M/s. Zinco Lab Pvt. Ltd., Nashik V. ACIT Cir. 2, Nashik, Nashik

ITA 650/PUN/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 49781 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 11 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-05-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 16-03-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 01-06-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: A S SINGH SHRI DEVENDRA JAIN
• Keywords: Depreciation
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE BEFORE SHRI I.C. SU DHIR JUDICIAL MEMBE R AND SHRI G.S. PANNU ACCOUNTANT MEMBER ITA NO. 650 /PN/200 9 ( ASSTT. YEAR : 200 4 - 05 ) M/S. ZINCO LAB PVT. LTD. , S - 4, JALDHARAN COMPLEX, NEAR BYTICO POINT, NASHIK ROAD, NASHIK APPELLANT PIN : NOT AVAILABLE VS. ACIT, CIRCLE - 2 , NASHIK RESPONDENT APPELLANT BY : SHRI A.S. SINGH RESPONDENT BY : SHRI DEVENDRA JAIN ORDER PER I.C. SUDHIR JM THE A SSESSEE HAS QUESTIONED REVISIONAL ORDER PASSED U/S. 263 OF THE ACT BY THE LD CIT MAINLY ON THE BASIS THAT LD CIT HAS ERRED IN SETTING ASIDE THE ENTIRE ASSESSMENT TO BE DONE DENOVO. 2. WE HAVE HEARD AND CONSIDERED THE ARGUMENTS ADVANCED BY THE PARTIES IN VIEW OF ORDERS OF THE AUTHORITIES BELOW AND THE DECISIONS RELIED UPON. 3. THE RELEVANT FACTS ARE THAT THE ASSESSMENT IN THE PRESENT CASE WAS FRAMED U/S. 143(3) OF THE ACT. SUBSEQUENTLY, THE LD CIT FOUND THE ASSESSMENT ORDER ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE FOR THE FOLLOWING REASONS : ZINCO LAB PVT. LTD. A.Y. 2004 - 05 2 I) THE ASSESSEE DISCLOSED VVIP OFRS. 10625787 ON ESTIMATE BASIS. THE A.O. FAILED TO MAKE ENQUIRY INTO THE ACCURACY OF THE ITEM IN THE BACKGROUND OF INFORMATION AVAILABLE ON RECORD THAT RAW MATERIALS, WI P, FINISHED PRODUCTS HAD BEEN HYPOTHECATED TO BANK OF BARODA. MOREOVER, WAGES AND LABOUR CHARGES WERE CLAIMED AT FIGURES MUCH HIGHER THAN LAST YEAR THOUGH PURCHASES AND SALES SHOWED A DECLINING TREND. AGAINST DECLINING SALES TURNOVER, SALES COMMISSION WA S CLAIMED AND GOT ALLOWED. II) THE ASSESSEE CHARGED RS. 56,56,399/ - UNDER AS - 22 TOWARDS TIMING DIFFERENCE OF DEPRECIATION BETWEEN BOOKS AND TAX RECORD. NO ENQUIRY WORTH THE NAME WAS CONDUCTED INTO THE ALLOWABILITY OF THIS CHARGE. III) IN NOTE NO.2 THE A UDITOR MAINTAINED THAT SALES TAX DEPARTMENT HAS RAISED DEMAND OF RS. 12.90 LAKHS AFTER PART PAYMENT OF RS. 3 LAKHS TOWARDS TAX, INTEREST AND PENALTY. THE A.O DID NOT TAKE COGNIZANCE OF THIS INFORMATION FOR EXAMINING TAX IMPLICATION FROM INCOME TAX ANGLE. IV) ACCOUNT EXTRACT OF PARIJAT CONSTRUCTION