DCIT, Bangalore V. M/s Komarla Hatcheries, Bangalore

ITA 680/BANG/2009

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 2065 (ITAT-BANGALORE)
• Duration Of Justice: 5 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-12-2009
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 02-07-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JASON P BOAZ
• Assessee Lawyers: A S VISHNU BHARATH
• Keywords: Depreciation; Additional evidence
• Section: 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI GEORGE GEORGE K., JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ITA NO.680/BANG/2009 ASSESSMENT YEAR : 2006-07 THE DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE 9(1), BANGALORE. : APPELLANT VS. M/S. KOMARLA HATCHERIES, 172, KAVI LAKSHMEESHA ROAD, V.V. PURAM, BANGALORE. : RESPONDENT APPELLANT BY : SHRI JASON P. BOAZ RESPONDENT BY : SHRI A.S. VISHNU BHARATH O R D E R PER A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST TH E ORDER OF THE LD. CIT (A)-V, BANGALORE FOR THE ASSESSMENT YEAR 2006-0 7 IN THE CASE OF M/S.KOMARLA HATCHERIES. 2. THE REVENUE HAS RAISED FIVE GROUNDS, OUT OF WHIC H, GROUND NOS: 1 AND 5 BEING GENERAL IN NATURE AND NO SPECIFIC ISSUE S INVOLVED, AND, THEREFORE, THEY ARE CONSIDERED AS NON-CONSEQUENTIAL . IN THE REMAINING ITA NO.680/BANG/ 09 PAGE 2 OF 6 GROUNDS, THE SUBSTANCE AND ESSENCES OF THE ISSUES R AISED ARE REFORMULATED CONCISELY AS UNDER: (I) WITHOUT APPRECIATING THE FACT THAT THE ASSESSMENT O RDER WAS MADE AFTER DUE VERIFICATION OF TRANSACTIONS/PARTIES CONC ERNED/DETAILS AND DOCUMENTS PRODUCED, THE CIT(A) ERRED IN TERMING THE ADDITIONS WERE MADE ON SURMISE AND GUISE WORK; (II) IN SPITE OF QUERIES, NO CONFIRMATIONS WERE FURNISHE D AND THAT THE ASSESSEE CANNOT TAKE A STAND NO IDENTITY PROOF WAS NOT CALLED FOR; & (III) THE CIT(A) ERRED IN ALLOWING THE APPEAL IN STEAD OF REFERRING BACK THE ISSUES TO THE AO FOR VERIFICATION ETC., 3. THE FACTS OF THE ISSUES, IN BRIEF, ARE THAT THE ASSESSEE FIRM IN THE BUSINESS OF POULTRY FARM HAD FURNISHED ITS ROI, F OR THE ASSESSMENT YEAR UNDER DISPUTE, ON 30.10.06 ADMITTING A TOTAL INCOME OF RS.75.21 LAKHS. THE AOS OBSERVATIONS ARE SUMMARIZED AS UNDER: (I) IN THE CASE OF MEENAKSHI & CO. A COMMUNICATION SE NT U/S 133(6) OF THE ACT WAS RETURNED UN-SERVED AND THE ASSESSEE HAD FAILED TO FILE THE CONFIRMATION. LIKEWISE, IN THE CASE OF RR ENTERPRISES, NEITHER REPLY HAD BEEN RECEIVED NOR CONFIRMATION LE TTER WAS FILED. THUS, ADDED RS.691363 [RS.280000 + 411363] AS UNEXP LAINED PURCHASES; (II) IN RESPECT OF REARING CHARGES PAID TO VARIOUS PARTI ES, INFORMATION CALLED FOR IN THE CASES OF 13 PARTIES, THE LETTERS SENT WERE RETURNED BY POSTAL AUTHORITIES WITH A REMARK THAT THE PARTI ES WERE NOT AVAILABLE AT THE GIVEN ADDRESSES. - IN THE REMAINING 12 PARTIES, THE ASSESSEE HAD FURNI SHED CONFIRMATION LETTERS WITHOUT IDENTITY PROOF AND THE PARTIES WERE NOT PRODUCED FOR VERIFICATION. - IN THE ABSENCE OF IDENTITY PROOF, THE CONFIRMATION LETTERS AUTHENTICITY COULD NOT BE VERIFIED. IN TOTO, RS.30.46 LAKHS WAS ADDED ON THIS COUNT; & ITA NO.680/BANG/ 09 PAGE 3 OF 6 (III) OUT OF TOTAL