The Deputy Commissioner of Income tax, Jalandhar V. M/s. Nirvair Singh Pawan Kumar, Jalandhar

ITSSA 2/ASR/2011

• Counselvise Citation: [2012] 121 COUNSELVISE.COM (IT) 8577 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 12 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 12-12-2012
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 06-12-2012
• Assessment Year: misc
• Appeal Filed On: 30-11-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: J S BHASIN
• Keywords: Depreciation; Block assessment; Unabsorbed depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. B.P.JAIN, ACCOUNTANT MEMBER I.T (SS)A. NO.02(ASR)/2011 BLOCK PERIOD : 01.04.1990 TO 06.04.2000 PAN :NIL THE DY. COMMR. OF INCOME TAX, VS. M/S. NIRVAIR SING H PAWAN KUMAR, CIRCLE-II, JALANDHAR. JALANDHAR. (APPELLANT) (RESPONDENT) APPELLANT BY:SH. TARSEM LAL, DR RESPONDENT BY:SH. J.S. BHASIN, ADVOCATE DATE OF HEARING: 06/12/2012 DATE OF PRONOUNCEMENT:12/12/2012 ORDER PER BENCH ; THE REVENUE HAS FILED THE PRESENT APPEAL AGAINST T HE ORDER OF THE CIT(A), JALANDHAR, DATED 13.09.2011 FOR THE BLOCK PERIOD 01/04/1990 TO 06/04/2000. THE REVENUE HAS RAISED FOLLOWING GROUND S OF APPEAL: 1. THE LD. CIT(A) HAS ERRED BOTH IN LAW AND ON FAC TS IN ALLOWING THE RETURNED LOSS OF A.Y. 2000-01 FROM THE UNDISCLO SED INCOME IN THE BLOCK PERIOD CONSISTING OF THAT YEAR AS WELL IN THE ABSENCE OF THE SPECIFIC PROVISION FOR SUCH ALLOWANCE IN THE INCOME TAX ACT, 1961 AND BY IGNORING THE FACT THAT THE BLOCK A SSESSMENT IS AN INDEPENDENT ASSESSMENT TO THAT OF REGULAR ASSESS MENT. IT(SS)A.NO.02(ASR)/2011 2 2. THE APPELLANT CARVES LEAVE TO ADD OR AMEND THE G ROUNDS OF APPEAL ON OR BEFORE THE APPEAL IS HEARD AND DISPOSE D OF. 3. IT IS PRAYED THAT THE ORDER OF THE CIT(A) BE SET -ASIDE AND THAT OF THE AO BE RESTORED. 2. AFTER HEARING BOTH THE PARTIES AND PERUSING THE RELEVANT RECORDS AVAILABLE WITH US, WE FIND THAT THE ASSESSEE HAS RA ISED VARIOUS GROUNDS BEFORE THE LD. FIRST APPELLATE AUTHORITY BUT THE ASSESSEE HAS WITHDRAWN ALL THE GROUNDS OF APPEAL EXCEPT GROUND NO.8 I.E. RELATING TO THE ISSUE IN DISPUTE WHICH PERTAINS TO THE CLAIM OF THE ASSESSEE REGARDI NG CURRENT BUSINESS LOSS IN BOTH THE YEARS FALLING IN BLOCK AS PER RETURNS FI LED, ANY ALLEGED UNDISCLOSED INCOME OUGHT TO HAVE BEEN ADJUSTED AGAINST SUCH BUS INESS LOSS. 3. THE LD. COUNSEL FOR THE ASSESSEE STATED THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION O F THE HONBLE APEX COURT IN THE RECENT DECISION IN THE CASE OF E.K. LINGAMUR THY & ANR. VS. SETTLEMENT COMMISSION (INCOME TAX & WEALTH TAX ) & ANR. REPORT ED IN (2009) 314 ITR 305 AND STATED THAT THE PRESENT APPEAL FILED BY THE REVENUE MAY BE DISMISSED. LD. DR RELIED UPON THE GROUNDS OF APPEAL AND ASSESSMENT ORDER. 