AMBERNATH PLASTO PACKAGING P. LTD,MUMBAI vs. ITO WD 2(1)(1), MUMBAI

The grounds of appeal read as under:

(A.Y. 2009-10) Ambernath Plasto Packaging Private Limited vs. ITO 1) The learned Commissioner of Income Tax (Appeals) erred in confirming the reopening of the assessment proceedings under section 147 of the Income tax Act, 1961. 2) The learned Commissioner of Income Tax (Appeals) erred confirming the disallowance of Rs.5056/- out of purchases of Rs.44,057/- from Newspark Trading Company Private Limited and addition of the same to total income as non genuine transaction. 3) The learned Commissioner of Income Tax (Appeals) erred in confirming that rent received by the appellants for part of the building is Income from House Property and not Profits and gains of business as computed by the Appellants. 4) The learned Commissioner of Income Tax (Appeals) erred in disallowing depreciation on all the assets including part of the building given on rent. 5) The learned Commissioner of Income Tax (Appeals) erred in disallowing all the expenses totaling to Rs.6,16,332/-. 6) The learned Commissioner of Income Tax (Appeals) erred in confirming the double disallowance of Rs.1,95,833/-, once disallowed in computation of income by the appellants and again by the Assessing Officer in the assessment order.

At the outset in this case challenging the reopening the ld. Counsel of the assessee submitted that there was no escapement of income envisages on accounts of the reason recorded for reopening inasmuch as the assessee had not debited the amount purchased. The impugned transaction was debited to the capital work-in- progress and no depreciation there was also claimed. Hence, the counsel submitted that the reason recorded that there was escapement of income was totally wrong. In these circumstances, he placed reliance upon the decision of Hon’ble Gujarat High Court in the case of Reckitt Benckiser Healthcare India Ltd. vs. Asst. CIT [2014] 360 ITR 427 (Guj). In this case, the Hon’ble High Court has expounded that notice for (A.Y. 2009-10) Ambernath Plasto Packaging Private Limited vs. ITO reopening has to be held to be invalid when the expenditure is not actually debited and the reason of reopening claims that income on this account.

Upon hearing both the counsels, I find that this aspect of challenge of reopening was duly made before the ld. Commissioner of Income Tax (Appeals), but the ld. Commissioner of Income Tax (Appeals) has laconically dismissed the issue by observing as under:

I find that on account of the above laconic order of the ld. Commissioner of Income Tax (Appeals) and non consideration of the submissions in this regard, it is appropriate to remit the issue to the file of the ld. Commissioner of Income Tax (Appeals). The ld. Commissioner of Income Tax (Appeals) is directed to consider the issue afresh in light of our observations and the assessee’s submissions as above. The issue as to whether the impugned expenditure was debited in the account or not also needs to be investigated. Needless to add, the assessee should be granted adequate opportunity of being heard. Since I am remitting the issue on account of reopening itself, no adjudication of merit is being done. The parties are at liberty to pursue the matter in consequence to the order of the ld. Commissioner of Income Tax (Appeals) after this remand.