GYARSI LAL GUPTA vs. C I T

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ITA/100/2005HC RajasthanRJHC02038657200506 December 20165 pages
AI SummaryPartly Allowed

What did the High Court hold?

The High Court decided to answer only issues 2 and 3. Issue 1 was deemed academic as the assessee had already paid the tax and filed a revised return. Regarding issue 2, the Court held that the assessee had not filed a revised return in response to the notice under Section 148, but rather stuck to the earlier return. Therefore, the additional depreciation claimed, which was more than what was claimed in the original return, was not permissible. The Court reasoned that depreciation cannot be allowed without filing a revised return. Consequently, issue 2 was answered in favour of the revenue and against the assessee. On issue 3, as issue 2 was decided in favour of the revenue, and issue 3 was consequential to issue 2, it was also answered in favour of the revenue and against the assessee. The appeal was disposed of accordingly.

What were the facts?

The assessee, M/s Gyarsi Lal Gupta & Sons, filed its return of income for the assessment year 1996-97 showing a net loss of Rs. 29,840. Proceedings under Section 147 were initiated, and a notice under Section 148 was issued on May 22, 2001, to reassess income. The assessee failed to comply with multiple notices issued under Section 142(1) requesting production of books of account, bills, and vouchers. The assessee filed a return on February 13, 2003, showing a loss of Rs. 29,840, but claimed increased interest to RFC and depreciation compared to the original return. The assessee claimed books of accounts were misplaced while also preparing income and expenditure details.

What were the issues?

The Tribunal had to decide the following substantial questions of law: 1. Whether the Tribunal was justified in upholding the validity of reassessment made under Section 147/148, irrespective of the AO's power under Section 133(6) being found not in accordance with law by the Tribunal? 2. Whether the Tribunal was correct in confirming the disallowance of additional depreciation claimed through returns filed in response to notice under Section 148, without considering that the original claim was restricted and profits were insufficient for a higher claim? 3. Whether, on the facts and circumstances, the Tribunal was justified in upholding the interest charged by the AO under Section 234A/B/C as legally correct and sustainable? Assessee's contentions: Not explicitly recorded for all issues. However, the filing of a revised return and payment of tax were highlighted in relation to issue 1. The assessee argued for the allowability of increased depreciation and consequential interest. Revenue's contentions: Not explicitly recorded. However, the revenue's position was upheld by the Tribunal on issues 2 and 3, implying arguments against the allowability of additional depreciation and consequential interest without a valid revised return and sufficient profits.

Which sections of the Income-tax Act were involved?

Section 147,Section 148,Section 142(1),Section 133(6),Section 234A,Section 234B,Section 234C

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B.INCOME TAX APPEAL NO. 100 / 2005 M/s Gyarsi Lal Gupta & Sons, Prop. of Hotel Goyal Vanasthali Marg, jaipur. ----Appellant Versus 1. The Commissioner of Income Tax, Jaipur. 2. Income-Tax Officer, Ward No.3(3) Jaipur. ----Respondent Connected With D.B.INCOME TAX APPEAL No. 30 / 2005 M/s Gyarsi Lal Gupta & Sons, Prop. of Hotel Goyal Vanasthali Marg, jaipur. ----Appellant Versus 1. The Commissioner of Income Tax, Jaipur. 2. Income-Tax Officer, Ward No.3(3) Jaipur. ----Respondent __________________________________________ For Appellant : Mr. P.K. Kasliwal For Respondent : Mr. Anuroop Singhi __________________________________________ HON'BLE MR. JUSTICE K.S. JHAVERI HON'BLE MR. JUSTICE DINESH MEHTA (2 of 5 ) [ITA-100/2005]

Judgment Per Hon’ble Jhaveri, J. 06/12/2016

1.

By way of this appeal, the assessee has challenged the judgment and order of the Tribunal whereby the Tribunal has dismissed both the appeals filed by the assessee as well as the department and confirmed the order of the CIT (Appeals).

2.

The facts of the case are that the assessee had filed its return of income on 16.10.1996 showing net loss of Rs.29840/-. The return of income was accompanied by computation of total income. The return was processed under section 143(1)(a) of the Act on 20.12.1996. Thereafter, on possession of information that the assessee had concealed its income proceedings under section 147 were initiated and a notice under section 148 was issued on 22.05.2001 to reassess the assessee’s income, which was issued after receiving prior approval of Additional CIT. Since the assessee failed to comply with notice under section 148, a notice u/s 142(1) was sent to him on 26.07.2001 wherein the assessee was required to produce information on various points and also to produce all the books of account with complete bills and vouchers on 06.08.2001. As no compliance to this notice was made, a notice under section 142(1) was issued on 07.09.2001. This notice was served upon the assessee on 24.08.2001 but on the date of hearing an adjournment application was received and the case was adjourned to 12.09.2001 but again there was no compliance. A fresh notice under section 142(1) dated

(3 of 5 ) [ITA-100/2005] 13.01.2003 was served on the assessee on 16.01.2003 to make compliance with the earlier requirements on 28.01.2003. But again adjournment was sought. It may be added that on none of the dates the assessee produced books of accounts, bills and vouchers though he was specifically asked to do so. The assessee was asked to furnish the information as already called for vide notice under section 142(1) dated 19.07.2001 and also to furnish the information on the points in this letter and also to produce books of accounts, bank pass books, bills and vouchers on 14.02.2003. The assessee filed return on 13.02.2003 showing loss of Rs.29840/-. Along with this return he has filed income and expenditure account wherein he has claimed interest to RFC for Rs. 1275500/- as against Rs.1375500/- claimed in the original return of income and has claimed depreciation of Rs.109840/- whereas in the original return it was Rs.9840/- only. In the reply it has been stated by the assessee that regular books of accounts, bills and vouchers have been maintained. On 26.02.2003 the assessee was again asked to furnish complete reply to the questionnaire and produce books of accounts on 28.02.2003. Since the assessee was avoiding to produce the books of accounts, bills and vouchers, though specifically asked for, one more opportunity was given to him by issuing notice under Section 142(1) on 07.03.2003 for compliance on 12.03.2003. On the one hand the assessee has prepared information regarding income and expenditure heads like salary, electricity, advertisement, telephone, room rent etc. and on the other hand saying that (4 of 5 ) [ITA-100/2005] the books of accounts have been misplaced.

3.

This court, on 28.10.2005, while admitting the appeal, framed following substantial questions of law:

“1. Whether the Tribunal was justified in upholding the validity of re-assessment made by the A.O. u/s 147/148 of the I.T. Act 1961 irrespective of the fact that power exercised by the A.O. U/s 133(6) of the Act by making enquiry from the R.F.C. and which forms the basis for re-assessment found to be not in accordance with law by the tribunal?

2.

Whether the Tribunal was correct in confirming the disallowance of additional depreciation claimed through returns filed in response to notice u/s 148 of the Act without considering the fact that claim of depreciation in original return was only restricted and the profits available with the assessee were not sufficient enough to cover the higher claim?

3.

Whether on the facts and in the circumstances of the case, the Tribunal was justified upholding that interest charged by the A.O. U/s 234/A/B/C, is legally correct and sustainable?

4.

In view of the fact that the assessee has already paid the tax and in view of the fact that the assessee has filed revised return, the question no.1 is only acadamic and we are not required to answer the same.

5.

On issue no.2, we are of the opinion that in view of the notice under Section 148 of the Income Tax Act, the assessee has not filed revised return and stuck to the earlier return filed by him and, therefore, we are of the opinion that further depreciation claimed more than what was claimed is nogt permissible. In that view of the matter, the depreciation

(5 of 5 ) [ITA-100/2005] cannot be allowed without filing of revised return. In that view of the matter, the issue no.2 is answered in favour of the department and against the assessee. On issue no.3, as the issue no.2 has been answered in favour of the department and against the assessee and in view of the fact that issue no.3 is consequential to issue no.2, therefore, we answer this issue in favour of the department and against the assessee.

The appeal stands disposed of accordingly. A copy of this order be placed in each of the file. (DINESH MEHTA)J. (K.S. JHAVERI)J. bblm

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