FILED BY ASSESSEE SHOWED CLOSING BALANCE OF RS. 1276417/ - WHEREAS BALANCE SHEET CARRIED THE FIGURE AT RS.1634516/ - . A.O DIID NOT CROSS - VERIFY THE AFORESAID BALANCE AND ALLOWED THE AMOUNT TO GO UNEXAMINED. V) F IXED ASSET SCHEDULE SHOWS SALE OF BUILDING FOR RS.10803334/ - WHEREAS IN THE P & L ACCOUNT NO INCOME / LOSS IS SHOWN FROM THE SAME. 4. BEING NOT SATISFIED WITH THE CAUSE SOWN BY THE ASSESSEE, THE LD CIT SET ASIDE ASSESSMENT ORDER WITH THIS DIRECTION TO T HE A.O. TO FRAME THE ZINCO LAB PVT. LTD. A.Y. 2004 - 05 3 ASSESSMENT DENOVO AFTER GIVING NECESSARY OPPORTUNITY TO THE ASSESSEE. THE ASSESSEE HAS QUESTIONED THE ACTION OF THE LD CIT BEFORE US. 5. THE LD. A.R. SUBMITTED THAT THE A.O HAD FRAMED ASSESSMENT AFTER CONDUCTING ENQUIRY ON THE IS SUES SHOWN IN THE REASONS FOR INVOKING THE PROVISIONS U/S. 263 OF THE ACT. IN SUPPORT, HE REFERRED ASSESSMENT ORDER, PARA NO. 4 WHEREIN A.O HAS MENTIONED ABOUT THE QUESTIONNAIRE RAISING SEVERAL QUERIES TO THE ASSESSEE. THE LD. A.R. SUBMITTED FURTHER THAT FIRST NOTICE U/S. 263 WAS ISSUED BY THE LD CIT ON 11.9.2007 ALLEGING THE ASSESSMENT ORDER AS ERRONEOUS ON 3 GROUNDS SPECIFIED IN THE NOTICE. ANOTHER NOTICE U/S. 263 WAS ISSUED ON 20 TH FEBRUARY 2009 ALLEGING THE ASSESSMENT ORDER AS ERRONEOUS ON SIX GROUND S SPECIFIED IN THE NOTICE WHICH INCLUDED TWO GROUNDS OF THE FIRST NOTICE. NEITHER OF THE TWO NOTICES ISSUED U/S. 263 CONTAINED ANY GROUND REGARDING THE SPECIAL CAPITAL INCENTIVE RECEIVED BY THE ASSESSEE. THE ASSESSEE WAS NEVER GIVEN ANY OPPORTUNITY TO SHO W AS TO HOW THE ASSESSMENT ORDER IS NOT ERRONEOUS ON THE GROUND OF SPECIAL CAPITAL INCENTIVES RECEIVED BY THE ASSESSEE. HE SUBMITTED THAT IT IS A SETTLED LEGAL POSITION THAT IF THE GROUND ON WHICH ORDER IS PASSED BY COMMISSIONER IS NOT SPECIFIED IN THE NOTICE ISSUED U/S. 263, SUCH AN ORDER CANNOT BE SUSTAINED. IN SUPPORT, HE PLACED RELIANCE ON THE FOLLOWING DECISIONS : (A) CIT V/S. THIMMALAISWAMY NAIDU AND SONS,230 ITR 534, 536S (SC) ( B ) CIT V/S CONTIMETERS ELECTRICALS (P.) LTD.[2009] 178 TAXMAN 422 (DELHI) ( C ) CIT V/S ASHISH RAJPAL [2009] 180 TAXMAN 623 (DELHI) ZINCO LAB PVT. LTD. A.Y. 2004 - 05 4 ( D ) COLORCRAFT KASHMIRA CERAMIXC COMPOUND V/S ITO [2007] 105 ITD 599 (MUM) ( E ) SANCO TRANS LTD. V/S. ACIT (1997) 61 ITD 317 (MAD) ( F ) ASIA RESORT LTD. V/S ACIT [2005] 143 TAXMA N 8 (CHD.) (MAG.) ( G ) GEC ALSTHOM INDIA LTD. V/S DCIT [2000] 112 TAXMAN 241 (CAL.) (MAG.) ( H ) GEOMETRIC SOFTWARE SOLUTION CO. LTD. V/S. ACIT [2009] 32 SOT 428 (MUM.) 6. THE LD. D.R., ON THE OTHER HAND, SUBMITTED THAT