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Income Tax Appellate Tribunal, “B” BENCH, AHMEDABAD
Before: SHRI RAMIT KOCHAR & MS. SUCHITRA KAMBLE
Assessment Year : 2018-19 Mukesh Trends Lifestyle Ltd. Dy. Commissioner of Income-Tax N.H. No.8, Narol Naroda v. Circle-2(1)(2) Road Ahmedabad Ahmedabad-382 405 (Gujarat) PAN: AABCM0500F अपीलाथ�/ (Appellant) अपीलाथ� �� यथ� �� य थ�/ (Respondent) अपीलाथ� अपीलाथ� �� य �� य थ� थ� Assessee by : Shri Vihar Soni, AR Revenue by : Shri Vipul Chavda, Sr.DR सुनवाई क� तारीख/Date of Hearing : 18/01/2024 घोषणा क� तारीख /Date of Pronouncement: 18/01/2024 आदेश/O R D E R आदेश आदेश आदेश Per Coram
This appeal filed by the assessee is directed against the appellate order dated 31/08/2023 passed by Ld. Commissioner of Income-tax (Appeals), National Faceless Appeal Centre, Delhi [“CIT(A)” in short] under Section 250 of the Income Tax Act, 1961 (hereinafter called “the Act”) for Assessment Year 2018-19 (DIN & Order No. ITBA/NFAC/S/250/2023- 24/1055630517(1)), the appellate proceedings have arisen before Ld.CIT(A) from assessment order dated 06/04/2021 passed by Ld.AO (hereinafter
Mukesh Trends Lifestyle Ltd. v. DCIT. AY 2018-19 2 called “the AO”) u/s.143(3) r.w.s.143(3A) & 143(3B) of the 1961 Act (DIN & Order No.ITBA/AST/S/143(3)/2021-22/1032243903(1)).
The assessee has raised following grounds of appeal in Memo of Appeal filed with Income Tax Appellate Tribunal, Ahmedabad Benches, Ahmedabad (hereinafter called “the Tribunal):
“1. The Ld.CIT(A) NFAC has erred in law and on facts in confirming the disallowance of depreciation claimed on intangible assets amounting to Rs.29,79,063/-. 2. The appellant craves leave to add, alter, amend or withdraw any of the grounds of appeal on or before of the final hearing of appeal.”
3. The brief facts of the case are that the assessee has filed its revised return of income on 08/03/2019 declaring income of Rs. 8,46,16,174/- . The same was processed u/s 143(1) of the 1961 Act. The said return of income was selected for framing scrutiny assessment u/s.143(3) r.w.s.143(2) of the Act. The assessment was framed by Assessing Officer vide assessment order dated 06.04.2021, wherein disallowance was made of Rs.29,79,063/- with respect to claim of deduction of depreciation on intangible asset (right to use drainage line) claimed by the assessee. The assessee filed its first appeal before Ld.CIT(A), which was dismissed by Ld.CIT(A) mainly for non- prosecution by holding as under:-
“4. During the course of appellate proceedings, notices have been issued several times but the appellant did not respond. Date wise detail of notices issued is given as under:-
S.No. Date of issuance Date fix of Compliance made of notice compliance by the Appellant 1. 24.02.2023 03.03.2023 No Compliance
Mukesh Trends Lifestyle Ltd. v. DCIT. AY 2018-19 3 2. 27.06.2023 07.06.2023 No Compliance 3. 10.07.2023 21.07.2023 No Compliance 4. 03.08.2023 18.08.2023 No Compliance
4.1 From the above details, it appears that the appellant has nothing to submit in support of its appeal. During the assessment proceedings too, the compliance of the appellant company was very poor. Looking at the merit of the case, in absence of any documentary evidence, the ownership of the right of use of drainage line cannot be ascertained. The appellant has not filed a copy of agreement with the owner of the drainage line with respect to its use, thus, the claim of allowability of depreciation on it cannot be accepted. The notice u/s 133(6) issued the Ld. AO remain unanswered. Thus, the claim of depreciation on account of intangible asset being the right of use of drainage line cannot be accepted. Accordingly, the appeal of the appellant is dismissed and not allowed.”
