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Income Tax Appellate Tribunal, DELHI BENCH ‘F’ : NEW DELHI
Before: SHRI J.S. REDDY & SHRI KULDIP SINGH
PER KULDIP SINGH, JUDICIAL MEMBER : Appellant, M/s. Regencey Creations Limited (hereinafter referred to as ‘the assessee’), by filing the present appeal sought to set aside the impugned order dated 05.02.2014 passed by the Commissioner of Income-tax (Appeals)-XVIII, New Delhi, affirming the assessment order dated 30.03.2012 under section 154 of the Income-tax Act, 1961 (for short ‘the Act’) qua the assessment year 2005-06 on the ground that :- “On the basis of the facts and circumstances of the case, the CIT (A)-XVIII, New Delhi has erred in the upholding wrongful disallowance made by the Assessing Officer”
Briefly stated the facts of this case are : the assessee company is into the business of 100% export of metal, handicrafts, home furnishing items and software export having three separate divisions : first deals in metal handicraft; second deals in home furnishing (both in the name AND STYLE of M/s. Regency Creations Ltd.) and third deals in the software in the name and style as M/s. Maxtech Isolution. Home furnishing and software division are having 100% export oriented status, thus, the assessee claimed 90% of the profit as exemption u/s 10B of the Act which was denied by the AO but allowed by the CIT (A) and ITAT.
However, the assessment was reopened u/s 148 after recording the reasons which were conveyed to the assessee. Assessee filed written submissions which were considered and accepted by the AO. However, after giving effect to the order of the CIT (A)/ITAT, income/loss is assessed at the value equal to the returned loss to the tune of Rs.7,05,35,059/- by the AO.
Assessee carried the matter before the ld. CIT (A) by challenging the order passed u/s 154 of the Act by way of filing an appeal which has been dismissed. Feeling aggrieved, the assessee has come up before the Tribunal by way of filing the present appeal.
We have heard the ld. Authorized Representatives of the parties to the appeal, gone through the documents relied upon and orders passed by the revenue authorities below in the light of the facts and circumstances of the case.
Ld. AR for the assessee challenging the impugned order contended that when the AO had admitted the loss declared by the assessee and has not made any addition in the AY 2002-03, disallowance of the carry forward loss by the AO/CIT (A) is not sustainable.
However, on the other hand, ld. DR for the revenue relied upon the order passed by the ld. CIT(A).
Bare perusal of the assessment order dated 31.12.2010 passed u/s 147/143(3) of the Act qua assessment year 2003-04 passed in assessee’s case apparently goes to prove that the income of the assessee to the tune of Rs.80,11,261/- was adjusted against the brought forward depreciation loss for AY 2002-03. Operative part of the assessment order dated 31.12.2010 is reproduced as under for ready reference :-
“Original assessment in this case was completed under section 143 (3) at income of Rs.80,11,261/- on 28.02.2006 which was adjusted against the brought forward depreciation loss for the A.Y. 2002-03.”
However, further perusal of para 6, 7, 8 and 9 of the assessment order qua AY 2003-04 (supra) further goes to prove that the loss declared by the assessee has been admitted and no addition has been made.
Before the ld. CIT (A), the assessee company has addressed categoric arguments which are reproduced for ready reference as under :-
“ARGUMENTS 1. For A.Y. 2002-03 income assessed u/s 143(1) was Rs.(-) 1.20 crores (copy enclosed). Assessing Officer in his order u/s 154 reduced it by Rs.80.11 lacs income from 2003- 04. For A.Y. 2003-04 Assessing Officer had vide order u/s 147/143(3) assessed on the returned loss of Rs.88.43 lacs (copy enclosed). Hence there is no reduction of carried forward loss and the carried forward loss as earlier assessed at Rs.8.73 crores is correct and ought not to have disturbed the total loss. We enclose herewith the copies of orde4rs for A.Y. 2002-03, 2003-04 and 2005-06 which confirms our contention and these orders were passed by Previous Assessing Officer Mrs. Surbhi Sharma. We request your honour to delete this wrongful disallowance of present Assessing Officer and accord relief.”
CIT (A) on the basis of grounds as well as arguments addressed by the parties returned the following grounds :-
“4.2 I have gone through the finding of AO and written submissions. In this regard, in the body of assessment order for Assessment Year 2003-04 dated 31.12.2010. AO has very specifically mentioned as under :- Original assessment in this case was completed under section 143(3) at income of Rs.80,11,261/- on 28.02.2006 which was adjusted against the brought forward depreciation loss for the AY 2002-03. 4.3 All the documents produced by the appellant were also perused by me and I found that AO has very rightly calculated brought forward figure at Rs.7,05,35,059/- as against claimed at Rs.8,73,89,860/-. There is no infirmity in the order of the AO in this regard. Grounds of appeal No.1 & 2 are dismissed.”
12. Bare perusal of the findings returned by the CIT (A) goes to prove that ld. CIT (A) without applying his mind ratified the findings returned by the AO. CIT (A) has not even preferred to peruse and return the findings on the issue if in AY 2002-03 income assessed u/s 143 (1) was (minus) Rs.1.20 crores nor he has determined if the assessee company has carried forwarded losses to the tune of Rs.8.74 crores as claimed by the assessee rather put his stamp on the assessment order passed by the AO. In these circumstances, we are of the considered view that the matter is required to be restored to the file of CIT (A) to decide afresh after providing an opportunity of being heard to the parties.
Consequently, the appeal is allowed for statistical purposes. Order pronounced in open court on this 24th day of August, 2016.