ITO, New Delhi V. M/s Lepide Software Pvt. Ltd., Delhi

ITA 5455/DEL/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 69183 (ITAT-DELHI)
• Duration Of Justice: 9 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-08-2013
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 29-07-2013
• Assessment Year: 2009-2010
• Appeal Filed On: 26-10-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MADHUKAR KUMAR BHAGAT
• Assessee Lawyers: S K GUPTA
• Keywords: Depreciation; Opportunity of being heard; Principle of natural justice
• Section: 133(6)

Judgement Text

ITA NO. 5455/DEL/2012 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D, NEW DELHI BEFORE SHRI R.P. TOLANI, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER I.T.A. NO. 5455/DEL/2012 A.Y. : 200 9 - 10 INCOMETAX OFFICER, WARD 13(3), R.NO. 338, C.R. BUILDING, NEW DELHI VS. M/S LEPIDE SOFTWARE PVT. LTD., FORMERLY KNOWN AS NUCLEUS DATA RECOVERY. COM PVT LTD., R/O 325, GARG PLAZA, ROAD NO. 44, PITAMPURA, NEAR RANI BAGH, DELHI 110 034 (PAN AACCN2139C) (APPELLANT) (APPELLANT) (APPELLANT) (APPELLANT) (RESPONDENT) (RESPONDENT) (RESPONDENT) (RESPONDENT) ASSESSEE BY : SH. S.K. GUPTA, CA DEPARTMENT BY : SH. MADHUKAR KUMAR BHAGAT, D.R. ORDER ORDER ORDER ORDER PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST TH E ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-XVI, N EW DELHI DATED 29.6.2012 PERTAINING TO ASSESSMENT YEAR 2009-10. 2. THE GROUNDS RAISED READ AS UNDER:- I) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. COMMISSIONER OF INCOME TAX (A) HAS ERRED IN ALLOWING THE DEDUCTION CLAIMED U/S. ITA NO. 5455/DEL/2012 2 10A AMOUNTING TO RS. 3,80,12,969/- WITHOUT SUBMITTING THE FORM 56F BY THE ASSESSEE EVEN AFTER SUFFICIENT TIME AND OPPORTUNITY WAS GIVEN TO THE ASSESSEE TO FURNISH THE REPORT IN FORM 56F FROM AN ACCOUNTANT. II) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE LD. COMMISSIONER OF INCOME TAX (A) HAS ERRED IN DELETING THE ADDITION MADE ON ACCOUNT OF DEPRECIATION OF RS. 16,62,525/- HELD THAT DEPRECIATION ON THE ASSETS CANNOT BE DISALLOWED MERELY BECAUSE THE RUNNING BILLS COULD NOT BE FURNISHED. III) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. COMMISSIONER OF INCOME TAX (A) HAS ERRED IN DELETING ADDITION OF RS. 6,68,351/- ON ACCOUNT OF UNEXPLAINED SUNDRY CREDITORS WITHOUT APPRECIATING THE FACTS PRODUCED BY THE ASSESSING OFFICER IN HIS ASSESSMENT ORDER. IV) THE APPELLANT CRAVES TO BE ALLOWED TO ADD ANY F RESH GROUNDS OF APPEAL AND / OR DELETE OR AMEND ANY OF THE GROUNDS OF APPEAL. 