THE A.O H AS NOT MENTIONED THE ISSUES SHOWN IN THE REASONS ON WHICH THE LD CIT HAS TREATED THE ASSESSMENT ORDER AS ERRONEOUS. THE LD CIT HAS PASSED THE REVISIONAL ORDER AFTER CONSIDERING THE SUBMISSIONS MADE BY THE ASSESSEE, THUS IT CANNOT BE SAID THAT OPPORTUN ITY WAS NOT AFFORDED TO THE ASSESSEE BY THE LD CIT BEFORE INVOKING THE REVISIONAL PROVISION ON THE BASIS OF ABOVE STATED REASONS. 7. CONSIDERING THE ABOVE SUBMISSIONS, AND HAVING GONE THROUGH THE ORDER IMPUGNED AS SWELL AS DECISIONS RELIED UPON BY THE LD . A.R., WE DO NOT FIND REASONS TO INTERFERE WITH THE REVISIONAL ORDER IMPUGNED BEFORE US. SINCE A.O HAS NOT DEALT WITH THE ISSUES SHOWN IN THE REASONS BY THE LD CIT FOR COMING TO THE CONCLUSION THAT ASSESSMENT ORDER IS ERRONEOUS AND PREJUDICIAL TO THE I NTEREST OF REVENUE JUSTIFYING HIS ACTION FOR INVOCATION OF SECTION 263 OF THE ZINCO LAB PVT. LTD. A.Y. 2004 - 05 5 ACT. SO FAR AS CONTENTION OF THE ASSESSEE THAT NO SHOW CAUSE NOTICE WAS ISSUED REGARDING THE SPECIAL CAPITAL INCENTIVE RECEIVED BY THE ASSESSEE IS CONCERNED, WE ALSO DO NOT FIN D SUBSTANCE THEREIN SINCE THE ISSUE IS CONNECTED WITH THE ISSUE OF SALES TAX RAISED IN REASON NO. III OF THE ABOVE STATED REASONS FOR INVOKING THE REVISIONAL PROVISIONS. THE LD CIT HAS DIRECTED THE A.O TO EXAMINE THE SPECIAL INCENTIVE RECEIVED BY THE A SSESSEE AS PER NOTE NO. 3 TO THE AUDITOR AGREEING TO RS. 10,00,000/ - UNDER SALES TAX DEFERRED AND CONSIDERED THE TAX IMPLICATIONS IN THE LIGHT OF JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF CIT V/S. THIM MALAISWAMY NAIDU AND SONS, , 230 ITR 534, 53 6 (SC) . WE ALSO DO NOT FIND SUBSTANCE IN THE CONTENTION OF THE ASSESSEE THAT THE LD CIT HAS ERRED IN SETTING ASIDE THE ENTIRE ASSESSMENT ORDER TO FRAME DENOVO SINCE THE LD CIT HAS JUSTIFIED IS SUCH ACTION WITH THIS OBSERVATION THAT THE ISSUES RA ISED IN THE REASONS FOR INVOCATION OF REVISIONAL PROVISIONS AND THE FACTS ARE OVERLAPPING EACH OTHER IN THEIR AREAS OF OPERATIONS. UNDER THESE CIRCUMSTANCES, WE DO NOT FIND REASON TO INTERFERE WITH THE REVISIONAL ORDER IMPUGNED. THE SAME IS UPHELD. THE GROUND IS ACCORDINGLY REJECTED. 8. IN RESULT, APPEAL IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 27TH MAY 2011. SD/ - SD/ - ( G.S.PANNU ) ACCOUNTANT MEMBER (I.C. SUDHIR) JUDICIAL MEMBE R PUNE: DATED: 27 TH MAY , 2011 ZINCO LAB PVT. LTD. A.Y. 2004 - 05 6 US COPY OF THE ORDER IS FORWARDED TO : 1. THE APP ELLA NT 2. THE RESPONDENT 3. THE CIT - I , NASHIK 4 . THE D.R. ITAT, B BENCH, PUNE 5 . GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL PUNE