2004 (10) TMI 295 - AT - Income Tax

Initiation of proceedings u/s 147 read with section 148 - withdrawing the excess claim of interest payment - Reference made by the Assessing Officer u/s 133(6) for calling information - disallowance of depreciation claimed through returns filed in response to notices u/s 148 - trading addition. HELD THAT - We are of the opinion that no appeal lies against section 133(6) of the Act and this Tribunal cannot adjudicate upon validity of action of the Assessing Officer under section 133(6) of the Income-tax Act. For this proposition, reliance is placed on the ITAT, Bangalore, Special Bench decision in the case of C. Ramaiah Reddy v. Asstt. CIT 2003 87 ITD 439. The case of Smt. Amiya Bala Paul was on the basis of entirely different facts. In that case, the Assessing Officer had no power to call for information from the Government Valuer. In the case before us, the Assessing Officer was authorized to call for information under section 133(6) of the Income-tax Act. The ld. A/R also relied upon the decision of Hon'ble Calcutta High Court in the case of Grindlays Bank Ltd. In this case, the Hon'ble Calcutta High Court had quashed the enquiry notice issued under section 133(6) by the Assessing Officer on the basis of writ filed by the assessee. Therefore, it is clear that such an action on the part of the Assessing Officer can be challenged only through writ. The ld. A/R had submitted that the information was not called for with the prior approval of the Commissioner. We are of the opinion that even if the information is called for in contravention of the legal provisions, the material obtained thereby can still be used by the Department against the person concerned in the light of the decision of the Apex Court in the case of Pooran Mal v. Director of Inspection (Investigation) 1974 93 ITR 505 and Dr. Pratap Singh v. Director of Enforcement 1985 155 ITR 166. No such plea has been raised before the lower authorities. Therefore, this ground raised for the first time before us by the appellant is hereby dismissed. Disallowance of depreciation - In the case before us, depreciation of Rs. 9,840 for assessment year 1996-97 and Rs. 14,890 for assessment year 1997-98 was claimed in the original returns. However, in the returns filed under section 148 for reassessment of the escaped income, the appellant had claimed higher deduction of depreciation at Rs. 1,09,840 for the assessment year 1996-97 and at Rs. 7,89,023 for the assessment year 1997-98. For the reasons given above, we are of the opinion that the order of the CIT(A) is not laconic in any manner. The order of the CIT(A) is sustained on this ground for the reasons given therein. Trading addition - After appraisal of the facts of the case, we find that the matter regarding declaration of trading results had attained finality when the period for issue of notices u/s 142 had already expired. Therefore, the Assessing Officer was not justified in making trading additions for both the years. Thus, we are of the opinion that the order of the ld. CIT(A) is not laconic in any manner. Therefore, we decline to interfere with his order. In the result, the appeals filed by the assessee for both the years are dismissed and the appeals filed by the Revenue for both the years are also dismissed.

Issues Involved:
1. Initiation of proceedings u/s 147 read with section 148.
2. Reference made by the Assessing Officer u/s 133(6) for calling information.
3. Confirmation of disallowance of depreciation claimed through returns filed in response to notices u/s 148.
4. Charging of interest u/s 234A and 234B.
5. Deletion of trading addition by the CIT(A).

Summary of Judgment:

1. Initiation of Proceedings u/s 147 read with Section 148:
The assessee challenged the initiation of proceedings u/s 147 read with section 148, arguing that the reasons for reopening were not supplied. The Tribunal found that the reasons were properly recorded and disclosed to the assessee. The CIT(A)'s order was sustained as it was not laconic.

2. Reference Made by the Assessing Officer u/s 133(6):
The assessee argued that the Assessing Officer called for information without prior approval of the CIT, which was a curable irregularity and not a nullity. The Tribunal held that no appeal lies against section 133(6) and the information obtained can still be used against the assessee. This ground was dismissed.

3. Confirmation of Disallowance of Depreciation:
The assessee claimed higher depreciation in returns filed in response to notices u/s 148. The Tribunal upheld the CIT(A)'s order, relying on the Supreme Court's judgment in CIT v. Sun Engineering Works (P.) Ltd., which stated that reassessment proceedings are open only for items of under-assessment. The original claim of depreciation was final and could not be revised in reassessment.

4. Charging of Interest u/s 234A and 234B:
The Tribunal noted that the Assessing Officer had given specific directions for charging interest u/s 234A, 234B, and 234C. The Assessing Officer was directed to allow consequential relief, if any.

5. Deletion of Trading Addition:
The Revenue appealed against the deletion of trading additions by the CIT(A). The Tribunal upheld the CIT(A)'s decision, stating that the reassessment proceedings are open only for items of under-assessment and not for reviewing concluded items. The CIT(A) had correctly followed the Supreme Court's decision in Sun Engineering Works (P.) Ltd. and the Punjab & Haryana High Court's decision in Vipan Khanna v. CIT.

Conclusion:
The appeals filed by the assessee for both years were dismissed, and the appeals filed by the Revenue for both years were also dismissed. The Tribunal upheld the CIT(A)'s order on all grounds.

← Previous Next →