DCIT, Central Circle, Vijayawada V. Atreyapuram Swarna Lakshmi, Visakhapatnam

ITA 557/VIZ/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 8665 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-03-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2006-2007
• Appeal Filed On: 26-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R S ARAVINDAKSHAN
• Keywords: Depreciation; Revenue expenditure; Capital expenditure
• Section: 143(3); 153A; 263

Judgement Text

ITA NO S . 557 & 558 /VIZAG/ 2017 SMT. ATREYAPURAPU SWARNALAKSHMI, VSKP 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM , . . , BEFORE SHRI B.R. BASKARAN, ACCOUNTANT MEMBER & SHRI DUVVURU R.L. REDDY, JUDICIAL MEMBER . / I . T .A.NO S . 557&558 /VIZAG/ 2017 ( / ASSESSMENT YEAR S : 2006 - 07 & 2007 - 08 ) DCIT, CENTRAL CIRCLE VIJAYAWADA SMT. ATREYAPURAPU SWARNALAKSHMI VISAKHAPATNAM [PAN NO. ADBPA3951TG ] ( / APPELLANT) ( / RESPONDENT) / APPELLANT BY : SHRI R.S. ARAVINDAKSHAN, DR / RESPONDENT BY : SHRI I. KAMASASTRY, AR / DATE OF HEARING : 19.03.2018 / DATE OF PRONOUNCEMENT : 22.03.2018 / O R D E R PER SHRI DUVVUR R.L. REDDY, JUDICIAL MEMBER : THESE APPEALS FILED BY THE REVENUE ARE DIRECTED AGAINST ORDERS OF THE CIT(A ) - 3, VISAKHAPATNAM VIDE ITA NOS.532&533/2015 - 16/CIT(A) - 3/VSP/2017 - 18 DATED 27.9.2017 FOR THE ASSESSMENT YEARS 2006 - 07 & 2007 - 08. SINCE, THE FACTS ARE IDENTICAL AND ISSUES ARE COMMON, THEY ARE ITA NO S . 557 & 558 /VIZAG/ 2017 SMT. ATREYAPURAPU SWARNALAKSHMI, VSKP 2 CLUBBED, HEARD TOGETHER AND DISPOSED - OFF BY WAY OF THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2 . THE REVENUE HAS RAISED THE FOLLOWING COMMON GROUNDS OF APPEAL S IN BOTH THE A SS T. Y EARS I.E. ASSESSMENT YEAR S 2006 - 07 & 2007 - 08 : - 1 . ON THE FACTS OF CIRCUMSTANCES, THE LD CIT(APPEALS) ERRED IN ALLOWING THE ASSESSEE'S APPEAL AS THE ASSESSEE CONTESTED FOR THE FIRST TIME BEFORE THE HO N 'BLE ITAT, VISAKHAPATNAM THAT THE ASSESSMENT U/S. 143(3) R.W.S.153A OF THE INCOME TAX ACT,1961 IS INVALID AND BAD IN LAW, AFTER THE ASSESSEE WITHDREW THE APPEAL FIL E D BEFORE THE CIT(A) AND GAVE UP THE RIGHT TO CONTEST AND AFTER IT HAD ATTAINED FINALITY? 2 . ON FACTS AND CIRCUMSTANCES, LD.CIT(APPEALS) ERRED IN ALLOWING THE ASSESSEE'S APPEALS AS THE ASSESSEE CHALLENGED FOR THE FIRST TIME BEFORE THE HON'BLE ITAT, VIS A KHAPATNAM THE VALIDITY OF T HE ASSESSMENT U/S.143(3) R.W.S. 153A OF THE INCOME TAX ACT, 1961 WHEN IT REACHED FINALITY, IN AN APPEAL CHALLENGING THE PROCEEDINGS INITIATED AN ORDER PASSED U/S.263 OF THE INCOME TAX ACT, 1961? 