3. APROPOS DEDUCTION CLAIMED U/S. 10A IN THIS CASE ASSESSING OFFICER HAD MADE THE DISAL LOWANCE U/S. 10A OF THE ACT ON THE GROUND THAT FORM NO. 56F WAS NOT FURNISHED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER. 4. BEFORE THE LD. COMMISSIONER OF INCOME TAX (A) AS SESSEE MADE ELABORATE SUBMISSIONS. LD. COMMISSIONER OF INCOME T AX (A) NOTED THAT ALTHOUGH HEARING BEFORE THE ASSESSING OFFICER IN THE PRESENT ITA NO. 5455/DEL/2012 3 CASE TOOK PLACE A NUMBER OF TIMES, ASSESSING OFFIC ER DID NOT ASK THE ASSESSEE TO FILE FORM 56-F EXCEPT ON 20.10.2011 . LD. COMMISSIONER OF INCOME TAX (A) NOTED THAT OTHER THA N THIS FORM, THE ASSESSEE HAS FURNISHED BEFORE THE ASSESSING OFFICER ALL THE DETAILS TO SUPPORT ITS CLAIM OF DEDUCTION U/S. 10A. LD. CO MMISSIONER OF INCOME TAX (A) FURTHER REFERRED TO THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF C.I.T. VS. MANTEC CONSULTANTS (P) LTD. IN I.T.A. NO. 1295/2008. LD. COMMISSIONE R OF INCOME TAX (A) FURTHER NOTED THAT FORM NO. 56-F WAS NOT FILED BEFORE THE ASSESSING OFFICER AND COPY OF THIS FORM WAS FILED BEFORE THE LD. COMMISSIONER OF INCOME TAX (A) DURING THE COURSE OF APPELLATE PROCEEDINGS. LD. COMMISSIONER OF INCOME TAX (A) A DMITTED THE SAME IN THE INTEREST OF NATURAL JUSTICE. LD. COMMI SSIONER OF INCOME TAX (A) FURTHER NOTED THAT FOR THE IMMEDIATELY TW O PRECEDING ASSESSMENTS YEARS, ASSESSMENT WAS COMPLETED U/S. 1 43(3) OF THE I.T. ACT AND THE ASSESSEE WAS ALLOWED DEDUCTION U/S . 10A BY THE ASSESSING OFFICER. HENCE, LD. COMMISSIONER OF INCO ME TAX (A) DIRECTED THE ASSESSING OFFICER TO ALLOW THE BENEFI T OF DEDUCTION U/S. 10A OF THE ACT. 5. AGAINST THE ABOVE ORDER THE REVENUE IS IN APPEAL BEFORE US. 6. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE R ECORDS. WE NOTE THAT ASSESSEE HAS FURNISHED ALL THE DETAILS I N SUPPORT OF ITS CLAIM OF DEDUCTION U/S. 10A BEFORE THE ASSESSING OF FICER AND THE ONLY REASON GIVEN BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER FOR NON-ALLOWING OF THE CLAIM WAS THE NON-FURNISHI NG OF FORM 56F. THE SAME FORM WAS ADMITTED BY THE LD. COMMISSIONER OF INCOME TAX (A) IN THE APPELLATE PROCEEDINGS. IN VIEW OF T HESE FACTS, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. COMM ISSIONER OF INCOME TAX (A). HENCE, WE AFFIRM THE SAME. ITA NO. 5455/DEL/2012 4 7. APROPOS ADDITION MADE ON ACCOUNT OF DEPRECIATION 7.1 ON THIS ISSUE ASSESSING OFFICER NOTED THAT IN THE DEPRECIATION CHART SUBMITTED BY THE ASSESSEE, IT WAS FOUND THAT ADDITION OF RS. 1,66,46,090/- WAS MADE IN THE BUILDING ACCOUNT. ASS ESSEE WAS ASKED BY THE ASSESSING OFFICER TO GIVE DETAILS OF THE ADDITION MADE. FROM THE DETAILS FILED OF ADDITION MADE, IT WAS OB SERVED THE ASSESSEE HAS CONSTRUCTED / RENOVATED THE COMMERCIAL BUILDING AT B- 57, SECTOR-57, NOIDA DURING THE YEAR WHICH WAS PUT TO USE ON DIFFERENT DATES MENTIONED IN THE CHART. ASSESSEE