Dy.CIT, Circle-3(3), Hyderabad V. M/s Visaka Industries Limited, Secunderabad

ITA 860/HYD/2014

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 6467 (ITAT-HYDERABAD)
• Duration Of Justice: 4 year(s) 2 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-07-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 27-06-2018
• Assessment Year: 2006-2007
• Appeal Filed On: 07-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M NAVEEN
• Assessee Lawyers: M V ANIL KUMAR
• Keywords: Reopening of assessment; Business income; Depreciation; Source of fund; Unabsorbed depreciation; Reassessment proceedings
• Section: 143(3); 80IB; 80G; 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A , HYDERABAD BEFORE S MT P. MADHAVI DEVI , JUDICIAL MEMBER AND SHRI S . RIFAUR RAHMAN , ACCOUNTANT MEMBER ITA NO. 860 /HYD/201 4 ASSESSMENT YEAR: 20 06 - 07 DY . COMMISSIONER OF INCOME - TAX, CIRCLE 3 ( 3 ), HYDERABAD. VS. M/S VISAKA INDUSTRIES LTD., SECUNDERABAD. PAN AAACV 7263 K (APPELLANT) (RESPONDENT) ITA NO. 811 /HYD/201 4 ASSESSMENT YEAR: 20 06 - 07 M/S VISAKA INDUSTRIES LTD., SECUNDERABAD. PAN AAACV 7263 K VS. DY . COMMISSIONER OF INCOME - TAX, CIRCLE 3 ( 3 ), HYDERABAD. (APPELLANT) (RESPONDENT) REVENUE BY : SHRI M. NAVEEN ASSESSEE BY : SHRI M.V, ANILKUMAR DATE OF HEARING 2 7 / 0 6 /2018 DATE OF PRONOUNCEMENT / 0 7 / 201 8 O R D E R PER S . RIFAUR RAHMAN , A .M. : T H E S E ARE CROSS APPEAL S FILED BY THE ASSESSEE AS WELL AS REVENUE DIRECTED AGAINST THE ORDER DATED 14 / 0 2 / 201 4 OF CIT(A) IV , HYDERABAD FOR AY 20 06 - 07 . 2. BRIEF FACTS OF THE CASE ARE, THE ASSESSEE, ENGAGED IN THE BUSINESS OF ASBESTOS CEMENT PRODUCTS, FILED ITS RETURN OF INCOME ON 2 ITA NO S . 860 & 811 /HYD/1 4 M/S VISAKA INDUSTRIES LTD. 25/11/2006 DECLARING TOTAL INCOME OF RS. 21,64,02,386/ - . AO COMPLETED THE ASSESSMENT U/S 143(3) ON 26/12/2008. LATER, REASSESSMENT PROCEEDINGS WERE INITIATED U/S 147 ISSUING NOTICE U/S 148 ON 25/06/2010. IN THE REASSESSMENT, AO ASSESSED THE INCOME AT RS. 22,68,35,848/ - BY MAKING DISALLOWANCE TOWARDS DEPRECIATION ON POLLUTION CONTROL EQUIPMENT OF RS. 14,54,327/ - AND DISAL LOWE D THE CLAIM OF DEDUCTION U/S 80IB OF RS. 85,79,135/ - . 3. WHEN THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) RAISING THE ISSUES OF I) ACTION OF AO IN INITIATING REASSESSMENT PROCEEDINGS, II) DISALLOWANCE OF DEPRECIATION AND III) DISALLOWANCE OF CL AIM OF DEDUCTION U/S 80IB, THE CIT(A) DISMISSED THE GROUNDS ON REASSESSMENT PROCEEDING AND DISALLOWANCE OF DEPRECIATION AND ALLOWED ASSESSEES CLAIM OF DEDUCTION U/S 80IB. HENCE, BOTH THE ASSESSEE AND REVENUE ARE IN APPEAL BEFORE US AGAINST THE ORDER OF CI T(A). 