HST Steel Private Limited, Hyderabad V. ACIT, Central Circle-5, Hyderabad

ITA 592/HYD/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 69985 (ITAT-HYDERABAD)
• Duration Of Justice: 7 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-12-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 26-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D SUDHAKAR RAO
• Assessee Lawyers: T CHAITANYA KUMAR
• Keywords: Depreciation; Bonafide belief
• Section: 143(3); 153A; 263; 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B : HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA.NO.592 & 593/HYD/2013 ASSESSMENT YEAR 2007-2008 & 2008-2009 HST STEEL PRIVATE LIMITED, HYDERABAD PAN AAACJ5992B VS . ACIT, C.C. 5 HYDERABAD (APPELLANT) (RESPONDENT) FOR APPELLANT : SHRI T. CHAITANYA KUMAR FOR RESPONDENT : SHRI D. SUDHAKAR RAO DATE OF HEARING : 18.12.2013 DATE OF PRONOUNCEMENT : 20.12.2013 ORDER PER SMT. ASHA VIJAYARAGHAVAN, J.M. THESE APPEALS ARE FILED BY THE ASSESSEE AGAINST T HE ORDER PASSED UNDER SECTION 263 OF THE INCOME TAX AC T, 1961 BY THE COMMISSIONER OF INCOME TAX (CENTRAL), HYDERA BAD FOR THE ASSESSMENT YEARS 2007-2008 AND 2008-2009. 2. ITA.NO.592/HYD/2013 :- BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A COMPANY IN WHICH PUBLIC ARE NOT SUBSTANTIALLY INTERESTED. THE ASSESSEE FILED ITS RE TURN OF INCOME FOR THE ASSESSMENT YEAR 2007-2008 ON 18.07.2008 ADM ITTING AN INCOME OF RS.1,73,46,400/-. THE ASSESSMENT WAS C OMPLETED UNDER SECTION 143(3) READ WITH SECTION 153A OF THE I.T. ACT ON 2 ITA.NO.592 & 593/HYD/2013 HST STEEL PVT. LTD., HYDERABAD 30.12.2009 DETERMINING THE TOTAL INCOME OF RS.1,73, 46,400/-. LATER, THE COMMISSIONER OF INCOME TAX (CENTRAL), HY DERABAD ISSUED SHOW CAUSE NOTICE UNDER SECTION 263 OF THE I NCOME TAX ACT, ON 16.02.2012 REQUIRING THE ASSESSEE TO EXPLAI N ABOUT THE DEPRECIATION CLAIMED ON COMMERCIAL VEHICLES AND ELE CTRICAL FITTINGS. IN REPLY, THE ASSESSEE SUBMITTED A DETAIL ED EXPLANATION BEFORE THE COMMISSIONER OF INCOME TAX (CENTRAL), HY DERABAD. HOWEVER, THE COMMISSIONER OF INCOME TAX (CENTRAL) D ID NOT ACCEPT THE CONTENTION OF THE ASSESSEE AND PASSED AN ORDER UNDER SECTION 263 OF THE I.T. ACT ON 12.03.2012, SE TTING ASIDE THE ASSESSMENT MADE BY THE A.O. WITH A DIRECTION TO RE-DO THE SAME AFTER EXAMINING THE CLAIM OF HIGHER RATE OF DE PRECIATION ON COMMERCIAL VEHICLES AND FOR VERIFICATION OF THE BOOKS OF ACCOUNT AND TO FIND OUT THE GENUINENESS OF THE CLAI M MADE TOWARDS DEPRECIATION ON ELECTRICAL FITTINGS. 