Tractel Tirfor India Pvt. Ltd., New Delhi V. ACIT, New Delhi

ITA 783/DEL/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 53111 (ITAT-DELHI)
• Duration Of Justice: 9 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-11-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Next Hearing Date: 11-11-2011
• Assessment Year: 1987-1988
• Appeal Filed On: 08-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Additional evidence
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH H DELHI BEFORE SHRI I.P. BANSAL AND SHRI K.G. BANSAL ITA NO. 783(DEL)/2011 ASSESSMENT YEAR: 1987-88 TRACTEL TIRFOR INDIA PVT. LTD., AS STT. COMMISSIONER OF INCOME 302, HARSH BHAWAN, 64-65, VS. TAX, CI RCLE 16(1), NEW DELHI. NEHRU PLACE, NEW DELHI-19. PAN: AAACT4320R (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ALOK KUMAR GU PTA, C.A. RESPONDENT BY : S MT. PRATIMA KAUSHIK, SR. DR DATE OF HEA RING : 11.11.2011 DATE OF PRO NOUNCEMENT : 11.11.2011 ORDER PER K.G. BANSAL : AM THE FACTS OF THE CASE ARE THAT THE ASSESSEE F ILED ITS RETURN ON 29.06.1987 DECLARING LOSS OF RS. 1,04,83,464/-. ORIGINAL ASSESSMENT U/S 143(3) WAS COMPLETED ON 15.03.1989. IN THIS ASS ESSMENT, THE AO INTER- ALIA RECOMPUTED THE DEPRECIATION ALLOWANCE AND DI SALLOWED THE CLAIM OF INVESTMENT ALLOWANCE. THE RESULT WAS THAT THE BU SINESS LOSS WAS COMPUTED AT RS. 22,655/- AND UNABSORBED DEPRECIA TION WAS COMPUTED AT RS. 15,99,242/-. PRIMARILY IT WAS HELD THAT THE ASSESSEE HAS NOT BEEN ABLE TO ESTABLISH THE PURCHASE OF MACHINERY ON WHICH D EPRECIATION AND INVESTMENT ALLOWANCE WERE CLAIMED. IN THE FIRST APPEAL, THESE CLAIMS WERE ITA NO. 783(DEL)/2011 2 ALLOWED INTER-ALIA ON THE GROUNDS THAT AUDITED AC COUNTS SHOW THE PURCHASE AND INSTALLATION OF THE MACHINERY, AND THE DETAILS OF MACHINERY HAVE BEEN FURNISHED. THE MATTER WAS CARRIED TO THE TRIBU NAL. IN ITA NO. 2126(DEL)/2002 DATED 29.05.2006. THESE MATTERS WERE RESTORED TO THE FILE OF THE AO ON THE GROUND THAT THE LD. CIT(A) ADMITT ED FRESH EVIDENCE BUT DID NOT GIVE ANY OPPORTUNITY TO THE AO TO REBUT THE EVIDENCE, THEREBY LEADING TO VIOLATION OF RULE 46A OF THE INCOME- TAX RULES, 1962. FOR THE SAKE OF READY REFERENCE, PARAGRAPH NO. 4 OF THIS DECISION IS REPRODUCED BELOW:- 4. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. BEFORE US , THE LEARNED DR HAS POINTED OUT BY REFERRING TO THE RELEVANT PO RTION OF THE LEARNED CIT(APPEALS)'S ORDER REPRODUCED ABOVE AS W ELL AS WRITTEN SUBMISSIONS FILED ON BEHALF OF THE ASSESSE E BEFORE HIM, THAT THE ADDITIONAL EVIDENCE IN THE FORM OF COPIES OF BILLS FOR PURCHASE OF THE NEW MACHINERY AS WELL AS CERTIFICAT ES FROM THE PLANT IN-CHARGE WAS FILED BY THE ASSESSEE BEFORE TH E LEARNED CIT(APPEALS) FOR THE FIRST TIME. HE HAS SUBMITTE D THAT THE SAID EVIDENCE WAS NOT PRODUCED BY THE ASSESSEE BEFOR E THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT