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TMI Blog2007 (12) TMI 251X X X X Extracts X X X X X X X X Extracts X X X X ..... 3(2) as required to be served within a period 12 months from the end of the month in which the return of income so filed, was served on the assessee and the same may be quashed. 5. We have heard the parties. The brief facts of the case are that the assessee derives income from manufacturing and trading of mustard oil and oil cake, the by-product of mustard oil in the industrial area at Tonk. The return of income was filed on 2nd Dec., 2003 which was processed under s. 143(1)(a) on 10th March, 2004. Thereafter a notice under s. 148 was issued on 8th April, 2004 and served on 9th April, 2004. The notice under s. 143(2) was served on 29th July, 2005. The assessee challenged the validity of (notice under) s. 148 of the Act which was rejected by the AO and the learned CIT(A) as well. 6. We have perused the facts of the case. The learned Authorised Representative argued that once the AO was having the statutory time available with it for the issuance and service of a notice under s. 143(2) during the pendency and availability of such a time, he could not have issued a notice under s. 148. The original return of income was filed on 2nd Dec., 2003 and as per the proviso below s. 143(2) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tled that during the availability of time to issue notice under s. 143(2), no notice under s. 148 can be validly issued. Hence the impugned notice and therefore, the impugned assessment be quashed as void being without jurisdiction. 7. The learned Departmental Representative on the other hand relied upon the decision of the authorities below. 8. We have perused the facts of the case. We are convinced with the arguments of the learned Authorised Representative that when the statutory time limit is available with the AO for issuance of notice under s. 143(2) of the Act. then the notice under s. 148 cannot be issued during the pendency of the proceedings. The notice under s. 143(2) could be served within 12 months from the end of the month in which the return is furnished as per proviso to s. 143(2) of the Act and in the present case, the notice under s. 143(2) has been served on 29th July, 2005 i.e. after the expiry of 12 months from the end of the month in which the return is furnished. Therefore, the AO is not authorized to issue the notice under s. 148 of the Act when the time limit for issuance of notice under s. 143(2) of the Act is still there and proceedings are pending. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esentative argued that at the outset, it is case of assessment under s. 147 and the same should not have been touched by the AO since the AO has not recorded any reason with regard to the trading addition and no rowing and fishing enquiry can be made for the assessment/reassessment under s. 147 of the Act in view of the decision of Hon'ble Punjab & Haryana High Court in the case of Vipan Khanna vs. CIT (2002) 175 CTR (P&H) 335 : (2002) 255 ITR 220 (P&H). We are convinced with the arguments of the learned Authorised Representative that the AO has not recorded the reasons on trading and therefore, in view of decision of Hon'ble Punjab & Haryana High Court in the case of Vipan Khanna, no assessment/reassessment can be framed on the basis of rowing and fishing enquiry and therefore, the additions made by the AO are directed to be deleted. We deal with the issue on merit as well. 13. The learned Authorised Representative argued that the learned CIT(A) confined himself only towards what the AO has said in his order and has ignored the various examples of lower prices given by the assessee in the same month of March, 2003. The assessee has adopted a method of accounting which is consiste ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee are allowed. 15. In ground No. 5, the assessee has prayed that the learned CIT(A) erred in law as well as on the facts of the case in confirming the disallowance of the entire amount of normal depreciation of Rs. 2,29,910 claimed on the new plant and machinery and also erred in confirming the disallowance of the entire amount of the additional depreciation thereon amounting to Rs. 2,75,892, totalling to Rs. 5,05,802 and the same may be deleted in full. 16. The brief facts of the case are that the AO made disallowance of depreciation of Rs. 5,05,802 claimed on the installation of new plant and machinery of Rs. 18,39,282, The inauguration of which was done on 29th March, 2003. The AO rejected the same saying that the power supply was installed in March, 2004. Secondly even there was no inauguration inasmuch as in the statement recorded of Shri Mithlesh Garg of Garg Tent House. It transpires that the bills, receipt etc. given by the assessee were bogus and lastly the expenses relating to the printing of the invitation card were also not shown in the books. He further alleged that as per electricity company (Jaipur Vidyut Nigam Ltd.), the total capacity of plant and mac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not complete and the new plant and machineries were not put to use. The learned CIT(A) confirmed the action of the AO. 20. We have perused the facts of the case. When the plant and machinery has been put to use and production has started in the factory building then the depreciation on the factory building cannot be denied on the expenditure incurred as at the end of the impugned year as per law. Therefore, the learned CIT(A) is not justified in confirming the action of the AO and the addition made by the AO is directed to be deleted. Thus the ground No. 6 of the assessee is allowed. 21. In ground No. 7, the assessee has prayed that the learned CIT(A) erred in law as well as on the facts of the case in confirming the disallowance of Rs. 11,375 (Rs. 13,000 cost minus Rs. 1,625 depreciation) on purchase of colour TV for the labour welfare as a capital expenditure as against the revenue expenses claimed by the assessee which may be deleted. 22. The brief facts of the case are that the AO disallowed the claim of new colour TV and treated the same as capital expenditure and allowed the depreciation. The learned CIT(A) confirmed the action of the AO. 23. We have perused the facts of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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