DEPRECIATION CLAIM OF RS.2.10 LAKHS, R S.1.13 LAKHS WAS DISALLOWED AS THE ASSESSEE HAD CLAIMED HIGHER RATE OF DEPRECIATION AT 40% IN STEAD OF ELIGIBLE RATE OF 15 % ONLY. 4. AGGRIEVED, THE ASSESSEE TOOK UP THESE ISSUES BEF ORE THE CIT(A) FOR REDRESSAL. AFTER CONSIDERING THE FORCEFUL ARGUMENT S OF THE ASSESSEE COUPLED WITH THE RELEVANT DOCUMENTARY EVIDENCE ETC. , THE LD.CIT(A) HAD OBSERVED THUS (I) 7I HAVE GONE THROUGH THE DETAILS OF CONFIRMATIO N IN THE CASE OF M/S.R.R.ENTERPRISES AND MEENAKSHI AND CO. THE DETAILS OF PAN, VOTERS IDENTITY, RATION CARDS IN RESPECT OF 12 PARTIES OF REARING CHARGES HAVE ALSO BEEN VERIFIED AND FOUND T O BE GENUINE. AS POINTED OUT, THE APPELLANT HAS BEEN IN THIS BUSI NESS SINCE 1972 AND ALL THESE YEARS MADE PURCHASES AND PAYMENTS TO VARIOUS PARTIES ALL OVER THE STATE OF KARNATAKA. THE MAIN REASON FOR MAKING DISALLOWANCES WAS DUE TO SHORTAGE OF TIME AN D IN THE ABSENCE OF CONFIRMATIONS AND IDENTITY PROOF OF ALL THESE PARTIES. IT IS A FACT THAT THE APPELLANT COULD NOT PRODUCE THES E PARTIES BEFORE THE AO BECAUSE THEY ARE SCATTERED ALL OVER THE STAT E. IT IS ALSO SEEN THAT THE APPELLANT HAS SHOWN INCOME OF RS.75.2 1 LAKHS AND PAID THE TAXES FULLY WHICH IS NOTEWORTHY IN THIS LI NE OF BUSINESS. THE ADDITIONS MADE BY THE AO ARE ON SURMISE; GUESS WORK AND CONJECTURE WITHOUT ANY MATERIAL OR EVIDENCES ON REC ORDS. IN VIEW OF THE FACTS OF THE CASE, THE ADDITIONS MADE ARE NO T JUSTIFIED AND CANNOT BE SUSTAINED (II) WITH REGARD TO CLAIM OF DEPRECIATION, THE CIT (A) W AS OF THE VIEW THAT I AM OF THE VIEW THAT THE CLAIM OF THE APPELLANT I S AS PER LAW. THE AO HAS NOT BROUGHT ANY EVIDENCE TO SH OW THAT DELIVERY VANS ARE ENTITLED ONLY 15% AND NOT 40%. T HE VANS HAVE BEEN USED FOR DELIVERY PURPOSES AND FOR RUNNING THE BUSINESS. THE DISALLOWANCE MADE IS NOT JUSTIFIED AND THE AO IS DI RECTED TO ALLOW 40% DEPRECIATION ON DELIVERY VANS AS CLAIMED BY THE APPELLANT. 5. DISILLUSIONED WITH THE STAND OF THE LD.CIT(A), T HE REVENUE HAS COME UP WITH THE PRESENT APPEAL. IT WAS VEHEMENTLY ADVO CATED BY THE LD. D.R THAT THE LD. CIT (A) HAD GROSSLY FAILED TO NOTICE T HE VERY FACT THAT THE AO, AFTER DUE VERIFICATION OF VARIOUS TRANSACTIONS FROM THE PARTIES CONCERNED AND ITA NO.680/BANG/ 09 PAGE 4 OF 6 ALSO TAKING INTO ACCOUNT THE DETAILS/DOCUMENTS FURN ISHED, HAD COME TO A WELL BALANCED CONCLUSION WHICH CANNOT BE CASTIGATED BY THE CIT(A) AS SURMISE AND GUESS WORK . IT WAS, THEREFORE, PLEADED THAT THE STAND OF THE CIT (A) REQUIRES TO BE ANNULLED AND THAT OF THE AO BE RESTORED. 5.1. ON HIS PART, THE LD. A R WAS VERY EMPHATIC IN HIS RESOLVES THAT THE LD.CIT(A); AFTER DULY ANALYZING THE EVIDENCES PROD UCED, HAD ARRIVED AT A CONCLUSION JUDICIOUSLY WHICH REQUIRES NO INTERFERE NCE AT THIS STAGE. 6. WE HAVE DULY CONSIDERED THE RIVAL SUBMISSIONS AN D ALSO CAREFULLY PERUSED THE RELEVANT RECORDS. 6.1. THE FUNDAMENTAL GRIEVANCES OF THE REVENUE ARE TWO-FOLD, NAMELY (I) THE CIT(A) HAD NOT APPRECIATED THE VERIFICATIONS/DU E CONSIDERATIONS MADE BY THE AO WHILE CONCLUDING THE ASSESSMENT; AND (II) THE ISSUES SHOULD HAVE BEEN REMITTED BACK TO THE AO FOR FURTHER VERIFICATION. 