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TMI Blog2023 (7) TMI 505X X X X Extracts X X X X X X X X Extracts X X X X ..... tstanding liabilities under consideration. It was also observed by the Pr. CIT that the A.O while framing the assessment had not made any enquiry to find out whether the railway tracks were laid inside or outside the factory premises, and had accepted the assessee s submission without applying the relevant provisions for allowing depreciation on the same. Thus we concur with the view taken by CIT that the failure of the A.O to carry out necessary verifications on both the aforesaid issues had rendered the assessment order passed u/s. 143(3) as erroneous in so far it was prejudicial to the interest of the revenue u/s. 263 - Decided against assessee. - ITA No. 113/RPR/2016 - - - Dated:- 10-7-2023 - Shri Ravish Sood, Judicial Member And Shri Arun Khodpia, Accountant Member For the Assessee : None For the Revenue : Dr. Simran Bhullar, CIT-DR ORDER PER RAVISH SOOD, JM: The present appeal filed by the assessee company is directed against the order passed by the Pr. Commissioner of Income Tax-2, Raipur (for short Pr. CIT ) u/s. 263 of the Income Tax Act, 1961 (for short Act ) dated 23.03.2016, which in turn arises from the order passed by the A.O. u/s. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (-) 219,26,42,619/- (including unabsorbed depreciation of Rs. 169,75,07,494/-). Case of the assessee company was thereafter selected for scrutiny assessment through CASS. 3. The A.O while framing the assessment vide his order passed u/s. 143(3) of the Act dated 04.03.2014 scaled down the total loss of the assessee company to Rs. 218,83,44,659/-, as against its returned loss of Rs. 219,26,42,619/-, observing as under: 5. Under reporting of income: On careful examination of Form 26AS, it was observed that the assessee company had not considered some of the amount of income paid/credited by the deductors as evident from the TDS statement. The details of such receipts are given in the following table: Sl. Name of deductor Income paid/credited (Rs.) Amount of TDS Remarks 1. Bhilai Jaypee Cement Ltd. 762413/- 76240/- Explained: Income pertains to Enexco Technology. However, the assessee wrongly put its own PAN The assessee s explanation for Sl. 1 appears to be justified since th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 6. In respect of interest income at Sl. 4 of 3 table, the Ld A/R. has given his argument which does riot appear to be acceptable on the ground that the assessee maintains its books of account on Mercantile basis, and the interest had indeed accrued and was credited on 31/03/2011 for which TDS was deducted u/s. 194A of he Act. Interestingly, the assessee company claimed credit of such TDS without offering the corresponding interest income of Rs. 39,27,540/- in the return of income for the AY 2011- 12. There was no plausible reasons to defer the taxation of income of Rs. 39,27,540/-, on cash system of accounting, in the subsequent year particularly when the hybrid system. of accounting is not permissible u/s 145 of the Income Tax Act, 1961. In 'view of this, the understatement of income to the tune of Rs. 42,63,981/- is added back, as evident from Form 26AS. Simultaneously, further credit of TDS of Rs, 5,666/- is also allowed. Penalty u/s. 271(1)(c) of the Act has been initiated separately. 6. Excess claim of additional depreciation: The assessee-company commissioned the clinker manufacturing unit at Babupur in December, 2009. Subsequently, the cement grinding unit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eflected under the head current liabilities. Apropos its claim of depreciation/additional depreciation on railway sidings, it was submitted by the assessee that as per the Company Act, 1956, Sch-XIV (Section 205 206)- Item No.15, the same were a part of plant and machinery. The assessee in support of his contention had placed reliance on two decisions, viz. (i) Kalinga Tubes Ltd. (1974) 96 ITR 20 (Orissa); and (ii) Visveswarayya Iron and Steel Ltd. (1993) 199 ITR 98 (Karn.). However, the aforesaid contentions of the assessee company did not find favour with the Pr. CIT. It was observed by the Pr. CIT that the A.O while framing the assessment had not called for any confirmatory letter for the outstanding liabilities for verification. In fact, it was noticed by the Pr. CIT that the assessee s counsel had admitted that the A.O had not called for any confirmation letter for the outstanding liabilities. Accordingly, the Pr. CIT held the assessment order passed by the A.O u/s. 143(3) dated 04.03.2014 as erroneous in so far it was prejudicial to the interest of the revenue, observing as under: 6. For the above findings, on going through the assessment file of the assessee it is obse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g aggrieved with the order passed by the Pr. CIT u/s. 263 of the Act dated 23.03.2016 has carried the matter in appeal before us. As the assessee appellant despite having been intimated about the hearing of appeal had failed to put up an appearance before us, therefore, we are constrained to proceed with and dispose off the appeal as per Rule 24 of the Appellate Tribunal Rules, 1963, i.e after hearing the revenue respondent and perusing the orders of the lower authorities. 6. We have heard the Ld. Departmental Representative (for short DR ), perused the orders of the lower authorities and the material available on record. 7. We have given a thoughtful consideration to the order of the Pr. CIT and are persuaded to subscribe to the same. We, say so, for the reason that a bare perusal of the assessment order reveals that the A.O had without carrying out any enquiry and verification on both the aforesaid two issues in question, viz. (i) outstanding unsecured loan : Rs. 21,53,64,890/-; and (ii) claim for depreciation @7.5% a/w. additional depreciation @10% on railway siding : Rs. 16,66,76,552/-, had summarily accepted the same. The summarily acceptance of the aforesaid issues by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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