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Income Tax Appellate Tribunal, DELHI BENCH “H” NEW DELHI
\IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “H” NEW DELHI BEFORE SHRI S.V. MEHROTRA : ACCOUNTANT MEMBER AND SHRI KULDIP SINGH: JUDICIAL MEMBER Asstt. Yr: 2007-08 T.I. Steels Pvt. Ltd., Vs. Income-tax Officer, Plot no. 17-18, F.F., F-Block, Ward-16(1), New Delhi. Commercial Shopping Complex-1, Mansarover Garden, New Delhi. PAN: AABCT 9896 R ( Appellant ) (Respondent) Revenue by : Shri Mohit Sachdeva Adv. Assessee by : ShriY.R. Sonbhadra Sr. DR Date of hearing : 10/03/2016. Date of order : 30/03/2016. O R D E R PER S.V. MEHROTRA, A.M:
This is assessee’s appeal assailing the CIT(A)’s order dated 31.3.2014 in appeal no. 106/13-14, relating to A.Y. 2007-08. 2. Brief facts of the case are that assessment u/s 143(3) was completed at a loss of Rs. 84,12,455/- against the returned loss of Rs. 1,54,07,709/-. The AO initiated proceedings u/s 147 on 23.3.2012. The proceedings u/s 147 had been initiated as it was noticed by AO from the perusal of record that assessee had claimed depreciation amounting to Rs. 1,26,12,629/- on plant and machinery, which was under installation. Since the machinery was not used, so depreciation should not have been allowed. The assessee filed objections to the reasons recorded. After considering the assessee’s objections, the AO disallowed the depreciation of Rs. 1,26,12,629/-, inter alia, observing that assessee could not justify its claim despite ample opportunities provided.
3. Before ld. CIT(A) the assessee had challenged the reopening of assessment on the ground that it was a case of change of opinion and this issue had already been considered in the assessment order u/s 143(3) dated 24.11.2009. Ld. CIT(A) observed that the assessment order was a very short order and there was no discussion on the issue on which the assessment had been reopened. He further observed that the assessee had not been able to show that any query on this issue was raised in the original assessment proceedings or that he on his own made disclosure of facts on this issue. He, accordingly, concluded that assessee failed to show that this issue was considered by the AO during the original assessment proceedings. He, accordingly, upheld the reassessment proceedings. On merits also the ld. CIT(A) dismissed the assessee’s appeal.
Being aggrieved the assessee is in appeal before us and has taken following grounds of appeal:
“1. That the order of Ld. CIT(A) is erroneous in facts and in law and is based on extraneous consideration and against the provision of the Act 2. That Ld. CIT (A) failed to appreciate that AO has already considered all the material facts and evidences during the original assessment proceeding and reassessment proceedings initiated by tile AO is merely on basis of change of opinion, hence reassessment order is liable to be quashed.
That the Ld. CIT(A) failed to appreciate that AO has duly considered the issue as during the assessment proceeding appellant filed COP) of bill for addition made to plant and machinery on 09-11-2009 in response to notice u/s 142 (1I) dated 08-09-2009. The AO in his order has stated "that the assessee company was engaged in the business of Manufacturing of iron & Steel Goods. Ferrous and Non Ferrous metals and this is the first year o~ the company which reflects that the AO has duly considered the issue and accepted that Plant and Machinery was put to use during the year under consideration.
4. That Ld. CIT(A) failed to full) take into considering the submissions and documents filed during the appellant proceeding. That the appellant filed various documents and evidence before the Ld. CIT(A) which are available on record have not been properly construed and judiciously interpreted. hence the addition / disallowance made is uncalled.
That Ld. CIT( ) did not take cognizance of document like Audit Report alongwith Balance Sheet and other annexure. Copy of certificate from Member, Secretary Single Window Clearance Agency and Certificate from H.p.state Environment Protection & Pollution Control Board. Paryavarn Bhawvan, Phase-III. Shimla which would will prove that the Plant &
Machinery was put to use and appellant has started production during the year under consideration.
6. That the Ld. CIT(A) erred in law and on facts in rejecting the application of the appellant for admission of additional evidence under Rule 46A.
7. That the Ld. CIT(A) failed to appreciate that the AO has disposed off the objection or the appellant by passing a non speaking order without considering the objections raised by the company.
8. That the Ld. CIT(A) failed to appreciate that the appellant was not afforded proper and sufficient to prod lice the relevant documents.
9. The appellant craves leave or reserving the right to amend. modify, alter. add or forgo any ground(s) of appeal at any time before or during the hearing of this appeal.”
5. Ld. counsel for the assessee submitted that AO has not brought on record any fresh material to bring the case u/s 147. He referred to page 56 of the paper book, wherein the list of fixed assets as on 31.3.2007 is contained, in which, in the detail of machinery, it was mentioned as under:
Name of fixed Rate of WDV(as on Addition Sale Total Dep. WDV Assets Dep.% 1.4.06 During During CGGD (upto 31.3.2007) The yr. The yr. During The yr. Before After 30.09.06 30.09.06 Machinery 15.00 43861784.69 100398539.00 23904664.00 - 168164987.69 12612374.00 155552613.69 (Under Inst.)
Ld. counsel referred to the written submissions filed before ld. CIT(A), contained in the appeal set, and submitted that depreciation claimed during the assessment year was duly considered by the AO at the time of original assessment proceedings. He pointed out that the plant & machinery which was under installation until FY 2005-06 was put to use in FY 2006-07 on 30.12.2006 for the purpose of business for a period of less than 180 days in the previous year and, therefore, depreciation amounting to Rs. 12607729/- calculated @ 7.5% on the total value of machinery had been claimed. The AO allowed the entire depreciation in the original assessment and also allowed all expenses, which were directly related to manufacturing activities such as wages, electricity expenses, manufacturing expenses etc.
Ld. counsel referred to pages 17 & 18 of the PB, wherein the questionnaire for assessment proceedings in AY 2007-08 raised by AO is contained, in which at sl. No. 15, the AO had required the assessee to furnish the details of fixed assets, purchase/ sale during the year along with documentary evidence.
Ld. counsel further pointed out that the above addition has been made on the basis of typographical error in the fixed asset schedule, extract from which has been reproduced earlier.
We have considered the rival submissions and have perused the record of the case. The sole basis for reopening the assessment was the description of machinery as contained in the fixed asset schedule as noted earlier. A mere mention of “under installation” in the fixed asset schedule in respect of machinery, cannot partake the character of a tangible material in possession of AO, particularly when AO had, in course of assessment proceedings, made specific query on this count. As a matter of fact, the AO wanted to review his order, which is not permissible under proceedings u/s 147, as has been held by Hon’ble Supreme Court in the case of CIT Vs. Kelvinator India Ltd. 320 ITR 561. At page 58 of the PB, complete details have been given as part of tax audit report regarding quantity of raw- material and finished goods, which have not been doubted by AO. It is well settled law that remissness on the part of AO cannot be the basis for re- opening an assessment. In view of above discussion, we quash the reassessment proceedings initiated by AO.
In the result, assessee’s appeal is allowed.
Order pronouncement in open court on 30/03/2016.