2020 (10) TMI 399 - AT - Income Tax

Disallowance of depreciation - purchase bills as submitted by the assessee are treated as not genuine - HELD THAT - Assessee has fairly agreed with the Bench that out of ₹ 14,33,621/-, ₹ 1,00,000/- may be disallowed on account of miscellaneous deficiency or differences - revenue has also agreed with the bench that in order to cover the miscellaneous deficiencies a minimum of ₹ 1,00,000/- may be disallowed. Therefore out of ₹ 14,33,621/- we disallow ₹ 1,00,000/- and balance of ₹ 13,23,621/-, is directed to be deleted. Order is being pronounced after 90 days of hearing - Taking note of the extraordinary situation in the light of the Covid-19 pandemic and lockdown, the period of lockdown days need to be excluded. For coming to such a conclusion, we rely upon the decision of JSW LIMITED AND (VICE-VERSA) 2020 (5) TMI 359 - ITAT MUMBAI

Summary

Issues involved:
Disallowance of depreciation claimed by the assessee in the assessment year 2015-16 based on improper purchase bills.

Analysis:
The appeal filed by the assessee challenged the order passed by the Commissioner of Income Tax (Appeal)-2, Kolkata, which upheld the disallowance of depreciation of ?14,33,621 made by the Assessing Officer. The assessing officer noted discrepancies in the purchase bills submitted by the assessee, including unsigned, unstamped bills with missing details like model numbers and company names. Consequently, a show cause notice was issued, and the AO disallowed the depreciation claimed based on the questionable bills.

The CIT(A) affirmed the AO's decision, stating that the bills submitted were not proper, unsigned, and lacked essential details. The CIT(A) found no infirmity in the AO's order and dismissed the appeal. Subsequently, the assessee appealed to the ITAT Kolkata.

During the ITAT hearing, both parties agreed to disallow a minimum of ?1,00,000 on account of miscellaneous deficiencies. The ITAT, after considering the submissions, agreed to disallow ?1,00,000 out of the total disallowed amount of ?14,33,621. The balance of ?13,23,621 was directed to be deleted.

The ITAT acknowledged the delay in pronouncing the order due to the Covid-19 pandemic and lockdown, excluding the lockdown days from the calculation. The decision was influenced by a similar case at the Mumbai Tribunal. Ultimately, the ITAT partly allowed the appeal of the assessee, ruling in favor of deleting a portion of the disallowed depreciation amount.

In conclusion, the ITAT Kolkata partially allowed the appeal, directing the deletion of ?13,23,621 out of the total disallowed depreciation amount.