DCIT CENT. CIR. - 3, MUMBAI V. M/s. KILLICK NIXON LTD., MUMBAI

ITA 820/MUM/2006

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 7387 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 1 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-03-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 1995-1996
• Appeal Filed On: 03-02-2006
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIRENDRA OJHA
• Assessee Lawyers: VIJAY KOTHARI
• Keywords: Depreciation; Set aside
• Section: 143(3); 250

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES F: MUMBAI BEFORE SHRI D.MANMOHAN, HONBLE VICE PRESIDENT AND SHRI R K PANDA, ACCOUNTANT MEMBER ITA NO. 820/MUM/2006 ASSESSMENT YEAR 1995-96 DY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 3, 9 TH FLOOR, OLD CGO BLDG, ANNEXE, M K. ROAD, MUMBAI 400 020 VS. M/S KILLICK NIXON LTD, KILLICK HOUSE, KILLICK ESTATE, BAJI PASALKAR MARG, CHANDIVALI, MUMBAI 400 072 PAN AAACK 8526 A (APPELLANT) (RESPONDENT) FOR APPELLANT : SHRI VIRENDRA OJHA FOR RESPONDENT : SHRI VIJAY KOTHARI ORDER PER D. MANMOHAN, V.P. 1. THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 16.11.2005 PASSED BY CIT (A) CENTRAL I, MUMBAI AND IT PERTAINS TO ASSESSMENT YEAR 1995-96. 2. THIS CASE HAS A CHEQUERED HISTORY. ASSESSEE-CO MPANY WAS ENGAGED IN THE BUSINESS OF THE MANUFACTURE AND SALE OF ENGINEERING PRODUCTS APART FROM TRADING ACTIVITY. IN RESPECT OF PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR 1995-96, IT DECLARED TOTAL INCOME AT RS 3.52 CRORES ON 30.11.1995, WHEREAS ASSESSMENT WAS COMPLETED ON A TOTAL INCOME OF RS 11.98 CRORES BY AN ORDER DATED 30 TH MARCH 1998. AGGRIEVED BY CERTAIN DISALLOWANCES, ASSESSEE-COMPANY PREFERRED AN APPEAL BEFORE THE CIT (A) WHO WAS PLEASED TO SET ASIDE THE ASSESSMENT ORDER WITH A DIRECTION TO CONSIDER A LL THE ISSUES DE NOVO . WHILE GIVING EFFECT TO THE ORDER DATED 24.3.1999, THE ASSESSING OFFICER PASSED A FRESH ORDER U/S 143(3) R.W.S. 250 OF THE ACT ON 27.3.2001, WHEREIN TOTAL I NCOME WAS DETERMINED AT RS 6.58 CRORES. 3. WE ARE CONCERNED HEREIN THAT WITH THE CLAIM O F DEDUCTION TOWARDS DEPRECIATION ON COMPUTERS (RS 2,15,593/-). THE ASS ESSING OFFICER OBSERVED THAT ALTHOUGH PAYMENT WAS STATED TO HAVE BEEN MADE BY CHEQUE AND NAMES OF THE PARTIES FROM WHOM COMPUTERS WERE PURCHASED, WERE FURNISHED, IN THE AB SENCE OF PRODUCTION OF THE PARTIES ITA 820/M/2006 M/S KILLICK NIXON LTD 2 DEPRECIATION CANNOT BE ALLOWED SINCE PURCHASES ARE NOT SUPPORTED BY EVIDENCE. THE ASSESSING OFFICER APPEARS TO HAVE SENT A LETTER TO THE ADDRESS OF M/S ARC SYSTEM AND M/S PERTEC COMPUTER LTD, WHICH WERE RETURNED WITH THE POSTAL R EMARK UNCLAIMED. UNDER THE CIRCUMSTANCES, THE ASSESSING OFFICER CONCLUDED THAT ASSETS WERE NOT PURCHASED BY THE ASSESSEE AND IT IS ONLY A PAPER ENTRY TO CLAIM DEPR ECIATION. 