Durovalves India Pvt. Ltd., Aurangabad V. Commissioner of Income Tax, Aurangabad, Aurangabad

ITA 945/PUN/2012

• Counselvise Citation: 94524514 RSA 2012
• Duration Of Justice: 1 year(s) 4 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-09-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 06-08-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 10-05-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Depreciation
• Section: 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI R.S. PADVEKAR, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO. 945/PN/2012 (ASSESSMENT YEAR 2007-08) DUROVALVES INDIA PVT. LTD., F57-58, MIDC INDUSTRIAL AREA, WALUJ, AURANGABAD-431136. PAN NO.AAACD 8064E .. APPELLANT VS. CIT, AURANGABAD .. RESPONDENT APPELLANT BY : SHRI KISHOR PHADKE RESPONDENT BY : SHRI SANTOSH KUMAR DATE OF HEARING : 05-09-2013 DATE OF PRONOUNCEMENT : 19-09-2013 ORDER PER R.K. PANDA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 09-03-2012 PASSED U/S.263 BY THE CIT, AURANGA BAD FOR A.Y. 2007-08. 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING INTERNAL C OMBUSTIONS, ENGINE VALVES ETC. IT FILED ITS RETURN OF INCOME ON 31-10 -2007 DECLARING TOTAL INCOME AT NIL AND RS.4,94,578/- U/S. 115JB OF THE I NCOME TAX ACT. THE ASSESSING OFFICER PASSED THE ORDER U/S.143(3) A CCEPTING THE RETURNED INCOME AT NIL AND THE INCOME DECLARED U/S. 115JB AT RS.4,94,578 VIDE ORDER DATED 29-12-2009. SUBSEQUEN TLY, THE LD.CIT CALLED FOR THE RECORDS AND NOTED THAT THE ASSESSEE HAS ADDED AN AMOUNT OF RS.5,76,93,990/- TO THE PROFIT AND LOSS ACCOUNT TOWARDS DEPRECIATION 2 WRITTEN BACK. THE SAID ADJUSTMENT WAS MADE BELOW T HE LINE AND THE PROFIT AVAILABLE FOR THE APPROPRIATION WAS WORKED A T RS.5,58,82,360/-. ON EXAMINATION OF RECORD IT WAS NOTICED BY HIM THAT THE ASSESSEE HAS NOT CONSIDERED THE AMOUNT OF RS.5,76,93,990/- WHILE COMPUTING THE BOOK PROFIT U/S.115JB WHICH HAS BEEN ERRONEOUSLY AC CEPTED BY THE ASSESSING OFFICER WHILE FINALISING THE ASSESSMENT U /S.143(3). HE, THEREFORE, ISSUED A SHOW CAUSE NOTICE U/S.263 ASKIN G THE ASSESSEE TO EXPLAIN AS TO WHY ACTION U/S.263 SHOULD NOT BE TAKE N. THE ASSESSEE FILED DETAILED SUBMISSIONS BEFORE THE LD.CIT. THE ASSESSEE ALSO FILED VARIOUS DECISIONS ON THE PROPOSITION THAT THE ISSUE IS A SUBJECT MATTER OF COMPLEX ACCOUNTING ANALYSIS/INTERPRETATION AND DELI BERATION AND IS NOT A PLAIN AND STRAIGHT ISSUE WHICH LEADS TO A CONCLUSIO N THAT THE ACCOUNTS ARE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF TH E REVENUE. 3. HOWEVER, THE LD.CIT WAS NOT SATISFIED WITH THE E XPLANATION GIVEN BY THE ASSESSEE. HE OBSERVED THAT THE ISSUE RAISED IN THE SHOW CAUSE NOTICE HAS MISSED THE ATTENTION OF THE ASSESS ING OFFICER AS HE HAS NOT CALLED FOR ANY DETAILS FOR VERIFICATION IN THIS REGARD. HE, THEREFORE, SET-ASIDE THE ASSESSMENT AND RESTORED THE ISSUE TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO ADJUDICATE TH E SAME AFRESH AS PER PROVISIONS OF LAW AND AFTER CONSIDERING PROPER FACT S AND SUBMISSIONS OF THE ASSESSEE. 3.1 AGGRIEVED WITH SUCH ORDER OF THE CIT THE ASSESS EE IS IN APPEAL BEFORE US WITH THE FOLLOWING GROUNDS : 1. THE LD.CIT, AURANGABAD ERRED IN LAW AND ON FACT S IN PASSING AN ORDER U/S.163. 3 2. LD.CIT, AURANGABAD HAS ERRED IN LAW AND ON FACTS IN RESTORING THE MATTER BACK TO THE ASSESSING OFFICER, WITH A DIRECTION THAT THE ASSESSMENT ORDER SHOULD BE REFRA MED AS PER THE PROVISIONS OF LAW AFTER CONSIDERING PROPER FACTS AN D THE SUBMISSIONS OF THE ASSESSEE, WITHOUT SATISFYING HIM SELF ABOUT THE ERRONEOUS/PREJUDICIAL NATURE OF THE ORDER. 3. THE ASSESSEE CRAVES LEAVE TO ADD/MODIFY/DELETE A LL OR ANY OF THE GROUNDS OF APPEAL 4. