2017 (1) TMI 1156 - HC - Income Tax

Claim for depreciation on Flameless Furnace - -Assessee was not able to explain even the whereabouts of the Furnace which is alleged to be owned by it - deleting the claim for depreciation as the purchase and lease was as sham on the basis of a statement of the Director of the lessee u/s. 133 - Held that - We note that a statement made under Section 133A of the Act is not bereft of any evidentary value. The same may not be conclusive but in the absence of any contrary evidence or explanation as to why the statement made under Section 133A of the Act is not credible, it can be acted upon. In the absence of Assessee offering any explanation as to why the statement cannot be relied upon, no fault can be found on the reliance upon the statement of the Director of M/s. Omega. Further, so far as request for cross examination is concerned, we find that Appellant-Assessee, during the first round of proceedings before the Assessing Officer did not raise any such issue. At that point of time, the person who make the statement, could have been produced by the Assessing Officer. It was only in the second round of proceedings when the Appellant-Assessee was not able to contact the Director of M/s. Omega, that they came up with a request for his cross examination. Therefore, the submission on part of the Appellant that the delay has led to it being unable to produce evidence is of no avail as the delay was in seeking cross examination by it. Further, the documents which were produced were considered along with and/or the facts viz nonproduction of vital documents. This coupled with the fact that the owner of the Furnace i.e. Appellant did not have any knowledge about its whereabouts at the time of adjudication. Thus the consistent view taken by the authorities under the Act including the Tribunal, is on the facts a possible view. No substantial question of law - Decided against assessee

Summary

Issues:
Challenge to order of Income Tax Appellate Tribunal regarding depreciation claim on Flameless Furnace for Assessment Year 1996-97.

Analysis:
The appellant, engaged in financing and leasing, claimed depreciation on a Flameless Furnace leased to M/s. Omega Steel Industries Pvt. Ltd. The Assessing Officer disallowed the claim based on the statement of M/s. Omega's Director under Section 133A, stating no machinery was leased. The CIT(A) set aside the order for fresh assessment. In subsequent proceedings, the appellant failed to produce the lessee or crucial documents due to unknown whereabouts of the lessee. Despite submitting bank statements, invoices, lease agreement, and delivery chalans, confirmation from the lessee was missing. The Assessing Officer denied the claim after considering evidence, including the Director's statement. The CIT(A) and Tribunal upheld this decision due to lack of crucial documents and failure to explain the furnace's whereabouts.

The appellant argued that documents submitted should have been considered, asserting the Director's statement lacked evidentiary value under Section 133A. The court noted Section 133A statements hold evidentiary value unless rebutted with contrary evidence or explanation. Citing a Madras High Court decision, the court rejected the appellant's reliance on the statement's alleged lack of credibility. The court emphasized that the appellant's failure to raise cross-examination during initial proceedings weakened their later request's credibility. Considering the delay in seeking cross-examination and the missing vital documents, the court found the authorities' consistent view, including the Tribunal's decision, reasonable. Consequently, no substantial legal question arose, leading to the dismissal of the appeal without costs.