3. ON FACTS CIRCUMSTANCES, LD.CIT(APPEALS) ERRED IN ALLOWING THE ASSESSEE'S APPEA L AS IT IS PE RMISSIBLE TO REVISE U/S. 263 OF THE INCOME TAX ACT THE ASSESSMENT ORDER U/S. 153A OF THE INCOME TAX ACT, 1961 IN THE CASE OF SEARCH ASSESSMENTS WITHOUT REFERRING TO THE INCRIMINATING MATERIAL IN THE CASE OF COMPLETED ASSESS MENTS AS HELD BY THE HON'BLE HIGH COURT OF K E RALA IN THE CASE OF E.N.GOPAKUMAR V COMMISSIONER OF INCOME TAX ( 390 IT R 131) (K E R) (2017) AND UNDER FACTS WHERE REVENUE PROPOSES TO CHALLENGE THE ORDER OF ITAT RELIED UPON BY CIT(A)? 3. AFTER CONSIDERING THE A BOVE SAID GROUNDS OF APPEAL RAISED BY THE REVENUE, WE ARE OF THE OPINION THAT THE ONLY EFFECTIVE GROUND RAISED BY THE REVENUE IS THAT THE CIT(A) HAS ERRED IN HOLDING THAT THE ASSESSMENT ORDER S PASSED BY THE A.O. (SECTION S 143(3) R.W.S. 153A & R.W.S. 263 OF THE ACT) GIVING EFFECT TO THE ORDER S UNDER SECTION 263 OF THE INCOME TAX ITA NO S . 557 & 558 /VIZAG/ 2017 SMT. ATREYAPURAPU SWARNALAKSHMI, VSKP 3 ACT, 1961 (HEREINAFTER CALLED AS 'THE ACT') ARE NOT VALID UNDER THE EY E S OF LAW. 4 . FOR THE SAKE OF CONVENIENCE, FACTS ARE TAKEN FROM ITA NO. 557/VIZ/2017. THE BRIEF FACTS OF THE C ASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND SHE IS ENGAGED IN THE BUSINESS ACTIVITY OF HIRING TRUCKS, CRANES, PORK LIFTS AND CARGO HANDLING WORKS. SHE HAD FILED HER ORIGINAL RETURN OF INCOME TAX FOR THE ASSESSMENT YEAR 2006 - 07 ON 31.10.2006 DECLARING T OTAL INCOME OF RS. 2,72,790/ - . THERE WAS A SEARCH & SEIZURE OPERATION CONDUCTED IN THE GROUP OF MAHA M ARUTHI LOGISTICS PVT. LTD., VISAKHAPATNAM ON 0 4. 0 2.2010. AS THE CASE WAS COVERED BY SEARCH OPERATION, IT WAS TAKEN UP FOR SCRUTINY AND THE ASSESSMENT PR OCEEDINGS WERE COMPLETED U/S 143(3) R.W.S. 153A OF THE ACT ON 2 9. 1 2.2011, DETERMINING THE TOTAL INCOME OF RS. 16,46,490/ - . WHILE DOING SO, ADDITIONS WERE MADE TO THE EXTENT OF RS. 12,22,257/ - TOWARDS SHORT DISCLOSURE OF GROSS RECEIPTS AND AN ADDITION OF R S. 1,51,439/ - , WHICH REPRESENT ED THE ADDITION MADE AS PER EARLIER ORDER U/S 143(3) OF THE ACT DATED 31. 0 1.2008. SUBSEQUENTLY, PROCEEDINGS U/S . 263 OF THE ACT WERE INITIATED IN HER CASE BY THE LD. CIT (CENTRAL), HYDERABAD BY ISSUING SHOW CAUSE NOTICE DATED 11. 0 3.2014 ON THE PRIMA FACIE OBSERVATION THAT THE ASSESSEE CLAIMED SOME EXPENSES TOWARDS REPAIRS AS REVENUE EXPENDITURE AND THAT SHE ALSO CLAIMED SOME INADMISSIBLE EXPENSES, SUCH ITA NO S . 