M/s. Sona Vets Pvt. Ltd., Kolkata V. DCIT, CC-2(1), Kolkata, Kolkata

ITA 947/KOL/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 1296 (ITAT-KOLKATA)
• Duration Of Justice: 5 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-10-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2010-2011
• Appeal Filed On: 04-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GOULEAN HANGSHING
• Assessee Lawyers: A K TULSYAN
• Keywords: Business income; Depreciation; Document seized; Corroborative evidences; Deemed dividend; Documents seized
• Section: 143(3); 153A; 80IB; 263; 132; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : KOLKATA [BEFORE HONBLE SHRI N.V.VASUDEVAN, JM & SHRI M.B ALAGANESH, AM ] I.T.A NO. 947/KOL/201 7 ASSESSMENT YEAR : 2010-1 1 M/S SONA VETS PVT. LTD. -VS- DCIT, CC- 2(1), KOLKATA [PAN: AAECS 0908 G] (APPELLANT) (RESPONDENT) FOR THE APPELLANT : SHRI A.K.TULSYAN, AR FOR THE RESPONDENT : SHRI GOULEAN HANGSHING, CIT DR DATE OF HEARING : 21.09.2017 DATE OF PRONOUNCEMENT : 17.10.2017 ORDER PER M.BALAGANESH, AM 1. THIS APPEAL BY THE ASSESSEE ARISES OUT OF THE O RDER OF THE LEARNED PRINCIPAL COMMISSIONER OF INCOME TAX, CENTRAL-1, KOLKATA [ IN SHORT THE LD CIT] IN M. NO. PR.CIT, CENTRAL-1/KOL/263/2016-17/1206 DATED 27.03. 2017 PASSED U/S 263 OF THE ACT AGAINST THE ORDER PASSED BY THE DCIT, CENTRAL CIRCL E-2(1), KOLKATA [ IN SHORT THE LD AO] UNDER SECTION 143(3) R.W.S 153A OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) DATED 27.03.2015 FOR THE ASSESSMENT YEAR 2010-11. 2. THE FIRST PRELIMINARY ISSUE TO BE DECIDED IN THI S APPEAL IS AS TO WHETHER THE LD CIT COULD HAVE VALIDLY INVOKED HIS REVISIONARY JURISDIC TION U/S 263 OF THE ACT IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. THE BRIEF FACTS OF THIS ISSUE IS THAT THE ASSESS EE IS A PRIVATE LIMITED COMPANY BELONGING TO SHALIMAR GROUP DERIVING INCOME FROM MANUFACTURE AND SELLING OF POULTRY 2 ITA NO.947/KOL/2017 M/S SONA VETS PVT. LTD. A.YR.2010-11 2 AND CATTLE FEED. THE RETURN OF INCOME FOR THE ASST YEAR 2010-11 WAS FILED BY THE ASSESSEE U/S 139(1) OF THE ACT ON 9.10.2010 DECLARI NG TOTAL INCOME OF RS 5,01,11,522/-. THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT ON 30.12.2011 ACCEPTING THE INCOME RETURNED. A SEARCH U/S 132 OF THE ACT WAS CARRIED OUT IN THE BUSINESS PREMISES OF THE ASSESSEE AT 17B & C, EVEREST HOUSE, 46C, CHO WRINGHEE ROAD, KOLKATA 700071 ON 13.12.2012. PANCHANAMAS WERE DRAWN IN THE NAME O F PERSONS INCLUDING THE ASSESSEE. THE FOLLOWING VALUABLES AND DOCUMENTS WERE FOUND / SEIZED DURING THE COURSE OF SEARCH : ADDRESS OF THE PREMISES WHERE SEARCH WAS CONDUCTED CASH JEWELLARY IDENTIFICATION MARK OF THE DOCUMENTS SEIZED FOUND (RS.) SEIZED (RS.) FOUND (RS.) SEIZED (RS.) 17B & C, EVEREST HOUSE, 46C, CHOWRINGHEE ROAD, KOLKATA- 700071 32,67,500/- 39,00,000 NIL NIL SPG/1 TO SPG/13 AND SPG/HD/1 PLOT NO. C-3, WBIIDC RANINAGAR INDUSTRIAL GROWTH CENTRE, JALPAIGURI- 7351010 NIL NIL NIL NIL SV/1 TO SV/4 AND SV/PD/1 HENCE AS ON THE DATE OF SEARCH, THE ORIGINAL ASSESS MENT PROCEEDINGS STOOD UNABATED I.E COMPLETED. PURSUANT TO THE SEARCH, NOTICE U/S 153 A OF THE ACT WAS ISSUED TO THE ASSESSEE AND THE ASSESSEE FILED A LETER DATED 9.12. 