Pazheri jewellers, Palakkad V. DCIT, Trichur

MA 70/COCH/2012

• Counselvise Citation: [2013] 123 COUNSELVISE.COM (IT) 9778 (ITAT-COCHIN)
• Duration Of Justice: 5 month(s) 11 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 11-01-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 07-12-2012
• Assessment Year: misc
• Appeal Filed On: 30-07-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S VIJAYAPRABHA
• Assessee Lawyers: C R HARISH
• Keywords: Depreciation

Judgement Text

1 ITA NO.70/COCH/2012 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI N.R.S. GANESAN (JM) AND SHRI B.R. BASKA RAN(AM) M.A. NO.70/COCH/2012 (ARISING OUT OF I.T(SS)A NO. 116/COCH/2005) (BLOCK PERIOD 01-04-1996 TO 28-08-2002) PAZHERI JEWELLERS VS DY.C.I.T., CENT.CIR. MANNARKKAD TRICHUR PALAKKAD PAN : AAGFP1096B (APPLICANT) (RESPONDENT) APPLICANT BY : SHRI C.R. HARISH RESPONDENT BY : SMT. S VIJAYAPRABHA DATE OF HEARING : 21-12-2012 DATE OF PRONOUNCEMENT : 11-01-2013 O R D E R PER N.R.S. GANESAN (JM) THE TAXPAYER HAS FILED THE PRESENT MISCELLANEOUS A PPLICATION ON THE GROUND THAT THERE IS AN ERROR IN THE ORDER OF THIS TRIBUNAL DATED 29-06-2012. 2. SHRI C.R. HARISH, THE LD.REPRESENTATIVE FOR THE TAXPAYER SUBMITTED THAT THE TAXPAYER CLAIMED DEPRECIATION BEFORE THE LOWER AUTHORITIES, HOWEVER, 2 ITA NO.70/COCH/2012 THE SAME WAS REJECTED AND THE SPECIFIC GROUND WAS RA ISED BEFORE THIS TRIBUNAL WITH REGARD TO THE DEPRECIATION. WHILE DI SPOSING OF THAT GROUND ON PAGE 6 AT PARAGRAPH 18, THE TRIBUNAL FOUND THAT THE INCOME WAS ESTIMATED U/S 44AF @5%. THEREFORE, THE TAXPAYER IS NOT ENTIT LED FOR ANY DEPRECIATION. ACCORDING TO THE LD.REPRESENTATIVE, PROVISIONS OF S ECTION 44AF ARE NOT APPLICABLE IN THE CASE OF THE TAXPAYER SINCE THE TO TAL RECEIPTS EXCEEDED THE PRESCRIBED LIMIT. THEREFORE, THE TAXPAYER CONTENDE D BEFORE THIS TRIBUNAL THAT THE PROVISIONS OF SECTION 44AF ARE NOT APPLICA BLE; AS SUCH, DEPRECIATION HAS TO BE GRANTED. THIS TRIBUNAL IGNORED THE SUBMI SSIONS OF THE TAXPAYER. THEREFORE, ACCORDING TO THE LD.REPRESENTATIVE, THER E IS AN ERROR WITHIN THE MEANING OF SECTION 254(2) OF THE ACT. WE HEARD, SM T. S VIJAYAPRABHA, THE LD.DR ALSO. 3. THE ONLY CONTENTION OF THE LD.REPRESENTATIVE FOR THE TAXPAYER IS THAT THE TOTAL TURNOVER EXCEEDED THE PRESCRIBED LIMIT, T HEREFORE, SECTION 44AF IS NOT APPLICABLE. WE HAVE CAREFULLY GONE THROUGH THE WRITTEN SUBMISSIONS OF THE LD.REPRESENTATIVE WHICH WAS FILED DURING THE HE ARING OF THE APPEAL. IN THE WRITTEN SUBMISSION, THE LD.AR CLEARLY STATED TH AT THE INCOME WAS 3 ITA NO.70/COCH/2012 COMPUTED U/S 44AF OF THE ACT. IN FACT, THE LD.REPR ESENTATIVE HAS STATED IN THE WRITTEN SUBMISSION AS