Smt. Surendar Kaur M. Sodhi, Ahmednagar V. Income-tax Officer,

ITA 912/PUN/2014

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 2276 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 7 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-12-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 15-10-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 05-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DHEERAJ KUMAR JAIN
• Keywords: Business income; Depreciation
• Section: 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, PUN E , , !'!! # , $ % BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM / ITA NO. 912/PN/2014 $& ' !(' / ASSESSMENT YEAR : 2004-05 SMT. SURENDAR KAUR M. SODHI, PROP. SODHI ENGINEERING FABRICATION, PLOT NO. L-14, MIDC, AHMEDNAGAR PAN : AEYPS6044J ....... / APPELLANT )& / V/S. INCOME TAX OFFICER, WARD 3, AHMEDNAGAR / RESPONDENT ASSESSEE BY : SHRI SUHAS P. BORA REVENUE BY : SHRI DHEERAJ KUMAR JAIN / DATE OF HEARING : 15-10-2015 / DATE OF PRONOUNCEMENT : 11-12-2015 * / ORDER PER VIKAS AWASTHY, JM : THE APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE OR DER OF COMMISSIONER OF INCOME TAX (APPEALS)-IT/TP, PUNE DATED 18 -02-2014 FOR THE ASSESSMENT YEAR 2004-05. IN APPEAL THE ASSESS EE HAS ASSAILED THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) BY RAISING FOLLOWING GROUNDS: 1. THE LEARNED CIT (APPEALS), PUNE HAS ERRED IN LAW AN D ON FACTS IN CONFIRMING THE ACTION OF THE A.O. OF REJECTION OF B OOKS OF ACCOUNTS AND ESTIMATING THE NET PROFIT @ 12% OF THE TURNOVER. 2 ITA NO. 912/PN/2014, A.Y. 2004-05 2. THE LEARNED CIT (APPEALS), PUNE HAS ERRED IN LAW AN D ON FACTS IN CONFIRMING ACTION OF THE AO IN NOT ALLOWING DEPRECI ATION OF RS.2,86,465.00 WITHOUT ASSIGNING ANY VALID REASON. 3. THE LEARNED CIT (APPEALS), PUNE HAS ERRED IN LAW AN D ON FACTS IN CONFIRMING ADDITIONS OF RS.1,62,388.00 ON ACCOUNT O F EXCESS LIABILITY SHOWN TO THE BANK WITHOUT ASSIGNING ANY VALID REASO N. 2. THE BRIEF FACTS OF THE CASE ARE : THE ASSESSEE IS ENGA GED IN THE BUSINESS OF ENGINEERING JOB WORK AND TRANSPORT THROUGH HER PROPRIETARY CONCERNS M/S. SODHI ENGINEERING AND FABRICATION AND M/S. S ATNAM TRANSPORT SERVICE, RESPECTIVELY. THE ASSESSEE FILED HER R ETURN OF INCOME IN THE IMPUGNED ASSESSMENT YEAR ON 01-11-2003 DECLARING TOTAL INCOME OF RS.1,84,687/-. THE CASE OF ASSESSEE WAS SELECTED FOR SC RUTINY AND ACCORDINGLY, NOTICE U/S. 143(2) WAS ISSUED TO THE ASSESSEE ON 08-08-2005. THEREAFTER, SEVERAL NOTICES WERE ISSUED TO T HE ASSESSEE U/S. 143(1) AND 143(2). DESPITE SERVICE OF NOTICES THE ASSE SSEE FAILED TO RESPOND AND DID NOT PARTICIPATE IN THE ASSESSMENT PROCE EDINGS. THE ASSESSING OFFICER HAD NO OTHER OPTION BUT TO MAKE BEST J UDGMENT ASSESSMENT U/S. 144 OF THE ACT. THE ASSESSING OFFICER EST IMATED TOTAL BUSINESS