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TMI Blog2007 (9) TMI 709X X X X Extracts X X X X X X X X Extracts X X X X ..... ommon Judgment is passed 3. Brief facts of the Appeals are stated for the purpose of appreciating the rival legal contention urged on behalf of parties to under the substantial questions of law framed in these cases. 4. The assessee is a registered public limited company and has its registered office at Manipal and branches at Mumbai, Bangalore, Mangalore etc. The assesses is a company engaged in the business of hire purchase and lease financing, it also accepts deposits from the public. It is also one of the leading non- banking finance companies governed by the Reserve Bank of India Rules. It has been assessed to Income Tax for the pest several years. A search was conducted by the officers of the Income Tax Department under Sec.132 of the Act in the business premises of the Assessee at Mumbai and also premises of RBPL on 18.12.1997. REA La, had claimed to have taken the plant machinery on lease several wind turbine generators which were entitled to 100% depreciation The assessee has claimed to have leased six wind turbine generators to M/s.REPL Ltd, During the course of search, statements of its Chairman and Mr.B.S.Doctor, director of REPL were recorded, who have admitted t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut agreement between buyer and lender. It is a colorable device adopted by the Assessee to avoid tax in the finding recorded by the assessing officer on the basis of certificate obtained from the GEDA to bow that the plant and machinery had been commissioned and installed at Ahmadabad were not found and therefore he has held that there are no assets of the assesse were existed to prove the claim of benefit of depreciation in the absence of assets said to have been. leased in favour of the Company by name REPL. He has also placed reliance upon the statements of Chairman, Managing Director of M/s.REPL Mr. Homi R.Patil and the Director Mr.B.S. Doctor and also on the basis of the evidence adduced on behalf of asseases, the Block Assessment order is passed by the Assessing Officer, which order was challenged by the Assensee before the Commissioner of Income Tax Appeals)-I, Bangalore, questioning the legality and validity of the order urging various legal contentions. The first Appellate Authority after recording certain findings in its order on the contentious issues that arose for its consideration has set aside the Block Assessment order and remanded the matter to the Assessing Office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ls like invoice, for having purchased the assets, payment made and clearing agents Certificates which did not disclose the actual existence of assets as held by that assessing officer? 14 whether the Tribunal having held that opportunity had to be printed to the assessee to cross-examine the persons whose statements the assessing officer had relies on and had to remand the matter beck for fresh consideration as was done by the Appellate Commissioner in spite of holding that the assessing officer had proceeded against the principles of naturel justice and could have remanded the matter back for fresh consideration? In support of the aforesaid substantial questions of law, the learned counsel for the revenue has made submissions questioning the correctress of the findings recorded in the impugned common order of the Tribunal and contended that the Tribunal has committed an error in law by merely relying on the invoices, alleged payments and caring certificates issued by the Transporter at Chennai and the erection and commission charges paid to REPL, which were rot reflecting the correct picture about the existence of assets as held by the assessing Officer. It is further conten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed assets for the reason that the assessee received refundable security deposits, which sums were equivalent to the purchase value of the assets. The security deposits were interest bearing. The lease rental payable by the lessee was equal to the interest payable on the security deposit. This Court has extracted the relevant portion of the observations made by the Apex Court in MODOWELL AND CO., LTD., VE, CTO (1985) 154 ITR 148(8C) which case is referred to by the Gujarath High Court in BANYAN AND BERRY .VB. CIT (1995) 222 ITR 831, 830. Reference is also made to the judgment of the Privy Council in BANK OF CHETTIKAD's case (1940) 8 ITR. 322, approving the dicta in the passage from the opinion of Lord Russel in WESTMISTER'S case (1936) AC 1 (HL) and also referred to the Constitutional! Bench judgment of the Apex Court in MATHURAM'S CAC (1999 5 SCC 567 at Page 12. It has been observed in the BAMYAN AND BERRY's case that the law in MS. DONELL's case has remained the same. It is further contended by the learned counsel that the findings of the Tribunal in its order in setting aside the order of the First Appellate Authority is not only contrary to the legal evidence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich return in Porn No.2B was submitted by it on 30.6.1998 and in fact on behalf of the company, its representative by Dame Sri. Mohandas Pai appeared before the Assessing Officer and his statement is recorded by him in the proceedings and his evidence is considered by the assessing officer and recorded the finding of fact holding that the compary failed to