1988 (9) TMI 86 - AT - Income Tax

Summary

Issues Involved:

1. Date of passing of the assessment order.
2. Denial of registration to the assessee firm.
3. Charging of interest under sections 139(8), 217(1)(a), and 217(1A) of the Act.
4. Allowance of depreciation on plant and machinery.
5. Issuance of penalty notices under sections 271(1)(a), 271(1)(c), and 273(2)(c).
6. Consideration of revised return filed under the Amnesty Scheme, 1986.

Detailed Analysis:

1. Date of Passing of the Assessment Order:

The assessee contended that the assessment order dated 13th March 1986 was actually passed later, possibly on 27th March 1986, as evidenced by the dates on accompanying documents like the demand notice and penalty notices. The Tribunal found that the assessment order was indeed dated 13th/27th March 1986, and credit for prepaid taxes paid on 19th March 1986 was given in the assessment order. This indicated that the order was not passed on 13th March 1986 but after 19th March 1986, thus supporting the assessee's claim.

2. Denial of Registration to the Assessee Firm:

The assessee claimed that Form No. 11 for registration was filed on 31st March 1980, but the original receipt was lost. The Tribunal directed the ITO to verify this claim from the assessment records and reconsider the registration afresh after giving the assessee an opportunity to present evidence.

3. Charging of Interest under Sections 139(8), 217(1)(a), and 217(1A) of the Act:

The Tribunal held that an appeal is maintainable against the levy of interest if the assessee denies liability to the levy at all. The assessee argued that interest under sections 217(1)(a) and 217(1A) could not be charged simultaneously for the same period. The Tribunal agreed, referencing a CBDT circular that stated interest under section 217(1A) should not be charged if interest under section 217(1)(a) is already charged. The Tribunal concluded that the assessee denied liability to interest under section 217(1A), making the appeal maintainable.

4. Allowance of Depreciation on Plant and Machinery:

The assessee claimed higher depreciation at 15% on machinery in contact with corrosive materials and additional depreciation on new machinery. The Tribunal found that these claims should be considered for substantial justice, particularly given the nature of the assessee's business involving corrosive materials. The Tribunal directed the ITO to adjudicate these claims afresh.

5. Issuance of Penalty Notices under Sections 271(1)(a), 271(1)(c), and 273(2)(c):

The Tribunal noted that under the Amnesty Scheme, no penalty proceedings should be initiated, nor interest charged if the revised return was filed under the scheme. The Tribunal directed that the ITO should not initiate penalty proceedings or charge interest, as the assessee's revised return was filed under the Amnesty Scheme.

6. Consideration of Revised Return Filed under the Amnesty Scheme, 1986:

The Tribunal found that the revised return filed on 17th March 1986 was not considered by the ITO, resulting in the denial of benefits under the Amnesty Scheme. The Tribunal directed the ITO to make a fresh assessment considering the revised return, ensuring that the assessed income does not exceed the income declared in the revised return. The Tribunal also instructed that no penalties or interest should be levied, adhering to the Amnesty Scheme provisions.

Conclusion:

The Tribunal allowed the appeal, setting aside the CIT(A)'s order, and directed the ITO to reassess the case considering the revised return, admit additional grounds, and verify the registration claim. The Tribunal emphasized compliance with the Amnesty Scheme, ensuring no penalties or interest were charged.