ACIT 14(1), MUMBAI V. R.K. EXPORTS, MUMBAI

ITA 7482/MUM/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 92576 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-05-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2003-2004
• Appeal Filed On: 19-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: LALCHAND CHOUDHARY
• Keywords: Depreciation; Rectification of order; Audit objection; Additional depreciation; Period of limitation; Time period of passing order; Unabsorbed depreciation
• Section: 143(3); 154; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL ' D ' BENCH, MUMBAI BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI SANJAY ARORA , ACCOUNTANT MEMBER ITA NO S . 7482 &7483 /MUM/2013 (ASSESSMENT YEAR S : 2003 - 04 & 2004 - 05 ) A C I T - 14(1) VS. M/S. R.K. EXPORTS ROOM NO. 202, 2ND FLOOR EARNEST HOUSE, NARIMAN POINT MUMBAI 400021 80/82, 1ST FLOOR, 3RD BHOIWADA BHULESHWAR, MUMBAI 400002 PAN - AAAFR2666M APPELLANT RESPONDENT APPELLANT BY: SHRI SANJAY PUNGLIA RESPONDENT BY: SHRI LALCHAND CHOUDHARY DATE OF HEARING: 21.05. 2015 DATE OF PRONOUNCEMENT: 21 .05.2015 O R D E R PER D. MANMOHAN, V.P. THESE APPEALS BY THE REVENUE ARE DIRECTED AGAINST THE ORDER S PASSED BY CIT(A) - 25, MUMBAI AND THEY PERTAIN TO A.Y. 2003 - 04 AND 2004 - 05. SINCE THE ISSUES ARE COMMON IN BOTH THE YEA RS, WE PROCEED TO DISPOSE OF THESE APPEALS BY A COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. FOLLOWING GROUNDS WERE URGED BEFORE THE US IN BOTH THE APPEALS: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN ALLOWING THE APPEAL FILED BY THE ASSESSEE WHICH RESULTED IN CARRY FORWARD OF EXCESS LOSS ON ACCOUNT OF UNABSORBED DEPRECIATION. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN ALLOWING DEPRECIATION ON D.G. SET @ 80% INSTEAD OF @25% ALLOWABLE AS PER I.T. ACT, 1961. 3. FOR THE ABOVE MENTIONED REASON AND ANY OTHER REASONS THAT MAY BE URGED AT THE TIME OF HEARING IT IS REQUESTED THAT THE ORDER OF THE CIT(A) BE QUASHED AND THAT OF THE A.O. BE RESTORED. 3. FACTS NECESSARY FOR DISPOSAL OF THE APPEAL S ARE STATED IN BRIEF. ASSESSEE IS A PARTNERSHIP FIRM AND IS ENGAGED IN THE BUSINESS OF ITA NO. 7482 &7483 /MUM/2013 M/S. R.K. EXPORTS 2 MANUFACTURE OF GLASS BEADS. IT FILED ITS RETURN OF INCOME FOR A.Y. 2003 - 04 ON 01.12.2003 AND THE SAME WAS PROCESSED UNDER SECTION 143(1) OF T HE ACT. THEREAFTER THE CASE WAS SELECTED FOR SCRUTINY AND ORDER WAS PASSED UNDER SECTION 143(3) OF THE ACT ON 28.12.2005 ADMITTING THE LOSS DECLARED BY THE ASSESSEE. THE LOSS OF ` 1,49,45,682/ - ON ACCOUNT OF UNABSORBED DEPRECIATION WAS ALLOWED TO BE CARRIED FORWARD. 