Shree Yamuna Proteins, Dahod V. The ACIT.,Cent.Circle-1, Baroda

ITSSA 231/AHD/2010

• Counselvise Citation: [2012] 121 COUNSELVISE.COM (IT) 8343 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 6 month(s) 11 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 21-09-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 22-06-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 11-03-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAVINDRA KUMAR
• Keywords: Depreciation; Bad and doubtful debts
• Section: 153A; 32; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, A BENCH, AHMEDABAD BEFORE SHRI A. K. GARODIA, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER I.T.(SS). NO. 227, 228, 229, 230, 231 & 232/ AHD/2010 (ASSESSMENT YEAR 2001-02 TO 2006-07) SHREE YAMUNA PROTEINS, DAHOD-GODHRA HIGHWAY, AT VAVDI, DAHOD VS. ACIT, CC-1, BARODA PAN/GIR NO. :AAHFS2188J (APPELLANT) .. (RESPONDENT) APPELLANT BY: SHRI SAKAR SHARMA, AR RESPONDENT BY: SHRI RAVINDRA KUMAR, CIT DR DATE OF HEARING: 18.07.2012 DATE OF PRONOUNCEMENT: 21.09.2012 O R D E R PER SHRI A. K. GARODIA, AM:- ALL THESE SIX APPEALS ARE FILED BY THE ASSESSEE AG AINST SIX SEPARATE ORDERS OF LD. CIT(A) IV, AHMEDABAD ALL DATED 14.12. 2009 FOR THE ASSESSMENT YEARS 2001-02 TO 2006-07. ALL THESE APP EALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OFF BY WAY OF THIS COMMON ORDER. 2. IT WAS AGREED BY BOTH THE SIDES THAT THE ISSUE I NVOLVED AND THE GROUNDS RAISED BY THE ASSESSEE ARE IDENTICAL FOR AL L THE SIX ASSESSMENT YEARS EXCEPT DIFFERENCE IN AMOUNT AND HENCE, THE FA CTS AND ARGUMENTS FOR ONE YEAR CAN BE CONSIDERED AND THE DECISION IN THIS YEAR CAN BE FOLLOWED IN THE REMAINING FIVE ASSESSMENT YEARS. HENCE, WE PROCEED BY CONSIDERING GROUNDS OF APPEAL, FACTS AND ARGUMENTS FOR THE ASSESSMENT I.T.A.NO.227-232/AHD/2010 2 YEAR 2001-02. THE GROUNDS RAISED BY THE ASSESSEE I N THIS YEAR IN I.T.A.NO. 227/AHD/2010 ARE AS UNDER: 1 . LD. CIT (A) ERRED ON FACTS AND IN LAW IN CONFI RMING ACTION OF ASSESSING OFFICER IN MAKING ASSESSMENT ON THE BASIS OF RETURN FURNISHED U/S 139 INSTEAD OF MAKING ASSESSMENT ON T HE BASIS OF RETURN FURNISHED U/S 153 A OF THE ACT. 2. LD. CIT (A) ERRED ON FACTS AND IN LAW IN C ONFIRMING DISALLOWANCE OF EXCESS AMOUNT OF DEPRECIATION OF RS .2,10, 186/- CLAIMED IN RETURN FILED U/S 153A V I.E. THE AMOUNT CLAIMED IN EXCESS OF DEPRECIATION CLAIMED IN RETURN FURNISHE D U/S 139 WITHOUT APPRECIATING THAT DEPRECIATION COMPUTED IN RETURN F URNISHED U/S 153A WAS IN ACCORDANCE WITH THE