FOLLOWS: 1) FOR THE ASSESSMENT YEARS 1997-98 TO 2001-02 THE INCOME IS ARRIVED AT ON THE BASIS OF DATA IN THE SEIZED ITEM RRA 12. FROM THIS THE ASSESSEE HAS DEDUCTED DEPRECIATION ON INVE STMENTS RELATING TO THE FIXED ASSETS UNEARTHED DURING THE S EARCH AND WHICH WERE NOT INCLUDED IN THE REGULAR BOOKS OF ACC OUNTS MAINTAINED BY HIM FROM WHICH THE INCOME UNDER SECTI ON 44AF WAS COMPUTED. THEREFORE, IT IS OBVIOUS THAT THE INCOME WAS COMPUT ED BY TAKING THE PROVISIONS OF SECTION 44AF @5%. THIS IS ALSO APPAR ENT FROM THE ASSESSMENT ORDER THAT THE ASSESSING OFFICER CLEARLY SAYS THAT THE TAXPAYER RETURNED TOTAL INCOME REFERRING TO SECTION 44AF @5% OF THE TOTAL T URNOVER. NOW THE TAXPAYER CLAIMS THAT HE ARGUED BEFORE THIS TRIBUNAL THAT 44AF IS NOT APPLICABLE, THEREFORE, HE IS ENTITLED FOR DEPRECIAT ION. WHEN THE TAXPAYER HIMSELF HAS COMPUTED THE INCOME ON THE BASIS OF PRO VISIONS OF SECTION 44AF AND ESTIMATED THE INCOME AT 5% WHILE FILING THE RET URN, THE TAXPAYER NOW CANNOT SAY THAT PROVISIONS OF SECTION 44AF ARE NOT APPLICABLE. NO DOUBT, PROVISIONS OF SECTION 44AF ARE NOT APPLICABLE IN RE SPECT OF TAXPAYERS WHOSE 4 ITA NO.70/COCH/2012 TURNOVER EXCEEDS RS.40 LAKHS. WHEN THE TAXPAYER HA S NOT RECORDED THE TRANSACTION IN THE BOOKS OF ACCOUNT PROPERLY AND TH E SEIZED MATERIAL FOUND IN THE COURSE OF SEARCH OPERATION REVEALED UNDISCLO SED TRANSACTION AND THE PROFIT WAS ESTIMATED ON THE BASIS OF THE MATERIAL F OUND DURING THE COURSE OF SEARCH OPERATION, THIS TRIBUNAL IS OF THE CONSIDERE D OPINION THAT THE TAXPAYER IS NOT ENTITLED FOR DEPRECIATION ONCE THE PROFIT WAS ESTIMATED. IN OTHER WORDS, WHEN THE PROFIT WAS ESTIMATED, ALL EXP ENDITURE INCLUDING DEPRECIATION ARE DEEMED TO HAVE BEEN ALLOWED. THER EFORE, IRRESPECTIVE OF THE FACT WHETHER SECTION 44AF IS APPLICABLE OR NOT, THE TAXPAYER IS NOT ELIGIBLE FOR DEPRECIATION ONCE THE PROFIT WAS ESTIM ATED. IN THIS CASE, THE TAXPAYER IN THE WRITTEN SUBMISSION AS WELL AS BEFOR E THE LOWER AUTHORITIES HAS ADMITTED THAT THE PROFIT WAS ESTIMATED AS PER S ECTION 44AF. THEREFORE, THIS TRIBUNAL DO NOT FIND ANY ERROR, MUCH LESS A PR IMA FACIE ERROR, IN THE ORDER DATED 29-06-2012. ACCORDINGLY, THE MISCELLAN EOUS PETITION OF THE TAXPAYER IS DISMISSED AS DEVOID OF MERIT. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 11 TH JANUARY, 2013. SD/- SD/- (B.R. BASKARAN) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN, DT : 11 TH JANUARY, 2013 PK/- 5 ITA NO.70/COCH/2012 COPY TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE COMMISSIONER OF INCOME-TAX 4. THE COMMISSIONER OF INCOME-TAX(A) 5. THE DR (TRUE COPY) BY ORDER ASSTT. REGISTRAR, INCOME-TAX APPELLATE TRIBUNAL, COCHIN BENCH