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TMI Blog2013 (8) TMI 1017X X X X Extracts X X X X X X X X Extracts X X X X ..... In the captioned appeals, one of the common issue relates to the claim made by the assessee in the course of assessment proceedings before the Assessing Officer that the depreciation allowance under the Act, being a non-cash expenditure was a source of availability of cash to that extent while preparing the cash-flow statements for the period of the respective assessments. Since it was a common point between the rival counsels that the facts and circumstances in relation to the aforesaid dispute are identical in all the appeals, the appeal in the case of Jagdishsingh Amritsingh Bindra vide ITA No. 872/PN/2013 pertaining to the assessment year 2001-02 is considered as the lead case in order to understand the rival positions. 3. ITA No.872/PN/2013 is an appeal by the assessee directed against an order of the Commissioner of Income Tax (Appeals)-II, Nashik dated 06.03.2013 which, in turn, has arisen from an order dated 24.12.2008 passed by the Assessing Officer, under Section 153A read with Section 143(3) of the Act, pertaining to the assessment year 2001-02. In the Memo of Appeal, the three Grounds of Appeal raised by the assessee read as under :- (1) On the facts and circum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of search. The appellant is engaged in the business of transportation, sales commission, C F agency income, income from house property and income from other sources. In para 6 of the assessment order, Assessing Officer has noted that assessee was not maintaining books of account; that assessee had not prepared any Profit and Loss account or Balance-sheet; and that the same were also never enclosed with the original returns of income filed. In para 8 of the assessment order, the Assessing Officer noticed that in order to examine the sources of income for the investments found to have been made, in the absence of regular books of account, assessee furnished cash-flow statements which were examined. However, the Assessing Officer rejected the cash-flow statements submitted by the assessee and according to him, the same did not explain the sources of investment in the assets found during the search. One of the points of rejection was that the claim of the assessee for considering the depreciation allowance as a source of cash-flow. This particular claim of the assessee is the subject matter of dispute before us, as the CIT(A) has also concurred with the Assessing Officer on this aspe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the search was unreliable and was indeed concocted. As per the CIT(A), the component of depreciation was already taken into consideration in the Balance-sheet filed along with original return of income and that in such Balance-sheet the WDV statement of trucks was adopted after depreciation. Furthermore, the CIT(A) verified the claim of the assessee by preparing a Receipts and Payment Account for the period 01.04.2005 to 31.02.2006, as the issue was same in all the assessment before him. In the impugned order for assessment year 2001-02, the CIT(A) has primarily relied upon his discussion on this aspect in the order passed by him in the assessee s case for assessment year 2003-04 dated 27.02.2012. In the course of hearing before us, the substantive discussion made in the order passed by the CIT(A) for assessment year 2003-04 on this aspect has been the basis for the rival arguments. On the basis of the Receipts and Payments Account prepared by the CIT(A) for the period 01.04.2005 to 31.02.2006 it is concluded by him that the closing balance of cash in the re-worked Receipts and Payments Account tallied with the cash balance shown by the assessee in its Balance-sheet as on 31.03.200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on the basis of sound accounting principles inasmuch as even certain non-cash transactions have been considered. In this context, the learned counsel has submitted a Written Synopsis pointing out the mistakes in the Receipts and Payments Account prepared by the CIT(A) and it has been stated that if the same is corrected the cash balance would come to ₹ 8,74,686/- as against as ₹ 1,00,207/- worked out by the CIT(A). It was therefore contended that the corrected Receipts and Payments Account would show that assessee was in possession of cash corresponding to the depreciation allowance and that the same was available for explaining the investment in the assets found at the time of search. In support of his submissions, the learned counsel also relied upon the decision of Cochin Bench of the Tribunal in the case of Shri C.J. Dominic vs. ITO, ITA No.577/Coch/2011 dated 17.02.2012 and also the decision of Ahmadabad Bench of the Tribunal in the case of Shri Rakesh Arvindbhai Patel vs. ITO, ITA No.608/Ahd/2010 dated 23.07.2010, copies of which have been placed on record. 