4. AFTER COMPLETION OF THE ASSESSMENT AO SOUGHT TO RECTIFY THE ORDER PASSED UNDER SECTION 143(3) OF THE ACT, BASED UPON CERTAIN AUDIT OBJECTIONS; AN ORDER UNDER SECTION 154 DATED 26.03.2012 WAS PASSED DISALLOWING THE EXCESS DEPRECIATION OF ` 39,11,12 3/ - CLAIMED BY THE ASSESSEE AND THEREBY RECTIFYING THE LOSS ON ACCOUNT OF UNABSORBED DEPRECIATION TO ` 1,10,34,559/ - ONLY. 5. IT MAY BE NOTICED THAT THE ORDER UNDER SECTION 143(3) WAS PASSED ON 28 . 12.2005 WHEREAS THE ORDER UNDER SECTION 154 OF THE ACT WAS PAS SED ON 26.03.2012, I.E. BEYOND A PERIOD OF FOUR YEARS. THEREFORE ASSESSEE CHALLENGED THE ORDER PASSED BY THE AO BEFORE THE CIT(A) CONTENDING, INTER ALIA, THAT THE ORDER WAS PASSED IN VIOLATION OF PROVISIONS OF SECTION 154(7) OF THE ACT. EVEN ON MERITS IT W AS SUBMITTED THAT THE AO WAS NOT JUSTIFIED IN TAKING A VIEW THAT THE ADDITIONAL DEPRECIATION COULD NOT BE ALLOWED WHERE A REPORT IN FORM 3AA IS NOT AVAILABLE ON RECORDS , BY OVERLOOKING THE FACT THAT AVAILABILITY OF REPORT AT ANY TIME BEFORE COMPLETION OF AS SESSMENT WOULD BE SUFFICIENT COMPLIANCE AND IN FACT THE ASSESSMENT UNDER SECTION 143(3) WAS MADE AFTER DUE CONSIDERATION OF THE REPORT IN FORM 3AA AND RELEVANT MATERIAL AVAILABLE ON RECORDS. 6. THE LEARNED CIT(A) ACCEPTED THE PLEA OF THE ASSESSEE ON BOTH COUN TS. IN THIS REGARD HE OBSERVED AS UNDER: - 5.5 I HAVE PERUSED THE ORIGINAL ASSESSMENT ORDER U/S 143(3), RECTIFICATION ORDER U/S 154, WRITTEN SUBMISSIONS OF THE APPELLANT, AND FACTS AND CIRCUMSTANCES OF THE CASE. I FIND THAT THERE IS MERIT IN THE CONTENTIO NS OF THE APPELLANT THAT THE RECTIFICATION ORDER PASSED BY AO IS TIME BARRED. SECTION 154(7) READS AS SAVE AS OTHERWISE PROVIDED IN SECTION 155 OR SUB - SECTION (4) OF SECTION 186, NO AMENDMENT UNDER THIS SECTION SHALL BE MADE AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE ORDER SOUGHT TO BE AMENDED WAS PASSED. THE APPELLANTS CASE DOES NOT FALL IN THE EXCLUSIONS UNDER SECTION 154(7), HENCE THE SAID LIMITATION PERIOD OF FOUR YEARS IS CLEARLY APPLICABLE. IN THE ITA NO. 7482 &7483 /MUM/2013 M/S. R.K. EXPORTS 3 PRESENT CASE, T HE ORDER SOUGHT TO BE AMENDED I.E. ASSESSMENT ORDER U/S 143(3) WAS PASSED ON 28.12.2005, WHICH FALLS IN FINANCIAL YEAR 2005 - 06, HENCE THE LIMITATION PERIOD UPTO WHICH THE SAME CAN BE RECTIFIED U/S 154 ENDS ON 31.03.2010, AS RIGHTLY CLAIMED BY THE APPELLANT . IN THIS REGARD, THE ARGUMENT OF THE AO THAT THE ASSESSEE ITSELF HAD REQUESTED FOR RECTIFICATION FOR A.Y. 2004 - 05 WHICH WAS ALSO TIME BARRED AND HENCE THE ASSESSEE CANNOT BEND THE RULES FOR HIS BENEFIT AND HAVE A DIFFERENT VIEW FOR ONE YEAR AND DIFFERENT FOR ANOTHER, CANNOT WITHSTAND THE TEST OF LAW. EVEN ASSUMING THAT THE ASSESSEE WOULD HAVE MADE A TIME BARRED CLAIM FOR ANOTHER ASSESSMENT YEAR, IT COULD HAVE BEEN DEALT WITH SEPARATELY AS PER LAW; BUT THE SAME COULD NOT BE TAKEN AS BASIS FOR ANOTHER ASSESS MENT YEAR TO OVERRULE THE EXPRESS PROVISIONS OF LAW. HENCE, I HOLD THAT THE RECTIFICATION ORDER PASSED BY AO WAS TIME BARRED U/S 154(7) OF THE ACT, AND HENCE QUASHED. 