TMI Blog2020 (11) TMI 595X X X X Extracts X X X X X X X X Extracts X X X X ..... t the premises of the assessee, which the Inspector failed to do. Purchases alleged to be bogus is not a trading asset but a fixed asset. The purchase of fixed asset is not reflected in the P L Account, hence, the same was not claimed by the assessee as an expenditure. Once the expenditure has not been claimed, the same cannot be disallowed. No infirmity in the order of CIT(A) in deleting the addition qua alleged bogus purchase of machinery and allowing assessee s claim of depreciation on the same. - Decided against revenue. Validity of reopening of assessment - AO without disposing the objections by passing a reasoned order has proceeded to pass assessment order - HELD THAT:- Hon ble Supreme Court of India in the case of G.K.N. Drive Shafts India Ltd. [ 2002 (11) TMI 7 - SUPREME COURT] has laid down the procedure to be followed by the AO for disposal of the objections and also the time line for filing of objections by the assessee in the case of reopening of assessment. In the present case we find that after reasons were supplied to the assessee, the assessee had not filed any objections against aforesaid reasons for reopening. The objections as referred to at page 27 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s well to the party who had allegedly installed the machine i.e. Jupiter Graphics. The notices were sent to the respective parties on the addresses furnished by the assessee. However, the notices were received back unserved from the Postal Authorities with the remark Left . Summons under section 131 of the Act were also issued to M/s. Jupiter Graphics, however the same could not be served. Further, the assessee failed to produce the vendor of the machine as well as the party that had installed the machine. The names of both the above said parties appear in the list of hawala dealers declared by Maharashtra Sales Tax Department. Since the assessee failed to prove genuineness of the purchase, the Assessing Officer rightly disallowed the cost of machinery, cost of installation as well as, depreciation claimed by assessee on the said machine. The ld. Departmental Representative prayed for reversing the finding of CIT(A) and restoring the addition/disallowance made by Assessing Officer in respect of bogus purchase. 4. Per contra, Shri Nimesh Chotnani, appearing on behalf of the assessee vehemently defended the order of CIT(A) in deleting the addition on merits. The ld. Authori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Inspector to the address who reported that the vendor was not available at the address furnished by the assessee. Similar was the fate of the notice and the visit by Inspector at the premises of M/s. Jupiter Graphics, a firm instrumental in installation of the machine at assessee s premises. After examining the material available on record, we observed that the Inspector never visited the premises of assessee to verify existence of the machine at the assessee s site. The Assessing Officer merely on the basis of enquiries conducted at the alleged premises of the supplier formed an opinion that it is a case of bogus purchase. 6. The assessee in order to prove the genuineness of the purchase has furnished invoice and the sanction letter of the bank. The assessee had financed the purchase and installation of the machine from Andhra Bank. The bank had certified that payments were made to. M/s. Span Enterprises, the vendor and M/s. Jupiter Graphics, who had installed the machine. This fact has not been rebutted by the Department. It is noteworthy that the machine was purchased during the financial year 2008-09 and Inspector visited the premises of the vendors in December, 2014. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h sides heard. The Hon ble Supreme Court of India in the case of G.K.N. Drive Shafts India Ltd. vs. ITO, 259 ITR 19(SC) has laid down the procedure to be followed by the Assessing Officer for disposal of the objections and also the time line for filing of objections by the assessee in the case of reopening of assessment. For the sake of completeness the relevant extract of the judgment of Hon ble Apex Court is reproduced herein below:- 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 a 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 order. From a bare perusal of the procedure explained by the Hon ble Apex Court, it is unambiguously clear that if the assesse is aggrieved by reopening, it was incumbent upon the assesse to file objections after receipt of reasons (for reopening assessment) from the Assessing Officer. However, in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered view that rather than taking a pedantic view of the rule requiring pronouncement of orders within 90 days, disregarding the important fact that the entire country was in lockdown, we should compute the period of 90 days by excluding at least the period during which the lockdown was in force. We must factor ground realities in mind while interpreting the time limit for the pronouncement of the order. Law is not brooding omnipotence in the sky. It is a pragmatic tool of the social order. The tenets of law being enacted on the basis of pragmatism, and that is how the law is required to interpreted. The interpretation so assigned by us is not only inconsonance with the letter and spirit of rule 34(5) but is also a pragmatic approach at a time when a disaster, notified under the Disaster Management Act 2005, is causing unprecedented disruption in the functioning of our justice delivery system. Undoubtedly, in the case of Otters Club Vs DIT [(2017) 392 ITR 244 (Bom)], Hon ble Bombay High Court did not approve an order being passed by the Tribunal beyond a period of 90 days, but then in the present situation Hon ble Bombay High Court itself has, vide judgment dated 15th April 2020, h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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