P ROCEEDINGS AND, THEREFORE, RELIANCE OF THE LEARNED CIT(APPEAL S) THEREON WHILE GIVING RELIEF TO THE ASSESSEE WITHOUT AFFORD ING ANY OPPORTUNITY TO THE ASSESSING OFFICER TO EXAMINE TH E SAME WAS CLEARLY IN VIOLATION OF THE RULE 46A. HE HAS AL SO SUBMITTED THAT NO REASONS WHATSOEVER HAVE BEEN GIVEN BY THE LEARNED CIT(APPEALS) IN HIS IMPUGNED ORDER FOR ADMITTING TH E SAID EVIDENCE AND HIS ORDER CONTAINS NO DISCUSSION WHATS OEVER ON THIS ASPECT OF ADMISSION OF ADDITIONAL EVIDENCE. H E HAS CONTENDED THAT THE IMPUGNED ORDER OF THE LEARNED CI T(APPEALS) GIVING RELIEF TO THE ASSESSEE ON THE ISSUE UNDER C ONSIDERATION RELYING ON THE ADDITIONAL EVIDENCE FILED BY THE ASS ESSEE BEFORE ITA NO. 783(DEL)/2011 3 HIM FOR THE FIRST TIME VIOLATING THE PROVISIONS OF RULE 46A THUS IS LIABLE TO BE SET ASIDE AND THE MATTER' MAY BE SE NT BACK TO THE ASSESSING OFFICER FOR DECIDING THE SAME AFRESH IN T HE LIGHT OF THE SAID ADDITIONAL EVIDENCE. THE LEARNED COUNSEL F OR THE ASSESSEE ON THE OTHER HAND HAS SUBMITTED THAT NO OP PORTUNITY WAS GIVEN BY THE ASSESSING OFFICER TO THE ASSESSEE TO PRODUCE THE COPIES OF BILLS FOR PURCHASE OF NEW MACHINERY A S WELL AS THE EVIDENCE SHOWING DOUBLE SHIFT WORKING OF THE ASSESS EE'S FACTORY AND IT WAS ONLY DURING THE COURSE OF APPELLATE PROC EEDINGS BEFORE THE LEARNED CIT(APPEALS) THAT THE ASSESSEE GOT THE OPPORTUNITY TO PRODUCE THE SAID EVIDENCE IN SUPPOR T OF ITS CLAIM. IN OUR OPINION, EVEN IF THIS CONTENTION OF T HE ASSESSEE IS ACCEPTED, THE LEARNED CIT(APPEALS) COULD BE SAID TO HAVE JUSTIFIED IN ADMITTING THE ADDITIONAL EVIDENCE FILE D BY THE ASSESSEE BEFORE HIM. HOWEVER, SINCE THE SAID ADDITI ONAL EVIDENCE WAS FILED BY THE ASSESSEE BEFORE HIM FOR T HE FIRST TIME, IT WAS INCUMBENT UPON HIM IN TERMS OF SUB-RULE (3) OF RULE 46A THAT THE ASSESSING OFFICER HAD BEEN ALLOWED REA SONABLE OPPORTUNITY TO EXAMINE THE SAID EVIDENCE BEFORE THE SAME WAS TAKEN INTO ACCOUNT BY HIM. SINCE NO SUCH OPPORTUNI TY WAS ADMITTEDLY GIVEN BY THE LEARNED CIT(APPEALS) TO THE ASSESSING OFFICER, HIS RELIANCE ON THE ADDITIONAL EVIDENCE F OR GIVING RELIEF TO THE ASSESSEE WAS CLEARLY IN VIOLATION OF RULE 46 A AS CONTENDED BY THE LEARNED DR BEFORE US. WE, THEREFO RE, DEEM IT JUST AND PROPER TO SET ASIDE THE IMPUGNED ORDER O F THE LEARNED CIT(APPEALS) ON THE ISSUES RAISED BY THE REVENUE I N THIS APPEAL AND RESTORE THE MATTER TO THE FILE OF THE AS SESSING OFFICER FOR DECIDING THE SAME AFRESH AFTER EXAMINING THE AD DITIONAL EVIDENCE PRODUCED BY THE ASSESSEE BEFORE THE LEARNE D CIT(APPEALS). THE ASSESSING OFFICER IS DIRECTED TO AFFORD SUFFICIENT OPPORTUNITY TO THE ASSESSEE OF BEING HEA RD IN THE SET ASIDE PROCEEDINGS. 1.1 IN PURSUANCE OF THE AFORESAID ORDER OF THE TR IBUNAL, THE AO FRAMED FRESH ASSESSMENT ON 02.08.2007. IN THIS ORDER, THE FINDINGS OF THE ORIGINAL ASSESSMENT ORDER WERE RESTORED IN THE MATTER. TH E BURDEN OF THE ORDER IS ITA NO. 783(DEL)/2011 4 THAT IN SPITE OF REPEATED OPPORTUNITIES GRANTED TO THE ASSESSEE, IT COULD NOT PRODUCE AUDITED ACCOUNTS, BILLS AND VOUCHER S, EVIDENCE REGARDING SHIFTING OF THE MACHINERY FROM MANUFACTURER TO TH E PREMISES OF THE ASSESSEE OR ANY OTHER EVIDENCE SPECIFIED IN THE O RDER OF THE TRIBUNAL. THIS FINDING WAS UPHELD BY THE LD. CIT(APPEALS) BY MENTIONING THAT EVEN IN THE DE-NOVO PROCEEDINGS, THE BOOKS OF ACCOUNT WERE NOT PRODUCED. THE RELEVANT PORTION OF HIS ORDER IS REPRODUCED BELOW: - 9.2 THE ASSESSEE IN THE SET ASIDE PROCEEDINGS ALSO HAS NOT FURNISHED THE BOOKS OF ACCOUNTS TO VERIFY THE COP IES OF THE BILLS PRODUCED AS ADDITIONAL EVIDENCE DESPITE OP PORTUNITIES GIVEN. THE ASSESSEE HAS NOT CONTROVERTED THE FIN DINGS OF THE AO. EVEN IN THESE PROCEEDINGS ALSO THE ASSESS EE HAS NOT PRODUCED BOOKS OF ACCOUNTS TO VERIFY THE CLAIMS OF THE ASSESSEE. NO REASONS ARE GIVEN FOR NOT PRODUCIN G THE BOOKS OF ACCOUNTS EXCEPT STATING THAT THESE BOOKS OF ACCOU NTS WERE NOT AVAILABLE. NO REASONS ARE GIVEN FOR NON-AVAILAB ILITY OF BOOKS OF ACCOUNTS. SINCE PRIMARY EVIDENCE WAS NOT PROD UCED EITHER BEFORE THE AO OR BEFORE ME, THE CLAIM OF THE ASSES SEE CANNOT BE ALLOWED ON INDIRECT OR CIRCUMSTANTIAL EVIDENCE . IN VIEW OF THE ABOVE DISCUSSION, THE ACTION OF THE AO CANNO T BE FAULTED. 1.2 AGGRIEVED BY THIS ORDER, THE ASSESSEE IS IN A PPEAL BEFORE US. IT HAS TAKEN UP SIX GROUNDS IN THE APPEAL, THE SUM AND S UBSTANCE OF WHICH IS THAT THE LD. CIT(APPEALS) ERRED IN NOT ALLOWING DEDU CTION OF DEPRECIATION ALLOWANCE AMOUNTING TO RS. 52,28,075/-, EXTRA SHIF T ALLOWANCE AMOUNTING TO RS. 15,44,125/- AND INVESTMENT ALLOWANCE OF RS. 42,03,340/-. ITA NO. 783(DEL)/2011 5 2. BEFORE US, THE LD. COUNSEL DREW OUR ATTENTION TO THE HISTORY OF THE CASE, WHICH HAS ALREADY BEEN NARRATED BY US. WE HAVE ALSO SUMMARIZED THE FINDINGS OF THE AO AND THE LD. CIT(APPEALS) TO WHICH OUR ATTENTION HAS BEEN DRAWN. A REFERENCE IS MADE TO ASSESSEES LETTER DATED 06.07.2007 ADDRESSED TO THE AO IN WHICH IT IS INTER-ALIA M ENTIONED THAT THE ASSESSEE COULD NOT PRODUCE ORIGINAL BILLS BECAUSE THOSE W ERE SUBMITTED TO THE ICICI AND IFCI, FROM WHOM TERM LOANS WERE TAKEN BY HYPOTHECATING THE MACHINERY, WHICH STANDS REFLECTED IN THE BALANCE- SHEET AS ON 31.12.1986. THE MACHINERY WAS IMPORTED AND PAYMENTS WERE MADE AGAINST LETTER OF CREDIT AND BILL OF ENTRY WAS FILED AS PROOF OF PURCHASE OF MACHINERY. A PHOTOCOPY OF LICENCE FOR IMPORT WAS ALSO FILED. THIS LETTER HAS BEEN PLACED IN THE PAPER BOOK ON PAGE NOS. 1 AND 2. THE DETAILS OF MACHINERY ADDED AS ON 31.12.1986 HAVE BEEN PLACED IN THE PAPER BOOK ON PAGE NO. 3. THE BILLS HAVE BEEN PLACED ON PAGE NOS. 4 TO 8. IT IS ADMITTED THAT THE BOOKS OF ACCOUNT WERE NOT PRODUCED AS THESE WE RE DESTROYED IN FIRE. IT IS REGRETTED THAT THERE IS SOME ERROR WHEN IT W AS MENTIONED THAT THE BOOKS OF ACCOUNT HAVE BEEN DESTROYED. THE INTENT WAS TO INFORM THAT THE BOOKS GOT DESTROYED IN FIRE. THE CASE OF THE LD. COUNSEL IS THAT EVEN IN ABSENCE OF THE BOOKS OF ACCOUNT, THERE IS SUFFICIENT EVI DENCE ON RECORD TO SHOW THAT ITA NO. 783(DEL)/2011 6 THE MACHINERY WAS IMPORTED AND THEN IT WAS INST ALLED IN THIS YEAR. ON QUESTIONING AS TO WHY CERTIFIED BILLS FROM ICI CI AND IFCI WERE NOT PRODUCED, IT IS STATED BY THE LD. COUNSEL THAT ATTEMPT SHALL BE MADE TO OBTAIN THE ORIGINAL BILLS OR CERTIFIED COPIES FROM THESE LENDERS FOR PRODUCTION BEFORE THE AO IF THE MATTER IS REMANDE D TO HIM FOR FRESH ADJUDICATION IN THE MATTER. ACCORDINGLY, IT IS UR GED THAT THE MATTER MAY BE REMANDED TO THE AO. 2.1 IN REPLY, THE LD. DR REFERRED TO THE FACT T HAT THE BOOKS OF ACCOUNT WERE NOT PRODUCED EVEN IN THE COURSE OF ASSESSME NT PROCEEDINGS. THE LD. CIT(APPEALS) HAD NOT GIVEN ANY FINDING IN THIS REG ARD. ALTHOUGH IT IS CLAIMED THAT THE BOOKS WERE DESTROYED IN FIRE O N 29.09.2006, NO EVIDENCE SUCH AS REPORT TO THE FIRE DEPARTMENT WAS FILE D BEFORE THE AO IN THE DE-NOVO PROCEEDINGS. IN THE LIGHT OF THESE FACTS , IT IS ARGUED THAT THE ASSESSEE IS MERELY DELAYING THE PROCEEDINGS AND, THEREFORE, THE APPEAL MAY BE DISMISSED. 3. WE HAVE CONSIDERED THE FACTS OF THE CASE AND SUBMISSIONS MADE BEFORE US. IT IS AN ADMITTED FACT THAT THE PHOTOCO PIES OF THE BILLS WERE PRODUCED BEFORE THE LD. CIT(APPEALS). IT IS TH E STAND OF THE ASSESSEE ITA NO. 783(DEL)/2011 7 THAT ORIGINAL BILLS ARE IN THE CUSTODY OF ICICI A ND IFCI, AND THE ASSESSEE WILL MAKE AN ATTEMPT TO GET EITHER THE ORIGINAL BILLS OR CERTIFIED COPIES THEREOF FROM ICICI AND IFCI FOR PRODUCTION BE FORE THE AO. BOOKS OF ACCOUNT ARE ADMITTEDLY NOT AVAILABLE WITH THE AS SESSEE. THUS, SOME EVIDENCE IS THERE ON RECORD REGARDING THE PURCH ASE OF MACHINERY AND SOME MORE EVIDENCE WILL BE FILED AS PER THE L D. COUNSEL. IT IS ALSO NECESSARY TO SEE THAT THE MACHINERY WAS AT LEA ST READY TO BE USED IN THIS VERY YEAR FOR CLAIMING VARIOUS DEDUCTIONS. SINC E SOME EVIDENCE IS AVAILABLE ON RECORD, WHICH HAS NOT BEEN LOOKED IN TO ON THE GROUND THAT THE BOOKS WERE NOT PRODUCED, WE THINK IT FIT IN THE INTEREST OF JUSTICE TO RESTORE THE MATTER TO THE FILE OF THE AO FOR RE-A DJUDICATION OF THE ISSUE. THE ASSESSEE SHALL FILE ALL EVIDENCE AVAILABLE WI TH HIM TO ENABLE THE AO TO DECIDE THE MATTER ON MERITS. THUS, THE MATTER IS R ESTORED TO THE FILE OF THE AO FOR FRESH DECISION IN THE MATTER. 4. IN THE RESULT, THE APPEAL IS TREATED AS ALLOW ED FOR STATISTICAL PURPOSE. SD/- SD/- (I.P. BANSAL) (K.G.BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER SP SATIA ITA NO. 783(DEL)/2011 8 COPY OF THE ORDER FORWARDED TO:- 1. TRACTEL TIRFOR INDIA PVT. LTD., NEW DELH I. 2. ACIT, CIRCLE 16(1), NEW DELHI. 3. CIT 4. CIT(A) 5. THE DR, ITAT, NEW DELHI. ASSISTANT REGISTRAR.