W AS ASKED TO EXPLAIN WITH THE EVIDENCE ALONGWITH THE CERTIFICATE OF COMPLETION OF BUILDING. IT WAS ALSO ASKED TO FURNISH THE COPY OF THE AGREEMENT WITH THE CONTRACTORS ALONGWITH BILLS RAISED BY THEM FOR PAYMENT ON DIFFERENT STAGES OF THE WORK DONE. LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE CANNOT PRODUCE THE COP Y OF THE BILLS RAISED BY THE CONTRACTORS WHO CONSTRUCTED / RENOVAT ED THE BUILDING AS THE SAME WERE IN THE POSSESSION OF THE ARCHITECT . FURTHER, IT WAS ALSO SUBMITTED THAT NO COMPLETION CERTIFICATE WAS ISSUED BY THE NOIDA AUTHORITY IN THIS CASE AND THE COMPLETION CER TIFICATE WAS ISSUED BY THE ARCHITECT, BASIS ON WHICH, THE ASSESS EE HAS SHOWN THE BUILDING READY TO PUT TO USE ON DIFFERENT DATES AND CLAIMED THE DEPRECIATION ACCORDINGLY. 7.2 IN THIS REGARD, IN ORDER TO VERIFY THE GENUIN ENESS OF THE TRANSACTIONS AND SUBMISSIONS OF THE ASSESSEE, NOTIC E U/S. 133(6) OF THE ACT WERE ISSUED TO THE CONTRACTORS AND ARCHITEC T. ON THE BASIS OF STATEMENT OBTAINED IN THIS REGARD, ASSESSING OFFIC ER NOTED THAT THE ARCHITECT HAS NOT GIVEN ANY COMPLETION CERTIFICATE TO THE ASSESSEE. FURTHER, ASSESSING OFFICER NOTED THAT THE CLAIM OF THE ASSESSEE THAT BILLS RAISED BY THE CONTRACTOR WERE IN POSSESSION O F ARCHITECT AND ITA NO. 5455/DEL/2012 5 CANNOT BE PRODUCED BY HIM, WERE FOUND IN CORRECT. IN LIGHT OF THE ABOVE, ASSESSING OFFICER HELD THAT IT IS ESTABLISH ED THAT THE PROPERTY WAS NOT READY TO PUT TO USE ON DIFFERENT DATES AS C LAIMED BY THE ASSESSEE. THEREFORE, THE CLAIM OF THE ASSESSEE FOR DEPRECIATION OF RS. 16,62,525/- WAS DISALLOWED AND ADDED BACK TO IT S TOTAL INCOME FOR TAXATION. 8. BEFORE THE LD. COMMISSIONER OF INCOME TAX (A) AS SESSEE INTER- ALIA SUBMITTED THAT ALL THE CONTRACTORS BILLS WER E SUBMITTED DURING THE ASSESSMENT PROCEEDINGS. CONSIDERING THE ABOV E, LD. COMMISSIONER OF INCOME TAX (A) HELD THAT HE WAS INC LINED TO AGREE WITH THE ASSESSEE THAT SINCE THE BILLS IN REGARD T O THE BUILDING WERE FURNISHED BY THE COUNSEL OF THE ASSESSEE, THE DE PRECIATION ON THE ASSETS CANNOT BE DISALLOWED MERELY BECAUSE THE RUNN ING BILLS COULD NOT BE FURNISHED. LD. COMMISSIONER OF INCOME TAX ( A) FURTHER NOTED THAT THE EXISTING BUILDING HAD BEEN RENOVATED AND A NEW BUILDING HAD NOT BEEN CONSTRUCTED AND THAT IS WHY COMPLETION CERTIFICATE COULD NOT BE PRODUCED. MOREOVER, THE BUSINESS HAS B EEN SHOWN TO HAVE BEEN CONDUCTED FROM THIS BUILDING, WHICH IMPLI ES THAT THE BUILDING MUST HAVE BEEN COMPLETE/ READY FOR USE DUR ING THE YEAR. THAT IN ANY CASE, THE EFFECT OF THIS ADDITION WOULD BE REVENUE NEUTRAL SINCE THE ASSESSEE IS ENTITLED TO DEDUCTION U/S. 10A AND ANY DISALLOWANCE OF DEPRECIATION WOULD NOT RESULT IN IN CREASE IN TAXABLE INCOME OF THE ASSESSEE. ACCORDINGLY, LD. COMMISSIO NER OF INCOME TAX (A) ALLOWED THIS GROUND OF APPEAL. 