PROVISIONS OF THE A CT. 3. LD. CIT (A) ERRED ON FACTS AND IN LAW IN C ONFIRMING ACTION OF ASSESSING OFFICER DENYING REFUND OF TAXES BASED ON INCOME DISCLOSED IN RETURN FURNISHED U/S 153 A OF THE ACT. 3. BRIEF FACTS OF THE CASE ARE THAT A SEARCH WAS CA RRIED OUT IN THE CASE OF THE ASSESSEE ON 19.09.2006 AND ON THE BASIS OF M ATERIAL FOUND DURING SEARCH, THE PROCEEDINGS U/S153A WERE INITIATED FOR THIS YEAR AND SUBSEQUENT FIVE ASSESSMENT YEARS. NOTICE U/S153A W AS ISSUED ON 12.03.2007 AND IN COMPLIANCE TO THE SAME, ASSESSEE FILED RETURN OF INCOME FOR THIS YEAR AS WELL AS FOR THE SUBSEQUENT FIVE ASSESSMENT YEARS. IN THE RETURN OF INCOME FILED BY THE ASSESSEE U/S 1 53A, THE RETURN OF INCOME WAS LESS THAN THE INCOME DECLARED BY THE ASS ESSEE IN THE ORIGINAL RETURN FILED US 139(1) OF THE ACT. THE YEAR-WISE D ETAILS OF SUCH INCOME DECLARED BY THE ASSESSEE IN THE ORIGINAL RETURN FIL ED U/S 139(1) AND IN THE RETURN FILED BY THE ASSESSEE U/S 153A IS AS PER THE FOLLOWING CHART AND IN THE SAME CHART, WE ARE ALSO MENTIONING THE DEPRECIA TION CLAIMED BY THE ASSESSEE IN THESE RETURN OF INCOME FILED U/S 153A A S COMPARED TO THE DEPRECIATION CLAIMED IN THE RETURN OF INCOME FILED U/S139(1). THE LAST COLUMN IS AMOUNT OF INCOME ASSESSED BY THE A.O. IN THE ASSESSMENT ORDER PASSED BY HIM U/S 153A:- I.T.A.NO.227-232/AHD/2010 3 ASSESSMENT YEAR INCOME DECLARED IN ORIGINAL RETURN U/S 139(1) INCOME DECLARED IN RETURN FILED U/S153A EXCESS DEP. CLAIMED IN THE RETURN FILED U/S 153A AS COMPARED TO THE ORIGINAL RETURN ASSESSED INCOME U/S 153A 2001-02 152400 24200 210186 362586 2002-03 317660 218320 162850 480510 2003-04 330540 262430 115426 445966 2004-05 1055830 1004940 115769 1171600 2005-06 1497460 1466890 69621 1567081 2006-07 1477450 1387740 104410 1581860 4. IN REPLY TO A QUERY OF THE BENCH AS TO THE ASSES SMENT YEAR FOR WHICH THE ASSESSMENT PROCEEDINGS WAS PENDING ON THE DATE OF SEARCH, THE ASSESSEE HAS FURNISHED AN YEAR WISE CHART AS PER WH ICH, UP TO ASSESSMENT YEAR 2004-05, THE ASSESSMENT WAS COMPLETED AND THE SAME WAS NOT PENDING BECAUSE THE DEEMED DATE OF PROCESSING OF R ETURN U/S 143(1) IS SHOWN AS 31.07.2005 BEING THE DATE OF ENDING OF 12 MONTHS AFTER THE END OF THE MONTH IN WHICH RETURN WAS FILED AND DATE OF FILING OF RETURN FOR THIS ASSESSMENT YEAR IS 15.07.2004. SUCH DEEMED DATE IS 30.09.2004 FOR ASSESSMENT YEARS 2003-04, 30.09.2003 FOR THE ASSESS MENT YEAR 2002-03 AND 30.09.2002 FOR THE ASSESSMENT YEAR 2001-02. HE NCE, THE ASSESSMENTS OF THESE FOUR YEARS HAVE NOT ABATED BECAUSE THE DAT E OF SEARCH IS 19.09.2006. SUCH DEEMED DATE OF PROCESSING OF RETU RN FOR THE ASSESSMENT YEAR 2005-06 HAD BEEN STATED TO BE 31.10.2006 AND F OR THE ASSESSMENT YEAR 2006-07 AS 31.12.2007 AND HENCE, THE ASSESSMEN T OF THESE TWO YEARS HAVE TO BE TAKEN AS ABATED ON THE DATE OF SEARCH I. E. 19.09.2006. 