2016 (8) TMI 102 - HC - Income Tax

Bogus expenditure - allowance of depreciation - whether regular assessment require fresh investigation and finding although the fact remain that the purchase of plant and machinery was already established as bogus in the Block Assessment ? - Held that - Regular assessment of the assessment year 2000-01 was completed under section 143(3), in which the aforesaid purchases of ₹ 3,14,47,344/- were not held to be bogus and depreciation of such purchase was allowed. In the assessment year 2001-02 depreciation has been claimed on the written down value and the learned Tribunal has allowed that. Mr.Nizamuddin was unable to point out any mistake on the part of the learned Tribunal in allowing the claim for depreciation. In that view of the matter, we are of the opinion that this appeal is wholly un-meritorious and the same is dismissed. The question formulated is based on incorrect assumption of facts.

Summary

Issues Involved:
Challenge to the judgment and order of the Income Tax Appellate Tribunal regarding the dismissal of an appeal by the revenue for the assessment year 2001-02. Question of law regarding the justification of the Tribunal's conclusion on the need for fresh investigation in the regular assessment despite the alleged bogus purchase of plant and machinery established in the Block Assessment.

Analysis:
The High Court of Calcutta dealt with an appeal challenging the judgment and order of the Income Tax Appellate Tribunal, "B" Bench, Kolkata, which dismissed an appeal by the revenue for the assessment year 2001-02. The primary question of law raised was whether the Tribunal was justified in concluding that a regular assessment required fresh investigation despite the alleged bogus purchase of plant and machinery established in the Block Assessment. The Court noted that the advocate for the appellant failed to demonstrate that the Tribunal had arrived at such a conclusion. The Court clarified that the Tribunal did not make the alleged conclusion, which was actually a part of the CIT(A)'s observation while partly allowing the appeal by the assessee.

The High Court further examined the findings of the Tribunal from a previous order dated October 27, 2005, where it was established that assets worth a specific amount were purchased during the assessment year 2000-01, and depreciation was claimed accordingly. The Tribunal found that in the assessment year 2000-01, the purchases were not deemed bogus, and depreciation was allowed. In the subsequent assessment year 2001-02, the Assessing Officer disallowed depreciation on the same assets without providing substantial evidence to support the claim of bogus purchases. The Court upheld the Tribunal's decision to allow depreciation based on the findings from the previous assessment year.

The advocate for the revenue appellant did not contest the Tribunal's findings that the purchases in the assessment year 2000-01 were not considered bogus during the regular assessment under section 143(3), where depreciation was allowed. The Court found no error in the Tribunal's decision to permit depreciation in the assessment year 2001-02 based on the previous assessment's conclusions. Consequently, the Court deemed the appeal unmeritorious and dismissed it. The Court also highlighted that the question formulated was based on incorrect assumptions of facts, rendering it unnecessary to address.

In conclusion, the High Court of Calcutta upheld the Tribunal's decision to allow depreciation in the assessment year 2001-02 based on the findings from the previous assessment year where the purchases were not deemed bogus. The appeal challenging the Tribunal's judgment was dismissed due to lack of merit and incorrect assumptions in the formulated question of law.