9. AGAINST THE ABOVE ORDER THE REVENUE IS IN APPEAL BEFORE US. 10. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. WE FIND THAT IN THIS CASE ASSESSING OFFICER HAS INTER -ALIA NOTED THAT THE BILLS OF CONTRACTORS FOR THE CONSTRUCTION WERE NOT PRODUCED BEFORE HIM. HOWEVER, THE ASSESSEE HAS SUBMITTED BEFORE L D. ITA NO. 5455/DEL/2012 6 COMMISSIONER OF INCOME TAX (A) THAT ASSESSEE HAS DU LY SUBMITTED THE BILLS BEFORE THE ASSESSING OFFICER. LD. COMMI SSIONER OF INCOME TAX (A) HAS ACCEPTED THIS. THERE IS NOTHING ON REC ORD TO SHOW THAT THESE SUBMISSIONS OF THE ASSESSEE WERE PUT BEFORE THE ASSESSING OFFICER. THUS WE FIND THAT IN THE ASSESSMENT ORDER , ASSESSING OFFICER HAS NOTED THAT ASSESSEE HAS NOT PRODUCED ANY BILL O F CONTRACTOR FOR CONSTRUCTION. HOWEVER, LD. COMMISSIONER OF INCOME TAX (A) HAS ACCEPTED THE ASSESSEES SUBMISSIONS THAT THE SAME W ERE PRODUCED DURING THE ASSESSMENT PROCEEDINGS. IN OUR CONSIDER ED OPINION, INTEREST OF JUSTICE DEMANDS IN THIS CASE THAT ASSES SING OFFICER BE GIVEN AN OPPORTUNITY TO GO THROUGH THESE BILLS AND SATISFY HIMSELF ABOUT THE VERACITY OF THE SAME. ACCORDINGLY, WE RE MIT THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER. NEEDLESS TO ADD THAT THE ASSESSEE SHOULD BE GIVEN ADEQUATE OPPORTUNITY OF BEING HEAR D. 11. APROPOS DELETION OF ADDITION ON ACCOUNT OF UNEX PLAINED SUNDRY CREDITORS 11.1 ON THIS ISSUE ASSESSING OFFICER NOTED THAT AS SESSEE HAS SHOWN SUNDRY CREDITORS AS ON 31.3.2009 OF RS. 6,88,351/-. THE DETAILS OF SUCH PARTIES ARE AS UNDER:- 1. M/S FORETECH COMPUTER SYSTEMS PVT. LTD. RS. 84,000/- 2. M/S ICICI BANK CARD ANIL VERMA RS. 1,293/- 3. M/S INFINITY ELECTRICAL RS. 2,38,977/- 4. M/S MIRACLE CREDIT CARD RUPESH RS. 17,316/- 5. M/S PARWANI & CO. RS. 4,810/- 6. M/S RELIANCE 9313558458 RS. 404/- 7. M/S SINGLA FABRICATION AND GLASS HOME RS. 35,5,48/- 8. M/S SUPREME AIRCON RS. 63,572/- 9. M/S UNITED CONCEPTS AND SOLUTIONS PVT. LTD. RS. 2,42,431/- ITA NO. 5455/DEL/2012 7 TOTAL TOTAL TOTAL TOTAL RS. 6,88,351/ RS. 6,88,351/ RS. 6,88,351/ RS. 6,88,351/- -- - 11.2 ASSESSING OFFICER ASKED THE ASSESSEE TO SUBMI T THE CONFIRMATIONS FROM THE ABOVE MENTIONED PARTIES. ASS ESSING OFFICER NOTED THAT IN SPITE OF GIVING SUFFICIENT TIME, THE ASSESSEE FAILED TO FURNISH THE CONFIRMATION CERTIFICATE FROM THE CREDI TORS. ASSESSING OFFICER NOTED THAT IN VIEW OF THE FAILURE OF THE A SSESSEE IN FURNISHING THE DESIRED CONFIRMATION CERTIFICATE FROM SUNDRY CR EDITORS THE GENUINENESS, THE CREDITWORTHINESS AND IDENTITY OF T HE CREDITORS HAS NOT BEEN ESTABLISHED. THEREFORE, ASSESSING OFFICE R HELD THAT UNEXPLAINED