5. IN THE LIGHT OF ABOVE NOTED FACTS, NOW WE PROCEE D TO CONSIDER THE ARGUMENTS OF LD. A.R. IT IS THE SUBMISSION OF THE L D. A.R. THAT THE JUDGEMENT OF HONBLE APEX COURT RENDERED IN THE CAS E OF SUN ENGINEERING AS REPORTED IN 198 ITR 297 IS NOT APPLI CABLE BECAUSE THIS JUDGEMENT IS IN RESPECT OF ESCAPEMENT OF INCOME AND NOT IN RESPECT OF SEARCH CASES. IT WAS ALSO SUBMITTED THAT THE 3 RD PROVISO TO SECTION 153A IS NOT RETROSPECTIVE WHICH HAS BEEN INSERTED BY THE FI NANCE ACT 2012 W.E.F. 1.7.2012. HE FURTHER SUBMITTED THAT EXPLANATION (5 ) TO SECTION 32 IS I.T.A.NO.227-232/AHD/2010 4 CLARIFICATORY AND HENCE, RETROSPECTIVE. THE SAME I S INSERTED BY THE FINANCE ACT 2001 W.E.F. 01.04.2002 AND AS PER THIS EXPLANATION, IT WAS PROVIDED THAT SUB-SECTION (1) TO SECTION 32 SHALL A PPLY WHETHER OR NOT THE ASSESSES HAS CLAIMED THE DEDUCTION IN RESPECT OF DE PRECIATION IN COMPUTATION OF HIS TOTAL INCOME. HE SUBMITTED THAT DEPRECIATION HAS TO BE ALLOWED TO THE ASSESSEE WHICH IS ALLOWABLE AS PER L AW AND IT SHOULD MAKE NO DIFFERENCE THAT ASSESSEE HAS CLAIMED LESSER AMOU NT OF DEPRECIATION IN THE ORIGINAL RETURN OF INCOME FILED BY THE ASSESSEE U/S 139(1). RELIANCE WAS PLACED BY HIM ON VARIOUS JUDICIAL PRONOUNCEMENT S BUT IN OUR CONSIDERED OPINION, THE SAME ARE NOT APPLICABLE WIT H REGARD TO THE GROUND RAISED BY THE ASSESSEE AS REPRODUCED ABOVE. IN OUR CONSIDERED OPINION, FOR THE PURPOSE OF DECIDING THESE GROUNDS, IT HAS T O BE SEEN AS TO WHETHER THE ASSESSMENT PROCEEDINGS HAVE ABATED OR NOT AS PE R THE PROVISIONS OF SECTION 153A AND IF THE SAME HAS NOT ABATED THEN, T HE INCOME ASSESSED AS PER THE ORIGINAL RETURN OF INCOME IN THE ASSESSMEN T COMPLETED PRIOR TO THE DATE OF SEARCH CANNOT BE DISTURBED AND ONLY CHANGE WHICH CAN BE MADE IS ON THE BASIS OF MATERIAL FOUND IN THE COURSE OF SEA RCH. IN THE PRESENT CASE, AS PER THE GROUND OF APPEAL RAISED BY THE ASSESSEE, THERE IS NO DISPUTE REGARDING VARIOUS ADDITIONAL INCOMES OFFERED BY THE ASSESSEE HIMSELF AS PER THE MATERIAL FOUND IN THE COURSE OF SEARCH AND THE A.O. HAS ALSO ACCEPTED THE SAME AND THE ONLY DISPUTE IS REGARDING EXCESS DEPRECIATION CLAIMED BY THE ASSESSEE AS PER THE RETURN OF INCOME FILED U/S 153A AS COMPARED TO