2013 TO TREAT THE RETURN FILED U/S 139(1) OF THE ACT AS A RETURN IN RESPONSE TO NOTICE U/S 15 3A OF THE ACT. THE LD AO COMPLETED THE ASSESSMENT U/S 153A READ WITH SECTION 143(3) OF THE ACT ON 27.3.2015 DETERMINING THE TOTAL INCOME AT RS 8,10,41,760/-. THE LD AO DEN IED THE BENEFIT OF DEDUCTION U/S 80IB OF THE ACT TO THE TUNE OF RS 3,09,30,242/- AND DISALLOWED THE SAME IN THE 3 ITA NO.947/KOL/2017 M/S SONA VETS PVT. LTD. A.YR.2010-11 3 ASSESSMENT FRAMED U/S 153A OF THE ACT ON 27.3.2015 ON THE GROUND THAT THE ASSESSEE IS NOT ENGAGED IN THE MANUFACTURING ACTIVITY. THE AS SESSEE PREFERRED AN APPEAL AGAINST THIS ORDER BEFORE THE LEARNED COMMISSIONER OF INCOM E TAX (APPEALS) [ IN SHORT THE LD CITA] WHO DELETED THE DISALLOWANCE U/S 80IB OF THE ACT VIDE HIS ORDER DATED 11.2.2016. ON FURTHER APPEAL BY THE REVENUE TO THIS TRIBUNAL, THE SAME WAS DISMISSED VIDE ORDER DATED 30.11.2016 ON THE GROUND THAT THERE WAS NO IN CRIMINATING MATERIAL FOUND IN THE COURSE OF SEARCH AND HENCE THE ASSESSMENT ALREADY F RAMED U/S 143(3) OF THE ACT COULD NOT BE DISTURBED. ON MERITS OF THE DISALLOWANCE, T HE TRIBUNAL ALSO HELD THAT THE ACTIVITY CARRIED ON BY THE ASSESSEE AMOUNTS TO MANUFACTURE A ND HENCE IS ELIGIBLE FOR DEDUCTION U/S 80IB OF THE ACT. IN EFFECT, THE CLAIM OF DEDU CTION U/S 80IB OF THE ACT WAS DIRECTED TO BE ALLOWED FOR THE ASST YEAR 2010-11 AND WAS ALS O FURTHER HELD THAT THE CONCLUDED ASSESSMENTS CANNOT BE DISTURBED WITHOUT THE EXISTEN CE OF ANY INCRIMINATING MATERIALS FOUND DURING THE SEARCH. 4. THE LD CIT SOUGHT TO REVISE THE ASSESSMENT FRAM ED U/S 153A OF THE ACT ON 27.3.2015 TREATING THE SAME AS ERRONEOUS AND PREJUDICIAL TO T HE INTEREST OF THE REVENUE IN AS MUCH AS THE SAID ORDER DID NOT ENQUIRE THE ASPECT OF DEE MED DIVIDEND U/S 2(22)(E) OF THE ACT IN RESPECT OF ADVANCE MONEY RECEIVED FROM M/S SHALI MAR HATCHERIES LTD OF RS 11,30,68,501/- AND CLAIM OF DEPRECIATION ON MOTOR L ORRIES TO BE REDUCED TO 15% FROM 30% CLAIMED BY THE ASSESSEE. A SHOW CAUSE NOTICE TO THIS EFFECT WAS ISSUED BY THE LD CIT TO THE ASSESSEE ON 5.9.2016. THE ASSESSEE FILE D A DETAILED WRITTEN SUBMISSIONS TOGETHER WITH THE SUPPORTING EVIDENCES VIDE REPLY D ATED 4.2.2017 BEFORE THE LD CIT BOTH ON LEGAL AND FACTUAL ASPECTS. IT WAS SPECIFICALLY BROUGHT TO THE NOTICE OF THE LD CIT THAT NO INCRIMINATING MATERIALS WERE FOUND IN THE COURSE OF SEARCH REGARDING THESE TWO ITEMS AND HENCE THE CONCLUDED ASSESSMENT U/S 143(3) OF TH E ACT DATED 30.12.2011 CANNOT BE DISTURBED EITHER BY THE LD AO OR BY THE LD CIT. T HE ASSESSEE PLACED RELIANCE ON VARIOUS DECISIONS IN THIS REGARD