2023 (9) TMI 384 - AT - Income Tax

Validity of assessment - non-service of notice u/s 143(2) - HELD THAT - We find that the AO has categorically stated that in the assessment order a notice u/s 143(2) of the Act was issued and duly served upon the assessee. Thereafter Statutory notices u/s 142(1) were issued and served upon the assessee. In response thereto assessee attended the proceedings. This finding on fact is not rebutted by the assessee by placing any contrary material on record. We therefore do not find any infirmity into the order of the authorities below the same is hereby affirmed. Ground No.1 raised by the assessee is thus dismissed. Disallowance of depreciation on electricity installations - as per DR Electricity installations are of different rate of depreciation - Assessee submitted electricity installations are being integral part of the plant machinery. Therefore the depreciation should be allowed as a plant machinery - HELD THAT - In the case in hand the assessee failed to bring on record any evidences in support of its contention that the electricity installations were integral part of the plant machinery. On the contrary it is brought on record that the electricity installations were separate from the plant machinery. No reason to interfere in the findings of authorities below the same is hereby affirmed. Thus Ground No.2 raised by the assessee is dismissed. Unexplained creditors - HELD THAT - AO did not make verification of claim of the assessee that the assessee had made payment in subsequent years so far the credit related to M/s. Lalit Wafers and Namkeens and M/s. Dutt Constructions. In our considered view Ld.CIT(A) also failed to get these credit entries verified from the aforementioned creditors. Therefore two creditors deserves to be allowed and impugned addition is hereby deleted. Rest of the addition is sustained as the assessee failed to rebut the finding on fact qua M/s. Accurate Tools (P) Ltd. This ground raised by the assessee is partly allowed.

Summary

Issues involved:
The judgment involves issues related to the assessment order passed under section 143(3) of the Income Tax Act, 1961 for the assessment year 2015-16. The grounds of appeal raised by the assessee include challenges to the sustainability of the assessment order, disallowance of depreciation on electric installation, treatment of sundry creditors, and violation of principles of natural justice.

Assessment Order and Notice Issue:
The appeal challenged the assessment order under section 143(3) of the Income Tax Act, alleging lack of proper notice. The Appellate Tribunal affirmed the order, noting that statutory notices were duly served upon the assessee, and the Authorized Representative attended the proceedings. The Tribunal found no infirmity in the order and dismissed this ground raised by the assessee.

Depreciation Disallowance Issue:
The appeal contested the disallowance of depreciation on electric installation. The assessee argued that the installations were integral to plant and machinery, hence depreciation should be allowed. However, the Tribunal upheld the disallowance, stating that the installations were separate from plant and machinery, and no evidence was presented to prove otherwise. Therefore, the ground raised by the assessee was dismissed.

Treatment of Sundry Creditors Issue:
The appeal challenged the addition made on account of unexplained creditors. The assessee contended that confirmations were submitted, and payments were made in subsequent years, thus the liabilities were valid. The Tribunal reviewed the creditors' details and confirmed the addition for some creditors while deleting it for others where verification was lacking. The Tribunal partially allowed this ground raised by the assessee.

Natural Justice Violation Issue:
The appeal also raised concerns about a violation of natural justice principles. The Tribunal did not specifically address this issue in the summary provided.

Conclusion:
The Appellate Tribunal upheld the assessment order, disallowing depreciation on electric installation and partially confirming the addition related to unexplained creditors. The Tribunal dismissed the challenge to the notice issuance and partially allowed the appeal, deleting the addition for some creditors. The judgment was pronounced on 5th September 2023.