GABRIEL INDIA LIMITED,PUNE, MAHARASHTRA vs. DY. COMMISSIONER OF INCOME TAX,5(1), MUMBAI

This is the second round of litigation. The brief facts restricted to the dispute under appeal state that assessee e-filed return of income for A.Y. 2011-12 on 30.09.2011, declaring total income of Rs. 34,95,92,462/-. Subsequently assessee filed revised return of income, declaring total income of Rs. 36,07,19,389/-. The case was selected for scrutiny under CASS. Statutory notices u/s. 143(2) & 142(1) of the Act were issued and served upon the assessee. After considering assessee’s submissions, learned assessing officer, vide order dated 11.03.2014 made an addition of Rs. 72,15,983/- along with certain other additions and assessed total income at 39,13,33,060/-. Dissatisfied with the assessment order dated 11.03.2014, assessee preferred an appeal before learned CIT(A), who, vide first appellate order dated 28.03.2016, dismissed assessee’s appeal. Aggrieved assessee preferred second appeal before this Tribunal. The Tribunal, vide order dated 10.07.2018 observed that the assessee has submitted before learned CIT(A) that without prejudice, the amount of in question may be treated as business income u/s. 28 of the Act and to substantiate its claim, it relied on the various decisions, however learned CIT(A) has not decided this ground of the appeal of the assessee. The Tribunal, vide order dated 10.07.2018 passed in the first round of litigation in for A.Y. 2011-12 restored the relevant ground no. 3 to the file of learned CIT(A) for deciding the issue Gabriel India Limited afresh on merit. Learned CIT(A), however, vide impugned order dated 14.06.2024 rejected assessee’s prayer for adducing additional evidence and also made remarks that the assessee, while computing total income, did not originally claim “capital work in progress written off and debited to P &L account of 72,15,983/-. Learned CIT(A) accordingly dismissed assessee’s appeal, hence this appeal in the second round.

Appellant assessee has preferred this appeal on the ground that learned CIT(A) has not allowed assessee’s legal claim of deduction of Rs. 72,15,983/-, being capital work-in-progress written off in respect of Singur Plant, without appreciating the fact that the appellant was forced to abandon, the Singur project and it has resulted into loss.

We have purused the records and heard learned representative for the appellant assessee and learned DR for the revenue.

We notice that the Tribunal, vide order dated 10.07.2018 passed in for A.Y. 2011-12, partly restored the matter to the file of learned CIT(A) on the aforesaid issue for deciding afresh on merit. The relevant para 11 of the Tribunal’s order is reproduced as under: “ 11. Vide Ground No. 3, the assessee has pointed that the Ld. CIT (A) has erred in not adjudicating the appellant claim of allowing of right of capital work in progress of Rs. 72,15,983/- as business loss u/s 28 of the Act. We notice that the assessee has submitted before the LD. CIT(A) that without prejudice the amount of Rs 72,15,976/- may be treated as business loss u/s 28 of the Act, and to substantiate the claim the Ld. counsel relied on the various decisions, however, the Ld. CIT(A) has not decided this ground of the appeal of the assessee. We, therefore, set aside this ground of appeal to the file of the Ld. CIT(A) for deciding this ground after hearing the assessee.”

1. Gabriel India Limited 6. We further notice that learned CIT(A) has also reproduced the aforesaid directions of this Tribunal in the impugned order. However, rejected assessee’s prayer for adducing additional evidence under rule 46A of the income tax rules 1961. It transpires that learned CIT(A) has not made bonafide efforts to decide the issue afresh on merit in the spirit of the direction of this Tribunal. Learned CIT(A) should have admitted assessee’s additional evidence to enable the first appellate authority to come to the logical conclusions on merit. We, therefore set aside the impugned order and restore the matter back to the file of learned CIT(A) with a caution to exercise the judicial discipline. The first appellate authority shall allow the assessee to file additional evidence if so prayed and to pass order afresh on merit in the true spirit of the directions issued by this Tribunal vide order dated 10.07.2018. The impugned order is thus set aside. The appeal is liable to be allowed accordingly.

In the result, the assessee’s appeal is allowed for statistical purposes. The impugned order dated 14.06.2024. Order pronounced in open court on 25.02.2025.