4. FIRST WE TAKE UP REVENUES APPEAL IN ITA NO. 860/HYD/2014 WHEREIN THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS OF THE CASE. 2. THE LEARNED CIT(A) OUGHT TO HAVE APPRECIATED THE DISALLOWANCE OF CLAIM OF DEDUCTION U/S 80LB. 3. THE CIT(A) OUGHT TO HAVE APPRECIATED THE FACTS COVERED IN THE CASE OF VELAYUDHASWAMY SPINNING MILLS ARE NOT IDENTICAL THE FACTS OF THE PRESENT CASE. 4. THE CIT(A) OUGHT TO HAVE APPRECIATED THE FACT THAT THE ASSESSEE HAS NOT SUBMITTED ANY DOCUMENTS EVIDENCING OTHER SOURCES OF INCOME AND THE PROFITS AGAINST WHICH THE BROUGHT FORWARD AND OTHER LOSSES WERE ABSORBED AND HENCE NO LOSS WAS OUTSTANDING. 5. THE LEARNED CIT(A) OUGHT TO HAVE APPRECIATED THE FACT THE ASSESSEE HAD FILED CONSOLIDATED PROFIT AND LOSS ACCOUNT WHICH IS AGAINST THE PROVISIONS AS ENUMERATED IN SEC. 80IA(5) OF THE IT ACT. 3 ITA NO S . 860 & 811 /HYD/1 4 M/S VISAKA INDUSTRIES LTD. 6. ANY OTHER GROUND(S) THAT MAY BE URGED AT THE TIME OF HEARING. 5. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE COMPANY CLAIMED DEDUCTION U/S 80IB(5)(II) OF RS. 2,59,52,254/ - BEING 30% OF PROFITS OF RS. 8,65,07,512/ - OF ITS MIDNAPORE UNIT. AO NOTED THAT IN THE ORDER PASSED U/S 143(3) FOR THE AY 2005 - 06, IT WAS DE TERMINED THAT THE MIDNAPORE UNIT WAS HAVING LOSS OF RS. 2,85,97,114/ - AS ON 31/03/2005. THE AO REFERRING TO THE PROVISIONS GOVERNING THE COMPUTATION OF DEDUCTION U/S 80IB(5)(II) R.W.S. 80IB(13) AND 80IA(5), OBSERVED THAT THE ELIGIBLE PROFITS ARE TO BE CALC ULATED AS IF THE BUSINESS IS SEPARATE ENTITY. THEREFORE, THE ELIGIBLE PROFITS ARE COMPUTED AFTER SET OFF OF BROUGHT FORWARD LOSSES OF THE UNIT ON WHICH DEDUCTION U/S 80IB UNDER THE HEAD BUSINESS OR PROFESSION. ACCORDINGLY, HE COMPUTED THE ELIGIBLE PROFIT OF MIDNAPORE UNIT AS UNDER: PROFITS ELIGIBLE FOR DEDUCTION (AS COMPUTED BY THE ASSESSEE COMPANY) 8,67,15,605 LESS: BROUGHT FORWARD LOSSES AS DISCUSSED ABOVE 2,85,97,114 5,81,18,491 LESS: DEDUCTION U/S 80G 2,08,094 ELIGIBLE PROFITS FOR DEDUCTION U/S 80IB 5,79,10,397 ACCORDINGLY, HE NOTED THAT THE DEDUCTION ALLOWABLE IS 30% OF ELIGIBLE PROFITS WHICH IS WORKED OUT AT RS. 1,73,73,119/ - (30% OF 5,79,10,397), HENCE, THE EXCESS CLAIM OF DEDUCTION U/S 80IB OF RS. 85,79,13 5/ - WAS DISALLOWED. 