The assessee has filed its second appeal before the ITAT and, at the outset, the ld. Counsel for the assessee submitted that the assessee had filed all the details before the Assessing Officer as well as before the Ld.CIT(A), and paper-book comprising as many as 75 pages is filed with the Tribunal(which is placed on record in file) . The said paper book contains certification that the documents were filed before the Assessing Officer as well as before the Ld.CIT(A). The ld.counsel for the assessee submitted that the assessee has made payments being its share towards laying of the mega drainage-pipe for polluted water, installed by Association namely Narol Textile Infrastructure & Enviro Management (NTIEM) , on which depreciation was claimed on the intangible asset(right to use drainage pipe) with respect to its share of investment in drainage pipe. It is submitted that the assesse has right to use drainage pipe for discharge of polluted water to Mukesh Trends Lifestyle Ltd. v. DCIT. AY 2018-19 4 the tune of 19 lacs litres per day. It was also submitted that the certificate dated 25.01.2019(PB/Page 18) issued by Narol Textile Infrastructure & Enviro Management (NTIEM) was produced before the Assessing Officer as well as before the Ld.CIT(A), where the assessee has right to use the drainage-pipe to the extent of discharge of polluted water to the tune of 19 lacs Litres per day . It is submitted that the assessee has claimed depreciation on the investment made by it in laying out the drainage-pipe by the Association namely Narol Textiles Infrastructure and Enviro Management Company . The plot of land on which drainage line was built was allotted by Ahmedabad Municipal Corporation to Association namely Narol Textiles Infrastructure and Enviro Management Company. It was submitted that both the lower authorities erred in stating that the said association namely Narol Textiles Infrastructure and Enviro Management Company , did not responded to notice issued by AO u/s 133(6), and infact reply dated 06.04.2021 was submitted by the said Association to the AO, which is placed in paper book at page 10-12 (including evidence of filing reply on ITBA portal). It was further submitted that the AO incidentally passed the assessment order on 06.04.2021, and the said association filed its reply on 06.04.2021 itself, which was not considered by the AO. It was further submitted by ld.counsel for the assessee that Ld.CIT(A) has not decided the issue on merits , and has passed a cryptic, non-speaking and non-reasoned order without considering the contentions of the assesse on merits, and in any case erred in holding that no replies were furnished while fact of the matter is that all the replies were furnished including replies to notice u/s 133(6) issued by the AO to Narol Textiles Infrastructure and Enviro Management Company . A prayer was made by the ld.counsel for the assessee that the appellate order of Ld.CIT(A) may be set aside and Mukesh Trends Lifestyle Ltd. v. DCIT. AY 2018-19 5 the matter may be sent back to the file of AO for fresh adjudication on merits in accordance with law, after giving proper and adequate opportunity of being heard.
The Ld.DR, on the other hand, has no serious objection if the matter is restored back to the file of ld. AO for fresh adjudication.
We have heard Ld. Representatives appearing for the respective parties and have perused the relevant material available on record. After considering the material available on record as well as the submissions made by both the parties, we are of the considered view that, in the instant case, the Ld.CIT(A) has not adjudicated the issue on merits and has simply dismissed the appeal of the assessee by passing a non-speaking, non- reasoned and cryptic order, and there is no independent application of mind by the Ld.CIT(A). It is further observed that the authorities below erred in holding that the replies were not furnished by the assesse as well by Narol Textiles Infrastructure and Enviro Management Company to whom notice u/s 133(6) were issued by the AO, but evidences on record clearly demonstrate that the replies were furnished by the assesse and even reply to notice issued u/s 133(6) by AO to Narol Textiles Infrastructure and Enviro Management Company was duly filed by said association on 06.04.2021 before the AO through ITBA portal. The AO also passed the assessment order incidentally on 06.04.2021 wherein the reply to notice u/s 133(6) was not considered by the AO , and main reason for disallowing of the claim by the AO was that the said association Narol Textiles Infrastructure and Enviro Management Company has not filed any reply to notice issued by the AO u/s 133(6), but the evidence on record proves that on 06.04.2021 ,
Mukesh Trends Lifestyle Ltd. v. DCIT. AY 2018-19 6 the said association uploaded reply on ITBA portal(PB/page 10-12) to notice issued by AO u/s 133(6). The assesse has claimed to have filed all details with respect to the claim of deduction of depreciation on intangible asset(right to use drainage pipe), but the same were not considered by authorities below. The assesse has filed before us paper book containing 75 pages, which is placed on record in file. There is a certificate issued by Narol Textile Infrastructure & Enviro Management (NTIEM) (placed in paper book) where the assessee has right to use the drainage-pipe for discharge of effluent quantity of polluted water to the tune of 19 lacs Litres per day . The plot of land on which drainage line is built is allotted by Ahmedabad Municipal Corporation to Narol Textiles Infrastructure and Enviro Management Company. The possession letter is placed in paper book at page 22. The assesse has claimed to have made payments towards its share of laying drainage pipe line by Association namely Narol Textiles Infrastructure and Enviro Management Company, on which depreciation was claimed by the assessee. The complete details were claimed to have been filed (Refer page 20-21 /paper book). The authorities below have not considered these evidences . The ld. DR could not controvert this position. Thus, in the interest of justice and fair play, we are inclined to restore the matter back to the file of AO for fresh adjudication of matter on merits in accordance with law, after providing reasonable opportunity of being heard to the assessee. Thus, the orders of authorities below are set aside. The assessee is also directed to co-operate with the AO and comply with the directions of the AO. We clarify that we have not commented on the merits of the issue in appeal, and all the contentions are kept open. Thus, in a nutshell, the appeal of the assessee is restored back to the file of ld.AO for Mukesh Trends Lifestyle Ltd. v. DCIT. AY 2018-19 7 fresh adjudication on merits in accordance with law.In the result, appeal of the assesse is allowed for statistical purposes. We order accordingly.
In the result, the appeal of the assessee is treated as allowed for statistical purposes.
Order pronounced in the Court on 18th January, 2024 at Ahmedabad in the presence of both the parties, and reduced to writing and signed on 22 January, 2024.