557 & 558 /VIZAG/ 2017 SMT. ATREYAPURAPU SWARNALAKSHMI, VSKP 4 AS, SELF ASSESSMENT TAX PAYMENT, WHICH ARE NOT ADMISSIBLE AS PER THE MANDAT ORY PROVISIONS CONTAINED IN THE LAW. 5. THE ASSESSEE CLAIMED AN AMOUNT OF RS. 2,78,800/ - TOWARDS PURCHASE OF OIL ENGINE ETC. AS REVENUE EXPENDITURE, WHILE THE SAME COULD BE IDENTIFIED AS A CAPITAL EXPENDITURE. THIS WAS POINTED OUT BY THE LD. CIT WHILE PA SSING THE ORDER UNDER SECTION 263 OF THE ACT. THE LD. CIT HAS ISSUED A NOTICE TO THE ASSESSEE. IN RESPONSE TO THE SAME, THE ASSESSEE HAS FILED A DETAILED EXPLANATORY REPLY DATED 20/03/2014 STATING THAT THESE CLAIMS WERE NOT LIABLE TO BE DISALLOWED AS PER THE STATUTORY PROVISIONS AND ALSO IN THE LIGHT OF VARIOUS JUDICIAL PRECEDENTS EXISTING ON THE ISSUE. ON CONSIDERATION OF THE WRITTEN SUBMISSIONS CONTEND ED IN HER REPLY, THE LD. CIT, HYDERABAD , HAD PASSED AN ORDER UNDER SECTION 263 OF THE ACT DATED 25/03/ 2014 SETTING ASIDE THE ORDER PASSED UNDER SECTION 143(3) READ WITH SEC. 153A OF THE ACT DATED 29/12/2011. THE LD. CIT HAS GIVEN A DIRECTION TO THE ASSESSING OFFICER TO REDO THE ASSESSMENT AFTER MAKING DETAILED ENQUIRY AND INVESTIGATION. IN CONSEQUENT TH ERETO, THE ASSESSEE WAS OFFERED AN OPPORTUNITY OF HEARING AND AFTER CONSIDERING THE WRITTEN SUBMISSIONS FILED BY THE ASSESSEE DATED 27/03/2015, THE ASSESSING OFFICER HAS COMPLETED THE ASSESSMENT VIDE ORDER DATED 31/03/2015 UNDER SECTION 143(3) R.W.S. 153A R.W.S. 263 OF THE ACT. THE TOTAL INCOME WAS ASSESSED AT RS. 7,42,554/ - BY MAKING AN ITA NO S . 557 & 558 /VIZAG/ 2017 SMT. ATREYAPURAPU SWARNALAKSHMI, VSKP 5 ADDITION OF RS. 2,75,050/ - AFTER ALLOWING DEPRECIATION @15% TOWARDS DISALLOWANCE OF CLAIM MADE UNDER THE HEAD REPAIRS ETC. TREATING THE SAME AS CAPITAL EXPENDITURE. THE ASSESSING OFFICER ALSO DISALLOWED AN AMOUNT OF RS.41,554/ - TOWARDS SELF - ASSESSMENT TAX PAYMENTS BY REJECTING THE PLEA OF THE ASSESSEE THAT THE SAME MAY NOT BE DISALLOWED IN CONSEQUENCE TO THE ORDER UNDER SECTION 263 OF THE ACT. 6 . BEING AGGRIEVED, THE ASSE SSEE PREFERRED AN APPEAL BEFORE THE LD.CIT(A). AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND BY RELYING ON THE ORDER OF THE ITAT, VISAKHAPATNAM PASSED IN ITA NO. 207 TO 211/VIZAG/2014, DATED 09/08/2017, THE LD. CIT(A) HAS ALLOWED THE APPEALS OF TH E ASSESSEE. 7 . ON BEING AGGRIEVED, THE REVENUE FILED THESE APPEALS BEFORE US. 8 . LD. DEPARTMENTAL REPRESENTATIVE STRONGLY SUPPORTED THE GROUNDS OF APPEAL AND THE ORDERS PASSED BY THE ASSESSING OFFICER UNDER SECTION 143(3) R.W.S. 153A R.W.S. 263 OF THE ACT BE CONFIRMED . 9 . ON THE OTHER HAND, LD. AUTHORISED REPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT THE ORDER PASSED UNDER SECTION 263 OF THE ACT WAS QUASHED BY THE HON'BLE ITAT IN 207 TO 211/VIZAG/2014, DATED 09/08/2017. THEREFORE, THE ORDERS PASSED UNDER SECTION 143(3) R.W.S. 153A R.W.S. 263 OF THE ACT, HAVE NO LEGS TO STAND. HENCE , THE APPEALS FILED BY THE REVENUE ARE LIABLE TO BE DISMISSED. ITA NO S . 