6. THE CIT(A), FOLLOWING THE DECISIONS I) VELAYUDHASWAMY SPINNING MILLS VS. ACIT [2012] 340 ITR 477 (MAD.) AND ANIL H LAD VS. DCIT 13 ITR (TR.) 581 (BAN), ON WHICH RELIANCE PLACED BY THE ASSESSEE, ALLOWED THE ASSESSEES CLAIM OF DEDUC TION U/S 80IB BY OBSERVING THAT IN THE DECISIONS CITED ABOVE, IT HAS BEEN HELD THAT LOSSES IN PRECEDING YEARS ALREADY ABSORBED AGAINST THE PROFIT OF OTHER 4 ITA NO S . 860 & 811 /HYD/1 4 M/S VISAKA INDUSTRIES LTD. BUSINESS CANNOT BE NOTIONALLY BROUGHT FORWARD AND SET OFF AGAINST THE PROFITS OF THE ELIGIBLE BUSINES S AS NO SUCH MANDATE IS PROVIDED IN SECTION 80IA(5). 7. AGGRIEVED BY THE ORDER OF CIT(A), THE REVENUE IS IN APPEAL BEFORE US. 8. BEFORE US, LD. DR BESIDES RELYING ON THE ORDER OF AO, PLACED RELIANCE ON THE DECISION OF HON BLE KARNATAKA HIGH COURT IN THE CASE OF MICROLABS LTD. VS. ACIT, [2015] 56 TAXMANN.COM 160 (KAR.) 9. LD. AR, ON THE OTHER HAND, SUBMITTED THAT THE ISSUE IN DISPUTE IS SQUARELY COVERED BY THE DECISION OF THE COORDINATE BENCH OF THIS TRIBUNAL IN ASSSESEES OWN CASE FOR AY 2005 - 06 IN ITA NO. 736/HYD/2011 ORDER DATED 28/02/2018 . HE, THEREFORE, SUBMITTED THAT THE DECISION OF THE COORDINATE BENCH IN AY 2005 - 06 MAY BE FOLLOWED. 10. CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. SIMILAR ISS UE CAME UP FOR CONSIDERATION BEFORE THE COORDINATE BENCH OF THIS TRIBUNAL IN ASSESSEES OWN CASE FOR AY 2005 - 06 (SUPRA), WHEREIN THE BENCH HAS OBSERVED AS UNDER: 15. AS REGARDS GROUNDS 1 & 2, WE FIND THAT THE MIDNAPORE UNIT HAD STARTED PRODUCTION IN THE F.Y RELEVANT TO A.Y 2003 - 04 ITSELF, BUT THE CLAIM FOR DEDUCTION U/S 80IB HAS BEEN MADE FOR THE FIRST TIME DURING THE A.Y 2005 - 06. THE HON'BLE SUPREME COURT, IN THE CASES OF (I) CIT VS. DEFREE ENGINEERING (P) LTD REPORTED IN(2017) 77 TAXMANN.COM 27 (S.C); ( II) PR.CIT VS. CHERAN SPINNING MILLS (P) LTD (2016) 76 TAXMANN.COM 28 (S.C); AND (III) CIT,COIMBATORE VS. P.S. VELUSAMY REPORTED IN (2016) 74 TAXMANN.COM 262 (S.C) HAS HELD THAT THE INITIAL A.Y REFERRED TO IN SECTION 80IA WOULD ONLY BE THE YEAR OF DEDUCTIO N U/S 80IA CLAIMED FOR THE FIRST TIME OUT OF THE TOTAL PERIOD, AND NOT THE YEAR OF COMMENCEMENT OF ELIGIBLE BUSINESS AND THAT THE ASSESSEE HAD THE OPTION TO CHOOSE THE INITIAL A.Y FOR CLAIMING THE DEDUCTION U/S 80IA. THEREFORE, THERE IS NO INFIRMITY IN THE ASSESSEE MAKING THE CLAIM U/S 80IB DURING THE A.Y BEFORE US. 16. AS REGARDS THE COMPUTATION OF DEDUCTION U/S 80IB IS CONCERNED, WE FIND THAT THE HON'BLE SUPREME COURT HAS TAKEN