4. AGGRIEVED BY THE ORDER DATED 27.3.2001, THE ASS ESSEE CONTENDED BEFORE THE LEARNED CIT (A) THAT NON-AVAILABILITY OF ANY PARTY AT THE GIVEN ADDRESS, AFTER CONSIDERABLE LAPSE OF TIME FROM THE DATE OF TRANSACTION, DOES NO T ENTITLE THE ASSESSING OFFICER TO DOUBT THE GENUINENESS OF THE TRANSACTION PARTICULARLY, WH EN THE TRANSACTION IS SUPPORTED BY DOCUMENTARY EVIDENCE. ASSESSEE PRODUCED COPIES OF THE BILLS BEARING SALES-TAX NUMBERS OF THE PARTIES AND ALSO SUBMITTED THAT THE PARTIES, FROM WHOM ASSESSEE PURCHASED, WERE LISTED COMPANIES REGISTERED WITH SEBI AND PAYMENT W AS MADE BY CHEQUE, WHICH COULD HAVE EASILY BEEN VERIFIED BY THE ASSESSING OFFICER. 5. CONSIDERING THE CIRCUMSTANCES OF THE CASE, TH E LEARNED CIT (A) AGAIN SET ASIDE THE MATTER TO THE FILE OF THE ASSESSING OFFIC ER WITH A SPECIFIC DIRECTION TO MAKE NECESSARY ENQUIRIES, AS DETAILED IN PARA 19 OF HIS ORDER, WHICH IS REPRODUCED FOR IMMEDIATE REFERENCE : I HAVE CONSIDERED THE ISSUES AND THE ARGUMENTS CAR EFULLY. IT APPEARS THAT THE DOCUMENTS AND DETAILS SUBMITTED BY THE APPELLANT HA VE NOT BEEN PROPERLY CONSIDERED. THE A.RS ARE ABLE TO SUBSTANTIATE THE CLAIM WITH ALL THESE RELEVANT DETAILS WHICH HAVE BEEN SUPPLIED BEFORE THE A.O. DU RING THE ASSESSMENT PROCEEDINGS. THE A.O. HAS NOT FULLY APPLIED HIS MI ND BASED ON THE DOCUMENTS FILED. WITH A BIT OF INVESTIGATION, VENDORS LIKE P ERTECH COMPUTERS LTD CANNOT BE SIMPLY REGARDED AS NON-EXISTENT COMPANY. DETAILS O F PAYMENTS MADE FOR THE COMPUTER SYSTEM WOULD ALSO HAVE PROVIDED AMPLE LEAD TO GATHER IMPORTANT INFORMATION ABOUT THE SUPPLIERS. THEREFORE, I AM D IRECTING THE A.O. TO CAREFULLY SCRUTINISE THE DOCUMENTS SUBMITTED BY THE APPELLANT AND IF THE NECESSARY DOCUMENTS ARE VERIFIABLE PARTICULARLY THE DETAILS O F THE PAYMENT BILLS, THE SAME SHOULD BE ENTERTAINED. 6. WHILE GIVING EFFECT TO THE AFOREMENTIONED ORDER DATED 14.10.2002, THE ASSESSING OFFICER MERELY OBSERVED AS UNDER : 2.5 THE SECOND GROUND PERTAINS TO THE ASSESSEES C LAIM OF DEPRECIATION OF RS 2,15,593/-, WHEREIN THE A.O. HAD DISALLOWED THE CLA IM OF DEPRECIATION ON ACCOUNT ITA 820/M/2006 M/S KILLICK NIXON LTD 3 OF THE PURCHASES MADE FROM PERTECH COMPUTERS LTD, N EW DELHI, AS THE ABOVE PARTY IS NOT IN EXISTENCE NOR ANY CONFIRMATION HAS BEEN FILED BY THE ASSESSEE, SO THE CLAIM OF THE DEPRECIATION IS DISALLOWED ACCORDI NGLY. 7. SINCE ASSESSING OFFICER HAS NOT CARRIED OUT THE DIRECTION OF THE CIT (A) LOGICALLY AND PROPERLY, AN APPEAL WAS PREFERRED BEFORE THE CI T (A) ONCE AGAIN TO CONTEND THAT THE MATERIAL FURNISHED BY THE ASSESSEE WAS SUFFICIENT T O PROVE THE GENUINENESS OF PURCHASE AND IN THE ABSENCE OF ANY EVIDENCE TO PROVE TO THE CONTRARY, DEPRECIATION CLAIMED BY THE ASSESSEE OUGHT NOT HAVE BEEN DISALLOWED, PARTICULAR LY IN THE WAKE OF SPECIFIC DIRECTION BY THE CIT (A) IN HIS ORDER DATED 14.10.2002. 