7. AGGRIEVED BY THE ORDER OF THE CIT(A), REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. IT MAY B E NOTICED THAT EVEN FOR A.Y. 2004 - 05, ON SAME LINES AS INDICATED ABOVE, AO SOUGHT TO PASS AN ORDER UNDER SECTION 154 ON 14.02.2012 AND THEREAFTER ON 27.03.2012. HERE ALSO THE LEARNED CIT(A) OBSERVED THAT RECTIFICATION ORDER UNDER SECTION 154 WAS PASSED JU ST TO GIVE CONSEQUENTIAL EFFECT TO RECTIFICATION ORDER PASSED FOR A.Y. 2003 - 04. SINCE THE ORDER PASSED UNDER SECTION 154 FOR A.Y. 2003 - 04 IS QUASHED, CONSEQUENTIAL ORDER PASSED FOR A.Y. 2004 - 05 WAS ALSO QUASHED FOR THE SAME REASONS. 8. REVENUE PREFERRED AN APPEAL BEFORE THE TRIBUNAL AGAINST THE ORDER PASSED BY THE LEARNED CIT(A) FOR A.Y. 2004 - 05. 9. AT THE TIME OF HEARING THE LEARNED D.R. FAIRLY ADMITTED THAT AO HAS PASSED THE ORDERS UNDER SECTION 154 OF ACT BEYOND THE PERIOD OF LIMITATION PRESCRIBED UNDER SECTION 15 4(7) OF THE ACT. HE THUS MERELY RELIED UPON THE ORDERS PASSED BY THE AO. 10. ON THE OTHER HAND, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ORDERS PASSED BY THE AO UNDER SECTION 154 OF THE ACT DESERVE TO BE QUASHED AND EVEN ON MERITS THE AO HAS NOT MADE OUT A CASE AND THUS STRONGLY SUPPORTED THE ORDER OF THE LEARNED CIT(A). 11. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY PERUSED THE RECORD. AGAINST THE REASONS GIVEN BY THE LEARNED CIT(A) FOR QUASHING THE ORDERS PASSED UNDER SECTION 154 OF THE ACT, BOTH ON TECHNICAL GROUNDS AND ALSO ON MERITS, NO MATERIAL, WHATSOEVER, WAS PLACED BEFORE US BY THE REVENUE TO ITA NO. 7482 &7483 /MUM/2013 M/S. R.K. EXPORTS 4 SHOW THAT THE ORDERS PASSED BY THE CIT(A) ARE CONTRARY TO LAW. HAVING REGARD TO THE CIRCUMSTANCES OF THE CASE WE DO NOT FIND ANY JUSTIFICAT ION TO INTERFERE WITH THE ORDER S PASSED BY THE LEARNED CIT(A) AND ACCORDINGLY WE UPHOLD THE ORDER S PASSED BY THE LEARNED CIT(A) AND DISMISS THE APPEAL S FILED BY THE REVENUE. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST MAY, 2015. SD/ - SD/ - ( SANJAY ARORA ) (D. MANMOHAN) ACCOUNTANT MEMBER VICE PRESIDENT MUMBAI, DATED: 21 ST MAY, 2015 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 25 , MUMBAI 4. THE CIT 14 , MUMBAI CITY 5. THE DR, D BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.