THE DEPRECIATION CLAIMED IN THE RETURN OF INCOME FILED U/S 139(1). ONE MORE DISPUTE IS THERE AS TO WHETHER TH E A.O. IS JUSTIFIED IN MAKING THE ASSESSMENT ON THE BASIS OF RETURN FURNIS HED U/S 139(1) INSTEAD OF MAKING ASSESSMENT ON THE BASIS OF RETURN FURNISH ED U/S 153A OF THE INCOME TAX ACT, 1961. LD. D.R. SUPPORTED THE ORDER S OF AUTHORITIES BELOW. I.T.A.NO.227-232/AHD/2010 5 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUSE D THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORIT IES BELOW. WE HAVE ALREADY NOTED THAT THE ASSESSMENT FOR THE ASSESSMEN T YEARS 2001-02 TO 2004-05 HAVE NOT ABATED BECAUSE THE ASSESSMENT PROC EEDINGS WERE NOT PENDING FOR THESE FOUR YEARS ON THE DATE OF SEARCH I.E. 19.09.2006. BUT THE ASSESSMENT FOR THE REMAINING TWO YEARS I.E. ASSESSM ENT YEARS 2005-06 AND 2006-07 HAVE ABATED. IN OUR CONSIDERED OPINION, FO R THE PURPOSE OF ASSESSING THE INCOME FOR EARLIER FOUR YEARS I.E. AS SESSMENT YEARS 2001-02 TO 2004-05, THE ASSESSEE CANNOT BE ALLOWED TO RAISE A NEW CLAIM REGARDING DEPRECIATION CLAIMED AND ALLOWED AT A LESSER AMOUNT IN THE RETURN FILED BY IT U/S 139(1) BECAUSE IN THOSE CASES, WHERE THE ASS ESSMENTS HAVE NOT ABATED, THE ONLY CHANGE WHICH CAN BE MADE IN THE AS SESSMENT U/S 153A OVER AND ABOVE THE ASSESSMENT ALREADY COMPLETED, IS TO BE ON THE BASIS OF THE MATERIAL FOUND IN THE COURSE OF SEARCH. BUT I N THE CASE OF THOSE YEARS WHERE THE ASSESSMENTS HAVE BEEN ABATED, THE A SSESSMENT HAS TO BE MADE INCLUDING THE ORIGINAL AS WELL AS REASSESSMENT ON THE BASIS OF MATERIAL FOUND IN THE COURSE OF SEARCH. THIS VIEW O F US FINDS SUPPORT FROM THE DECISION OF SPECIAL BENCH OF THE TRIBUNAL RENDE RED IN THE CASE OF AIRWIDE EXPRESS CARGO VS ITO IN I.T.A.NO. 3721/AHD/ 2008 ORDER DATED 21.10.2011. 7. THEREFORE, WE HOLD THAT IN THE ASSESSMENT FOR AS SESSMENT YEARS 2001-02 TO 2004-05, THE ASSESSEE CANNOT BE ALLOWED TO CLAIM EXCESS DEPRECIATION AS COMPARED TO DEPRECIATION CLAIMED B Y THE ASSESSEE IN THE RETURN FILED BY IT U/S139(1). WE HAVE ALSO FOUND T HAT THE A.O. HAS PROCEEDED TO MAKE ASSESSMENT FOR ALL THE EARLIER YE ARS ON THE BASIS OF TOTAL INCOME DECLARED BY THE ASSESSEE IN THE RETURN FILED U/S 139(1) AND IN THE SAME, HE HAS ADDED THE AMOUNT OF EXCESS DEPRECIATIO N CLAIMED BY THE ASSESSEE IN THE RETURN FILED BY IT U/S 153A AS COMP ARED TO DEPRECIATION I.T.A.NO.227-232/AHD/2010 6 CLAIMED BY THE ASSESSEE IN THE RETURN FILED BY IT U /S 139(1). IN OUR CONSIDERED OPINION, THIS APPROACH/ACTION OF THE A.O . IS NOT JUSTIFIED BECAUSE