8. HAVING REGARD TO THE CIRCUMSTANCES OF THE CASE, LEARNED CIT (A) ACCEPTED THE PLEA OF THE ASSESSEE AND DIRECTED THE ASSESSING OFFICER TO ALLOW DEPRECIATION BY OBSERVING IN PARA 9.1 AS UNDER : 9.1 HAVING CONSIDERED THE SUBMISSION OF APPELLANT AND PURCHASE INVOICES AS WELL AS COPY OF LEDGER ACCOUNT AS PRODUCED BEFORE M E AND ALSO TAKING INTO ACCOUNT THE WELL KNOWN NAME OF THE SELLER PARTIES T HERE IS NO REASON TO DOUBT THE CLAIM OF APPELLANT AFTER TAKING INTO ACCOUNT THE EX TENT OF CLAIM OF DEPRECIATION INVOLVED AND MAGNITUDE OF BUSINESS CARRIED ON BY TH E APPELLANT. IN THE EARLIER YEAR ALSO, THE APPELLANT COMPANY HAS PURCHASED THE ASSETS FROM THESE CONCERNS AND THEIR GENUINENESS HAS NOT BEEN DOUBTED. THEREF ORE, AO IS DIRECTED TO ALLOW THE DEPRECIATION TO THE APPELLANT AS CLAIMED AND TH IS GROUND OF APPEAL IS ALLOWED. 9. AGGRIEVED, REVENUE IS IN APPEAL BEFORE US. IT MAY BE NOTICED THAT THE APPEAL FILED BY THE REVENUE WAS ORIGINALLY DISPOSED OF BY ITAT VIDE ORDER DATED 11 TH SEPTEMBER 2008, WHEREIN INADVERTENTLY GROUND NO. 2 & 3 WERE NOT TAKEN-UP FOR ADJUDICATION. IN OTHER WORDS, ONLY GROUND NO.1 WAS TAKEN-UP FOR CONSIDERATION. 10. THEREFORE, ON AN APPLICATION FILED BY THE REVE NUE, THE TRIBUNAL DIRECTED THE REGISTRY TO RE-FIX THE APPEAL FOR FRESH HEARING ONL Y IN SO FAR AS GROUND NUMBERS 2 & 3 ARE CONCERNED. THUS, THIS APPEAL WAS PLACED BEFORE US. CASE OF THE REVENUE IS THAT THE BURDEN IS UPON THE ASSESSEE TO PROVE THE FACTUM OF PURCHASE OF COMPUTERS IN ORDER TO CLAIM DEPRECIATION. ON THE OTHER HAND, THE CASE OF THE ASSESSEE IS THAT THE INITIAL BURDEN PLACED UPON THE ASSESSEE WAS DISCHARGED BY FURNISHI NG BILLS AND PROOF OF PAYMENT OF AMOUNT BY CHEQUE. THE ASSESSING OFFICER HAS NOT DI SPUTED THE USER OF COMPUTERS. THE LEARNED CIT (A) HAS GIVEN A SPECIFIC DIRECTION TO T HE ASSESSING OFFICER TO MAKE FRESH ITA 820/M/2006 M/S KILLICK NIXON LTD 4 INVESTIGATION BASED UPON THE PURCHASE BILLS AND PAY MENT THROUGH BANK IN WHICH EVENT, IF THE REVENUE IS AGGRIEVED, IT OUGHT TO HAVE PREFERRE D AN APPEAL AGAINST THE ORDER OF THE CIT (A) DATED 14.10.2002; HAVING NOT PREFERRED ANY APPE AL, THE ASSESSING OFFICER IS BOUND TO FOLLOW THE DIRECTION OF THE CIT (A) AND IN THE ABSE NCE OF NOT FOLLOWING THE DIRECTIONS, THE LEARNED CIT (A), IN THE IMPUGNED ORDER, IS JUSTIFIE D IN ACCEPTING THE PLEA OF THE ASSESSEE. 11. HAVING REGARD TO THE RIVAL SUBMISSIONS, WE DID NOT FIND ANY INFIRMITY IN THE ORDER OF LEARNED CIT (A). WE, THEREFORE, AFFIR M THE ORDER OF LEARNED CIT (A) AND REJECT GROUNDS NO.2 & 3 OF THE REVENUE. ORDER PRONOUNCED ON 5-03-2010. SD/- SD/- (R K PANDA) (D.MANMOHAN) ACCOUNTANT MEMBER VICE PRESIDENT MUMBAI, DATE: 5 TH MARCH, 2010 . COPY TO 1. THE APPELLANT. 2. THE RESPONDENT 4. CIT(A) CENTRAL-I, MUMBAI. 5 CIT- CENTRAL-I, MUMBAI. 6. D.R. F BENCH, MUMBAI. 7. GUARD FILE. BY ORDER / / TRUE COPY / / ASST. REGISTRAR, ITAT, MUMBAI BENCHES MUMBAI *CHAVAN/- ITA 820/M/2006 M/S KILLICK NIXON LTD 5 SNO DATE INITIALS 1 DRAFT DICTATED ON 04-03-2010 SR.P.S 2. DRAFT PLACED BEFORE AUTHOR 04-03-2010 SR.P.S 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER V.P. 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER A.M 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.P.S 6. KEPT FOR PRONOUNCEMENT ON SR.P.S 7. FILE SENT TO THE BENCH CLERK SR.P.S 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER