1994 (1) TMI 309 - AT - Income Tax

Summary

Issues:
1. Validity of the order passed by the CIT under section 263 of the IT Act regarding depreciation claim on a boiler.
2. Allegations of inadequate enquiry by the Assessing Officer.
3. Discrepancies in the cost of the boiler and application of relevant sections of the IT Act.

Detailed Analysis:
1. The appeal challenged the order of the CIT under section 263 of the IT Act, which set aside the assessment order by the Assessing Officer concerning the claim of depreciation on a boiler. The CIT alleged that the Assessing Officer allowed the depreciation claim without proper enquiry into the acquisition and leasing of the boiler. The CIT also questioned the 100% depreciation claim and the discrepancy in the cost of the boiler. The appellant vehemently argued against these allegations, stating that the necessary enquiries were made by the Assessing Officer, and all justifications were provided in response to the show cause notice.

2. The appellant contended that the Assessing Officer had indeed examined the acquisition, cost, installation, and use of the boiler based on the information provided by the appellant. The statutory auditors and tax auditors had verified and certified the correctness of the claims made by the appellant. The appellant emphasized that the CIT's order was based on suspicions and conjectures, lacking concrete evidence to prove that the assessment order was erroneous and prejudicial to the Revenue's interests. The appellant argued that the CIT failed to establish any falsity in the information provided to the Assessing Officer, leading to the cancellation of the CIT's order under section 263.

3. The learned Departmental Representative argued that the Assessing Officer did not adequately address certain aspects related to the boiler in the assessment order, such as whether it was a second-hand boiler and entitled to higher depreciation. However, the Tribunal found that the Assessing Officer had made necessary enquiries based on the information provided by the appellant. The Tribunal emphasized the importance of giving weight to the reports of statutory auditors and tax auditors in verifying claims made by the assessee. The Tribunal concluded that the CIT's order lacked substantial evidence to prove that the assessment order was erroneous and prejudicial to the Revenue's interests, leading to the cancellation of the CIT's order under section 263.

In conclusion, the Tribunal allowed the appeal filed by the assessee, emphasizing the importance of proper enquiry and justification in assessment orders to avoid unwarranted suspicions and conjectures.