3. ITA.NO.593/HYD/2013 : THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2008-2009 ON 14.10.2008 ADMITTING AN INCOME OF RS.3,15,39,100/-. THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) READ WITH SECTION 153A OF THE I.T. ACT ON 30.12.2009 DETERMIN ING THE TOTAL INCOME OF RS.3,15,39,100/-. LATER, THE COMMIS SIONER OF INCOME TAX (CENTRAL), HYDERABAD ISSUED SHOW CAUSE N OTICE UNDER SECTION 263 OF THE INCOME TAX ACT, ON 16.02.2 012 REQUIRING THE ASSESSEE TO EXPLAIN ABOUT THE DEPRECI ATION CLAIMED ON COMMERCIAL VEHICLES AND ELECTRICAL FITTI NGS. IN REPLY, THE ASSESSEE SUBMITTED A DETAILED EXPLANATION BEFOR E THE COMMISSIONER OF INCOME TAX (CENTRAL), HYDERABAD. HO WEVER, 3 ITA.NO.592 & 593/HYD/2013 HST STEEL PVT. LTD., HYDERABAD THE COMMISSIONER OF INCOME TAX (CENTRAL) DID NOT AC CEPT THE CONTENTION OF THE ASSESSEE AND PASSED AN ORDER UNDE R SECTION 263 OF THE I.T. ACT ON 12.03.2012, SETTING ASIDE TH E ASSESSMENT MADE BY THE A.O. WITH A DIRECTION TO RE-DO THE SAME AFTER EXAMINING THE CLAIM OF HIGHER RATE OF DEPRECIATION ON COMMERCIAL VEHICLES AND FOR VERIFICATION OF THE BOO KS OF ACCOUNT AND TO FIND OUT THE GENUINENESS OF THE CLAIM MADE T OWARDS DEPRECIATION ON ELECTRICAL FITTINGS. 4. AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE US. AT THE OUTSET THERE IS A DELAY OF 332 DAYS IN FILIN G THE APPEAL. THE LEARNED COUNSEL FOR THE ASSESSEE SHRI T. CHAITA NYA KUMAR FILED A SWORN AFFIDAVIT BY SHRI ANIL KUMAR GAGGAR, MANAGING DIRECTOR OF THE COMPANY STATING AS FOLLOWS : FOR THE A.Y. 2007-2008 THE PETITIONER FILED ITS RETURN OF INCOME ON 18.07.2008 ADMITTING TOTAL INCOME OF RS.1,73,46,400/-. THE A.O. COMPLETED THE ASSESSMENT U/S.143(3) R.W.S.153A OF THE I.T. ACT ON 30.12.2009 ACCEPTING INCOME RETURNED. LATER, THE COMMISSIONER OF INCOME TAX BY VIRTUE OF THE POWERS VESTED IN HIM PASSED AN ORDER U/S. 263 OF THE I.T. ACT DIRECTING THE A.O. TO RE-DO THE ASSESSMENT. THE A.O. ACCORDINGLY, PASSED AN ORDER U/S.143(3) R.W.S.263 OF THE I.T. ACT ON 07.03.2013. AGGRIEVED WITH THE ORDER OF ASSESSMENT, THE PETITIONER FILED AN APPEAL BEFORE THE CIT(A)-1, HYDERABAD AND THE SAME IS PENDING. WHEN THE SAME WAS DISCUSSED WITH AN ADVOCATE, 4 ITA.NO.592 & 593/HYD/2013 HST STEEL PVT. LTD., HYDERABAD HE ADVISED THAT AN APPEAL LIES AGAINST THE ORDER PASSED BY THE CIT U/S. 263 OF THE I.T. ACT. THEREFORE, THE PETITIONER IS FILING THE PRESENT APPEAL BEFORE THE HONBLE ITAT. THERE IS A DELAY OF 416 DAYS AND THE PETITIONER HUMBLY SUBMITS THAT HE WAS UNDER THE BONAFIDE BELIEF THAT AS AN APPEAL WAS FILED BEFORE THE CIT(A) AGAINST THE ORDER U/S. 143(3) R.W.S.263, NO APPEAL NEED BE FILED CONTESTING THE ORDER U/S. 263 OF THE I.T. ACT . THE PETITIONER HUMBLY SUBMITS THAT THE DELAY IS FOR THE REASONS SUBMITTED ABOVE IS NOT INTENTIONAL. THE PETITIONER, THEREFORE, PRAYS THAT THE HONBLE ITAT TO KINDLY CONDONE THE DELAY AND PASS APPROPRIATE ORDERS IN THE MATTER. 5. A SIMILAR SWORN AFFIDAVIT AS ALSO FILED IN ITA.NO.593/HYD/2013 WHEREIN THE DELAY IS OF 416 DAY S. 6. WE ARE CONVINCED WITH THE REASONS FILED BY THE ASSESSEE AND WE, THEREFORE, CONDONE THE DELAY IN FI LING THE PRESENT APPEALS AND ADMIT THE SAME. 7. DURING THE COURSE OF HEARING, THE LEARNED COUNS EL FOR THE ASSESSEE SHRI T. CHAITANYA KUMAR SUBMITTED THAT THE LEARNED COMMISSIONER ERRED IN NOT CONSIDERING THE F ACT THAT THE VEHICLES WERE USED FOR