10. On the other hand, the learned Departmental Representative appearing for the Revenue has primarily ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s depreciation is a non-cash expense. Ostensibly, depreciation allowance claimed or allowed while computing total income is a notional deduction, unaccompanied by cash out-flow. Therefore, funds represented by the depreciation allowance can be said to be available with the assessee in a given situation. So, however, having accepted the aforesaid proposition inprinciple, we proceed to examine as to whether such a proposition is available to the assessee in the present case, having regard to the facts and circumstances of the case. 12. In-fact, even the Assessing Officer has not disputed the claim of the assessee in-principle inasmuch as it is accepted by him in the assessment order that As per provision of Section 44AE, the depreciation is deemed to have been allowed. Be that as it may, the Assessing Officer did not allow the claim of the assessee on the ground that such depreciation fund has not been kept aside by the assessee. According to him, such depreciation fund would have been utilized by the assessee in his Trucking business towards purchase of diesel, repairs, maintenance of truck, repayment of installments of loan and interest, etc. The Assessing Officer further noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s returns of income originally leaves much to be desired even if we find it expedient to accept the proposition of assessee in-principle that the amount of depreciation allowance in Trucking business is available as a cash in-flow. It is equally true that the Assessing Officer has also dismissed the plea of the assessee on a mere presumption that such cash flow would have been used by the assessee is in his Trucking business. 14. In so far as the order of the CIT(A) is concerned his inference that even after the considering the depreciation as a source of cash in the Receipts and Payments Account, the resultant cash balance remained the same as stated in the Balance-sheet originally filed is concerned, the same in our view, is misplaced. Firstly, we find that such an exercise carried out by the CIT(A) in relation to the period 01.04.2005 to 31.03.2006 as discussed by him in the order of the assessment year 2003-04 dated 27.03.2012 contains some inherent errors. In the said Receipts and Payments Account, certain items have been considered which are of non-cash in nature for instance, interest accrued on NSC, etc. whereas only transactions of pure cash are required to be considere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to assessee s claim for the depreciation as cash in-flow, the similar Grounds raised in other captioned appeals are also liable to be decided accordingly, as it was a common point between the parties that the facts and circumstances in all the appeals are similar with respect to the said dispute. 19. ITA No.30/PN/2013 is an appeal by the assessee (Jagdishsingh Amritsingh Bindra) directed against an order of the Commissioner of Income Tax (Appeals)-II, Nashik dated 06.03.2013 which, in turn, has arisen from an order dated 24.12.2008 passed by the Assessing Officer, under Section 143(3) of the Act, pertaining to the assessment year 2007-08. In the Memo of Appeal, the Ground of Appeal No. 1 is read as under :- 1. On the facts and circumstances of the case and in law since the assessment year under appeal is the year in which search and seizure action was conducted under S. 132(1) of the Act. Therefore, in view of settled position of law by orders and judgments of co-ordinate Benches of Tribunal and also the judicial precedent of Hon'ble High Court of Kerala reported as Dr. K. M. Mehboob vs. Dy. CIT Anr. (2012) 76 DTR (Ker) 90, the assessment of the year in which search ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de u/s. 144 r.w.s. 153C of the Act which was patently illegal (Para No. 13 of the judgment). The Department resisted the said statement of the assessee by filing the affidavit in reply which is as under: 14. In view of the aforesaid contentions raised, an additional statement dt. 14th March, 2011 has been filed on behalf of the respondent. Insofar as the validity of the assessment for the year 2009-10 is concerned, in the additional statement it has been stated thus : 2. In para No. 3 of the reply-affidavit the petitioner is trying to establish that the assessment made for asst. yr. 2009-10 is illegal since the assessment should have been made only from asst. yr. 2003-04 to asst. yr. 2008-09 i.e. fox six assessment years only and not for asst. yr. 2009-10. This argument is wrong for the following reasons: (a) As per the provisions of the Act the assessment in such cases shall be made for six assessment years immediately preceding the assessment year relevant to the previous year in which the search is conducted or requisition is made. The relevant search in this case was conducted in the financial year 2008-09 which is relevant to the asst. yr. 2009-10. Hence, the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch even in respect of the assessment relevant to the previous year in which the warrant of authorization is executed, should also to be made in compliance with the provisions of Sec. 153A and 153B. 9. In the assessment order, Section 143(3) is mentioned, can it be said that the assessee s assessment is not in conformity as contemplated in the provisions 153A, 153B and 153C ? So far as the time limit for assessment is concerned, it is provided in Sec. 153B(1)(b). The Ld Counsel fairly admitted that the assessment is completed as per the time limit as povided in the said proviso i.e. within the period of 2 years from the end of F.Y. 2004-05 as admittedly, the assessment is completed on 29.12.2006. Hence, the A.O has made the compliance of the mandatory condition in completing the assessment as provided u/s. 153B(1)(b) of the Act. 10. Then next question which arises for consideration is whether the A.O has considered the seized material found during the course of search for framing the assessment of the assessee or not. We find that the A.O has considered the seized material found during the course of search and the assessment is not merely based on the books of account and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... result, appeal of the assessee in ITA No.30/PN/2013 is partly allowed. 