TMI Blog2010 (5) TMI 420X X X X Extracts X X X X X X X X Extracts X X X X ..... er section 260A of the Income-tax Act, 1961. On November 26, 1996 the respondent- assessee-company filed its return admitting income of Rs. 34,76,480 for the assessment year 1996-97. The assessee claimed to have entered into a lease agreement with M/s. Prakash Industries Ltd., New Delhi, whereby air pollution control equipment and flameless furnaces claimed to have been purchased by the assessee from M/s. Pioneer Engineering Company, Jamshedpur and M/s. Ashish Engineering Company, Durg, Madhya Pradesh respectively were leased out to M/s. Prakash Industries Ltd. In the return, filed declaring income, the assessee claimed 100 per cent. depre- ciation amounting to Rs. 3,60,19,500 as cost of the abovesaid equipment. The Department conducted search and enquiry on the genuineness of the claim of depreciation. The respondent was also heard and assessment was finalised rejecting the claim for 100 per cent. depreciation towards the cost of the abovesaid equipment along with certain other claims. 2. The assessee-respondent feeling aggrieved preferred an appeal before the Commissioner of Income-tax (Appeals), Thiruvananthapuram. The first appellate authority, though allowed the appeal par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y itself or on its own without remanding the same for being considered by the Assessing Officer on the merits in accordance with law and with jurisdiction ? (2) Whether, on the facts and in the circumstances of the case and in the light of the findings by the Assessing Officer and Commis- sioner of Income-tax (Appeals) that the entire lease transaction are bogus and mere paper transactions, in the absence of a definite con- trary finding by the Tribunal, the Tribunal is right in law and fact in holding that `But as far as the assessee-company is concerned it has incurred a loss,' the loss has been incurred in the course of carrying on of that regular business activity' `it is not a loss by way of loss of capital assets' and are not the findings wrong, erroneous and against facts and realities ? (3) Whether, on the facts and in the circumstances of the case the assessee is entitled to claim deduction of the loss in the assessment year 1996-97 and the Tribunal is right in law in giving a direction to the officer to that effect ? 5. The first question of law raised is regarding the error in the procedure adopted by the Appellate Tribunal after arriving at a finding regardi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e was neither any purchase of the abovemen- tioned equipment nor any lease transaction. It is in the above circumstance, the claim for 100 per cent. depreciation was disallowed by the assessing authority as well as the first appellate authority. Though the above con- current finding was assailed in the second appeal, the respondent did not pursue the ground raised in the appeal memorandum assailing the said finding. The result is that the said finding that there was no lease trans- action had become final. 7. Going by the order impugned and the additional ground urged by the respondent, we find that the additional ground urged is only an attempt to make it appear that the bogus transaction had taken place and to avoid payment of tax in the form of a claim of business loss which the Appellate Tribunal found as a complementary issue to the main issue of 100 per cent. depreciation and answered in favour of the respondent with an observation that no enquiry regarding the facts are called for to adjudicate the additional grounds. 8. The learned senior counsel on behalf of the appellant would argue that since the Assessing Officer as well as the first appellate authority had foun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iness. The respondent having decided not to press ground No. 1 pertaining to lease transaction, as mentioned above, the finding of the Assessing Officer concurred by the appellate authority had become final and would operate as res judicata as against the plea of business of lease and any loss thereon. Though certain documents were seen produced by the assessee before the Appellate Tribunal and the Appellate Tribunal in paragraph 24 of its order mentioned about some documents, there is no specific finding that any of the documents produced are either legally valid documents or that any such documents would establish a lease transaction between the assessee and the so-called lessee. Neither is there any finding that the finding of the Assessing Officer or the first appellate authority that the alleged lease transaction is bogus is unsustainable nor that there was any lease transaction established. Without basing any document, the Appellate Tribunal accepted the assessee's version that there is loss out of the lease transaction and allowed the appeal in the manner stated earlier. That finding without the support of any document is illegal and unsus- tainable. 10. Before us 16 doc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed order granting permission to withdraw the complaint. The first reason is that once a complaint is forwarded to the police station under section 156(3) of the Criminal Procedure Code, no complaint would be pending before the Magistrate so as to enable the complainant to withdraw the same. Other thing is that, except the offence under section 420 of the Indian Penal Code, the other offences alleged are non-compoundable and the allegations in the complaint are of very grave in nature and is triable under Chapter XIX of the Code of Criminal Procedure. Once a case is registered by the police and investigation started, no court has got any authority to interfere with the investigation either by an order withdrawing the complaint or otherwise. Withdrawal of the complaint under section 257 the Criminal Procedure Code is permissible only in respect of offences triable under Chapter XX of the Criminal Procedure Code. If the allegation is true, the offences alleged being triable under Chapter XIX, the complaint is not liable to be withdrawn under section 257 of the Criminal Procedure Code. So, the contention of the respondent that the payment was made by the alleged accused in pursuance of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . v. CIT [2003] 261 ITR 231 (Mad) ; CIT v. Mahendra N. Shah [2006] 280 ITR 462 (Guj) and Dr. T. A. Quereshi v. CIT [2006] 287 ITR 547 (SC) ; [2007] 2 SCC 759. Going by the above judgments we find that the set of facts has no application to the case on hand. In George Maijo's case [2003] 261 ITR 231 (Mad), the assessee had imported goods. The seller had reported that the goods were sent through ship which was reportedly sank. CBI enquiry revealed that the contracted goods were not put on board. However, money was paid by the bank to the foreign seller. It was a case wherein the seller played fraud on the assessee. In Mahendra's case [2006] 280 ITR 462 (Guj) a false shipping document was created and money was collected. In T. A. Quereshi's case [2006] 287 ITR 547 (SC) the assessee had manufactured heroin illegally and the heroin was seized by the authorities and thus loss was sustained to the assessee. Here, in this case there is no such transaction, but, the assessee had made documents as if equipment were purchased and the lease trans- actions had taken place and payments were made. All documents were rejected by all the authorities below. So, the dictum laid down in those cases ca ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