SUNDRY CREDITORS OF RS. 6,68,351/- WERE DISALLOWED AND ADDED TO THE INCOME OF THE ASSESSEE U/S. 68 OF TH E I.T. ACT. 12. LD. COMMISSIONER OF INCOME TAX (A) IN THIS REGA RD NOTED THAT THE ASSESSING OFFICER HAD REQUIRED THE ASSESSEE TO PROVIDE DETAILS OF SUNDRY CREDITORS EXCEEDING RS. 50,000/- BUT HAS PROCEEDED TO MAKE ADDITION ON ACCOUNT OF SUNDRY CREDITORS, MOST OF WHOM ARE BELOW THAT AMOUNT. LD. COMMISSIONER OF INCOME TAX ( A) FURTHER OBSERVED THAT NOT ONLY THIS, THE SUNDRY CREDITORS R EPRESENT AMOUNTS OUTSTANDING ON ACCOUNT OF CREDIT CARDS, EXPENSES LI KE LEGAL BILLS, ETC. THAT IF THE ASSESSING OFFICER HAS ACCEPTED SUCH EX PENSES CLAIMED BY THE ASSESSEE IN ITS PROFIT AND LOSS ACCOUNT, HE COULD NOT HAVE MADE ADDITION ON ACCOUNT OF SUCH EXPENSES REMAINING OUTSTANDING AT THE END OF THE YEAR. THAT MOREOVER, THE EFFECT OF THIS ADDITION TO INCOME WOULD ALSO BE REVENUE NEUTRAL BECAUSE THE ASSESSEE IS CLAIMING DEDUCTION U/S. 10A. ACCORDINGLY, THE ADD ITION SO MADE WAS ALSO DIRECTED TO BE DELETED. 13. AGAINST THE ABOVE ORDER THE REVENUE IS IN APPE AL BEFORE US. 14. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. WE FIND THAT ASSESSING OFFICER IN THIS REGARD HAS NOT ED THAT ASSESSEE ITA NO. 5455/DEL/2012 8 HAS FAILED TO PRODUCE THE CONFIRMATION CERTIFICATE FROM SUNDRY CREDITORS. THE SAME WAS ALSO NOT PRODUCED BEFORE T HE LD. COMMISSIONER OF INCOME TAX (A). HOWEVER, THE LD. C OMMISSIONER OF INCOME TAX (A) HAS ACCEPTED THE ASSESSEES SUBMISS ION THAT SINCE THE EXPENSES IN THIS REGARD HAVE BEEN ADMITTED, THE ADDITION ON ACCOUNT OF SUNDRY CREDITORS WAS UNJUSTIFIED. IN OUR CONSIDERED OPINION, LD. COMMISSIONER OF INCOME TAX (A) HAS ERR ED IN THIS REGARD. ASSESSING OFFICER WANTED TO EXAMINE THE S UNDRY CREDITORS. BUT THE ASSESSEE DID NOT PROVIDE THE CONFIRMATION C ERTIFICATE. LD. COMMISSIONER OF INCOME TAX (A) HAS NOT HIMSELF MADE THE VERIFICATION. HENCE, IN OUR CONSIDERED OPINION, TH E VERACITY OF SUNDRY CREDITORS IS NOT ESTABLISHED. HENCE, IN THE INTEREST OF JUSTICE, WE REMIT THIS ISSUE TO THE FILE OF THE ASSESSING OF FICER. THE ASSESSING OFFICER SHALL EXAMINE THE ISSUE AFRESH B Y GIVING THE ASSESSEE ADEQUATE OPPORTUNITY OF BEING HEARD. 15. IN THE RESULT, THE APPEAL FILED BY THE REVENUE STANDS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 08/8/2013. SD/- SD/- [ [[ [R.P. TOLANI R.P. TOLANI R.P. TOLANI R.P. TOLANI] ]] ] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] JUDICIAL JUDICIAL JUDICIAL JUDICIAL MEMBER MEMBER MEMBER MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER DATE 08/8/2013 SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: - -- - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES ITA NO. 5455/DEL/2012 9