NOTE OF THE DECISION OF THE HON'BLE MADRAS HIGH COURT IN THE CASE OF VELAYUD HASWAMY SPINNING MILLS (P) LTD VS. ACIT REPORTED IN (2012) 340 ITR 477 (MADRAS) TO HOLD THAT THE UNABSORBED LOSS/UNABSORBED DEPRECIATION PERTAINING TO THE YEARS PRIOR TO INITIAL A.Y, ALREADY ABSORBED AGAINST OTHER BUSINESS INCOME OF THE ASSESSEE, CANNOT BE NOTIONALLY BROUGHT FORWARD AND SET OFF AGAINST THE 5 ITA NO S . 860 & 811 /HYD/1 4 M/S VISAKA INDUSTRIES LTD. INCOME OF THE ASSESSEE DURING RELEVANT A.Y IN WHICH THE CLAIM WAS FIRST MADE U/S 80IB OF THE ACT. THE HON'BLE SUPREME COURT ALSO CONSIDERED THE CBDT CIRCULAR NO.1/2016 DATED 15/12/2016 BEFORE DISMISSING T HE SLPS FILED BY THE REVENUE AGAINST THE DECISION IN THE CASE OF VELAYUDHASWAMY SPINNING MILLS (P) LTD AS REPORTED IN (2016) 76 TAXMANN.COM 176 (S.C). RESPECTFULLY FOLLOWING THE ABOVE DECISION OF THE HON'BLE APEX COURT, WE HOLD THAT THE ASSESSEE IS ELIGIBL E TO CLAIM DEDUCTION U/S 80IB OF THE ACT FOR THE FIRST TIME DURING THE A.Y 2005 - 06 WITHOUT SETTING OFF THE UNABSORBED LOSS & DEPRECIATION OF EARLIER A.YS WHICH HAS ALREADY BEEN SET OFF AGAINST PROFIT OF OTHER BUSINESS. 17. WE FIND THAT THE AO HAS DISALLO WED THE CLAIM U/S 80IB ALSO FOR THE FOLLOWING OTHER REASON: I) THAT THE ASSESSEE HAS NOT FILED THE COPIES OF THE P&L A/C AND BALANCE SHEET FOR THE MIDNAPORE UNIT AS CERTIFIED BY THE C.A. 18. AS REGARDS THIS OBJECTION OF THE AO, WE FIND THAT THE ASSESSEE HAS NOT FILED A SEPARATE P&L A/C AND THE BALANCE SHEET OF THE MIDNAPORE UNIT CERTIFIED BY THE CA FOR MAKING THE CLAIM IN FORM NO.10CCB OF THE ACT. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE PROFIT DECLARED BY THE ASSESSEE AND CLAIMED AS A DEDU CTION IN FORM 10CCB AS HAD BEEN CERTIFIED BY THE CA, IS EXACTLY THE SAME AS IS CLAIMED IN THE P&L A/C AND BALANCE SHEET SIGNED BY THE AUTHORIZED SIGNATORY OF THE COMPANY WHICH HAS BEEN FILED BEFORE THE AO DURING THE RE - ASSESSMENT PROCEEDINGS. THEREFORE, AC CORDING TO HIM, THE INSISTENCE OF THE AO THAT SUCH P&L A/C AND BALANCE SHEET OF THE MIDNAPORE UNIT SHOULD BE SIGNED BY THE CA ONLY, IS NOT SUSTAINABLE BECAUSE ACCORDING TO HIM, THE RULE ONLY PRESCRIBES THAT FORM NO.10CCB IS TO BE OBTAINED FROM A CHARTERED ACCOUNTANT AND THAT A SEPARATE REPORT IS TO BE OBTAINED FOR EACH UNDERTAKING OR ENTERPRISE OF THE ASSESSEE IN RESPECT OF WHICH DEDUCTION IS CLAIMED AND THE REPORT IS REQUIRED TO BE ACCOMPANIED BY THE P&L A/C AND BALANCE SHEET OF THE UNDERTAKING OR ENTERPRI SE AS IF THE UNDERTAKING OR THE ENTERPRISE WERE A DISTINCT ENTITY. 