2011 (3) TMI 13 - HC - Income Tax

Depreciation allegation of Bogus purchase of machinery - AO held that machinery supplied to the assessee was not manufactured by the supplier itself and the benefit under Section 80IA was wrongly claimed by the supplier and it was only on that account that the supplier had approached the Settlement Commission - merely the fact that the supplier had gone to the Settlement Commission would not be of any relevance inasmuch the issue before the Settlement Commission was entirely different which pertain to the benefit wrongly availed by the supplier under Section 80IA of the Act - Detailed discussion in this order also confirmed transportation of the machinery from the factory of the supplier to the factory of the assessee where the machinery was installed. - no question of law arises Appeal dismissed

Summary

Issues Involved:
Assessment year 1996-97 - Claimed depreciation on machinery - Reassessment under Section 148 of the Income Tax Act - CIT(A) appeal - Machinery purchase legitimacy - Cross-examination opportunity - Remand report verification - ITAT decision confirmation - Mr. Viren Ahuja's statement - Settlement Commission relevance - Section 80IA benefit claim - Dismissal of appeal.

Analysis:
For the assessment year 1996-97, the respondent/assessee declared a loss and claimed depreciation on plant and machinery purchased from a supplier. A reassessment notice was issued under Section 148 of the Income Tax Act, challenging the legitimacy of the machinery purchase. The Assessing Officer, relying on a statement by Mr. Viren Ahuja, concluded the purchase was bogus and disallowed the depreciation. The CIT(A) allowed the appeal, noting the assessee's requests for inquiries and documents, including cross-examination of Mr. Viren Ahuja and reports from the Settlement Commission. The Assessing Officer's remand report confirmed the machinery installation at the assessee's factory, leading to the CIT(A) deleting the addition.

The ITAT upheld the CIT(A) decision after re-examining the issue, confirming the machinery purchase. The primary dispute revolved around whether the purchase was genuine or bogus. The ITAT highlighted the absence of Mr. Viren Ahuja for cross-examination but noted his statement did not dispute the machinery supply to the assessee. The Settlement Commission's involvement was deemed irrelevant as it pertained to a different issue regarding Section 80IA benefits wrongly claimed by the supplier. Ultimately, the court found no legal question to consider and dismissed the appeal, affirming the machinery purchase legitimacy based on factual findings and the remand report verifying transportation and installation.

In conclusion, the judgment centered on establishing the authenticity of the machinery purchase, addressing procedural concerns such as cross-examination opportunities and document requests, and clarifying the Settlement Commission's role in a separate matter. The decision rested on factual determinations supported by the remand report, leading to the dismissal of the appeal without raising any legal issues.