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TMI Blog2020 (2) TMI 68X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, 1961 2011-12 TPL Plastech Ltd. (PAN AAACT 1968P) citing Ref:- ACIT-ll(3)(l)/Notice u/s 148/2016-17." Filing objection after a span of almost one month from the date of receipt of notices u/s. 143(2) & 142(1) is not tenable. Hence, the objection was not disposed of." 2. "Whether in law and on the facts and in the circumstances of the case, the Ld. CIT(A) erred in appreciating the fact that the assessee used the assets previously used by its parent company, had not disclosed the same and was still claiming additional depreciation in violation of provisions of the Act." 3. "Whether in law and on the facts and in the circumstances of the case, the Ld. CIT(A) erred in appreciating the fact that the assessee had purchased new plant and machinery worth Rs. 9,27,41,361/- from the manufacturing division of Time Technoplast Ltd. which was duly supported by the documentary evidence and claimed the additional depreciation as per the provisions of the Act." 4. "The appellant prays that the order of the CIT (A) on the above grounds be set aside and that of the A.O. be restored." 1.2 We have carefully heard the rival submissions, perused relevant material on record including docume ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , copies of purchase invoices were furnished and the attention was drawn to the fact that excise duty was charged in the invoices itself because goods could not be removed out of the factory without charging excise duty as the excise duty was levied on manufacture. In case of old machinery, no excise duty would be charged. 2.5 However, the said submissions could not find favour with the Ld. AO, who concluded that the assessee could not furnish any irrefutable and clinching evidence to differentiate between the old and new machinery. The assessee failed to furnish one to one reconciliation and mapping of depreciation claimed with item-wise and block-wise plant and machinery. Accordingly, the additional depreciation of Rs. 338.34 Lacs claimed by the assessee u/s 32(1)(iia) was disallowed and added to the income of the assessee. 3.1 Before first appellate authority, the assessee assailed the stand of learned AO on legal grounds as well as on merits by way of elaborate written submissions, which have already been extracted on page nos. 3 to 14 of the impugned order. The assessee in its ground of appeal, contested the validity of reassessment proceedings, inter-alia, on the ground tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... letter of machinery supplier i.e. M/s Time Technoplast Ltd., verifying the same along with the statement showing bifurcation of old and new machinery as purchased by the assessee. It was submitted that Ld. AO failed to appreciate that the description of the assets was clearly mentioned in the invoices. However, no notice u/s 133(6) was ever issued to the holding company to verify the submitted details. The Ld. AO chose not to take any action against submissions made by assessee but chose to make additions for the simple reason that the assessee was not able to furnish the details of the books of account of another entity. Therefore, the approach adopted by Ld. AO was absurd and no addition could be sustained on that basis. In the above background, it was submitted that the assessee had provided all the evidences as asked for by Ld. AO in discharging the onus of proving the genuineness of said claim of additional depreciation. But Ld. AO did not make any inquiry in order to prove that the transaction was not genuine and merely rejected the evidences without commenting on the same. 3.4 The Ld. CIT (A), concurred with assessee's submission on legal grounds as well as on merits by ob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat income of the assessee had escaped assessment. Moreover, the availability of tangible material in the possession of AO at the time of recording is a sine qua none, before the AO can record reasons for reopening of the case. Thus, in view of these facts, I am satisfied that the reopening is bad in law and need to be quashed. The following cases are in support of the appellant: a) In the case of Bombay Stock Exchange Ltd. (writ petition no.2468 dt. 12.06.2014) (89 CCH 118), ; b) The Mumbai ITAT in the case of Motilal R.Todi (supra) c) In the case of CIT vs. Shri Atul Kumar Swami in ITA No.112/2014 dated 18-03- 2014 reported at 52 Taxmann.com 47; d) General Machinery & Technical Services Ltd. Vs. ACIT (ITA No. 1176/Mum/2011) 4. Further, the only information which the AO had was that certain assets were alienated during the year by Time Technoplast Ltd. and no enquiry whatsoever was conducted by the AO in order to form a belief that these alienated assets were actually transferred to the appellant. Thus, the AO merely on surmises and conjecture held that these alienated assets were transferred to the assessee company without bringing on record anything to prove the same. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO in order to dispose-off the objections so raised and proceeded to pass the reassessment order u/s 147. Further, no reference of the same was made by the AO in his assessment order. Thus in view of the these facts, I am of the opinion that the AO has grossly erred in law as any objection filed against the reasons for reopening need to be disposed-off by the AO before proceeding to complete the reassessment proceedings. The following cases are in support of the appellant: a) The Apex Court in the case of GKN Driveshafts (India) Ltd. v/s D.C.I.T. (2003) 259 ITR 19 (SC) has laid down the procedure to challenge the reassessment proceedings and held as follows: "We see no justifiable reason to interfere with the order under challenge. However, we clarify that when a notice under section 148 of the Income Tax Act is issued, the proper course of action for the noticee is to file return and if he so desires, to seek reasons for issuing notices. The Assessing Officer is bound to furnish reasons within a reasonable time. On receipt of reasons, the noticee is entitled to file objections to issuance of notice and the Assessing Officer is bound to dispose of the same by passing a speaking ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... permissible as per law; c) The AO didn't dispose-off the objection filed against the reasons for reopening; d) The claim of additional depreciation was allowed to the appellant during the course of original assessment proceedings and disallowing the same now in the absence of fresh tangible material is merely change of opinion which is not permissible as per law. Decision Ground No. 1 & 2. Thus, initiation of reassessment proceedings by the Assessing Officer itself was bad in law and the reassessment completed in pursuance thereof is liable to be quashed