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE US. THERE IS NO DIS PUTE TO THE FACT THAT THE ASSESSING OFFICER IN THE INSTANT CASE HAS NEIT HER EXAMINED NOR CALLED FOR ANY DETAILS ON THE ISSUE OF DETERMINATIO N OF BOOK PROFIT U/S.115JB. WE ALSO FIND THAT THE ASSESSING OFFICER HAS NOT AT ALL APPLIED HIS MIND TO THE PROPOSITION THAT THE SURPLU S ON CHANGE IN THE METHOD OF CHARGING DEPRECIATION HAS TO BE ROUTED TH ROUGH APPROPRIATION PART OF THE PROFIT & LOSS ACCOUNT AND THEREAFTER TO THE GENERAL RESERVES AND THAT EXCESS DEPRECIATION OF THE EARLIER YEARS W RITTEN BACK IN THE YEAR IS TO BE TAKEN INTO PROFIT & LOSS ACCOUNT. ON THE PERUSAL OF THE ASSESSMENT ORDER IN QUESTION, WE FIND THAT EVEN NO QUERY IS RAISED BY THE ASSESSING OFFICER OR EVEN NO WHISPER IN THE SAI D ORDER. IN THE CRYPTIC ORDER PASSED BY THE ASSESSING OFFICER, THIS IMPORTANT ISSUE IS TOTALLY SIDE TRACKED WHICH IS HAVING BEARING ON COM PUTATION OF THE BOOK PROFIT UNDER SECTION 115JB OF THE I.T. ACT. 5. IN THE CASE OF MALABAR INDUSTRIAL CO. LTD., VS. CIT, 243 ITR 83 (SC) THE HONBLE SUPREME COURT HAS OBSERVED THAT TH E SCHEME OF THE ACT IS TO LEVY AND COLLECT TAX IN ACCORDANCE WITH T HE PROVISIONS OF THE 4 ACT AND THIS TASK IS ENTRUSTED TO THE REVENUE. IF DUE TO THE ERRONEOUS ORDER OF THE ASSESSING OFFICER, THE REVENUE IS LOSI NG TAX LAWFULLY PAYABLE BY A PERSON, IT WILL CERTAINLY BE PREJUDICI AL TO THE INTEREST OF THE REVENUE. IN THIS CASE, WE ARE UNABLE TO ACCEPT THE ARGUMENT OF THE LD. COUNSEL THAT IT IS A DEBATABLE ISSUE AND TWO VIEWS ARE POSSIBLE. ADMITTEDLY THE PROCEEDINGS U/S.263 VESTS REVISIONAR Y POWER IN THE CIT TO CORRECT THE ERRONEOUS ORDERS PASSED BY THE ASSES SING OFFICER, WITHOUT APPLICATION OF HIS MIND WHEN HE IS DUTY BOUND TO EX AMINE ALL THE IMPORTANT ISSUES INVOLVED IN FRAMING THE ASSESSMENT OF A PERSON. FAILURE OF THE ASSESSING OFFICER WITHOUT APPLYING H IS MIND TO ANY ISSUE HAVING BEARING ON THE DETERMINATION OF INCOME OR TA X, IN SUCH A SITUATION, THE ORDER IS TO BE TREATED AS ERRONEOUS ORDER. IN THE INSTANT CASE, IT IS ADMITTED FACT THAT NEITHER THE ASSESSIN G OFFICER CALLED FOR ANY DETAILS NOR THE ASSESSEE FURNISHED ANY SUCH DETAILS IN RESPECT OF THE COMPUTATION OF THE BOOK PROFIT U/S.115JB. IT IS A DIFFERENT SITUATION, WHERE ENQUIRY AND INVESTIGATION IS MADE BY THE ASSE SSING OFFICER ON ANY IMPORTANT ISSUE HAVING BEARING ON THE DETERMINA TION OF THE TOTAL INCOME, BUT AFTER BEING SATISFIED, ASSESSING OFFICE R PREFERS TO ACCEPT THE CONTENTION OF THE ASSESSEE AND DOES NOT DISCUSS ANY MORE IN THE ASSESSMENT ORDER, THEN IT MAY BE PRESUMED THAT THE ASSESSING OFFICER HAS APPLIED HIS MIND. AFTER GIVING OUR ANXIOUS CONS IDERATION TO THE REASONS GIVEN BY THE LD. CIT IN THE ORDER PASSED U/ S.263, WE ARE OF THE OPINION THAT HE HAS RIGHTLY EXERCISED THE JURISDICT ION U/S.263 OF I.T. ACT AS BOTH THE MANDATES OF THE SAID SECTION I.E. (1) O RDER SHOULD BE ERRONEOUS AND (2) IT SHOULD ALSO BE PREJUDICIAL TO THE INTEREST OF THE REVENUE ARE FULFILLED. MOREOVER, THE ASSESSEE IS G ETTING THE OPPORTUNITY 5 TO MAKE HIS SUBMISSION ON THE ISSUE, ON WHICH THE O RDER IS SET ASIDE BEFORE THE ASSESSING OFFICER. WE ACCORDINGLY, UPH OLD THE ORDER PASSED BY THE CIT U/S.263 OF THE ACT AND DISMISS THE GROUN DS TAKEN BY THE ASSESSEE. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON THIS THE 19 TH DAY OF SEPTEMBER 2013. SD/- SD/- (R.S. PADVEKAR) (R.K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE, DATED : 19 TH SEPTEMBER 2013 SATISH COPY OF THE ORDER IS FORWARDED TO : 1. THE ASSESSEE 2. THE DEPARTMENT 3. THE CIT, AURANGABAD 4. D.R. B BENCH, PUNE 5. GUARD FILE BY ORDER // TRUE COPY // SENIOR PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, PUNE