557 & 558 /VIZAG/ 2017 SMT. ATREYAPURAPU SWARNALAKSHMI, VSKP 6 10 . WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH ORDERS OF THE AUTHOR ITIES BELOW. 11 . IN THESE CASES, THE ASSESSMENT ORDERS PASSED UNDER SECTION 143(3) R.W.S. 153A OF THE ACT WERE QUASHED BY THE LD. CIT BY PASSING AN ORDER UNDER SECTION 263 OF THE ACT BY HOLDING THAT THE ASSESSMENTS ARE ERRONEOUS AND PREJUDICIAL TO THE INTE REST OF THE REVENUE. HOWEVER, SUBSEQUENTLY THE ORDERS PASSED UNDER SECTION 263 OF THE ACT WERE QUASHED BY THE ITAT IN ITA NOS. 207 TO 211/VIZAG/2014, DATED 09/08/2014. BASED ON THE ABOVE SAID ORDERS, THE LD. CIT(A) PASSED THE FOLLOWING ORDER: - I HAVE PE RUSED THE ORDER OF THE HONBLE TRIBUNAL WHEREIN THE HONBLE ITAT VIZAG BENCH, IN ITS ORDER FOR THE ASSESSMENT YEAR 2006 - 07, HAS HELD AS UNDER. THEREFORE WE HOLD THAT IT IS NOT PERMISSIBLE TO REVISE THE ASSESSMENT ORDER IN THE CASE OF SEARCH ASSESSMENTS WITHOUT REFERRING TO THE INCRIMINATING MATERIAL IN THE CASE OF COMPLETED ASSESSMENTS. IN THE INSTANT CASE THE ASSESSMENTS WERE UNABATED AND THERE IS NO INCRIMINATING MATERIAL. HENCE WE SET ASIDE THE ORDERS OF THE LD. CIT AND ALLOW THE APPEAL OF THE ASSES SEE FOR THE A.Y. 2006 - 07 AND 2007 - 08. IT IS CLEAR FROM THE ORDER OF THE TRIBUNAL THAT THE VERY FOUNDATION OF THE ORDER OF THE ASSESSING OFFICER IS ON THE DIRECTIONS OF CIT U/S 263 OF THE ACT. SINCE THE ORDER OF THE CIT U/S 263 OF THE ACT IS HELD AS INV ALID, THE ORDER APPEALED AGAINST HAS NO LEGS TO STAND. ACCORDINGLY, THE ORDER PASSED BY THE ASSESSING OFFICER IS HELD AS INVALID. 12 . AFTER CONSIDERING THE FINDINGS OF THE LD. CIT(A), WE DO NOT FIND ANY INFIRMITY IN THE ORDERS PASSED BY THE LD. CIT(A) . THEREFORE, WE ARE OF THE FIRM OPINION THAT THE LD. CIT(A) HAS RIGHTLY ALLOWED THE APPEALS OF THE ITA NO S . 557 & 558 /VIZAG/ 2017 SMT. ATREYAPURAPU SWARNALAKSHMI, VSKP 7 ASSESSEE AGAINST THE ORDERS UNDER SECTION 143(3) R.W.S. 153A R.W.S. 263 OF THE ACT. THEREFORE, WE RESTORE THE ASSESSMENT ORDERS PASSED UNDER SECTION 143 READ WITH SECTION 153A OF THE ACT. 13 . IN THE RESULT, BOTH THE APPEALS FILED BY THE REVENUE ARE DISMISSED. T HE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 22 ND MAR 20 18 . S D/ - SD/ - ( ) ( . . ) ( B.R. BASKARAN ) ( DUVVURU R.L. REDDY ) /ACCOUNTANT MEMBER /JUDICIAL MEMBER /VISAKHAPATNAM: /DATED : 22 /03/2018 VG /VR / COPY OF THE ORDER FORWARDED TO : - 1. / THE APPELLANT THE DCIT, CENTRAL CIRCLE, VIJAYAWADA 2 . / THE RESPONDENT SMT. ATREYAPURAPU SWARNA LAKSHMI, PROP: S.L. TRNAS, FLAT NO.6, MUKUND SUVASA APARTMENTS, DWARAKAN AGAR, 3 RD LANE, VISAKHAPATNAM 3 . / THE PR. CIT (CENTRAL) , VISAKHAPATNAM 4 . ( ) / THE CIT (A) - 3, VISAKHAPATNAM 5 . , , / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM