The ACIT, 1(1), V. M/s V.K. Tiwari,

ITA 803/IND/2007

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 1439 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 10 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2009
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 25-11-2009
• Assessment Year: 2001-2002
• Appeal Filed On: 31-12-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: APARNA KARAN
• Assessee Lawyers: H P VERMA; A GOYAL
• Keywords: Depreciation; Difference of opinion; Reason to believe; Change of opinion; Revenue expenditure; Reassessment proceedings; Capital expenditure
• Section: 143(3); 147; 148

Judgement Text

- 1 - IN THE INCOME TAX APPELATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH AND SHRI V.K. GUPTA, AM ITA NO. 803/IND/07 A.Y. 2001-02 ASSTT. COMMR. OF INCOME TAX 1(1) BHOPAL APPELLANT VS. M/S V.K.TIWARI ITARSI RESPONDENT PAN AAAFV-5324-Q APPELLANT BY SMT. APARNA KARAN, SR. DR RESPONDENT BY SHRI HP VERMA & A. GOYAL O R D E R PER JOGINDER SINGH, JM THIS APPEAL IS BY THE REVENUE AGAINST THE ORDER OF THE LEARNED FIRST APPELLATE AUTHORITY DATED 5.10.2007 ON THE FOLLOWIN G GROUNDS :- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED IN 1. QUASHING THE REASSESSMENT PROCEEDINGS INITIATED BY BY THE ASSESSING OFFICER UNDER THE PROVISIONS OF SE CTION 147 OF THE INCOMETAX ACT 2. DELETING THE ADDITION OF RS.3,19,476/- MADE BY T HE ASSESSING OFFICER ON ACCOUNT OF DISALLOWANCE OF SHU TTERING CONSUMABLES AS REVENUE EXPENDITURE WHICH WAS TREAT ED AS A PART OF PLANT AND MACHINERY. - 2 - 2. DURING HEARING OF THIS APPEAL, WE HAVE HEARD SMT . APARNA KARAN, LEARNED SR. DR AND SHRI H.P. VERMA ALONG WITH SHRI ASHISH GOYAL, LEARNED COUNSELS FOR THE ASSESSEE. THE LD. SR. DR STRONGLY DEFENDED THE ASSESSMENT ORDER WHEREAS THE LEARNED COUNSEL FOR TH E ASSESSEE DEFENDED THE IMPUGNED ORDER. THE FIRST GROUND RAISED BY THE REVENUE PERTAINS TO QUASHING THE REASSESSMENT PROCEEDINGS INITIATED BY THE ASSESSING OFFICER UNDER THE PROVISIONS OF SECTION 147 OF THE ACT. TH E ASSERTION OF THE REVENUE IS THAT THE REASSESSMENT PROCEEDINGS SO INI TIATED ARE QUITE JUSTIFIED AS NECESSARY DETAILS WERE NOT FURNISHED B Y THE ASSESSEE. ON THE OTHER HAND, THE LEARNED COUNSEL FOR THE ASSESSEE CO NTENDED THAT THE SHUTTERING EXPENSES WERE DULY DEBITED TO PROFIT AND LOSS ACCOUNT FOR WHICH OUR ATTENTION WAS INVITED TO PAGE 15 OF THE P APER BOOK. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL AVAILABLE IN THE FILE AND AT PAGE 15 OF TH E PAPER BOOK IN ITS PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED ON 31 ST MARCH, 2001 WE HAVE FOUND THAT THE ELEVENTH ITEM FROM BOTTOM THE SHUTTERING C ONSUMABLES AT RS. 3,19,476/- HAS BEEN DULY MENTIONED BY THE ASSESSEE. EVEN DURING FRAMING OF ASSESSMENT UNDER SECTION 143(3) THE ASSE SSEE VIDE ITS REPLY AVAILABLE AT PAGES 33 TO 36 AT PAGE 34 HAS CLEARLY EXPLAINED THE SHUTTERING CONSUMABLES. THE LEARNED ASSESSING OFFI CER AFTER CONSIDERING - 3 - THE MATERIAL AVAILABLE ON RECORD FRAMED THE ASSESSM ENT AS IS EVIDENT FROM PAGES 22 AND 23 OF THE PAPER BOOK. THE CASE WAS REO PENED FOR TREATING CERTAIN CONSUMABLES AS CAPITAL EXPENDITURE INSTEAD OF REVENUE EXPENDITURE ON THE REASONS AS STATED AT PAGE 37 OF THE PAPER BOOK. THE REASONS SO RECORDED FOR REOPENING THE ASSESSMENT AR E AS UNDER :- THE ORDER U/S 143(3) WAS PASSED ON 10.02.2004 OF THE I.T. ACT, 1961. ON VERIFICATION OF RECORD IT IS FOUND THAT THE ASSESSEE WAS ALLOWED REVENUE EXPENDITURE OF RS. 3,19,476/- ON ACCOUNT OF SHUTTERING CONSUMABLES. THE SAME IS TO BE DISALLOWED AS REVENUE EXPENDITURE AND DEPRECIATION AT THE RATE OF 25% AS A PART OF PLANT AND MACHINERY SHOULD HAVE BEEN ALLOWED. THIS HAS RESULTED INTO UNDERASSESSMENT OF RS.2,39,607/-. I HAVE REASONS TO BELIEVE THAT THE INCOME OF RS.2,39,607/- HAS ESCAPED ASSESSMENT AND THIS IS A FIT CASE FOR STARTING PROCEEDINGS U/S 147. WE HAVE FOUND THAT THE ASSESSMENT WAS COMPLETED AFT ER DUE VERIFICATION OF THE RECORD AND IT IS MERELY A CASE OF CHANGE OF OPINION WHICH IS NOT PERMITTED. OUR VIEW FINDS SUP PORT FROM THE FOLLOWING DECISIONS :- 1.ACIT V.YASHODHRA DAIRY P.LTD.;153 TAXMAN 410(MP) 2.CIT V. EICHER LTD.; 163 TAXMAN 259 (DEL.) 3.CIT V. PITHAMPUR STEELS P.LTD.; 173 TAXMAN 190 (M P) IN THE LIGHT OF THE AFORESAID FACTS AND THE JUDICIA L PRONOUNCEMENTS MENTIONED ABOVE, WE HAVE FOUND THAT THERE - 4 - WAS NO FRESH INFORMATION IN THE POSSESSION OF THE L EARNED ASSESSING OFFICER, CONSEQUENTLY, IT CAN BE SAID THA T THERE WAS NO REASON TO BELIEVE RATHER IT CAN BE SAID THAT IT IS A REASON TO SUSPECT. EVEN IN THE ASSESSMENT ORDER THE ASSESSIN G OFFICER HAS NOT MENTIONED AS TO WHY THE EXPENDITURE SHOULD BE TREATED AS CAPITAL EXPENDITURE. IN VIEW OF THESE FACTS, WE ARE IN AGREEMENT WITH THE ORDER OF THE LEARNED FIRST APPEL LATE AUTHORITY IN HOLDING THAT THE ISSUANCE OF NOTICE UN DER SECTION 148 IS ILLEGAL AND THE SUBSEQUENT PROCEEDINGS ARE A LSO INVALID. THERE IS NO INFIRMITY IN THE IMPUGNED ORDER, CONSEQ UENTLY, THIS APPEAL OF THE REVENUE IS HAVING NO MERIT. SINCE ON THE ISSUE OF SECTION 148 WE HAVE UPHELD T HE STAND OF THE LEARNED FIRST APPELLATE AUTHORITY, THE REFORE, WE ARE REFRAINING OURSELVES IN DEALING WITH THE ISSUE ON M ERIT. 4. IN THE RESULT, THE REVENUES APPEAL IS DISMISSED . ORDER PRONOUNCED IN OPEN COURT IN THE ON 27 TH NOVEMBER, 2009. SD/- SD/- (V.K. GUPTA) (JOGINDER SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER NOVEMBER 27 TH , 2009 COPY TO APPELLANT/RESPONDENT/CIT/CIT(A)/DR DN/ - 5 -