GAJANAN MAHARAJ URBAN CO-OP BANK,PUNE vs. ASSISTANT COMMISSIONER OF INCOME-TAX, JALNA CIRCLE, JALNA

The assessee’s sole substantive grievance raised in the instant appeal challenges correctness of both the lower authorities action A.Y.2013-14 Gajanan Maharaj Urban Co.Op Bank [A] rejecting its depreciation claim of Rs.8,81,812/- during the course of assessment and affirmed in the CIT(A)’s order as follows: “4. In the solitary ground of appeal, the appellant has challenged the action of the AO in making an addition of Rs.8,81,812/- on account of disallowance of depreciation. Before me, the counsel of the appellant has argued that the assessee was running a co-operative bank at Bhokardan. It was alleged that the appellant bank was maintaining regular books of account which were also audited. The tax audit report was also filed along with the return of income. Further various details as called for by the AO at the time of assessment proceedings were also submitted. The AO had disallowed the claim of depredation amounting to Rs.8,81,812/- in spite of the fact that it was allowable as a business expenditure. It was alleged that all the assets were used for the business purpose during the year and therefore the AO was not justified in disallowing the claim of depreciation. In view of above facts, it was requested to delete the addition of Rs.8,81,812/- made by the AO.

I have duly considered the submissions of the appellant. On perusal of the assessment order, it is seen that the Auditors had made a remark in column 14 of the audit report that they could not ascertain depreciation allowable as per Income Tax Act, 1961 since opening WDV of assets was not available. On the other hand, the appellant bank had debited depreciation of Rs.8,81,812/- on various assets to the profit & loss account. In the absence of opening WDV, the genuineness of such a claim of depreciation could not be ascertained by the AO and he disallowed the depreciation of Rs.8,81,812/-. There is no change in this factual position during the present appellate proceedings. The counsel of the appellant has sought adjournment on various dates on the A.Y.2013-14 Gajanan Maharaj Urban Co.Op Bank [A] pretext of gathering necessary details from the branches regarding opening WDV however these details are not forthcoming. In these facts & circumstances, I have no alternative but to reject the contentions of the appellant bank. It was held by Honourable Delhi High Court in the case of CIT Vs Motor General Finance Ltd (254 ITR 449) that since the assessee, despite several opportunities granted, did not produce the relevant documents, an adverse inference had to be drawn against it. As the assessee could not produce the document, an adverse inference in terms of section 114 of the Evidence Act, 1872, had to be drawn to the effect that, had that document been produced, it would have gone against the interests of the assessee. It is a settled law that the onus is totally on the assessee to prove the genuineness of any expenditure claimed by it and mere explanation is not sufficient. It has to be backed up by documentary evidences. Moreover it was held by Hon’ble Delhi High Court in the case of Goodyear India Ltd. Vs CIT (246 ITR 116) that merely because an audit report is available, there is no fetter on the powers of the Income-tax Officer to require the assessee to justify its claim with reference to the records, materials and evidence. Such a power is inherent with the Assessing Officer in the scheme of the Act. Therefore disallowance of depreciation was required to be made in the present case. The addition of Rs.8,81,812/- made by the AO is confirmed. This ground of appeal is accordingly dismissed.”

Faced with the situation and in light of the fact that the assessee’s foregoing details require factual verification, we restore its instant sale depreciation grievance back to the learned Assessing Officer with a rider that it shall be risk and responsibility of the taxpayer only to file and prove all the necessary details of the impugned WDV as per law in three effective opportunities of hearing. Ordered accordingly.