INCLUDING THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF PCIT VVS SALASAR STOCK BROKING LIMIT ED (ITAT NO. 264 OF 2016) DATED 4 ITA NO.947/KOL/2017 M/S SONA VETS PVT. LTD. A.YR.2010-11 4 24.8.2016 AND CIT VS VEERPRABHU MARKETING LIMITED REPORTED IN 73 TAXMANN.COM 149 (CALCUTTA) . IT WAS ALSO SPECIFICALLY POINTED OU T WITH SUPPORTING EVIDENCES THAT THE LD AO HAD DULY EXAMINED THESE ASPECTS OF DEEMED DIVIDE ND AND EXCESS CLAIM OF DEPRECIATION ON MOTOR LORRIES AT HIGHER RATE DURING THE COURSE OF ASSESSMENT PROCEEDINGS. IT WAS STATED THAT THERE WAS DUE AND PROPER APPLICATION OF MIND OF THE LD AO BEFORE FRAMING THE ASSESSMENT ON THESE TWO ISSUE S AMONG OTHERS. ACCORDINGLY IT WAS PLEADED THAT THE ORDER OF THE LD AO CANNOT BE T ERMED AS ERRONEOUS WARRANTING REVISION U/S 263 OF THE ACT. 4.1. THE ASSESSEE ALSO EXPLAINED BEFORE THE LD CIT THAT THE ASSESSEE PURCHASED HATCHING EGGES FROM M/S SHALIMAR HATCHERIES LTD AND SOLD CHI CKS TO THE SAID COMPANY. ACCORDINGLY IT HAD MAINTAINED BOTH SUNDRY CREDITORS LEDGER AND SUNDRY DEBTORS LEDGER IN ITS BOOKS IN THE NAME OF SHALIMAR HATCHERIES LIMITE D. EVEN WITHIN THE SUNDRY CREDITORS LEDGER, THE ASSESSEE MAINTAINS SEPARATE CREDITORS L EDGER FOR SHALIMAR HATCHERIES LIMITED ; SHALIMAR HATCHERIES LIMITED (GUWAHATI) SHALIMAR HATCHERIES LIMITED (HABRA) ; SHALIMAR HATCHERIES LIMITED (NATUNGRAME ). SIMILARLY ASSESSEE MAINTAINS DIFFERENT SUNDRY DEBTORS LEDGER SUCH AS SHALIMAR H ATCHERIES LIMITED ; SHALIMAR HATCHERIES LIMITED (PANCHAL) ; SHALIMAR HATCHERIE S LIMITED (RAJAFARMBI). IT WAS STATED THAT TOTAL PURHCASES MADE BY THE ASSESSEE FR OM THE SAID COMPANY WAS RS 9,80,00,700/- AND TOTAL SALES MADE TO THEM WAS RS 2 ,57,00,096/-. FROM THE SUNDRY CREDITORS LEDGER, IT COULD BE FOUND THAT THE TOTAL VALUE OF CREDIT TRANSACTIONS WAS RS 11,30,68,501/- WHICH INCLUDES, PURCHASE, PAYMENTS A ND TRANSFER ENTRY THROUGH JOURNAL. THE CREDIT TRANSACTIONS INCLUDES PURCHASE BILLS TOT ALING TO RS 9,80,00,700/- AND BALANCE AMOUNT OF RS 1,50,67,801/- WAS TOWARDS CLOSING BALA NCE OF RS 1,32,54,079/- TRANSFERRED FROM OTHER LEDGER ACCOUNTS MAINTAINED IN THE NAME O F SHALIMAR HATCHERIES LIMITED NAD PAYMENT OF RS 18,13,722/- RECEIVED FROM THE SAID PA RTY AGAINST SALE. ACCORDINGLY IT WAS PLEADED THAT THE TOTAL CREDIT TRANSACTIONS OF RS 11 ,30,68,501/- WAS MISINTERPRETED AS ADVANCE ALTHOUGH THE SAME WAS PURCHASE, PAYMENT REC EIVED AGAINST SALE AND BALANCE OF 5 ITA NO.947/KOL/2017 M/S SONA VETS PVT. LTD. A.YR.2010-11 5 DIFFERENT LEDGERS AND HENCE THE ASSESSEE HAD NOT RE CEIVED ANY ADVANCE OR LOANS FROM THE SAID PARTY AND ACCORDINGLY THE QUESTION OF DEEMED D IVIDEND U/S 2(22)(E) OF THE ACT DOES NOT ARISE. 