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M/s. Shirpur Gold Refinery Ltd. v/s Dy. Commissioner of Income Tax

    Income Tax Appeal No. 1802 of 2016

    Decided On, 05 March 2019

    At, High Court of Judicature at Bombay

    By, THE HONOURABLE MR. JUSTICE AKIL KURESHI & THE HONOURABLE MR. JUSTICE M.S. SANKLECHA

    For the Appellant: Dr. K. Shivram, Sr. Advocate, Rahul Hakani, Advocate. For the Respondent: -------



Judgment Text

Akil Kureshi, J.Though served, none appeared for the Respondent-Revenue Department. Learned Counsel for the Appellant stated that, affidavit of service is already filed. We, therefore, proceed ex-parte.2. For the purpose of this appeal, we frame following substantial question of law :"whether the Income Tax Appellate Tribunal was right in law in allowing Revenue's Appeal and reversing the order of CIT(A) without examination of disputed additions?"3. Bring facts are as under:(i) The Appellant is a Limited Company. The Appellant had filed return of income for the Assessment Year 200607. Return was taken in scrutiny by the Assessing Officer who passed an order under section 143(3) of the Income Tax Act, 1961 (in short "the Act") on 22nd December, 2009. Thereafter, he issued a notice under Section 148 of the Act on 28th August, 2011 and passed an order of reassessment on 22nd December, 2011, in which, he made additions principally by disallowing certain expenditure and the Assessee's claim of depreciation. Against such order of reassessment, the Assessee preferred appeal.(ii) In such appeal, Assessee raised the ground of validity of the reassessment as well as challenged the merits of the additions made by the Assessing Officer. Commissioner of Income Tax (Appeals) [for short "CIT(A)], allowed the appeal by order dated 14th February, 2013, in which, he held that, the reassessment proceedings were invalid. Even on merits, he held that, the Assessing Officer was not justified. In this respect, he made following observations:"Even on merit, there is no case for the Assessing Officer because the issue of allow ability of depreciation has been considered by the Hon'ble ITAT Mumbai 'E' Bench in the appellants own case vide ITA No.231/Mum/2011 of A. Y. 200708 order dated 31.5.2011. Of course, that case was in respect of 271(1)(c) but in Para 4, Hon'ble ITAT has discussed the facts of case where assets were not put to use but case where assets were ready to use and assessee could not commence commercial production due to lack of working capital. The concept of put to use and ready to use has been clarified and it has been upheld that appellant is entitled for depreciation. Respectfully following the decision of Hon'ble Jurisdictional ITAT in the appellant's own case such depreciation is found to be allowable.As regards, disallowance of balance expenditure of Rs. 39,55,36,942/- it is relevant to mention that in Para 10, Assessing Officer has reviewed the decision of the then Assessing Officer and has tried to change the opinion and assessment. He has admitted that the then Assessing Officer has disallowed Rs. 5,09,150/- out of total various expenses of Rs. 12,72,874/- and thereafter has further disallowed all the expenses without any valid reason. Therefore, it is very obvious that there is change of opinion. Therefore, such act of the Assessing Officer can not be sustained.Therefore, in the light of the above discussion Ground No.1 to 5 are allowed."(iii) The Revenue carried the matter in appeal before the Tribunal. The Tribunal by the impugned judgment dated 4th March, 2015, allowed Respondent's appeal by holding that, proceedings for reassessment were not invalid. The Tribunal, however, do not deal with the merits of the additions made by the Assessing Officer which were deleted by the CIT(A). The Assessee, thereupon, filed an application for rectification before the Tribunal, in which, once again, Assessee took up both the questions.(iv) Besides, urging before the Tribunal, that notice of reassessment was issued at the behest of audit report, Assessee also urged that in any case, no hearing on merits had taken place. The Tribunal rejected the rectification application, primarily reiterating its finding in its original order, pertaining to validity of reassessment. Thereupon, Assessee has filed this appeal.4. From the record, it clearly emerges that the CIT(A) had allowed the appeal of the Assessee on both grounds. The CIT(A) did not stop at declaring the reassessment proceedings is invalid. We have reproduced the relevant portion of the CIT(A)'s order, in which, the CIT(A) has discussed the merit of the additions made by the Assessing Officer. The CIT(A) was of the opinion that, such additions were not sustainable. Under the circumstances, when the Revenue had filed an appeal before the Tribunal, the Tribunal was required to examine the correctness of the conclusions of the CIT(A) on both counts.5. The Tribunal only reversed the finding of the CIT(A) with respect to validity of the reassessment proceedings. In order to allow the Revenue's appeal, the Tribunal also had to hold that the CIT(A) was not correct in deleting disallowances made by the Assessing Officer. Without any discussion, or even any conclusion in this respect, the Tribunal merely allowed the Revenue's Appeal, reversing the decision of the CIT(A) and thereby, restoring the order of the Assessing Officer. Even when this error was pointed out to the Tribunal through application for rectification, such error was not corrected.6. We have perused the application filed by the Assessee for said rectification, in which, specific reference was made to issues on merit, on which, according to the Assessee, no discussion had taken place since, (perhaps as understood by the assessee), the Appeal was to be dismissed only on the ground of legality of the reassessment. Whether the Assessee was correct in carrying such expression or not, is not important. What is important is that, with or without arguments, the Tribunal has not disposed of aspects of deletions by the CIT(A) on merits.7. In plain terms, without reversing CIT(A)'s order in this respect, the Tribunal could not have allowed the Revenue's appeal. The Assessee had not got any answer from the Tribunal, regarding the justification of the additions made by the Assessing Officer, on which, the Assessee had succeeded in Appeal before the CIT(A).8. Under the circumstances, the question is answered in favour of the Assessee. The Judgment of the Tribunal is set aside. Respondent's appeal is revived and restored to the Tribunal for consideration of the merits of the additions which were deleted by the CIT (A).9. Before closing, we may, however, record that, learned Counsel for the Appellant had argued that Revenue's Appeal

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before the Tribunal was confined to the question of legality of the reassessment proceedings. We, however, do not agree with this suggestion. Revenue's grounds of appeal, may be somewhat brief, the general ground of the correctness of the CIT(A)'s order was present.10. In any case, Revenue cannot succeed, by raising only this ground of legality of the reassessment proceedings. This contention, we, therefore, have not accepted. The question of correctness of the Tribunal's finding regarding reassessment are not examined by us in this Appeal. It would be open for the Assessee to bring fresh appeal, once the Tribunal disposes of the appeal restored to it by this order. Accordingly, Appeal Allowed.
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