2009 (2) TMI 250 - AT - Income Tax

Summary

Issues Involved:
1. Time-barred notice under section 142(1).
2. Disallowance of depreciation on computer hardware and software.
3. Disallowance of late payment to Provident Fund.
4. Disallowance of advertisement expenses.

Issue-wise Detailed Analysis:

1. Time-barred Notice under Section 142(1):
- The assessee contended that the notice under section 142(1) was time-barred by law of limitation.
- The Tribunal found that this ground was not raised before the CIT(A), nor were any arguments advanced during the appeal hearing. Consequently, this ground was dismissed.

2. Disallowance of Depreciation on Computer Hardware and Software:
- The assessee, engaged in computer education and software development, claimed depreciation of Rs. 4,56,16,559, including 60% on computer hardware and 100% on computer software.
- A survey under section 133A revealed that the purchases of computer software and hardware were non-genuine. The assessee revised its return, withdrawing the depreciation claim of Rs. 3,18,24,077 on non-existing assets.
- The Assessing Officer disallowed the depreciation claim, adding Rs. 3,18,24,076 to the assessee's income for the assessment year 2001-02.
- The CIT(A) upheld the disallowance, rejecting the assessee's objections regarding the opportunity to be heard, non-consideration of an affidavit, and issuance of summons to only two parties.
- The Tribunal confirmed the CIT(A)'s findings, noting that the assessee failed to prove the genuineness of the purchases. The Tribunal emphasized that the affidavit filed by the assessee was considered, but the statements made during the survey were not under duress, and no assets were found during the survey.

3. Disallowance of Late Payment to Provident Fund:
- The assessee's claim for late payment of Rs. 7,53,103 to the Provident Fund was disallowed by the Assessing Officer.
- The Tribunal dismissed this ground, citing the decision of the Hon'ble Bombay High Court in CIT v. Godaveri (Manner) Sahakari Sakhar Karkhana Ltd. [2008] 298 ITR 189, which ruled against the assessee.

4. Disallowance of Advertisement Expenses:
- During the survey, it was found that some advertisement expenses claimed by the assessee were not genuine. Both the Managing Director and the Finance and Accounts In-charge admitted to non-genuine expenses.
- The Assessing Officer disallowed Rs. 19,64,652 claimed as advertisement expenses due to the lack of supporting documents and failure to produce the concerned parties for verification.
- The CIT(A) confirmed the disallowance as the assessee did not provide any evidence or details to support the claim.
- The Tribunal upheld the CIT(A)'s decision, noting that the assessee failed to advance any arguments or provide supporting evidence before the Tribunal.

Conclusion:
- The Tribunal dismissed the appeals filed by the assessee, confirming the disallowances made by the lower authorities on the grounds of depreciation, late payment to Provident Fund, and advertisement expenses.