TRANSPORTATION. IT WAS SUBMI TTED BY THE LEARNED COUNSEL THAT THE ASSESSEE HAS CLAIMED HIGHE R RATE OF DEPRECIATION ON VEHICLES SINCE THE ASSESSEE OWNED S OME VEHICLES WHICH WERE HIRED TO OTHER PERSONS AND THE ASSESSEE 5 ITA.NO.592 & 593/HYD/2013 HST STEEL PVT. LTD., HYDERABAD HAS RECEIVED HIRE CHARGES. FURTHER, IT WAS STATED T HAT THE ASSESSEE HAS ALSO HIRED VEHICLES FOR WHICH HE PAID FREIGHT CHARGES. THE ASSESSEE SUBMITTED THAT THE HIRE CHARG ES PAID WERE NETTED AGAINST THE FREIGHT CHARGES RECEIVED AN D THE BALANCE AMOUNT ONLY WAS DEBITED TO THE P & L ACCOUN T. 8. IT WAS ALSO SUBMITTED BY THE LEARNED COUNSEL FO R THE ASSESSEE THAT THE ASSESSEE IS CLAIMING DEPRECIA TION ON ELECTRICAL EQUIPMENTS AS THE ELECTRICAL ITEMS OF PL ANT AND MACHINERY WERE INCLUDED IN ELECTRICAL FITTINGS. THE LEARNED COUNSEL SUBMITTED THAT THE ORDER PASSED BY THE COMM ISSIONER OF INCOME TAX UNDER SECTION 263 OF THE I.T. ACT SET TING ASIDE THE ORDER OF THE ASSESSING OFFICER IS TO BE QUASHED WHEN THERE IS NO ERROR AND HENCE IS NOT PREJUDICIAL TO THE INT ERESTS OF THE REVENUE. 9. ON THE REQUEST OF THE BENCH, THE LEARNED COUNSE L FOR THE ASSESSEE PRODUCED THE ASSESSMENT ORDER PASS ED UNDER SECTION 143(3) FOR THE EARLIER YEARS I.E., FOR A.Y. 2004-2005 AND THE ASSESSMENT ORDER PASSED UNDER SECTION 143(3) RE AD WITH SECTION 153A OF THE I.T. ACT FOR THE A.Y. 2002-2003 . WE FIND THAT IN BOTH THE ASSESSMENT YEARS, THE DEPRECATION CLAIMED BY THE ASSESSEE HAS BEEN ACCEPTED BY THE ASSESSING OFF ICER. WE OBSERVE THAT THE ITEMS ARE IN THE SAME BLOCK AND HE NCE, DEPRECIATION CANNOT BE DISALLOWED THIS YEAR AND THE REFORE, THE COMMISSIONER OF INCOME TAX WAS INCORRECT IN ASSUMIN G JURISDICTION UNDER SECTION 263 OF THE I.T. ACT, 196 1. FURTHER, THE JURISDICTIONAL HIGH COURT IN THE CASE OF SPECTR A SHARES & SCRIPS PVT. LTD. VS. CIT-III (2013) 354 ITR 35 (AP) (HC) OBSERVED 6 ITA.NO.592 & 593/HYD/2013 HST STEEL PVT. LTD., HYDERABAD THAT CONSISTENCY IN THE ASSESSMENT PROCEEDINGS HAVE TO BE ADHERED TO. THE RELEVANT OBSERVATIONS IN THE CASE O F SPECTRA SHARES & SCRIPS PVT. LTD. (SUPRA) ARE AS UNDER : 48. ...IN RADHASOAMI SATSANG (12 SUPRA), THE SUPREME COURT HELD AT PAGE-329 AS FOLLOWS: 'WE ARE AWARE OF THE FACT THAT, STRICTLY SPEAKING, RES JUDICATA DOES NOT APPLY TO INCOME-TAX PROCEEDINGS. AGAIN, EACH ASSESSMENT YEAR BEING A UNIT, WHAT IS DECIDED IN ONE YEAR MAY NOT APPLY IN THE FOLLOWING YEAR BUT WHERE A FUNDAMENTAL ASPECT PERMEATING THROUGH THE DIFFERENT ASSESSMENT YEARS HAS BEEN FOUND AS A FACT ONE WAY O R THE OTHER AND PARTIES HAVE ALLOWED THAT POSITION TO BE SUSTAINED BY NOT CHALLENGING THE ORDER, IT WOULD NO T BE AT ALL APPROPRIATE TO ALLOW THE POSITION TO BE CHANGED IN A SUBSEQUENT YEAR. ON THESE REASONINGS, IN THE ABSENCE OF ANY MATERIAL CHANGE JUSTIFYING THE REVENUE TO TAKE A DIFFERENT V IEW OF THE MATTER - AND, IF THERE WAS NO CHANGE, IT WAS IN SUPPORT OF THE ASSESSEE WE DO NOT THINK THE QUESTION SHOU