IF THE A.O. STARTED WITH THE AMOUNT OF INCO ME DECLARED BY THE ASSESSEE U/S 139(1) THEN THERE IS NO EXCESS DEPRECI ATION CLAIMED BY THE ASSESSEE IN THIS AMOUNT OF INCOME DECLARED BY IT IN THE RETURN OF INCOME FILED U/S 139(1). IN OUR CONSIDERED OPINION, THE A .O. HAS TO START THE COMPUTATION OF INCOME IN THE ASSESSMENT COMPLETED B Y HIM U/S 153A WITH THE INCOME DECLARED BY THE ASSESSEE IN THE RET URN FILED BY IT U/S 153A AND AFTER THIS, HE CAN MAKE THE ADJUSTMENT ON ACCOU NT OF EXCESS DEPRECIATION CLAIMED BY THE ASSESSEE. ACCORDINGLY, WE DIRECT THE A.O. TO RECOMPUTE THE INCOME OF THE ASSESSEE IN ASSESSMENT YEARS 2001-02 TO 2004-05 BY STARTING WITH THE AMOUNT OF INCOME DECLA RED BY THE ASSESSEE IN THE RETURN FILED BY IT U/S 153A AND MAKING ADDIT ION ON ACCOUNT OF EXCESS DEPRECIATION CLAIMED BY THE ASSESSEE IN THOS E FOUR YEARS IN THE RETURN OF INCOME FILED BY THE ASSESSEE U/S 153A AS COMPARED TO DEPRECIATION CLAIMED IN THE RETURN OF INCOME FILED BY THE ASSESSEE U/S 139(1). GROUND NO.1 OF THE ASSESSEE IN ALL THESE F OUR YEARS IS ALLOWED WHEREAS THE REMAINING TWO GROUNDS I.E. GROUNDS NO.2 & 3 IN ALL THESE FOUR YEARS ARE REJECTED. 8. IN THE RESULT, THESE FOUR APPEALS OF THE ASSESSE E ARE PARTLY ALLOWED. 9. NOW, WE TAKE UP THE APPEAL FOR THE REMAINING TWO YEAS I.E. APPEALS FOR THE ASSESSMENT YEARS 2005-06 & 2006-07. 10. WE HAVE ALREADY NOTED THAT ASSESSMENT OF THESE TWO YEARS HAVE BEEN ABATED ON THE DATE OF SEARCH I.E. 19.09.2006 A ND THEREFORE, FOR THESE TWO YEAS, THE A.O. HAS TO DECIDE THE AMOUNT OF DEPR ECIATION ALLOWABLE TO THE ASSESSEE AS PER LAW. IN THOSE TWO YEAS, THE A. O. HAS TO START WITH THE AMOUNT OF INCOME DECLARED BY THE ASSESSEE IN THE RE TURN OF INCOME FILED BY THE ASSESSEE U/S 153A AND NO DISALLOWANCE OF DEP RECIATION CAN BE I.T.A.NO.227-232/AHD/2010 7 MADE IN THOSE TWO YEARS ON THIS BASIS THAT THE AMOU NT IS IN EXCESS OF DEPRECIATION CLAIMED IN THE RETURN OF INCOME FILED U/S 139(1) OF THE INCOME TAX ACT, 1961. THE A.O. HAS TO EXAMINE AS T O WHETHER THE AMOUNT OF DEPRECIATION CLAIMED BY THE ASSESSEE IN T HESE TWO YEARS AS PER THE RETURN OF INCOME FIELD BY THE ASSESSEE U/S 153A , IS AS PER LAW OR NOT AND IF THE SAME IS AS PER LAW, NO DISALLOWANCE IS C ALLED FOR. WITH THESE DIRECTIONS, WE SET ASIDE THE ORDERS OF LD. CIT(A) I N BOTH THESE YEAS AND RESTORE THE MATTER BACK TO THE FILE OF THE A.O. FOR A FRESH DECISION AS PER ABOVE DISCUSSION. 10. IT WAS ALSO POINTED OUT BY THE LD. A.R. THAT IN THE ASSESSMENT YEAR 2005-06 I.E. IN I.T.