19. THE LEARNED DR, ON THE OTHER HAND, SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 20. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD, WE FIND THAT THE DEDUCTION U /S 80IB IS A SPECIAL DEDUCTION ALLOWABLE TO THE UNDERTAKINGS WHICH ARE SET UP IN A BACKWARD AREA AS CERTIFIED BY THE CENTRAL GOVT. THEREFORE, THERE IS A REQUIREMENT THAT WHILE MAKING THE CLAIM U/S 80IB(5) OF THE ACT, THE CLAIM SHOULD BE MADE INFORM NO.10CC B SIGNED BY THE CA OF THE ASSESSEE AND SHOULD BE ACCOMPANIED ALONG WITH THE REPORT FOR EACH OF THE UNDERTAKING ALONG WITH THE P&L AND THE BALANCE SHEET OF THE UNDERTAKING AS IF IT IS A DISTINCT ENTITY. IN THE CASE OF THE ASSESSEE, THOUGH THE ASSESSEE HAS G OT ITS BOOKS OF ACCOUNT AUDITED AND FORM 10CCB IS SIGNED BY THE C.A. OF THE ASSESSEE COMPANY, THE REPORT IS NOT SIGNED BY THE CA BUT IS SIGNED BY THE AUTHORIZED SIGNATORY. HOWEVER, AS RIGHTLY POINTED OUT BY THE LEARNED COUNSEL FOR THE ASSESSEE, THERE IS NO VARIATION IN THE CLAIM OF DEDUCTION U/S 80IB(5) IN FORM NO.10CCB AND P&L A/C AND BALANCE SHEET OF THE ASSESSEE FILED DURING THE RE - ASSESSMENT PROCEEDINGS. THEREFORE, THE OBJECTION RAISED BY THE AO, IN OUR OPINION, IS A TECHNICAL OBJECTION AND UNLESS THE A O BRINGS OUT AS TO HOW THE P&L A/C AND THE BALANCE SHEET ARE NOT RELIABLE AND VARY WITH THE RESULTS DECLARED BY THE ASSESSEE IN FORM NO.10CCB, THE AO CANNOT DENY THE DEDUCTION ON THIS GROUND ALONE. IN VIEW OF THE SAME, WE DIRECT THE AO TO ALLOW THE DEDUCTI ON U/S 80IB(5)(II) OF THE ACT AFTER VERIFYING THE ASSESSEES CLAIM OF DEDUCTION U/S 80IB(5)(II) OF THE ACT. 6 ITA NO S . 860 & 811 /HYD/1 4 M/S VISAKA INDUSTRIES LTD. AS THE ISSUE UNDER CONSIDERATION IS MATERIALLY IDENTICAL TO AY 2005 - 06, FOLLOWING THE DECISION THEREIN, WE UPHOLD THE ORDER OF THE CIT(A) IN ALLO WING THE ASSESSEES CLAIM OF DEDUCTION U/S 80IB . WE NOTICE THAT LD. DR RELIED ON THE CASE OF MICROLABS LTD. (SUPRA), IN WHICH, THE HONBLE KARNATAKA HIGH COURT HAS ACCEPTED THE VIEWS OF SPECIAL BENCH DECISION IN THE CASE OF VELAYUDHASWAMY SPINNING MILLS (P ) LTD. (SUPRA). HENCE, WE DISMISS THE GROUNDS RAISED BY THE REVENUE IN THIS REGARD. 11. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. 12. IN ITS APPEAL (ITA NO. 811/HYD/2014), THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. YOUR APPELLANT SUBMITS THAT THE ISSUE OF NOTICE UNDER SECTION 148 IS BAD IN LAW AND WITHOUT JURISDICTION. 