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Income Tax Appellate Tribunal, MUMBAI BENCH “B”, MUMBAI
Before: D.T. GARASIA & SHRI RAJESH KUMAR
Per D.T. GARASIA, Judicial Member:
The present appeal has been preferred by the assessee against the order dated 21.12.2012 of the Commissioner of Income Tax (Appeals) [hereinafter referred to as the CIT(A)] relevant to assessment year 1989-90.
The assessee has raised the following grounds: “Ground No.1. Validity of assessment u/s 154
The impugned order dtd. 21.2.2011/18.8.2011 made u/s 154 is ab- initio, null, void and bad in law.
Ground No. 2. Addition on account of depreciation: Rs.7,27,387/- i) The Id. CIT(A) erred in confirming the addition of Rs.7,27,387/- for depreciation. ii) The appellant submits that u/s 154(7) of the Act no rectification could be done after the expiry of 4 years from the end of the financial year in which the order sought to be Ground No. 3. Addition on account of investment Allowance: Rs. 7,76,925/-. i) The Id. CIT(A) erred in confirming the addition of Rs.7,76,925/- for Investment Allowance, whereas the facts do not justify any rectification. ii) The appellant submits that the impugned order dated 21.2.2011 was made pursuant to an audit query : Rs.7,76,925/- which was alre ady allowed while framing assessment u/s 143(3)/251 dtd. 30/09/1994 has remained to be withdrawn while passing subsequent order u/s 143(3) dtd. 30/11/1998," which itself suggested time barred action. iii) The appellant, therefore, submits that u/s 154(7) no rectification could be done after the expiry of 4 years from the end of the financial year in which the order sought to be amended was passed. In the instant case the relevant order was passed on 30.9.1994.
Ground No 4. Deduction of Rs. 1,88,057/- u/s 43B:
The Id CIT(A) erred in not deciding ground No. 8 raised in the appeal as under:-
"The A.O. erred in not allowing a deduction of Rs.1,88,057/- pursuant to the directions of the CIT(A) in the order dated 30.9.1992 with reference to section 43B, in respect of which necessary details were filed by the appellant vide letter dated 5. 1.2009."
Ground No. 5. Levy of interest u/s 234D: The Id. CIT(A) erred in not deleting interest levied u/s 234D insofar as Sec. 234D does not apply to the assessments made for years prior to A.Y. 2004-05.
Ground No. 6. Levy of Interest u/s 234B & 220(2) The Id. CIT(A) erred in not deleting interest levied as under:- Rs. 40,13,926/- Interest u/s 234B. Rs. 1,32,69,352/- Interest u/s 220(2).
The appellant denies its liability to be assessed by levy of interest u/s 234B and 220(2)”
The short facts of the case are as under: The assessee is engaged in business of running hotels. The appeal is prepared against order dated 21.02.11 under section 154 made by ACIT 1(2) for A.Y. 1989-90. The assessment was completed in March 1992 determining total income at Rs. 182.55 lacs which was subsequently rectified and the last rectification u/s. 154 was done in September 2008 on application filed by the assessee. In that order, the Assessing Officer (hereinafter referred to as the AO) has also allowed the claim of brought forward losses in assessment order u/s. 143(3)1263 dated 30/11/1998 amounting to Rs.27,45,437/- and order u/s. 154 dated 26/2/1999 against the order u/s. 143(3)/263 dated 30/11/1998 where an additional claim of brought forward losses of Rs.22,07,302/- was allowed to the assessee.
In the impugned rectification order, the AO has observed that order dated 27.09.2007 for A.Y. 1989-90 it was stated that all the brought forward losses were set off and no further brought forward losses to be set off in subsequent years. Therefore, AO was of a view that the set off given in A.Y. 1989-90 is a mistake apparent from records.
The Ld. CIT(A) has confirmed the order of AO. Hence, the assessee is in appeal before us.
Before us, the Ld. A.R. submitted that AO has issued notice dated 27.04.2009 under section 154/155 of the Act on the basis of audit objection which were annexed to the notice inter alia stated that investment allowance to the extent of Rs.7,76,925/- which was allowed in the order u/s 143(3)/251 dated 30.9.1994 remained to be withdrawn while passing subsequent order dated 30.11.1998; that the income taken in the order dated 30.11.1998 was the 4 M/s. Narangs International Hotels Pvt. Ltd. same as was in the order dated 30.9.1994. In the order dated 18.5.1999 to give effect to CIT(A)'s order dated 31.3.1999 department had allowed repairs to buildings of Rs.34,53,246/-, on which depreciation of Rs.7,29,387/- was allowed was not withdrawn. Thus, it is clear that the rectification sought to rectified u/s 154 related to the orders dated 30.11.1998 and 18.5.1999 specifically pointed out by the revenue auditors which very much beyond the period of 4 years. Therefore, the order dated 21.2.2011 is barred by limitation and therefore the order dated 21.2.2011 is abinitio null, void and bad in law. In respect of additional depreciation of Rs.7,29,387/-, the Ld. CIT(A)’s order dated 31.03.1999 directed to allow expenditure on repairs to buildings, amounting to Rs.36,53,240/-. The AO, n the order dated 18.05.1999 giving effect to the order of the Ld. CIT(A) gave effect to the order of the Ld. CIT(A). He did not withdraw depreciation on buildings. AO wanted to rectify the order dated 18.05.1999 under section 154 i.e. after expiry of nine years which is not permissible in law. The notice under section 154 & 155 was issued on 27.04.2009 i.e. beyond 4 years. In respect of investment allowance, the Ld. CIT(A) has confirmed the addition of Rs.7,76,925/- for investment allowance.
We have heard the rival contentions of both the parties. We find that the assessee was disallowed investment allowance of Rs.7,76,925/-. We find that in respect of order giving effect to Ld. CIT(A)’s order the AO should have withdrawn the investment allowance within four years. The AO wanted to rectify this order on 27.04.09 which is beyond four years. Therefore, Ld. A.R. submitted that AO cannot rectify the order dated 30.09.1994 which is very much beyond four years, therefore, this order is not capable of being rectified. Therefore, we allow the same.
In respect of depreciation which was allowed by AO in A.Y. 1989-90 for repairing expenses which were treated as capital expenditure by AO. The Ld. CIT(A) has granted the relief by treating it as revenue expenditure. While
5 M/s. Narangs International Hotels Pvt. Ltd. giving effect in the order dated 18.05.1999, the AO should have withdrawn the depreciation while giving effect to the Ld. CIT(A)’s order dated 31.03.1999. The AO did not withdraw the depreciation which AO wanted to withdraw this depreciation in order dated 21.02.11 which is also beyond four years. Therefore, we are of the view that this cannot be done beyond four years. Therefore, we allow the appeal of the assessee.
In the result, appeal of the assessee is allowed.
Order pronounced in the open court on 11.09.2017.