SALIM ABDULLAH RATHOD,MUNDRA vs. DY COMMISSIONER OF INCOME TAX, GANDHIDHAM CIRCLE

The grounds of appeal raised by the assessee are as under:

The brief facts of the case are that The assessee has filed original return of income on 28-09-2012 declaring therein total income of Rs.37,68,510/ This case was subsequently selected for scrutiny through CASS and notice u/s 143(2) dated 23-09-2013 & 142(1) along-with questionnaire dated 02-04-2014 was issued. In response to the notices, Shri Nikunj Thacker, CA duly Authorized Representative of the assessee attended on 24-09-2014 and submitted the details/explanations as called for vide notice dated 02-04-2014. The Authorized Representative of the assessee was discussed with him. The assessee is sole proprietor of M/s. AD Rathod and is engaged in the business of civil construction.

Disallowance of depreciation claimed @ 30%.

The assessee submitted the justifications for claiming depreciation @ 30% vide letter dated 15-01-2015. The submissions of the assessee have been considered carefully and the same are found to be erroneous, unconvincing and untenable. In the trading and P & L account the assessee has not shown any transportation income therefore it is clear that the assessee has received no transportation income during the year under consideration and hence the assessee it not eligible to claim depreciation 30%. That the assessment was computed with following observation:

Aggrieved by the order of the AO, the assessee came in appeal before the Ld. CIT(A) That the Ld.CIT(A) has decided the appeal with following observation: “6.9. Thus, considering the discussion made above and case laws relied upon, I find no reason to alter the action of the Ld AO and therefore, upheld the disallowance of depreciation and restrict it to 15% which is Rs.18,41,483/- instead of 30% as claimed by the appellant assessee.”

Aggrieved by the order of the Ld. CIT(A), the Revenue is in appeal before us.

We have heard both the parties, perused the material available on record. Before us, written submission was filed by the AR of the assessee, whereby it was submitted that in earlier year the assessment completed u/s. 143(3) of the Act and higher depreciation was allowed by AO, copies of the assessment order was annexed for 10-11, 9-10, 7-8, 6-7. The Ld. DR for the revenue has also relied on the judgment “Hon'ble Supreme Court in case of Gupta Global Exim 305 ITR 132 has laid down the real test for claiming depreciation at higher rates applicable for "motor lorring used in business of running them on hire. We note that at perusal the order of assessment, the AO has framed an order under Section-143(3) of the Act, however in the assessment proceeding, the AO has rejected the books of accounts and assessee has submitted books of accounts no supporting voucher were submitted that payment cash for labour payments, salary wages, labour and staff welfares. However, no addition has been made the addition was due to disallowance of depreciation @ 30% as claimed by the assessee. Further, we note that CIT has allowed partly to the extent of 15%. We are of the view after rejecting the books of accounts, no addition has been made by the AO under Section-143(3). The assessment has taken place under Section-144 of the Income Tax Act. We are of the view that no proper adjudication has been made by the AO that was a contradictory order of the assessment as to whether it should be u/s. 143(3) of 144 of the Act. We restore the matter back to the file of the Assessing Officer for Page 4 of Salim Abdullah Rathod v. DCIT proper adjudication which a direction to frame an assessment order according to law after giving due opportunities to the assessee.

In the result, the appeal of the assessee is allowed, for statistical purposes.