4.2. THE ASSESSEE EXPLAINED BEFORE THE LD CIT WITH REGARD TO CLAIM OF DEPRECIATION ON MOTOR LORRIES AT 30% AS UNDER:- 6.2. IN THIS CONTENTION, IT IS PERTINENT TO MENTIO N THAT THE ASSESSEE IS A COMPANY ENGAGED IN THE MANUFACTURING AND SELLING OF POULTRY FEED, EGGS & TOTAL CHICKEN AND IT NEEDS HEAVY MOTOR VEHICLES FOR THE TRANSPORTATION O F ITS RAW MATERIALS AS WELL AS FINISHED GOODS. THEREFORE, THE ASSESSEE HAS BOUGHT ITS OWN MOTOR LORRIES FOR THIS PURPOSE. NOW, AS PER THE RULE 5 OF THE INCOME TAX R ULES, DEPRECIATION SHOULD BE APPLICABLE AS PER THE RATES PRESCRIBED IN THE DEPRE CIATION SHOULD BE APPLICABLE AS PER THE RATES PRESCRIBED IN THE DEPRECIATION SCHEDULE. ANY ASSESSEE IS ELIGIBLE FOR DEPRECIATION AT THE RATES PRESCRIBED IN THE SCHEDUL E. IN CASE OF THE ASSESSEE, THE YEAR CONCERNED HERE IS ASSESSMENT YEAR 2010-11. HENCE, T HE ASSESSEE WOULD BE ELIGIBLE FOR DEPRECIATION AT THE RATES APPLICABLE TO THAT PARTIC ULAR YEAR. NOW, IN THE CONCERNED YEAR I.E. FY 2009-10, IT WAS MENTIONED IN THE SCHEDULE T HAT NEW COMMERCIAL VEHICLE WHICH IS ACQUIRED ON OR AFTER THE 1 ST DAY OF JANUARY, 2009 BUT BEFORE THE 1 ST DAY OF OCTOBER, 2009 FOR THE PURPOSE OF BUSINESS OR PROFESSION WOUL D BE ELIGIBLE FOR DEPRECIATION AT THE RATE OF 50%, WHERE COMMERCIAL VEHICLEMEANS HEAVY GOODS VEHICLE, HEAVY PASSENGER MOTOR VEHICLE, LIGHT MOTOR VEHICLE, M EDIUM GOODS VEHICLE AND MEDIUM PASSENGER MOTOR VEHICLE BUT DOES NOT INCLU DE MAXI-CAB, MOTOR CAB, TRACTOR AND ROAD-ROLLER. THE EXPRESSIONS HEAV Y GOODS VEHICLE, HEAVY PASSENGER MOTOR VEHICLE, LIGHT MOTOR VEHICLE, M EDIUM GOODS VEHICLE AND MEDIUM PASSENGER MOTOR VEHICLE BUT DOES NOT INCLU DE MAXI-CAB, MOTOR CAB, TRACTOR AND ROAD-ROLLER SHALL HAVE THE MEANINGS RESPECTIVELY AS ASSIGNED TO THEM IN SECTION 2 OF THE MOTOR VEHICLES ACT, 1988 (59 OF 1988). (COPY OF SCHEDULE ATTACHED). THUS, FROM THE ABOVE CITED RULES, IT IS CLEARLY EVI DENT THAT ANY COMMERCIAL VEHICLE PURCHASED BY ANY ASSESSEE ON OR AFTER 01.01.2009 BU T BEFORE 01.10.2009 AND ALSO PUT TO USE BEFORE 01.10.2009, WOULD BE ELIGIBLE FOR DEPREC IATION AT THE 50% PROVIDED THE SAME ASSET WAS USED FOR THE PURPOSE OF BUSINESS OR PROFE SSION. 6.3 NOW, COMING TO FACTS OF THE CASE, THE ASSESSEE PURCHASED VARIOUS MOTOR LORRIES DURING THE PERIOD OF 01.01.2009 TO 30.09.2009 AND A LSO PUT THEM TO USE FOR ITS BUSINESS PURPOSE. PLEASE FIND ENCLOSED HEREWITH THE DETAILS OF ADDITION TO MOTOR CAR ALONG WITH COPY OF THE REGISTRATION CERTIFICATE ETC. THE ASSES SEE USED THOSE MOTOR LORRIES FOR CARRYING ITS PRODUCTS FROM ONE PLACE TO ANOTHER. TH US, IT IS BEYOND ANY QUESTION THAT THE LORRIES WERE USED FOR THE PURPOSE OF BUSINESS OF TH E ASSESSEE. THUS, THE ASSESSEE HAS FULFILLED THE CRITERIA FOR CLAIMING THE DEPRECIATIO N AT A HIGHER RATE THAN THE NORMAL PRESCRIBED RATE OF 15%. BUT INSTEAD OF CLAIMING THE DEPRECIATION AT 50%, THE ACCOUNTANT OF THE ASSESSEE NOT BEING PROFESSIONALLY EQUIPPED A ND NOT VERY WELL ACCUSTOMED WITH THE TAXATION LAWS, MISTAKENLY CLAIMED THE DEPRECIATION @ 30%. THEREFORE, THE ASSESSEE HAS 6 ITA NO.947/KOL/2017 M/S SONA VETS PVT. LTD. A.YR.2010-11 6 INADVERTENTLY