LD HAVE BEEN REOPENED AND CONTRARY TO WHAT HAD BEEN DECIDED BY THE COMMISSIONER OF INCOME TAX IN THE EA RLIER PROCEEDINGS, A DIFFERENT AND CONTRADICTORY STAND SH OULD HAVE BEEN TAKEN. WE ARE, THEREFORE, OF THE VIEW THA T THESE APPEALS SHOULD BE ALLOWED AND THE QUESTION SHOULD B E ANSWERED IN THE AFFIRMATIVE, NAMELY, THAT THE TRIBU NAL WAS JUSTIFIED IN HOLDING THAT THE INCOME DERIVED BY THE RADHASOAMI SATSANG WAS ENTITLED TO EXEMPTION UNDER SECTIONS 11 AND 12 OF THE INCOME-TAX ACT OF 1961'. 49. IN ESCORT LTD. , (7 SUPRA), IT WAS HELD BY THE DELHI HIGH COURT THAT ALTHOUGH PRINCIPLE OF RES JUDICIATA DID NOT APPLY TO THE INCOME TAX PROCEEDINGS, THE REVENUE CA NNOT BE ALLOWED TO CHANGE ITS VIEW WITH REGARD TO A FUNDAMENTAL ASPECT OF A TRANSACTION TAKEN IN EARLIE R ASSESSMENT YEAR UNLESS IT IS ABLE TO DEMONSTRATE A CHANGE IN CIRCUMSTANCES IN THE SUBSEQUENT ASSESSMENT YEAR. IT HELD THAT WHERE A FUNDAMENTAL ASPECT PERMEATING THR OUGH 7 ITA.NO.592 & 593/HYD/2013 HST STEEL PVT. LTD., HYDERABAD THE DIFFERENT ASSESSMENT YEARS HAS BEEN FOUND AS A FACT ONE WAY OR THE OTHER AND THE PARTIES HAVE ALLOWED T HAT POSITION TO BE SUSTAINED BY NOT CHALLENGING THE ORD ER, IT WOULD NOT BE AT ALL APPROPRIATE TO ALLOW THE POSITI ON TO BE CHANGED IN A SUBSEQUENT YEAR. SIMILAR VIEW WAS TAKE N BY THE MUMBAI HIGH COURT IN DARIUS PANDOLE (10 SUPRA) AND IN GOPAL PUROHIT (11 SUPRA). THE DECISION OF THE MUMBAI HIGH COURT IN GOPAL PUROHIT (11 SUPRA) WAS UPHELD BY THE SUPREME COURT IN CIT VS. GOPAL PUROHIT, DATED 15-11-2010 IN SLP (CIVIL) NO.32891 OF 2010. 50. IN VIEW OF THE ABOVE, WE HOLD THAT THE RESPOND ENT CANNOT UNDER SEC.263 INTERFERE ON AN ISSUE WHICH HA S BEEN ACCEPTED BY THE REVENUE FOR A NUMBER OF YEARS PARTICULARLY WHEN THE ASSESSING OFFICER IN THE ASSE SSMENT ORDER FOR THE ASSESSMENT YEAR 2006-07 TAKES THE SAM E VIEW BY TERMING IT ERRONEOUS AS THE RESPONDENT IS A BLE TO DEMONSTRATE A CHANGE IN CIRCUMSTANCES IN THE SAID ASSESSMENT YEAR. 10. THEREFORE, WE ARE OF THE OPINION THAT CONSISTE NTLY FOLLOWING THE CLAIM OF DEPRECIATION ALLOWED BY THE ASSESSING OFFICER IN THE EARLIER YEARS FOR THE ASSET WHICH BE LONGS TO THE SAME BLOCK, WE HOLD THAT THE ORDER OF COMMISSIONER OF INCOME TAX UNDER SECTION 263 OF THE I.T. ACT, 1961 IS INCO RRECT AND IS TO BE QUASHED. 11. IN THE RESULT, APPEALS OF THE ASSESSEE ARE ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 20. 12.2013. SD/- SD/- (CHANDRA POOJARI) (ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATE 20 TH DECEMBER, 2013 VBP/- 8 ITA.NO.592 & 593/HYD/2013 HST STEEL PVT. LTD., HYDERABAD COPY TO : 1. HST STEELS PRIVATE LIMITED, HYDERABAD, C/O. T. CHAITANYA KUMAR, FLAT 409, METRORESIDENCY, RAJBHAVAN ROAD , SOMAJIGUDA, HYDERABAD. 2. ACIT, CENTRAL CIRCLE - 5 , HYDERABAD 3. C OMMISSIONER OF I NCOME T AX (CENTRAL) , 7 TH FLOOR, AAYAKAR BHAVAN, BASHEERBAGH, HYDERABAD. 4. AD DL. CIT , CENTRAL RANGE - 2, HYDERABAD 5. D.R. ITAT B BENCH, HYDERABAD.