(SS) NO.531/AHD/2010, THERE IS ONE MORE GROUND REGARDING DISALLOWANCE OF BAD DEBTS OF RS.19,448/-. WE FIND THAT THE A.O. HAS DISCUSSED THE ABOVE DISALLOWANCE OF RS.19. 448/- IN RESPECT OF THE CLAIM OF THE ASSESSEE REGARDING BAD DEBTS U/S 3 6(1)(VII) BY FOLLOWING THE JUDGMENT OF HONBLE GUJARAT HIGH COURT RENDERED IN THE CASE OF DHAL ENTERPRISES AND ENGINEERS PVT. LTD. VS CIT AS REPOR TED IN 207 CTR 729 (GUJ.) BUT WHILE COMPUTING THE INCOME ON PAGE 4 OF THE ASSESSMENT ORDER, HE HAS MADE ONLY ONE ADDITION OF RS.69,621/- I.E. W ITH REGARD TO EXCESS DEPRECIATION. NOW, THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE JUDGMENT OF HONBLE APEX COURT RENDERED IN THE CASE OF TRF LTD. AS REPORTED IN 323 ITR 397 WHEREIN, IT WAS HELD THAT B AD DEBT IS ALLOWABLE IN THE YEAR OF WRITE OFF OF BAD DEBT AND THE ASSESSEE IS NOT REQUIRED TO ESTABLISH THAT THE DEBT HAVE ACTUALLY BECOME BAD. RESPECTFULLY FOLLOWING THIS JUDGEMENT OF HONBLE APEX COURT, WE HOLD THAT NO DISALLOWANCE OF BAD DEBTS IS CALLED FOR BUT THIS FACT HAS TO BE ASC ERTAINED BY THE A.O. AS TO WHETHER ANY ADDITION ON THIS ACCOUNT WAS IN FACT MA DE BY THE A.O. OR NOT AND IF SUCH ADDITION WAS MADE THEN THE SAME SHOULD BE DELETED. GROUND I.T.A.NO.227-232/AHD/2010 8 NO.3 OF THE ASSESSEES APPEAL IN THE ASSESSMENT YEA R 2005-06 IS DISPOSED OFF IN THESE TERMS. 11. IN THE RESULT, THESE TWO APPEALS OF THE ASSESSE E FOR THE ASSESSMENT YEARS 2005-06 & 2006-07 ARE ALLOWED FOR STATISTICAL PURPOSES IN THE TERMS INDICATED ABOVE. 12. IN THE COMBINED RESULT, APPEALS OF THE ASSESSEE FOR THE ASSESSMENT YEARS 2001-02 TO 2004-05ARE PARTLY ALLOWED FOR STAT ISTICAL PURPOSE AND REMAINING TWO APPEALS OF THE ASSESSEE FOR THE ASSES SMENT YEARS 2005-06 & 2006-07 ARE ALLOWED FOR STATISTICAL PURPOSES. 13. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED HEREINABOVE. SD./- SD./- (KUL BHARAT) (A. K. GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER SP COPY OF THE ORDER FORWARDED TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT (APPEALS) 5. THE DR, AHMEDABAD BY ORDER 6. THE GUARD FILE AR,ITAT,AHMEDABAD 1. DATE OF DICTATION 29/08/2012 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 10.09.2012.OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P .S./P.S. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 21/09/2012 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S.21/9/12 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 21/9/12 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER . 9. DATE OF DESPATCH OF THE ORDER. .