BDPS SSOFTWARE LTD vs. THE DY. COMMISSIONER OF INCOME TAX CIRCLE 6 (1)

Since the advocate for the appellant has consistently remained absent   on   several   occasions,   we   had   asked   the   representative   of   the appellant, Mr.Thadani who has been regularly taking adjournment to make alternate   arrangements.     On   the   last   occasion,   the   said   representative expressed the inability of the appellant to engage any other advocate to argue the case on behalf of the appellant.   In these circumstances, we requested Mr.Subhash Shetty to assist the Court as amicus curiae, which he readily agreed.  Accordingly, the matter was adjourned so as to enable Mr.Shetty to go through the file and take necessary instructions from the representative of the assessee.

Today, we have heard Mr.Shetty for the appellant and Mr.Suresh Kumar for the Revenue.  The appeal is admitted on the following substantial question of law. “Whether the Income Tax Appellate Tribunal was right in law in confirming   the   addition   of   Rs.3,18,24,076/­   on   account   of   depreciation disallowed   and   on   account   of   late   payment   of   providend   fund   of   Rs. 7,53,103/­ made during the year ?”

By   consent,   the   matter   is   taken   up   for   final   hearing.     The assessment year involved herein is AY 2001­2002. 4. The assessee is engaged in the business of computer education and software development.  In the assessment year in question, the assessee Uploaded on - 21/08/2020 filed   return   of   income   on   30th  October   2001   claiming   depreciation   on computer software and computer hardware at Rs.4,32,96.085/­.  There was a survey action at the premises of the assessee on 23rd December 2002, wherein statements of the managing director and the chief accountant of the assessee were recorded.   In their statements, the managing director and the chief accountant admitted that they have not purchased the computer software and   computer   hardware   and   out   of   the   depreciation   amounting   to   Rs. 4,32,96,085/­ agreed to offer the amount of Rs.3,18,24,076/­ for taxation.

Accordingly, on 26th December 2002, revised return was filed by the assessee withdrawing the depreciation amounting to Rs.3,18,24,076/­. The revised return was accepted on 13th January 2003 under Section 143(1) of the Income Tax Act, 1961. Thereafter, the assessee sought to file re­revised return on 15th January 2003 along with an affidavit, wherein it was stated that in the revised return filed on 26th  December 2003 the depreciation amount was erroneously withdrawn and wrongly offered to tax.   In the affidavit filed along with the re­revised return the assessee sought to retract the statements recorded during the course of survey action.  The re­revised return filed on 15th January 2003 could not be obviously entertained once the revised return filed on 26th  December 2002 was processed on 13th January 2003. 6. Thereafter,   a   notice   was   issued   under   Section   143(2)   and assessment   order   under   Section   143(3)   was   passed   on   30th  May   2003, Uploaded on - 21/08/2020 wherein the retracted statement of the assessee was disbelieved and the amount of Rs.3,18,24,076/­ offered in the revised return was accepted.  The assessing officer further disallowed Rs.7,53,103/­ being the provident fund dues paid by the assessee belatedly. Challenging the aforesaid order, the assessee filed an appeal before the Commissioner of Income Tax (Appeals). By   an   order   dated   27th  August   2003,   the   Commissioner   of   Income   Tax (Appeals) dismissed the appeal filed by the assessee.  Further appeal filed by the  assessee  was also dismissed  on 24th  February  2009. Challenging the aforesaid order, present appeal is filed by the assessee under Section 260A of the Income Tax Act, 1961. 7. Mr.Shetty,  amicus  curiae  submitted   that   once  the  statement made during the course of survey has been retracted by filing an affidavit and re­revised   return   has   been   filed   on   15th  January   2003   withdrawing   the amount   of   Rs.3,18,24,076/­,   the   authorities   below   were   not   justified   in denying the depreciation and making addition of the aforesaid amount.  He also submitted that in the light of the judgment of the Apex Court in the case of Commissioner of Income Tax V/s. Alom Extrusions Limited reported in (2009)  319 ITR 306 (S.C.), dis­allowance of Rs.7,53,103/­ on account of late payment of provident fund cannot be sustained.

Mr.Suresh Kumar, learned Advocate appearing on behalf of the Revenue fairly stated that the issue relating to dis­allowance on account of late payment of provident fund dues would have to be decided in favour of Uploaded on - 21/08/2020 the assessee in view of the decision of the Apex Court in the Alom Extrusions Limited (supra).  As regards the additions of Rs.3,18,24,076/­ is concerned, he submitted that in view of the revised return filed by the assessee, the authorities   below   were   justified   in   sustaining   the   addition   of   Rs. 3,18,24,076/­.

On careful consideration of the rival submissions, in our opinion, the challenge to the addition of Rs.3,18,24,076/­ cannot be sustained.  In the present   case,   though   the   assessee   initially   claimed   depreciation   of   Rs. 4,31,96,085/­, the assessee admitted during the course of survey that the computer software and hardware has not been purchased by the assessee and the assessee itself filed revised return wherein the claim towards depreciation amounting to Rs.3,18,24,076/­ was withdrawn and the said amount was offered to tax.   Although the assessee has filed an affidavit retracting the statement recorded during the course of survey, there is no material on record to show that the computer software and computer hardware to the extent of Rs.3.18 crores were actually purchased by the assessee.

The Income Tax Appellate Tribunal has recorded a finding of fact that during the course  of survey neither the assets were found nor the assessee could establish names of the parties from whom these computer software and computer hardware were purchased.  Moreover, the Income Tax Appellate Tribunal has recorded a finding of fact that even the payments were made by bearer cheques and not by account payee cheques.  In these Uploaded on - 21/08/2020 circumstances, the decision of the Income Tax Appellate Tribunal in rejecting the claim of the assessee cannot be faulted.

As regards the disallowance of Rs.7,53,103/­ on account of late payment of provident fund amount is concerned, counsel on both sides agree that in view of the decision of the Apex Court in the case of Alom Extusions Limited (supra), the issue has to be answered in favour of the assessee.

Accordingly, the appeal is disposed by upholding the order of the Income Tax Appellate Tribunal in so far as it relates to bringing to tax the amount of Rs.3,18,24,076/­ offered to tax by the assessee in its revised return and by setting aside the order of the Income Tax Appellate Tribunal insofar as it relates to disallowing the provident fund dues paid belatedly.

The appeal is disposed off accordingly with no order as to costs.

Before concluding, we place on record our appreciation of the assistance rendered to the Court by Shri Subhash Shetty as amicus curiae. (K.K. Tated, J.) (J.P. Devadhar, J.) Uploaded on - 21/08/2020 Powered by TCPDF (www.tcpdf.org)