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TMI Blog2021 (12) TMI 597X X X X Extracts X X X X X X X X Extracts X X X X ..... .(a) Whether on the facts and the circumstances of the case, the Ld CIT(A} had erred in holding that the assets had been put to use during the year under assessment on the basis of the documents furnished during the appellate proceedings, not appreciating the fact that the assessee had failed to adduce any evidence during the assessment proceedings regarding having actually put the assets to use during the year under assessment. (b) Whether on the facts and in the circumstances of the case, the Ld CIT(A), was correct in admitting the additional evidence produced by the assessee by observing that the additional documents furnished by the assessee during appellate proceedings were sent to the AO for his comments, when no such documents were enclosed with the communication(s} addressed by the Ld CIT(A} to the AO and, therefore, the AO never got the opportunity to examine the additional evidence. (c) Whether on the facts and in the circumstances of the case, the Ld CIT(A) has erred in allowing depreciation on the fixed assets on the ground that the AO had made high-pitched assessment without giving reasonable opportunity of being heard to the assessee, not appreciating the fact tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee has purchased fixed assets for the purpose of business, however assessee has failed to prove that the assessee has put to use these assets during the year under consideration. Merely purchasing such fixed assets the assessee does not get entitled for such huge depreciation and accordingly, he disallowed the entire depreciation claimed of Rs. 50,81,93,950/-. 5. Before the ld. CIT (A), one of the main contention raised by the assessee was that nowhere in show-cause notice or queries, AO has asked, whether the assessee has started its business or not. He has simply asked for the fixed assets and disallowed the depreciation without appreciating the material available on record in the form of financial statements and other documents. Accordingly, the assessee had filed certain additional evidences and other documents which were also filed before the AO. The details of which are as under :- (i) Mechanical completion certificate; (ii) RG-1 Register; (iii) Copy of excise return (ER-1); (iv) Copy of VAT Return; (v) Finished goods inventories (Schedule 15 of audited financial statements); (vi) Excise duty amounting to Rs. 88,363/- (Schedule 19 of audited financial stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Appellant Company before making such huge addition. You are directed to comment on the same and also provide copy of Show Cause Notice issued to the Appellant Company, if any. 4. In the submission submitted before me, the Ld. AR of the Appellant Company has mentioned that on perusal of the financial statements it can be seen that the Appellant Company has started its business during the AY 2012-13 itself. The Ld. AR has drawn a attention on the following items of the financial statement to establish that the Appellant Company had already started its business during the AY 2012-13 and was also eligible for depreciation under normal provisions of Income Tax Act. 1961: a. Finished Goods Inventories (manufactured) amounting to Rs. 67,91,425/-. b. Excise duly amounting to Rs. 88,363/-. c. Cost of material consumed of Rs. 1,75,10,366/- d. Revenue From Operations amounting to Rs. 6,80,056/- e. Trade receivables amounting to Rs. 3,47,525/- Before me, ld. AR is relying on the above entries In the financial statement of the appellant company to prove the starting of business during the A.. 2012-13 itself. You are directed to directed to comment on the same and if the same is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owing evidences to prove that the business of the Appellant Company was already started in the AY 2012-13 itself and assets were actually put to use during the year involved: (i) Mechanical completion certificate; (ii) RG-1 Register; (iii) Copy of excise return (ER-1); (iv) Copy of VAT Return; (v) Finished goods inventories (Schedule 15 of audited financial statements); (vi) Excise duty amounting to Rs. 88,363/- (Schedule 19 of audited financial statements); (vii) Cost of material consumed amounting to Rs. 1,75,10,366/-; (viii) Revenue from operations amounting to Rs. 6,80,056/- (Schedule 19 of audited financial statements); (ix) Trade Receivables amounting to R.3,47,525/- (schedule 19 of audited financial statements); (x) Party-wise detail of Trade receivables amounting to Rs. 3,47,525/-. 6.6 From the assessment record I find that apart from first four item in the above list, all other documents were filed before AO. However the AO did not appreciate these documents. From the assessment order itself, it can be appreciated that by way of furnishing bills of assets purchased, ownership of the assets was proved by the Appellant Company before the AO. So it is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he also submitted that the assessee had consumed raw material of around Rs. 9.95 crores and finished goods of Rs. 32,22,945, unfinished goods of Rs. 67,91,425/-, closing stock, trade receivables and cost of material consumed of Rs. 1.75 crores. Thus, it clearly shows that assessee carried out its production and huge stock of finished goods and closing stock was generated out of the manufacturing process and part of this were also sold. These facts were available before the lower authorities, which has been accepted by the AO. Thus, it cannot be held that assets were not put to use, because without the assets and plant & machinery, no manufacturing can be carried out. In order to prove the factum of production, the assessee had filed various documents partly before the AO and partly before the ld. CIT (A), as noted by the first appellate authority in its impugned order. Out of the 10 documents in the appellate order, most of them were before the AO as even noted by the ld. CIT (A), i.e. details of finished goods inventories, excise duty, cost of material consumed, revenue from operations and trade receivables. Assessee has submitted additionally, Mechanical Completion Certificate, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment record. On perusal of the assessment record, it is found that no show cause notice was issued to the Appellant Company, before making such a huge addition of Rs. 50,81,93,951/-. The Ld. AR has categorically submitted that had the assessee been given an opportunity by the AO it could have demonstrated that business activities were started and assets were also put to use during the AY 2012-13 and no addition or: disallowance could be made. 6.3 Further, the Ld. AR also submitted certain additional evidences. In the aforesaid letter to the AO, comment on the additional evidences i.e. Mechanical completion certificate, RG-1 register, Excise Return and Vat return, submitted by the Appellant Company before me, is also sought. But no report was received from the office of the AO. Accordingly, I have asked the AO to provide the assessment record. On perusal of the order sheet entry dated 18.03.2016, it is observed that the query relating to the fact that the assets were put to use was asked by the AO on 18.03.2016 and the assessment order is passed on 28.03.2016. On perusal of the order sheet it can be made out that adequate opportunity was not given to the appellant." 12. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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