prove that it is the owner of a set of plant and machinery in respect of which it has wrongly claimed 100% depreciation and the same are put to use by it in its business. Therefore, both the Appellate Commissioner and the Tribunal proceeded on the wrong assumption that the wets were purchased by it is erroneous for the reason that the asseasee was required to prove the act of owning assets by producing positive and substantive evidence on record independently and justify its claim of depreciation benefit availed under Sec 32 of the Act and it should have discharge its oms of proof to prove its claim. This important aspect of the matter has not been considered by the Commissioner of appeal and the Tribunal, which has rendered both the orders erroneous and stuffers from error in law. Therefore he has urged that the order of remand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... favour of REPL is based on proper Appreciation of facts and evidence on record by the Tribunal is the finding of fact and therefore, the substantial questions of law as framed in the appeals or any other question of les would 320t arise for consideration of this Court. Therefore, he has requested this Court to dismiss the appeals. 8. With reference to the above rival legal contentions urged by the learned counsel on behalf of the parties, we are required to answer whether the substantial questions of law as framed in these appeals are to be treated as questions of lax and the same would arise for our consideration and whether the same are required to be answered in favour of the revenue or the assessee. After hearing these matters at length and examining the correctress of the finding recorded by the assessing officer, Commissioner of Income Tax and the Tribunal in their orders, we are of the view that the substantial questions 11, 12 and 13 memorandum of Appeal as extracted above in this Judgment has to be answered in seriatum in favour of the revenue for the following reasons: (I) For this purpose, it would be very much necessary for us to refer to certain finding recorded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bine generators were installed at Ahmadabad as claimed by the assessee and certain documents relating to the anticipatory bail proceedings initiated by the company against the Chairman cum-Managing Director of M/s.REPL and interlocutor; orders passed in the original suit and the statement of one Sri.Mohandas Pai, representing the company is considered and recorded a finding of fact holding that no plant and machinery was acquired by the assessee and it has wrongly claimed depreciation in its returns and got the benefit, which is an undisclosed income. Therefore, the same was brought for block assessment by the Assesssing Officer by following the procedure contemplated under Chapter XIVB of the act In this regard, it is required to state that no doubt the assessing officer has referred to the statements of the Chairman-cum-Managing Director and another Director or REPL It is also an undisputed fact that those persons were not made available for cross-examination by the representative of the assessee and not making them available for cross-examination is the reason for the first appellate authority to remand the matter to the Assessing officer to give an opportunity to the assessee f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... record. The burden of proof lies upon it in view of Sec.101 of the evidence Act, which states whoever desires any Court to give judgment as to any legal right or liability dependent on the existence of facts which he asserts, must prove that those facts exist. Sec.102 of the Evidence Act further states that the burden of proof in a suit or proceeding lies on that person who would fail if, no evidence at all in that regard were given on either side. Therefore, a careful reading of the provisions of the Evidence Act having regard to the undisputed fact that claim of 100% depreciation was made with the revenue by the assessee on the assertion that it is the owner of the above referred plant und machianery purchased from M/s.Bonus Energy, who is the supplier of 6 WTGs which were us tailed at Ahmadabad with a view to generate power and the same were leased in favour of REPL on lease basis in the claim made by the assease, In this regard, it is necessary for us to consider the documents, which are sized from the office of Mumbai of the Assessee at the time of search made by the Officers of the Revenue to examine the correctness of the finding of fact recorded by the Assessing Officer i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cord, it clear that both ICDS Arnd REPL had borrowed money from the Syndicate Bank for the purchase of plant and machinery. Time was given to the assessee's counsel to clarify in this regard by producing the loan documents to prove the fact that the assessee alone has raised loan form Syndicate Bank for purchase of plant and machinery. The learned counsel on behalf of the assessee has produced the memo along with two xerox copies of documents marked as Annexures-R1 and R-2 The latter dated 17.7.2007 Addressed by the assessee to its counsel Mr. Partkasarathy. R-2 is the copy of the letter dated 3.7.2003 addressed by the Syndicate Bank to the respondent. The contents of the above letter are stated in the Meno, which roads thus: We have for reference your letter No Nil dated 19h July, 2007 wherein you have requested us to provide the Copy of application filed for opening of captioned LEARNED COUNSEL In this connection we write to inform you that the transaction pertains to the year 1995 and we regret to inform you that the copy is not available with us and other relevant documents. If the documents of purchase of plant and machinery are exclusively in the name of ICDS, why ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... actice for those desiring to rely upon a certain state of facts to withhold from the Court the written evidence in their 3o8session which would throw light upon the proposition. 