CLAIMED A LOWER RATE OF CONTENDED BY YOUR HONOURS OF CLAIMING A HIGHER RATE OF DEPRECIATION. THUS, THE ASSESSEE DID NOT CL AIM ANY EXTRA DEPRECIATION INSTEAD IT CLAIMED DEPRECIATION AT A LOWER RATE. 6.4 THUS, FROM THE ABOVE DISCUSSED FACTS AND CIRCUM STANCES WE CAN COME TO THE CONCLUSION THAT THE CHARGING OF DEPRECIATION IN THI S PARTICULAR CASE IS CASE SPECIFIC THE DEPRECIATION CHARGED ON THE LORRIES IS BASED ON THE CONDITION PRESCRIBED IN THE SCHEDULE. THE ASSESSEE THOUGH ELIGIBLE FOR DEPRECIA TION AT A HIGHER RATE OF 50%, HAS CLAIMED DEPRECIATION @ 30% ONLY. THUS, THE ASSESSEE CLAIMED A LOWER RATE OF DEPRECIATION AS BEING UNAWARE OF THE TAXATION LAWS. THUS, THE CONTENTION OF YOUR HONOUR THAT THE ASSESSEE CLAIMED DEPRECIATION AT A HIGHER RATE THAN THE PRESCRIBED ONE IS NOT JUSTIFIED. BASED ON THIS SUBMISSION, IT WAS PLEADED ON THE POI NT OF CLAIM OF DEPRECIATION, THAT THE SAME COULD BE CONSTRUED ONLY AS PREJUDICIAL TO THE INTEREST OF THE ASSESSEE AND NOT PREJUDICIAL TO THE INTEREST OF THE REVENUE. 4.3. THE LD CIT REFERRED TO CERTAIN SEIZED DOCUMENT S MARKED AS SHL (CORPORATE OFFICE) -2, SPG-3, SPG -1 . ACCORDING TO LD CIT, THE SEIZ ED DOCUMENT MARKED AS SHL -2 IN PAGE 8 THEREON CONTAINED THE FACT THAT M/S SONA VET S PVT LTD (ASSESSEE HEREIN) IS HOLDING 360000 SHARES OUT OF TOTAL 1095050 SHARES ( WHICH IS IN EXCESS OF 10%) AS EVIDENT FROM THE LIST OF SHAREHOLDING PATTERN OF MS SHALIMAR HATCHERIES LIMITED. FROM THE SEIZED DOCUMENT MARKED AS SPG-3 IN PAGES 14 & 1 5, THE LD CIT OBSERVED THAT ASSESSEE COMPANY HAS SHOWN LIABILITIES IN THE NAME OF M/S SHALIMAR HATCHERIES. FROM THE SEIZED DOCUMENT MARKED AS SPG-1 IN PAGES 17 & 1 8, THE LD CIT OBSERVED FROM THE TRIAL BALANCE THAT ASSESSEE HAD SHOWN NUMEROUS LORR IES AS PART OF THE ASSETS. THE ASSESSEE EXPLAINED BEFORE THE LD CIT THAT THE LD AO HAD DULY REPLIED IN THIS REGARD BEFORE THE LD AO VIDE LETTER DATED 20.2.2015 AS UND ER:- (1) PAGE NO. 1 TO 24 OF SPG 1 BELONG TO SONA VETS P RIVATE LIMITED CONTAINS COPY OF TRIAL BALANCE FOR THE F.Y. 2012-13 WHICH ARE AS PER REGULAR BOOKS OF ACCOUNTS AND ARE ENCLOSED HEREWITH. 7 ITA NO.947/KOL/2017 M/S SONA VETS PVT. LTD. A.YR.2010-11 7 (5) PAGE NO. 11 TO 20 OF SPG 3 BELONG TO SONA VETS PRIVATE LIMITED CONTAINS COPY OF GROUP SUMMARY OF SUNDRY CREDITORS FOR F.Y. 2007-08 TO 2011-12 WHICH ARE AS PER REGULAR BOOKS OF ACCOUNTS AND ARE ENCLOS ED HEREWITH. THE ASSESSEE VIDE SEPARATE LETTER DATED 20.2.2015 E XPLAINED THE SEIZED DOCUMENT SHL/02 AND ITS CONTENTS PAGE WISE IN DETAIL BEFORE THE LD AO. IN EFFECT, IT WAS STATED THAT THE ASSESSEE HAD DULY EXPLAINED THE FOLLOWING SEIZED DOCUMENTS BEFORE THE LD AO VIDE LETTER DATED 20.2.2015 :- 1. PAGE NO. 1 TO 24 OF SPG 1 2. PAGE NO. 25 TO 37 OF SPG 1 3. PAGE NO. 1 TO 47 OF SPG 2 4. PAGE NO. 48 TO 52 OF SPG 2 5. PAGE NO. 1 TO 10 OF SPG 3 6. PAGE NO. 11 TO 20 OF SPG 3 7. PAGE NO. 1 TO 7 OF SPG 4 8. PAGE