28. ITA No.33/PN/2013 is an appeal by the assessee directed against an order of the Commissioner of Income Tax (Appeals)-II, Nashik dated 29.11.2012 which, in turn, has arisen from an order dated 24.12.2008 passed by the Assessing Officer, under Section 143(3) of the Act, pertaining to the assessment year 2007-08. 29. The first issue in this appeal is similar to what has been dealt with by us in Ground of Appeal No. 1 in ITA No.30/PN/2013 and following the same, the said Ground is hereby rejected. 30. The only other Ground in this appeal is with regard to assessee s claim for availability of depreciation found as a cash in-flow. This aspect has been dealt with by us in Ground of Appeal No. 2 in ITA No. 872/PN/2013 and the Assessing Officer is directed to apply the same and thereafter re-work the total income accordingly. 31. In the result, appeal of the assessee in ITA No.33/PN/2013 is partly allowed. 32. ITA No.868/PN/2013 is an appeal by the assessee directed against an order of the Commissioner of Income Tax (Appeals)-II, Nashik dated 06.03.2013 which, in turn, has arisen from an order dated 24 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tly allowed. 42. ITA No.29/PN/2013 is an appeal by the assessee is directed against an order of the Commissioner of Income Tax (Appeals)-II, Nashik dated 31.10.2012 which, in turn, has arisen from an order dated 24.12.2008 passed 2 by the Assessing Officer, under Section 143(3) of the Act, pertaining to the assessment year 2007-08. 43. The first issue in this appeal is similar to what has been dealt with by us in Ground of Appeal No. 1 in ITA No.30/PN/2013 and following the same, the said Ground is hereby rejected. 44. The only other Ground in this appeal is with regard to assessee s claim for availability of depreciation as a cash in-flow. This aspect has been dealt with by us in Ground of Appeal No. 2 in ITA No. 872/PN/2013 and the Assessing Officer is directed to apply the same and thereafter re-work the total income accordingly. 45. In the result, appeal of the assessee in ITA No.32/PN/2013 is partly allowed. 46. ITA No.379/PN/2012 is an appeal by the assessee is directed against an order of the Commissioner of Income Tax (Appeals)-II, Nashik dated 24.01.2012 which, in turn, has arisen from an order dated 24.12.2008 passed by the Assessing Officer, under Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 012 is partly allowed. 55. ITA No.378/PN/2012 is an appeal by the assessee is directed against an order of the Commissioner of Income Tax (Appeals)-II, Nashik dated 24.01.2012 which, in turn, has arisen from an order dated 24.12.2008 passed by the Assessing Officer, under Section 153A read with Section 143(3) of the Act, pertaining to the assessment year 2001-02. 56. In this appeal the only point raised by the assessee is to allow the benefit of the depreciation as cash in-flow in order to explain the addition of ₹ 25,000/- made by the Assessing Officer representing repayment of loan in cash to Raj Mohan builders. This aspect has been dealt with by us in Ground of Appeal No. 2 in ITA No. 872/PN/2013 and the Assessing Officer is directed to apply the same and thereafter re-work the total income accordingly. 57. In the result, appeal of the assessee in ITA No. 378/PN/2012 is partly allowed. 58. ITA No.31/PN/2013 is an appeal by the assessee is directed against an order of the Commissioner of Income Tax (Appeals)-II, Nashik dated 31.10.2012 which, in turn, has arisen from an order dated 24.12.2008 passed by the Assessing Officer, under Section 143(3) of the Act, pert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2/PN/2012 is partly allowed. 68. ITA No.383/PN/2012 is an appeal by the assessee is directed against an order of the Commissioner of Income Tax (Appeals)-II, Nashik dated 25.01.2012 which, in turn, has arisen from an order dated 24.12.2008 passed by the Assessing Officer, under Section 153A read with Section 143(3) of the Act, pertaining to the assessment year 2005-06. 69. The only Ground in this appeal is with regard to assessee s claim for availability of depreciation as a cash in-flow. This aspect has been dealt with by us in Ground of Appeal No. 2 in ITA No. 872/PN/2013 and the Assessing Officer is directed to apply the same and thereafter re-work the total income accordingly. 70. In the result, appeal of the assessee in ITA No.383/PN/2012 is partly allowed. 71. ITA No.1052/PN/2012 is an appeal by the assessee is directed against an order of the Commissioner of Income Tax (Appeals)-II, Nashik dated 14.03.2012 which, in turn, has arisen from an order dated 24.12.2008 passed by the Assessing Officer, under Section 153A read with Section 143(3) of the Act, pertaining to the assessment year 2002-03. 72. The first issue in this appeal is with regard to assessee s clai ..... X X X X Extracts X X X X X X X X Extracts X X X X
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