being invalid. Accordingly, the Ground No. 1 & 2 of the said appeal is allowed. Ground No. 3 & 4. As a result of the decision rendered above on the preliminary issue quashing/cancelling the assessment made by the Assessing Officer u/s. 143(3) read with section 147, the Ground No.3 & 4 raised in the appeal in respect of addition made in the assessment have become infructuous and not necessary or expedient to decide the same the appeal of the assessee is allowed. Aggrieved by aforesaid adjudication, the revenue is under further appeal before us. 4.1 We have applied our mind to the adjudication of learned fist app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this Court, as well as by the Hon'ble Apex Court in the case of this very Appellant. Mr. Dada submits that the Assessing Officer, without disposing of the objections raised by the Appellants, could not have proceeded to make the assessment, which has been done in the present case. He submits that such a course of action has been expressly held as impermissible by this Court in the cases of Bayer Material Science (P) Ltd. vs. Deputy Commissioner of Incometax- 10(3), and KSS Petron Private Ltd. vs. The Assistant Commissioner of Income Tax Circle 10(2). For all these reasons, Mr. Dada submits that the first substantial question of law is required to be answered in favour of the Appellant-Assessee and against the Respondent Revenue. 6. Mr. Dada adopted the submissions made by him in Tax Appeal No.32/2006 and other connected Appeals, in so far as the second substantial question of law is concerned. However, he submits that should the first substantial question of law be answered in favour of the Appellant, then, at least. in this appeal, there is no necessity of adverting to the second substantial question of law. 7. Ms. Linhares, learned Standing Counsel for the Respondent submitt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions of Section 11 of the said Act. 12. Hon'ble Supreme Court in GKN Driveshafts (India) Ltd. (supra) has, however, further held that once reasons are furnished, the Assessee is entitled to lodge his objections and the Assessing Officer is duty bound to dispose of such objections, by passing a speaking order. 13. In the present case, the Appellants did lodge their objections vide letter dated 14th April, 2003. By a further letter dated 25th March, 2004, the Appellants requested the Assessing Officer to dispose of such objections by passing a speaking order before proceeding with the reassessment in respect of the Assessment Year 1997-98. However, the Assessing Officer, without proceeding to dispose of the objections raised by the Appellants by passing a speaking order, straight away proceeded to make the assessment order dated 26th March, 2004, bringing to charge taxable expenditure on Rs.10,22,73,987/-. The assessment order dated 26th March, 2004, no doubt, deals with the objections raised by the Appellant and purports to dispose of the same. Ms. Linhares contends that this is a sufficient compliance with the procedure set out in GKN Driveshafts (India) Ltd. (supra), as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. Linhares's contention based upon the any alleged variance between the provisions of the said Act and the provisions of the Income Tax Act, in so far as applicability of the principles in GKN Driveshafts (India) Ltd. (supra) is concerned. 18. The moot question is, therefore, the disposal of the objections by the Assessing Officer in his assessment order dated 26th March, 2004 constitutes sufficient compliance with the procedure prescribed by the Hon'ble Supreme Court in the case of GKN Driveshafts (India) Ltd. (supra) or, whether it was necessary for the Assessing Officer to have first disposed of the Appellant's objections by passing a speaking order and only upon communication of the same to the Appellants, proceeded to reopen the assessment for the Assessment Year 1997- 98. 19. Virtually, an identical issue arose in the cases of Bayer Material Science (P) Ltd. (supra) and KSS Petron Private Ltd. (supra) before the Division Benches of our High Court at Bombay. 20. In Bayer Material Science (P) Ltd. (supra), by a notice dated 6/2/2013, the Revenue sought to reopen the assessment in the year 2007-08. The Assessee filed a revised return of income and sought for reasons recor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter having set aside the orders, it restored the Assessment to the Assessing Officer to pass fresh order after disposing of the objections to reopening notice dated 28th March, 2008, in accordance with law. 8. We note that once the impugned order finds the Assessment Order is without jurisdiction as the law laid down by the Apex Court in GKN Driveshafts (supra) has not been followed, then there is no reason to restore the issue to the Assessing Officer to pass a further/fresh order. If this is permitted, it would give a licence to the Assessing Officer to pass orders on reopening notice, without jurisdiction (without compliance of the law in accordance with the procedure), yet the only consequence, would be that in appeal, it would be restored to the Assessing Officer for fresh adjudication after following the due procedure. This would lead to unnecessary harassment of the Assessee by reviving stale/ old matters. 24. According to us, the rulings in Bayer Material Science (P) Ltd. (supra) and KSS Petron Private Ltd. (supra) afford a complete answer to the contentions raised by Ms. Linhares in defence of the impugned order. 25. Since, in the present case, the Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hinery and the claim of additional depreciation was separately shown in the depreciation schedule. After considering the same, Ld. AO chose not to make any additions in this respect. Therefore, revisiting the same issue in reassessment proceedings would tantamount to review of the order, which is impermissible under law. 4.4 It is also evident that as per assessee's submissions, it acquired new plant & machinery from the parent entity and in support of the same, it filed copies of invoices clearly mentioning the description of machinery bought by the assessee. The excise duty was charged in the invoices which would make it a case of manufacturing since no excise duty would be applicable in case of old machinery. However, no investigation, whatsoever, was done by Ld. AO during reassessment proceedings, to rebut the assessee's claim and no further verification was done. No contrary material was brought on record to fortify the stated additions except making an allegation that the assessee claimed additional depreciation on old machinery. 4.5 Keeping in view the entirety of facts and circumstances, we find that no fault could be found in the impugned order. 5. Resultantly, the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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