THE ASSESSEE AS THE SAME ARE HAVING RELEVANCE TO THE ISSUE INVOLVED IN THE MATTER. HOWEVER, WE A RE OF THE VIEW THAT MATTER NEEDS VERIFICATION OF FACTS TO CONSIDER CLAI M OF THE ASSESSEE. THEREFORE, IN THE INTEREST OF JUSTICE WE SET ASIDE THE IMPUGNED ORDER AND RESTORE TO THE FILE OF CIT(A) WHO MAY EXAMINE T HE MATTER AFRESH IN THE LIGHT OF ADDITIONAL EVIDENCE NOW FILED AS WE LL AS OTHER MATERIAL GATHERED BY HIM ON FURTHER ENQUIRIES AND VERIFICATI ON OF FACTS. 5. BY THE IMPUGNED ORDER, THE CIT(A) DELETED THE DI SALLOWANCE OF DEPRECIATION WITH THE FOLLOWING OBSERVATION:- I HAVE GONE THROUGH THE CONTENTION OF THE ASSESSEE IN LIGHT OF ADDITIONAL EVIDENCE PRODUCED BEFORE HONBLE ITAT. I HAVE ALSO ITA-541/D/2007 4 PERUSED THE REMAND REPORT OF THE ASSESSING OFFICER AND FIND THAT IN THE INSTANT CASE INQUIRIES BY THE ADIT (INV.) BHAVN AGAR THOUGH REVEALED THE DIFFERENT STORIES IN RESPECT OF THE AS SESSEE COMPANY THE FACT REMAINS THAT ON THE SAME SET OF FACTS DEPARTME NT HAD CARRIED OUT FURTHER INQUIRIES IN CASE OF M/S VINOD KUMAR JAIN W HICH REVEALED THAT BOTH THE PARTIES VIZ. THE CYLINDER VENDOR M/S MODERN STEEL TRADING CO. AND TRANSPORTERS M/S ORIENT TRANSPORT W ERE IN EXISTENCE, WHICH IN CASE OF INQUIRIES MADE FOR THE ASSESSEES CASE WERE FOUND TO BE NON EXISTENCE. FURTHER THE INQUIRIES ALSO REVEA LED THE FACT THAT CYLINDERS PURCHASED BY THE APPELLANT COMPANY AND SA ID TO BE LYING WITH M/S RATHI SUPER STEEL WERE FOUND TO BE PHYSICA LLY AVAILABLE WHICH WERE DULY RECORDED IN THE BOOKS OF SAID RATHI SUPER STEEL LTD. THUS, IT IS NOT IN DISPUTE THAT CYLINDERS CLAIMED T O HAVE BEEN PURCHASED WERE EXISTING AND LYING WITH THE ULTIMATE LESSEE. THUS, IT IS NOT A CASE THAT THE ENTIRE TRANSACTION WAS MEREL Y A PAPER TRANSACTION WHERE GOODS WERE NOT FOUND. SINCE HON BLE ITAT HAS CATEGORICALLY ADMITTED THE ADDITIONAL EVIDENCE TO D ECIDE THE CASE AND BASED ON THE SAID DIRECTION THE ASSESSING OFFICER W AS ASKED TO VERIFY THE DETAILS, THE ASSESSING OFFICER SHOULD HAVE CARR IED FURTHER INQUIRIES TO REBUT THE APPELLANTS CLAIM MORE PARTI CULARLY IN LIGHT OF ADDITIONAL EVIDENCE PRODUCED WHERE ON SAME SET OF F ACTS TRANSACTIONS WERE ADMITTED TO BE GENUINE BY THE DEPARTMENT. IT IS TRUE THAT AFTER A GAP OF NONE YEARS INQUIRIES MIGHT NOT HAVE BEEN SUC CESSFUL BUT THAT WOULD NOT DETER THE ASSESSING OFFICER FROM CARRYING SOME CONCRETE INQUIRIES. INSTEAD OF MAKING ANY EFFORTS THE ASSES SING OFFICER HAS MERELY MADE A PLEA THAT FACTS OF ONE CASE MAY NOT B E APPLICABLE TO OTHERS CASE. HOWEVER, IN LIGHT OF CATEGORIC DIREC TION BY THE HIGHER FORUM IT WOULD BE ALL THE MORE REQUIRED TO ESTABLIS H AS TO HOW FACTS OF THE APPELLANTS CASE WAS DIFFERENT THEN THAT OF THE OTHER PARTY. IN THIS REGARD, IT WOULD BE APT TO REPRODUCE THE EXCER PT OF LETTER WRITTEN TO THE AO FOR HIS REPORT:- IT IS PERTINENT TO NOTE THAT IN CASE OF SAID SHRI VINOD JAIN TRANSACTIONS ARE TREATED AS GENUINE BY THE DEPARTME NT AND THEREFORE THE BASIS ON WHICH THE DISALLOWANCE OF DEPRECIATION MADE IN THE CASE OF APPELLANT COMPANY NOW DOES NOT REMAIN ON SOLID F OUNDATION. MORE SO IN VIEW OF THE FACT THAT FINDINGS IN CASE O F THE SAID SH.VINOD JAIN ARE