4. WE HAVE PERUSED THE IMPUGNED ORDER AND FOUND THA T THE LD. FIRST APPELLATE AUTHORITY HAS PARTLY ALLOWED THE APPEAL O F THE ASSESSEE BY RESPECTFULLY FOLLOWING THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF E.K. LINGAMURTHY & ANR. VS. SETTLEMENT COMMISSIO N (SUPRA) AND FOR THE IT(SS)A.NO.02(ASR)/2011 3 SAKE OF CONVENIENCE PARA 3 & 4 OF THE IMPUGNED ORDE R OF THE CIT(A) IS REPRODUCED AS UNDER: 3. THE AR SUBMITTED PHOTOCOPIES OF RETURN FILED IN FORM NO.2D FOR A.Y. 2000-01 DECLARING A LOSS OF RS.94,56 ,961/- WITH A CLAIM OF REFUND OF RS.4,05,278/- WHICH HAD BEEN P ROCESSED U/S 143(1) ON 30/3/2001. THE AO WAS DIRECTED TO CON FIRM IF THE CLAIM OF THE APPELLANT ON THIS ISSUE WAS FACTUALLY CORRECT OR NOT VIDE THIS OFFICE LETTER DATED 30/6/2011. THE AO VID E HIS LETTER DATED 13/07/2011 CONFIRMED THE AUTHENTICITY OF CLAI M OF THE APPELLANT AS DETAILED ABOVE. THE HONBLE APEX COURT IN RECENT DECISION IN THE CASE OF E.K. LINGAMURTHY & ANR. VS. SETTLEMENT COMMISSION 19 DTR 99 HAS HELD AS UNDER: IN THIS CASE, WE ARE CONCERNED WITH THE COMPUTATIO N OF UNDISCLOSED INCOME UNDER S. 158BB OF THE ACT. SEC . 158BB, INTER ALIA, STATES THAT UNDISCLOSED INCOME O F THE BLOCK PERIOD SHALL BE THE AGGREGATE OF THE TOTAL I NCOME OF THE PREVIOUS YEARS FALLING WITH THE BLOCK PERIOD COMPUTED IN ACCORDANCE WITH THE PROVISIONS OF CHAPT ER IV TOTAL INCOME IS DEFINED IN S. 2(45) TO MEAN TH E TOTAL AMOUNT OF INCOME REFERRED TO IN SECTION 5, COMPUTED IN THE MANNER LAID DOWN IN THE ACT. IN OTHER WORDS CHA PTER XIV DOES NOT RULE OUT CHAPTER IV OF THE ACT IN THE MATTER OF COMPUTATION OF UNDISCLOSED INCOME UNDER CHAPTER XIVB. IT MAY BE MENTIONED THAT ORDINARY, IN THE CAS E OF REGULAR ASSESSMENT, THE UNIT OF ASSESSMENT IS ONE Y EAR CONSISTING OF TWELVE MONTHS WHEREAS IN THE CASE OF BLOCK ASSESSMENT, THE UNIT OF ASSESSMENT CONSISTS OF TEN PREVIOUS YEARS AND THE PERIOD UPTO TO THE DATE OF T HE SEARCH. SECTION 158BB PROVIDES FOR AGGREGATION OF INCOME/LOSS OF EACH PREVIOUS YEAR COMPRISED IN THE BLOCK PERIOD. THE BLOCK PERIOD ASSESSMENT UNDER CHAPTER XIVB IS IN ADDITION TO REGULAR ASSESSMENT. ANALYZING SECTION 158BB(4) R/W EXPLANATION (A) THER ETO, ONE FINDS THAT ONLY BROUGHT FORWARD LOSSES OF THE P AST YEARS UNDER CHAPTER VI AND UNABSORBED DEPRECIATION U/S 32(2) ARE TO BE EXCLUDED WHILE AGGREGATING THE TOTA L IT(SS)A.NO.02(ASR)/2011 4 INCOME OR LOSS OF EACH