6.2. AT THE OUTSET, WE WOULD LIKE TO POINT OUT THA T UNDER RULE 46A OF THE I.T. RULES, THE CIT (A) WAS WITHIN HIS DOMAIN TO AD MIT ADDITIONAL EVIDENCE PRODUCED BY THE ASSESSEE. IN THE CASE ON HAND, THE CIT(A) HAD DULY ALLOWED THE AO A REASONABLE OPPORTUNITY, BY WAY OF CALLING FOR HIS REMAND REPORT, ON THE BASIS OF THE NEW EVIDENCE PRODUCED B EFORE HIM. WE SELECTIVELY QUOTE FROM THE IMPUGNED ORDER OF THE CI T(A) THAT - 6. .ACCORDINGLY, THE AO WAS ASKED FOR COMMENT S AND REMAND REPORT REGARDING THE ADDITIONAL EVIDENCES FI LED IN RESPECT OF 25 PARTIES OF REARING CHARGES AND TWO PARTIES FOR P URCHASES MADE BY THE APPELLANT. THE AO SUBMITTED THAT KEEPING IN VIEW OF THE TIME CONSTRAINT IN COMPLETING THE ASSESSMENT FOR AY 06-0 7, WHEREVER NECESSARY EVIDENCES ARE NOT RECEIVED, THE ADDITIONS WERE MADE . IF ITA NO.680/BANG/ 09 PAGE 5 OF 6 CIT(A)-V KINDLY GO THROUGH THE PROOF, THE CIT(A) MA Y TAKE SUITABLE DECISION ACCORDINGLY. THE ADDL. CIT, RANGE 9 IN HIS FORWARDING LETTER OF THE REMAND REPORT OF THE AO ALSO STATED T HAT THE CIT(A) MAY KINDLY DECIDE THE CASE ON MERITS WHEREVER SUFFI CIENT EVIDENCES/PROOF ARE PRODUCED BY THE ASSESSEE. IT IS SEEN THAT BOTH THE AO AND THE ADDL.CIT DID NOT GIVE ANY SPECIFIC COMMENTS REGARDING THE EVIDENCES FILED WHICH COULD NOT BE FI LED BEFORE THEM DURING THE ASSESSMENT PROCEEDINGS. NO OBJECTIONS H AVE BEEN RAISED AS THESE EVIDENCES ARE PART OF THE ASSESSMENT PROCE EDINGS BEFORE THE AO. INSTEAD OF EXAMINING AND VERIFYING THE EVIDENC ES, THE AO STATED THAT IF THE EVIDENCES ARE FOUND AS SUFFICIEN T PROOF, SUITABLE DECISION MAY BE TAKEN BY CIT(A). 6.3. IT IS VERY CLEAR FROM THE ABOVE THAT BOTH THE AO AND THE ADDL. CIT HAVE CONCEDED THAT THE ISSUES BE DECIDED ON MERITS. ACCORDINGLY, THE CIT(A) HAD DECIDED THE ISSUE ON THE BASIS OF THE MA TERIALS PLACED BY THE ASSESSEE. FOR HAVING CONCEDED THE ISSUES TO BE DE CIDED ON MERITS, THE REVENUES NEW FOUND STAND OF FINDING FAULT WITH THE DECISION OF THE CIT(A) NOW IS RATHER SURPRISING. 6.4. LET US NOW MOVE ON TO THE OTHER GRIEVANCE OF THE REVENUE THAT THE CIT(A) OUGHT TO HAVE REFERRED BACK THE ISSUES O N THE FILE OF THE AO FOR FURTHER VERIFICATION AND, HENCE, ERRED IN ALLOW ING THE ASSESSEES APPEAL IS TOTALLY MISCONCEIVED. THE CIT(A)S POWERS UNDER SE CTION 251(1)(A) OF THE ACT, BY REMITTING/REFERRING BACK/SET-ASIDE AN ISSU E TO THE AO FOR FRESH CONSIDERATION, HAVE SINCE BEEN DISPENSED WITH [ SOURCE: FINANCE ACT, 2001 W.E.F. 1.6.2001 ]. 6.5. IN AN OVER ALL CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE ISSUES DISCUSSED IN THE FORE-GOING PARAGRAPHS, WE A RE OF THE UNANIMOUS ITA NO.680/BANG/ 09 PAGE 6 OF 6 VIEW THAT THE LD. CIT(A) WAS JUSTIFIED IN HIS ENDEA VOUR AND, THUS, REVENUE FAILS ON BOTH THE COUNTS. 7. IN THE RESULT, THE REVENUES APPEAL IS DISMISSE D. PRONOUNCED IN THE OPEN COURT ON THIS 18 TH DAY OF DECEMBER, 2009. SD/- SD/- (GEORGE GEORGE K. ) (A. MOHAN ALANKAMONY ) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED, THE 18 TH DECEMBER, 2009. DS/- COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE (1+1) BY ORDER ASSISTANT REGISTRAR ITAT, BANGALORE.