2018 (9) TMI 795 - HC - Income Tax

Disallowance of purchases made from related parties, disallowance of unverified fixed assets, and depreciation on bottles and crates - Held that -Tribunal has not specifically considered and dealt with the contention and pleas raised by the appellant/assessee while remanding the case on the two aspects relating to addition to fixed assets and purchases of bottles etc. Observation of the Tribunal that the appellant-assessee had not produced books of accounts is seriously disputed and contested by the appellant-assessee. It is stated and claimed that they had produced books of accounts, except books of accounts relating to the manufacturing units, which could not be produced due to Telangana agitation. Invoices and details relating to purchases etc. were produced. The issue would be whether and what documents and papers in respect of the purchases were produced before the Assessing Officer as held by the Commissioner of Income Tax (Appeals) or the findings and observations of the Assessing Officer were justified. Our aforesaid decision would equally apply to the question of claim of depreciation on bottles and tetra packs, which were disallowed by the Assessing Officer. The question of law is partly answered in favour of the appellant-assessee and partly answered in favour of the respondent-Revenue. We uphold the order of remand passed by the Tribunal in respect of disallowance of unverified purchases from related parties. We, however, set aside the order of the Tribunal remanding the matter to the Assessing Officer on the question of unverified fixed assets and depreciation.

Summary

Issues:
1. Challenge to the order of remand on various issues by the appellant-assessee.
2. Dispute over the remand order on specific issues of disallowance of purchases from related parties, unverified fixed assets, and depreciation.
3. Examination of the correctness of the remand order by the Tribunal.
4. Dispute over the production of books of accounts and documents by the appellant-assessee during assessment proceedings.
5. Disagreement on the additions made by the Assessing Officer regarding operating expenses, unverified purchases, and fixed assets.
6. Review of the Tribunal's decision on remanding the case to the Assessing Officer for fresh adjudication.

Detailed Analysis:

1. The appeals filed by the appellant-assessee challenge the order of remand by the Tribunal on various issues, including disallowance of operating expenses, purchases from related parties, unverified fixed assets, and depreciation for the Assessment Year 2007-08.

2. The appellant-assessee contested the remand order specifically on disallowance of purchases from related parties, unverified fixed assets, and depreciation, arguing that all necessary facts and details were available on record and that the remand was unnecessary.

3. The Tribunal remanded the issues of disallowance of purchases from related parties, unverified fixed assets, and depreciation to the Assessing Officer for fresh adjudication, which was contested by the appellant-assessee.

4. The dispute arose over the production of books of accounts and documents during the assessment proceedings, with the Assessing Officer noting that certain records were not provided by the appellant-assessee.

5. The Assessing Officer had made additions on account of operating expenses, unverified purchases from related parties, and unverified fixed assets, which were partially upheld by the Commissioner of Income Tax (Appeals).

6. The Tribunal's decision to remand the case was reviewed, with the Court setting aside the remand order on the issues of unverified fixed assets and depreciation, directing a fresh examination based on the documents produced before the Assessing Officer.

7. The Court upheld the remand order on the issue of disallowance of purchases from related parties, emphasizing the interconnected nature of operating expenses and purchases, which required a comprehensive review.

8. Ultimately, the appeals were disposed of with a partial decision in favor of the appellant-assessee and the respondent-Revenue, clarifying the need for a fresh examination of specific issues based on the available documents and records.

9. The Court vacated the stay order and concluded the judgment without any costs, ensuring a thorough review of the disputed issues in the assessment proceedings.