NO. 8 TO 9 OF SPG 4 9. PAGE NO. 10 TO 119 OF SPG 4 10. PAGE NO. 1 TO 53 OF SPG 5 11. PAGE NO. 1 TO 71 OF SPG 6 12. PAGE NO. 1 TO 63 OF SPG 7 13. PAGE NO. 1 TO 48 OF SPG 8 14. PAGE NO. 1 TO 78 OF SPG 9 15. PAGE NO. 1 TO 16 OF SPG 10 16. PAGE NO. 17 TO 22 OF SPG 10 17. PAGE NO. 23 TO 30 OF SPG 10 18. PAGE NO. 31 TO 39 OF SPG 10 19. PAGE NO. 1 OF SPG 11 20. PAGE NO. 2 TO 8 OF SPG 11 21. PAGE NO. 9 TO 23 OF SPG 11 22. PAGE NO. 24 TO 35 OF SPG 11 23. PAGE NO. 1 TO 3 OF SPG 12 24. PAGE NO. 4 TO 6 OF SPG 12 25. PAGE NO. 7 OF SPG 12 26. PAGE NO. 8 TO 9 OF SPG 12 27. PAGE NO. 11 OF SPG 12 28. PAGE NO. 12 TO 16 OF SPG 12 29. PAGE NO. 17 TO 23 OF SPG 12 30. PAGE NO. 24 TO 25, 36 & 37 OF SPG 12 8 ITA NO.947/KOL/2017 M/S SONA VETS PVT. LTD. A.YR.2010-11 8 31. PAGE NO. 26 TO 28 OF SPG 12 32. PAGE NO. 29 OF SPG 12 33. PAGE NO. 30 TO 35 OF SPG 12 34. PAGE NO. 24 TO 25 & 36 OF SPG 12 35. PAGE NO. 38 TO 43 & 44 OF SPG 12 36. PAGE NO. 45 TO 47 OF SPG 12 37. PAGE NO. 48 TO 49 OF SPG 12 38. PAGE NO. 52 OF SPG 12 39. PAGE NO. 1 OF SPG 13 40. PAGE NO. 2 OF SPG 13 41. PAGE NO. 3 & 20 OF SPG 13 42. PAGE NO. 4 & 5 OF SPG 13 43. PAGE NO. 6,7,8,9 & 19 OF SPG 13 44. PAGE NO. 10 TO 14 OF SPG 13 45. PAGE NO. 15 TO 18 OF SPG 13 46. PAGE NO. 21 TO 24 OF SPG 13 47. PAGE NO. 25 TO 30 OF SPG 13 48. PAGE NO. 31 OF SPG 13 49. PAGE NO. 32 TO 39 OF SPG 13 50. PAGE NO. 01 TO 02 OF SHL/02 51. PAGE NO. 03-07OF SHL/02 52. PAGE NO. 08 OF SHL/02 53. PAGE NO. 09-21 OF SHL/2 54. PAGE NO. 22 OF SHL/2 55. SHL/3 & 4 56. PAGE NO. 1 OF SHL/5 57. PAGE NO. 2 OF SHL/5 58. PAGE NO. 03-08 OF SHL/5 FURTHER VIDE LETTER DATED 23.2.2015, M/S WEBSOL ENE RGY SYSTEM LIMITED EXPLAINED THE SEIZED DOCUMENT MARKED AS SHL/03 IN PAGES 1 TO 78 ; SHL/04 IN PAGES 1 TO 41; EXPLANATION OF HARD DISK VIDE ID MARKED HD-1 AND SH L-7 BEFORE THE LD AO AS BELONGING TO THEM. 4.4. THE ASSESSEE REPLIED BEFORE THE LD CIT THAT TH E SEIZED DOCUMENT MARKED AS SHL -2 PAGE 8 CONTAINS LIST OF SHAREHOLDERS OF SHALIMAR HA TCHERIES LIMITED TOGETHER WITH NUMBER OF SHARES HELD BY EACH SHAREHOLDER. IN THIS LIST, THE NAME FO THE ASSESSEE ALSO 9 ITA NO.947/KOL/2017 M/S SONA VETS PVT. LTD. A.YR.2010-11 9 APPEARS AS HOLDING 360000 SHARES OF SHALIMAR HATCHE RIES LIMITED AND ASSESSEE PLEADED THAT SUCH INFORMATION IS ALREADY IN THE PUBLIC DOMA IN AND IS PART OF REGULAR BOOKS OF ACCOUNTS OF THE ASSESSEE AND THERE IS NOTHING INCRI MINATING THEREIN. 4.4.1. THE ASSESSEE REPLIED BEFORE THE LD CIT THAT THE SEIZED DOCUMENT MARKED AS SPG-3 PAGES 14& 15 CONTAINS SUNDRY CREDITORS TRIAL BALAN CE FOR THE PERIOD FROM 1.4.2009 TO 31.3.2010 WHICH ARE PART OF REGULAR BOOKS OF ACCOUN TS OF THE ASSESSEE AND THERE IS NOTHING INCRIMINATING THEREIN. 4.4.2. THE ASSESSEE REPLIED BEFORE THE LD CIT THAT THE SEIZED DOCUMENT MARKED AS SPG-1 PAGES 17& 18 CONTAINS TRIAL BALANCE FOR THE PERIOD FROM 1.4.2012 TO 31.3.2013 WHICH ARE PART OF REGULAR BOOKS OF ACCOUNTS OF THE ASSESS EE AND THERE IS NOTHING INCRIMINATING THEREIN. 