OF THE DEPARTMENT ITSELF AND THEREFORE IT CAN NOT BE REBUTTED UNLESS SOME OTHER EVIDENCE OR INQUIRIES ARE MADE RE VEALING THE FACT THAT TRANSACTIONS WERE BOGUS IN CASE OF THE APPELLA NT COMPANY. VARIOUS DOCUMENTS AND OTHER EVIDENCE PRODUCED BY TH E APPELLANT IN THIS REGARD ARE ALREADY WITH YOU. YOU ARE THEREFOR E DIRECTED TO GIVE YOUR COMMENTS ON THE SUBJECT MATTER WHICH IF NOT RE CEIVED BY ME WITHIN 20 DAYS WOULD COMPEL ME TO ALLOW THE APPEAL. IN CASE IF YOU ITA-541/D/2007 5 NEED TO CARRY OUT ANY OTHER VERIFICATION AFRESH YOU MAY ALSO DO SO AND SEND YOUR REPORT THEREON. PLEASE NOTE THAT ON THE BASIS OF SUCH ADDITIONAL EVIDENCES ONLY THE ITAT HAS RESTORED THE MATTER TO MY OFFICE FOR ADJUDICATION AND THEREFORE YOUR COMMENT WOULD BE OF UTMOST IMPORTANCE, WITHOUT WHICH I WILL BE COMPELLE D TO ACCEPT THE ARGUMENTS OF THE APPELLANT AND ALSO TO ACCEPT THE A DDITIONAL EVIDENCE PRODUCED BEFORE ME AS MATERIAL IN DECIDING THE APPE AL. 10. THUS DESPITE CARRYING THE MATTER FURTHER AO HAS CHOSEN TO QUOTE FINDINGS OF CIT WHICH WOULD NOT HOLD WATER IN LIGHT OF DIRECTIONS GIVEN BY THE HONBLE ITAT AND THEREFORE IN ABSENCE OF ANY ADVERSE MATERIAL BROUGHT ON RECORD OR FOR THAT MATTER ANY CONCRETE DIFFERENTIATION MADE I AM CONSTRAINED TO A CCEPT THE ARGUMENT OF THE APPELLANT THAT TRANSACTION SHOULD B E ACCEPTED AS GENUINE AND AS SUCH AO IS DIRECTED TO ALLOW THE DEP RECIATION ON GAS CYLINDERS IN ACCORDANCE WITH LAW. IN THE RESULT APPEAL IS ALLOWED. 6. FROM THE RECORD, WE FOUND THAT IN A SIMILAR CASE WHERE INVESTIGATION WAS DONE BY THE DEPARTMENT, BOTH THE PARTIES VIZ. CYLIN DER VENDOR M/S MODERN STEEL TRADING COMPANY AND TRANSPORTER M/S ORIENT HARYANA TRANSPORT CO. WAS IN EXISTENCE. THE ENQUIRIES ALSO REVEALED THE FACT TH AT IN CASE OF VINOD KUMAR JAIN, THE CYLINDERS WERE CLAIMED TO HAVE BEEN PURCHASED A ND LYING WITH THE ULTIMATE LESSEE. BOTH THESE PARTIES WERE SAME IN CASE OF AS SESSEE ALSO. EVEN THOUGH LONG TIME HAS PASSED, BUT WHEN THE TRIBUNAL HAS RESTORED THE MATTER BACK WITH CERTAIN DIRECTIONS, THE SAME IS TO BE COMPLIED WITH. MEREL Y BECAUSE LONG TIME HAS PASSED, THAT COULD NOT DETER THE AO FROM CARRYING SOME CONC RETE ENQUIRIES. WITHOUT MAKING ANY ENQUIRY, THE AO HAS MERELY MADE A PLEA T HAT FACTS OF ONE CASE MAY NOT BE APPLICABLE TO THE OTHER CASE. UNDER THESE CIRCU MSTANCES, THE CIT(A) HELD THAT IN THE ABSENCE OF ANY ADVERSE MATERIAL BROUGHT ON R ECORD OR FOR THAT MATTER ANY CONCRETE DIFFERENTIATION IS MADE, THE ASSESSEES CL AIM OF DEPRECIATION CANNOT BE DISALLOWED, AS THE FACTS AND CIRCUMSTANCES IN CASE OF VINOD KUMAR JAIN, WHO HAS ALSO CARRIED OUT SIMILAR TRANSACTION, WHEREIN SUPPL IER AND TRANSPORTER WERE THE SAME WERE FOUND TO BE GENUINE AND THE CYLINDERS WER E CLAIMED TO BE PURCHASED ITA-541/D/2007 6 WERE EXISTING AND LYING WITH THE ULTIMATE LESSEE. WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF CIT(A). 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. DECISION PRONOUNCED IN THE OPEN COURT ON 30 TH JUNE, 2009. (C.L.SETHI) (R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED :30.06.2009. VK. COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT DEPUTY REGISTRAR