PREVIOUS YEAR IN THE BLOCK P ERIOD OUT SET OFF OF THE LOSS SUFFERED IN ANY OF THE PREV IOUS YEARS IN THE BLOCK PERIOD AGAINST THE INCOME ASSESS ED IN OTHER PREVIOUS YEARS IN THE BLOCK PERIOD IS NOT PRO HIBITED. IN OUR VIEW, THE SETTLEMENT COMMISSIONER HAD ERRED IN DISALLOWING THE APPLICATION OF THE ASSESSEE FOR SET OFF OF INTER SE LOSSES AND DEPRECIATION ACCRUING IN ANY OF THE PREVIOUS YEAR IN THE BLOCK PERIOD AGAINST THE INCOM E RETURNED/ASSESSED IN ANY OTHER PREVIOUS YEAR IN THE BLOCK PERIOD. FOR THE AFORESTATED REASONS, WE SET ASIDE THE IMPUG NED JUDGMENT OF THE HIGH COURT AS WELL AS THE DECISION OF THE SETTLEMENT COMMISSION AND WE REMIT THE MATTER TO TH E SETTLEMENT COMMISSION FOR FRESH COMPUTATION OF THE UNDISCLOSED INCOME UNDER SECTION 158BB OF THE I.T. ACT, 1961 FOR THE BLOCK PERIOD IN QUESTION. 4. IN VIE OF THE JUDGMENT OF APEX COURT QUOTED ABOV E AND THE FACTS OF CASE UNDER CONSIDERATION WHEREIN THE A SSESSEE HAD RETURNED LOSS OF RS.94,56,962/- FOR A.Y. 2000-01, T HE UNDISCLOSED INCOME FOR THE SAID YEAR HAS TO BE COMP UTED AFTER GIVING EFFECT TO THE LOSS AS PER RECORD. AS SUCH AP PEAL OF THE ASSESSEE ON THIS ISSUE IS ALLOWED. 5. KEEPING IN VIEW THE DECISION OF THE HONBLE SUPR EME COURT IN THE CASE OF E.K. LINGAMURTHY & ANR. VS. SETTLEMENT COMM ISSION (SUPRA), THE LD. FIRST APPELLATE AUTHORITY HAS ALLOWED THE RELIE F TO THE ASSESSEE. BUT AT THE TIME OF HEARING BOTH THE PARTIES AGREED THAT THE DI RECTIONS GIVEN BY THE HONBLE SUPREME COURT IN THE AFORESAID CASE MAY BE ISSUED TO THE A.O. THUS, KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES O F THE PRESENT CASE AND THE DECISION OF THE HONBLE SUPREME COURT IN THE CA SE OF E.K. LINGAMURTHY IT(SS)A.NO.02(ASR)/2011 5 & ANR. VS. SETTLEMENT COMMISSION (SUPRA), WE ARE OF THE VIEW THAT THE ISSUE IN DISPUTE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF E.K. LINGAMURTHY & ANR . VS. SETTLEMENT COMMISSION (SUPRA) AND ACCORDINGLY, WE SET ASIDE TH E IMPUGNED ORDER AND REMIT THE MATTER TO THE AO FOR COMPUTATION OF UNDIS CLOSED INCOME UNDER SECTION 158BB OF THE I.T.ACT FOR THE BLOCK PERIOD I N QUESTION, IN VIEW THE DECISION OF HONBLE SUPREME COURT (SUPRA). 6. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 12TH DECEMBER, 2012. SD/- SD/- (B.P. JAIN) (H.S. SIDHU) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 12TH DECEMBER, 2012 /SKR/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:M/S. NIRVAIR SINGH PAWAN KUMAR 2. THE DCIT, CIRCLE-II, JALANDHAR. 3. THE CIT(A), JLR. 4. THE CIT, JLR 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.