9 The assessee who is claiming to be the purchaser of the plant and machinery which is the asset claimed to Have been used in its business and claimed 100% depreciation from Income Tax Department under Seotion.32 of the Act must necessarily possess the document of ownership of the above property and also with regard to the lease of the property in favour of REPL. Non-production of these relevant documents by the Assessee before the Assessing Officer to justify its claim certainly an adverse inference should have been drawn by him on this relevant and important aspect of the matter. For the reasons stated above, we are conurring with the findings of fact recorded by the assessing officer to Fasten the liability in his block assessment order. This important aspect of the matter has not been noticed by both the Appellate Authority and the Appellate Tribunal, therefore tie findings in their orders are not only erroneous but also suffers from error in law, Further, from the very evidence on record namely the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not the case of the assessee that it has no documents with regard to the ownership of the assets in question, it should have produced the secondary evidence to prove its title of the property the same has not been produced by it. The documents namely invoices, bill of landing, bill of entry, letter of credit issued by the Syndicate Bank, letter issued by the Syndicate Bank to the Police, lorry receipts, way bills, the fex message from M/s.Bonus energy om 16/1/1998 etc., are seized from the office of the assessee at the time of search conducted by the Officers of the Department. These documents would clearly establish the fact that the goods were imported in the name of both ICDS and REFL it is mentioned ICDS as lessor and REPL as the lessee and in the absence of relevant material documents of ownership to substantiate the claim that assessee has acquired the ownership of the assets for its use in the business, the decision of Gujarat High Court which is referred to by this Court in the case of very same aseessee in another case, upon which reliance placed by the learned counsel for the Revenue is very opt to be referred in this judgment as the same is with all fours applicable to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Appellate Authority and the Tribunal is an erroneous assumption and they have wrongly set-aside the same tor the reasons that the statements of Chairman-cum-Manging Director and other Director of REPL are not tendered or cross-examimation by the Assessee representative in the proceedings before the Assessing Officer, but their evidence is considered and recorded the finding against the asses see which is in violation of the principles of natural justice. Further it is held that the certificate issued by GEDA is considered by the Assessing Officer without examining any person from the above Authority to prove the same, therefore, the first Appellate Authority has opined that though h has concurred with the finding of fact recorded by the assessing Officer in the course of the order. Having cone to such conclusions by the first Appellate Authority in its order, there was no need for him to remand the matter to the Assessing Officer with a direction to give an opportunity to the assessee as observed in the panultimate paragraph of his order. The Revenue was justified in taking the matter to the Appellate Tribunal questioning the correctness of the order of remand passed by the first ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aside. Accordingly, we answer the substantial question Nos.11, 12 and 13 in favour of the Revenue and we affirm the block assessment order. 15. For the reasons recorded above, the question Famed at Paragraph 14 in the Memorandum of Appeal need not be answered as the same is wholly unnecessary for the following reasons: 16. It is the case of the assessee that it has not been given an opportunity to defend its case. But, in fact it was given opportunity, it had participated in the proceeding conducted by the assessing officer as Sri Mohandas Pai's statement is recorded in the proceedings who is the representative of the assessee. No doubt, the statements of the Chairman-cum- Managing Director and another director of REPL have been referred to in the order of the Assessing Officer, they were not tendered for cross-examination by the Assessee representative before the Assessing Officer. For the above reasons it cannot contend that prejudice was caused for it for the reason that the burden of proof to prove the fact that it has acquired ownership of the plant and machinery used in business by leasing the same in favour of REPL was upon it, that burden of proof is not discharge ..... X X X X Extracts X X X X X X X X Extracts X X X X
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