2. THE ASSESSING OFFICER WITHOUT GIVING COGENT REASONS FOR BELIEVING INCOME ESCAPED ASSESSMENT OUGHT NOT TO HAVE ISSUED NOTICE UNDER SECTION 148 OF THE INCOME TAX ACT, 1961. 3. THE CIT(A) ERRED IN NOT ALLOWING THE DEPREC I ATION AS CLAIMED IGNORING THE FACT THAT THE ORIGINAL ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) AND ADDITIONS HAVE BEEN VERIFIED AND ALLOWED DEPRECIATION. 4. THE CIT(A) OUGH T TO HAVE ALLOWED THE DEPRECIATION ON POLLUTION CONTROL EQUIPMENT RECORDED IN THE BOOKS AND CONSIDERING THE FACT THAT THE BOOKS OF ACCOUNTS ARE SUBJECT TO AUDIT UNDER THE COMPANIES ACT, 1956 AND UNDER SECTION 44AB OF THE INCOME TAX ACT, 1961. 5. THE CIT( A) IGNORING THE FACT THAT ALL THE DETAILS FOR ADDITIONS TO FIXED ASSETS HAVE BEEN PRODUCED AND VERIFIED AT THE TIME OF O RIGINAL ASSESSMENT ITSELF, CANNOT DISALLOW THE DEPRECIATION CLAIMED IN THE RETURN OF INCOME. 13. GROUND NOS. 1 TO 3 ARE PERTAINING TO INITIATION OF REASSESSMENT PROCEEDINGS WHEREIN THE ASSESSEES CONTENTION IS THAT THE AO WITHOUT GIVING COGENT REASONS FOR BELIEVING INCOME ESCAPED ASSESSMENT OUGHT NOT TO HAVE ISSUED NOTICE U/S 148 OF THE ACT. 7 ITA NO S . 860 & 811 /HYD/1 4 M/S VISAKA INDUSTRIES LTD. 13.1 LD . AR SUBMITTED THAT AO HAS PASSED ORDER U/S 143(3) OF THE ACT ON 26/12/2008 AFTER CONSIDERING ALL THE INFORMATION SUBMITTED BEFORE HIM. HE ALSO BROUGHT TO OUR NOTICE THAT AO HAS REOPENED THE ASSESSMENT FOR THE PREVIOUS AY I.E. 2005 - 06, THE SAME WAS RECEIVED BY THE ASSESSEE ON 25/11/2008. ALL THE ISSUES WHICH ARE RAISED DURING THE PRESENT REOPENED ASSESSMENT WERE SAME ISSUES. AO HAS CONSIDERED SIMILAR ISSUE WHILE PASSING THE PREVIOUS REOPENED ASSESSMENT ORDER. IT IS NEEDLESS TO SAY THAT AT THE SAME PE RIOD, ORDER U/S 143(3) WAS ALSO PASSED. THE AO HAS CONSIDERED ALL THE ASPECTS WHILE PASSING THE ORDER U/S 143(3) . EVEN IT CAN BE PRESUMED THAT AO HAS CONSIDERED THE ISSUES IN THIS ASSESSMENT ORDER. THEREFORE, HE SUBMITTED THAT REOPENING OF ASSESSMENT FOR C URRENT IMPUGNED ORDER IS NOT PROPER. 13.2 FURTHER, HE SUBMITTED THAT DEPRECIATION CLAIMED ON POLLUTION CONTROL EQUIPMENT IS GENUINE AND ALL THE RELEVANT INFORMATIONS ARE SUBMITTED BEFORE AO AT THE TIME OF REGULAR ASSESSMENT AND ALSO THE BOOKS OF ACCOUNT ARE SUBJECT TO TAX AUDIT. THEREFORE, ADDITION MADE OR DISALLOWANCE OF DEPRECIATION SHOULD BE DELETED. 14. CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WITH REGARD TO REOPENING OF ASSESSMENT, WE NOTICE THAT THE ASSESSMENT ORDER U/S 14 3(3) WAS PASSED ON 26/12/2008. THE REOPENING PROCEEDINGS FOR AY 2005 - 06 WERE INITIATED IN NOVEMBER, 2008. THE ASSESSEE SOUGHT REASONS FOR REOPENING AND FILED ITS OBJECTIONS VIDE LETTER DATED 25/11/2009. AO DISPOSED OFF THE OBJECTIONS AND COMPLETED THE ASSE SSMENT U/S 143(3) R.W.S. 147 ON 29/12/2009. NO DOUBT, THE REASSESSMENT PROCEEDINGS WERE INITIATED IN NOVEMBER, 2008 BUT COMPLETED THE ASSESSMENT IN DECEMBER, 2009. BUT THE ORDER PASSED U/S 143(3) FOR THE CURRENT AY ON 2 6/12/2008 IS WITHIN ONE MONTH OF INITIATING REASSESSMENT PROCEEDINGS FOR PREVIOUS AY RELEVANT TO AY 2005 - 06. THEREFORE, IN OUR VIEW, AO MAY NOT HAVE 8 ITA NO S . 860 & 811 /HYD/1 4 M/S VISAKA INDUSTRIES LTD. CONSIDERED THE VARIOUS ISSUES WHICH WERE R AISE D IN REASSESSMENT OF AY 2005 - 06. FURTHER, WE ALSO NOTICED THA T THE ASSESSMENT ORDER PASSED U/S 143(3) IS NOT A SPEAKING ORDER. THEREFORE, WE DO NOT SEE ANY MERIT IN REJECTING THE PROCEEDINGS INITIATED U/S 147 FOR THE AY 2006 - 07. HENCE, THE GROUND RAISED BY THE ASSESSEE ON THIS ISSUE IS DISMISSED. 14.1 COMING TO G ROUND NOS. 4 & 5, AO HAS DISALLOWED THE DEPRECIATION CLAIMED BY THE ASSESSEE ON THE GROUND THAT ASSESSEE FAILED TO SUBSTANTIATE THE PROOF FOR MAKING ADDITION TO THE EXTENT OF RS. 14,54,327/ - . EVEN THE BOOKS OF ACCOUNT ARE SUBJECT TO TAX AUDIT, IT MEANS THA T THE PROOF OF PURCHASES WAS PRESENTED BEFORE AUDIT. THEREFORE, AO CAN DEMAND FOR PROOF OF MAKING ADDITION IN THIS BLOCK OF ASSE T. IT IS THE DUTY OF THE ASSESSEE TO SUBSTANTIATE THE CLAIM BEFORE THE AO. EVEN BEFORE US, NO EVIDENCE WAS SUBMITTED IN ORDER TO ADJUDICATE ON MERIT. HENCE, THESE GROUNDS RAISED BY THE ASSESSEE ARE DISMISSED AS NOT SUBSTANTIATED THE PROOF OF MAKING ADDITION IN THE BLOCK OF ASSETS IN POLLUTION CONTROL EQUIPMENT. 1 5 . IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISSED . 18. TO SU M UP, BOTH THE APPEALS OF REVENUE AND ASSESSEE ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON 27 TH JULY, 2018 . SD/ - SD/ - ( P. MADHAVI DEVI ) (S . RIFAUR RAHMAN ) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED: 27 TH JU LY , 2018 KV 9 ITA NO S . 860 & 811 /HYD/1 4 M/S VISAKA INDUSTRIES LTD. C OPY TO: - 1) D CI T, C IRCLE 3 ( 3 ), HYDERABAD. 2) M/S VISAKA INDUSTRIES LTD., C/O M. ANANDAM & CO., CAS, 7A, SURYA TOWERS, SP ROAD, SECUNDERABAD. 3) CIT(A) IV , HYDERABAD. 4) CIT - III , HYD. 5 ) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDERABAD. 6 ) GUARD FILE