5. THE LD CIT HOWEVER IGNORED ALL THE EXPLANATIONS AND SUBMISSIONS MADE BEFORE HIM AS WELL AS BEFORE THE LD AO AND OBSERVED THAT THE LD A O HAD NOT MADE ENQUIRY WITH REGARD TO THESE SEIZED DOCUMENTS , OBSERVED THAT THE ORDER PASSED BY THE LD AO WAS BASED ON INCORRECT ASSUMPTION OF FACTS OR INCORRECT APPLICAT ION OF LAW AND TREATED THE ORDER OF THE LD AO AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE AND DIRECTED THE LD AO TO PASS A FRESH ASSESSMENT ORDER IN THIS REGARD. AG GRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUNDS:- 1. THAT THE LD. PCIT WAS WRONG IN EXERCISING JURISD ICTION U/S 263 OF THE I.T. ACT, ON THE ORDER PASSED U/S 143(3)/ 153A OF THE I.T. AC T ON THE ISSUE OF DEEMED DIVIDEND U/S 2(22)(E) OF THE I.T. ACT AND RATE OF D EPRECIATION ON LORRIES, ON THE ASSESSMENT ALREADY COMPLETED PRIOR TO SEARCH. THE A BOVE ISSUES ARE NOT PART OF ANY INCRIMINATING DOCUMENT FOUND/SEIZED AS A RESULT OF A SEARCH. AS SUCH, AS PER WELL SETTLED LAW, NO ADDITION CAN BE MADE U/S 143(3 )/153A PROCEEDING ON THE COMPLETED ASSESSMENT. AS SUCH, JURISDICTION U/S 263 OF THE ACT CANNOT BE EXERCISED ON THE SAME. THE ORDER PASSED U/S 263 O F THE I.T. ACT NEEDS TO BE QUASHED. 10 ITA NO.947/KOL/2017 M/S SONA VETS PVT. LTD. A.YR.2010-11 10 2. THAT WITHOUT PREJUDICE TO OUR ABOVE GROUND, THE AO HAS CONDUCTED PROPER ENQUIRY. THE ORDER OF THE AO IS NOT ERRONEOUS AS WE LL AS PREJUDICIAL TO THE INTEREST OF THE REVENUE ON THE ISSUE OF DEEMED DIVI DEND AND RATE OF DEPRECIATION ON LORRIES. AS SUCH, EXERCISING OF THE POWER U/S 26 3 OF THE I.T. ACT IS BAD IN LAW AND NEEDS TO BE DELETED. 3. THAT NO ADVANCE OF RS. 11,30,68,501/- HAS BEEN R ECEIVED BY THE ASSESSEE. THE FACT IS THAT THE ASSESSEE PURCHASED GOODS OF RS. 9, 80,00,700/- AND TOTAL SALES MADE TO THE SAID COMPANY IS RS. 2,57,00,096/-. THE FIGURE OF RS. 11,30,68,501/- HAS BEEN TAKEN FROM SUNDRY CREDITORS LEDGER SHOWING TOTAL OF CREDIT TRANSACTION WHICH INCLUDES PURCHASE, PAYMENTS AND TRANSFER ENTR Y THROUGH JOURNAL. AS SUCH, THE ADDITION MADE BY THE LD. PCIT IS ON MISINTERPRE TATION OF FACTS AND HENCE EXERCISING THE JURISDICTION U/S 263 IS FACTUALLY WR ONG AND NEED TO BE QUASHED. 4. THAT THE LD. PCIT WAS WRONG ABOUT CLAIM OF RATE OF DEPRECIATION @ 30% ON MOTOR LORRIES. AS PER PROVISION OF THE I.T. ACT, ON PURCHASE OF VEHICLE BETWEEN 01.01.2009 TO 01.10.2009, DEPRECIATION IS ALLOWABLE @ 50% ON VEHICLES USED FOR THE PURPOSE OF BUSINESS OR PROFESSION WHEREAS THE A SSESSEE HAS INADVERTENTLY CLAIMED DEPRECIATION @ 30% WHICH IS LOWER THAN AS P RESCRIBED RATE. AS SUCH, THE LD. PCIT WAS WRONG IN EXERCISING THE JURISDICTI ON U/S 263 OF THE I.T. ACT. 5. THAT THE PETITIONER CRAVES LEAVE TO ADD, ALTER, AMEND OR WITHDRAW ANY GROUND/S OF APPEAL BEFORE OR AT THE TIME OF HEARIN G. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD INCLUDING THE PAPER BOOKS FILED BY THE ASSESSEE CON TAINING THE SEIZED DOCUMENTS AND EXPLANATIONS GIVEN BY THE ASSESSEE THEREON BEFORE T HE LD AO AND THE LD CIT. IT IS NOT IN DISPUTE THAT AS ON THE DATE OF SEARCH THE ORIGINAL ASSESSMENT FOR ASST YEAR 2010-11 WAS COMPLETED U/S 143(3) OF THE ACT AND HENCE STOOD UNA BATED. IT IS NOW WELL SETTLED BY VARIOUS HIGH COURTS INCLUDING THE HONBLE JURISDICT IONAL HIGH COURTS RELIED UPON SUPRA THAT THE CONCLUDED ASSESSMENTS COULD BE DISTURBED O NLY IN THE EVENT OF PRESENCE OF ANY INCRIMINATING MATERIALS FOUND IN THE COURSE OF SEAR CH. WE FIND FROM THE ABOVE EXPLANATION OF VARIOUS SEIZED DOCUMENTS FOUND IN TH E COURSE OF SEARCH, THERE WAS ABSOLUTELY NO MATERIAL MUCH LESS ANY INCRIMINATING MATERIAL, SO AS TO DISTURB THE EARLIER CONCLUDED ASSESSMENT FOR THE ASST YEAR 2010-11. HE NCE THE LD AO HAD RIGHTLY NOT CONSIDERED THE ASPECT OF DEEMED DIVIDEND AND CLAIM OF DEPRECIATION ON MOTOR LORRIES AT 11 ITA NO.947/KOL/2017 M/S SONA VETS PVT. LTD. A.YR.2010-11 11 30% WHILE FRAMING THE SEARCH ASSESSMENT U/S 153A O F THE ACT. MOREOVER, WE FIND THAT THE ASSESSEE HAD GIVEN PROPER EXPLANATIONS REGARDIN G THESE ITEMS BEFORE THE LOWER AUTHORITIES AS REPRODUCED ABOVE. WE FIND THAT THE A SSESSEE HAD ALSO DULY EXPLAINED THE COMPLETE CONTENTS OF THE SEIZED DOCUMENTS RELIED UP ON BY THE LD CIT IN HIS ORDER. IN OUR CONSIDERED OPINION, THOSE MATERIALS ARE NOT INC RIMINATING AT ALL AND ARE FORMING PART OF REGULAR BOOKS OF ACCOUNTS OF THE ASSESSEE. THE SE EXPLANATIONS HAVE BEEN COMPLETELY IGNORED BY THE LD CIT WHILE DIRECTING THE LD AO TO FRAME THE ASSESSMENT AFRESH. WE HOLD THAT WHEN AN ADDITION COULD NOT BE MADE AS PER LAW IN SECTION 153A PROCEEDINGS, THEN THE SAID ORDER CANNOT BE CONSTRUED AS ERRONEOU S WARRANTING REVISIONARY JURISDICTION U/S 263 OF THE ACT BY THE LD CIT. WE HOLD THAT EVE N ON MERITS, THERE IS NO CASE MADE OUT BY THE LD CIT FOR MAKING ANY ADDITION TOWARDS DEEME D DIVIDEND OR DISALLOWANCE OF EXCESS DEPRECIATION ON MOTOR LORRIES. IN THESE FAC TS AND CIRCUMSTANCES, WE FIND THAT THE ORDER OF THE LD CIT U/S 263 OF THE ACT DESERVES TO BE QUASHED. ACCORDINGLY, THE PRELIMINARY GROUND RAISED BY THE ASSESSEE ON THE IS SUE OF ASSUMPTION OF JURISDICTION U/S 263 OF THE ACT IS ALLOWED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE COURT ON 17.10.2017 SD/- SD/- [N.V. VASUDEVAN] [ M.BALAGANESH ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 17.10.2017 SB, SR. PS 12 ITA NO.947/KOL/2017 M/S SONA VETS PVT. LTD. A.YR.2010-11 12 COPY OF THE ORDER FORWARDED TO: 1. M/S SONA VETS PVT. LTD., 17B & C, EVEREST HOUSE, 46C, CHOWRINGHEE ROAD, KOLKATA- 700071. 2. DCIT, CC-2(1), KOLKATA, AAYAKAR BHAWAN POORVA, 1 10, SHANTIPALLY, KOLKATA- 700107. 3.P.C.I.T, CENTRAL-1, KOLKATA 4. C.I.T.- KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER SENIOR PRIVAT E SECRETARY HEAD OF OFFICE/D.D.O., ITAT, KOLKATA BENCHE S