RECEIPTS AT RS.50 LACS AND COMPUTED NET PROFIT T HEREON AT THE RATE OF 12%. THE ASSESSING OFFICER MADE FURTHER ADDITION ON ACCOUNT OF EXCESS LIABILITY OF THE BANK LOAN AMOUNTING TO RS.1,62,388/-. THUS, THE ASSESSING OFFICER ASSESSED THE TOTAL INCOME OF THE ASSESSE E AS RS.7,62,390/-. AGGRIEVED BY THE ASSESSMENT ORDER DATED 23-11-2006, T HE ASSESSEE PREFERRED AN APPEAL BEFORE THE COMMISSIONER OF I NCOME TAX (APPEALS). THE COMMISSIONER OF INCOME TAX (APPEALS) VIDE ORD ER DATED 03-10-2008 DISMISSED THE APPEAL OF THE ASSESSEE. AGAINST THE SAID ORDER THE ASSESSEE APPROACHED THE TRIBUNAL IN ITA NO. 9 8/PN/2009 DECIDED ON 29-02-2012. SINCE, THE IMPUGNED ORDER WAS N OT PASSED ON 3 ITA NO. 912/PN/2014, A.Y. 2004-05 MERITS, THE CO-ORDINATE BENCH OF THE TRIBUNAL VIDE ORDER DATED 29-02- 2012 SET ASIDE THE ORDER OF COMMISSIONER OF INCOME TAX (A PPEALS) AND RESTORED THE APPEAL BACK TO THE FILE OF COMMISSIONER OF IN COME TAX (APPEALS) FOR AFRESH ADJUDICATION. IN THE SECOND ROUND OF LIT IGATION, THE COMMISSIONER OF INCOME TAX (APPEALS) ON THE BASIS OF INFOR MATION FURNISHED BY THE ASSESSEE AND THE REMAND REPORT DATED 15-04-2008 PARTLY ACCEPTED THE APPEAL OF THE ASSESSEE. THE COMMIS SIONER OF INCOME TAX (APPEALS) IN THE ABSENCE OF ANY CONTRARY EVIDE NCE ACCEPTED THE TURNOVER OF ASSESSEE AS RS.37,56,449/-. HOWEVER, THE COMMISSIONER OF INCOME TAX (APPEALS) CONFIRMED THE FINDINGS O F ASSESSING OFFICER WITH REGARD TO THE RATE OF NET PROFIT AT 12% AND ADDITION OF RS.1,62,388/- IN RESPECT OF EXCESS LIABILITY OF THE B ANK LOAN SHOWN BY THE ASSESSEE. NOW, THE ASSESSEE IS IN SECOND APPEAL IMPUGNING THE FINDINGS OF THE COMMISSIONER OF INCOME TAX (APPEALS). 3. THE LD. AR SUBMITTED THAT THE COMMISSIONER OF INCOME T AX (APPEALS) HAS ERRED IN IGNORING THE REMAND REPORT. IN REM AND REPORT THE ASSESSING OFFICER HAS ACCEPTED THE CONTENTION OF THE ASSESSEE AND HAS ALSO ADMITTED THE FACT THAT THE ASSESSEE IS MAINTAININ G BOOKS OF ACCOUNT ON MERCANTILE BASIS. THE COMMISSIONER OF INCOME T AX (APPEALS) HAS ERRED IN ESTIMATING THE RATE OF NET PROFIT, DISA LLOWING DEPRECIATION AND CONFIRMING ADDITION ON ACCOUNT OF EXCESS B ANK LIABILITY WITHOUT ANY VALID REASON. IN SUPPORT OF HIS CONTENT IONS THE LD. AR PLACED RELIANCE ON THE DECISION OF HON'BLE BOMBAY HIGH C OURT IN THE CASE OF JIVATLAL PURTAPSHI VS. COMMISSIONER OF INCOME TAX R EPORTED AS 65 ITR 261 (BOM). 4. ON THE OTHER HAND SHRI DHEERAJ KUMAR JAIN REPRESEN TING THE DEPARTMENT VEHEMENTLY SUPPORTED THE FINDINGS OF THE CO MMISSIONER OF 4 ITA NO. 912/PN/2014, A.Y. 2004-05 INCOME TAX (APPEALS) AND PRAYED FOR DISMISSING THE APPEAL O F THE ASSESSEE. 5. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESEN TATIVES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF AUTHORITIES BE LOW. THE ASSESSEE IN APPEAL HAS CHALLENGED THE FINDINGS OF COMMISSION ER OF INCOME TAX (APPEALS) IN CONFIRMING THE NET PROFIT ESTIMATED A T 12%, DISALLOWANCE OF DEPRECIATION RS.2,86,465/- AND ADDITION OF RS.1,62,388/- ON ACCOUNT OF EXCESS LIABILITY SHOWN TOWARDS T HE BANK. DURING THE FIRST APPELLATE PROCEEDINGS THE COMMISSIONER OF I NCOME TAX (APPEALS) SOUGHT REMAND REPORT. THE ASSESSING OFFICER IN RE MAND REPORT DATED 15-04-2008 HAS STATED THAT THE ASSESSE E IS MAINTAINING BOOKS OF ACCOUNT ON MERCANTILE BASIS. IN RESPECT OF EXCE SS LIABILITY TOWARDS THE BANK THE ASSESSING OFFICER OBSERVED AS UNDER: III) AS REGARDS THE ADDITION OF RS.1,62,388/- MADE ON ACCOUNT OF EXCESS LIABILITY SHOWN BY THE ASSESSEE IN THE FINAN CIAL STATEMENTS AND AS CONFIRMED BY THE BANK. ON VERIFYING THE BANK STA TEMENT, IT IS SEEN THAT THE BHINGAR URBAN CO-OP. BANK LTD. HAS DEBITED INTEREST ON TERM LOAN OF RS.18 LAKHS ONLY FOR THREE MONTHS I.E. APRI L, MAY AND JUNE 2003. AS THE ASSESSEE IS MAINTAINING THE BOOKS OF ACCOUNT S ON MERCANTILE BASIS AND THE ACCOUNT BEING N.P.A. THE ASSESSEE HAS MADE PROVISION OF INTEREST OF RS.1,70,506/- FOR REMAINING 9 MONTHS AND DEBITED TO BANK INTEREST A/C ARID CREDITED THE BHINGAR URBAN CO-OP. BANK. I N SUBSEQUENT YEAR I.E FOR ASST. YEAR. 2005-06, THE ASSESSEE HAS CLOSE D THE ACCOUNT OF BHINGAR URBANK CO-OP. BANK ON 30.10.2004 BY OBTAINI NG THE LOAN FROM BANK OF BARODA. THE ASSESSEE, AFTER SETTLEMENT, HAS PAID FINAL LOAN AMOUNT OF RS.15,05,610/- AND INTEREST FOR REMAINING PERIOD OF RS.1,08,568/-. IN SO FAR AS DEPRECIATION IS CONCERNED THE ASSESSING OFFIC ER HAS NOT COMMENTED ANYTHING EXCEPT THAT THE ASSETS SHOWN IN THE BALANCE SHEET AS ON 31-03-2003 AND 31-03-2004 ARE THE SAME. 5 ITA NO. 912/PN/2014, A.Y. 2004-05 6. WE OBSERVE THAT THE FINDINGS OF THE ASSESSING OFFICER GIV EN IN THE ORIGINAL ASSESSMENT ORDER, THE REMAND REPORT AND THE IMP UGNED ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) ARE INCOHERENT. THE COMMISSIONER OF INCOME TAX (APPEALS) HAS CAST ASPERSIONS ON THE REMAND REPORT OF ASSESSING OFFICER. THEREFORE, THE CORRECT PICTURE OF THE ACCOUNTS OF THE ASSESSEE IS NOT EMERGING FROM THE ORDER S OF THE AUTHORITIES BELOW. IN THIS BACKDROP, THE IMPUGNED ORDER IS SET ASIDE AND THE FILE IS REMITTED BACK TO THE ASSESSING OFFICER FOR DE -NOVO ASSESSMENT, IN ACCORDANCE WITH LAW. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON FRIDAY, THE 11 TH DAY OF DECEMBER, 2015. SD/- SD/- ( . . / R.K. PANDA) ( ! ' / VIKAS AWASTHY) #' / ACCOUNTANT MEMBER $ % #' / JUDICIAL MEMBER / PUNE; &# / DATED : 11 TH DECEMBER, 2015 RK *+,$-.'/'(- / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. ' () / THE CIT(A)-IT/TP, PUNE 4. ' / THE CIT-I, PUNE 5. !*+ %%,- , ,- , . /01 , / DR, ITAT, A BENCH, PUNE. 6. + 2 34 / GUARD FILE. // ! % // TRUE COPY// #5 / BY ORDER, %6 ,1 / PRIVATE SECRETARY, ,- , / ITAT, PUNE