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TMI Blog2025 (1) TMI 1202X X X X Extracts X X X X X X X X Extracts X X X X ..... ffect that the invoice was prepared without actual supply of the machinery for the purpose of availing finance, the machineries were not available on the date of visit by the AO and no records were submitted to substantiate the supply of machineries and the appellant taking contrary stands at different points of time, it is clear that no actual supply of machinery was made through the invoice. Further inspite of sufficient opportunities, the assessee failed to submit any records in respect of the usage of the machinery and therefore the Tribunal had rightly allowed the appeal and deleted the disallowance made by the appellate authority.
Substantial questions of law are answered as against the appellant and in favour of the Revenue. X X X X Extracts X X X X X X X X Extracts X X X X ..... they do not wish to cross-examine Mr.Gopal Damani and admitted that the assessment can be completed by disallowing the claim of depreciation and all the above persons have also signed the order sheet. Based on the admission, the AO completed the assessment and passed the assessment order dated 05.03.2001 under Section 143(3) of the Act. 6. Again the assessee preferred an appeal before the CIT (Appeals) and the appellate authority by order dated 07.06.2002 allowed the appeal on the ground that the AO had travelled beyond the directions issued in the earlier order. The appellate authority held that the earlier assessment order was not set aside in a strict technical sense, but the same was also only restored to the AO for the limited purpose of deciding the appellant's claim in regard to depreciation and further the AO had only verified the proforma invoice in respect of one financier. As such, the appellate authority deleted the disallowance made in respect of the depreciation claim on machinery to the tune of Rs. 48,65,360/-. 7. In the appeal preferred by the Revenue before the Income Tax Appellate Tribunal [in short "ITAT"], the assessee had not participated in enquiry and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earned Senior Standing Counsel for the revenue contended that when the whole issue was in respect of disallowance of the depreciation on machinery, the CIT (Appeals) remitted the matter back to the AO to consider all the materials to be produced by the assessee and pass a fresh order on merits. Only since the assessee failed to submit the materials with respect to the purchase made by them and after providing ample opportunities, the AO had complied with the directions of the appellate authority by issuing summons under Section 131 to the assessee and on failure, the AO had visited the premises of the assessee and recorded sworn statement on 22.12.2000. 12. As the machineries were not available and the assessee has not submitted any purchase invoices and had taken contrary stands, the AO visited the finance company who had financed the assessee for purchase of the machinery. Based on the sworn statement recorded from the seller, the assessee was given sufficient time and opportunity to respond to the statement that no machinery was sold to them and that the invoice was prepared and issued only for the purpose of availing the loan. Only since the assessee company along with their a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the appellate authority by order dated 18.07.2000 allowed the appeal on the ground that the AO ought not to have come to the conclusion that the machinery was not installed and the depreciation claim was false, only because the details were not furnished before him and therefore held additions made by the AO cannot be sustained. The assessee was directed to furnish all the details before the AO within a period of 15 days from the date of receipt of a copy of the order and the AO was directed to afford opportunity relating to the depreciation and consider the same and pass a speaking order. The relevant portion of the order is extracted hereunder:- "2.4.On going through the record and submissions of the learned counsel, I find that there was sufficient justification for the Assessing Officer to pass an ex parte Order under section 144 of the Income Tax Act. However, it is to be noted that even in an ex parte Order, the Assessing Officer will have to weigh the evidence on record and the attendant circumstances and facts before deciding to add any income or to deny claims. In the instant case, the only reason for effecting the additions seems to be that the details were not furnis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 18. As the assessee was not cooperating and being left with no other option, the AO had visited the premises of the assessee company wherein a sworn statement was recorded on 22.12.2000. In the statement, the Director of the assessee had stated that he will file the purchase invoices on 26.12.2000 and for the first time he took a stand that the day book and ledger got destroyed by white ants, when even as on 07.11.2000 they had sought time for submitting these records. 19. Since the machinery were not found in the premises on the day of recording the sworn statement, when questioned about the whereabouts, it was responded that some of the machineries were destroyed due to the collapse of the building and they had requested for time to submit all the relevant records. As the assessee failed to submit purchase invoices and also failed to submit any other relevant records for completing the proceedings, the AO proceeded with the enquiry by visiting the finance company who had financed the assessee for purchase of the machinery. From the financiers M/s.Operating Lease and Hire Purchase Ltd. and M/s.South Asian Finance Exchange Ltd., the AO had collected the invoice based on which th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as present, in respect of the sworn statement given by him. 23. Again on 19.02.2001, Mr.Gopal Damani had submitted a letter reiterating that they had neither manufactured those machineries nor purchased from anybody and therefore there was no question of supplying the machineries to the appellant. The appellant had thereafter given a letter dated 19.02.2001 stating that they did not wish to cross-examine Mr.Gopal Damani and had admitted that the assessment can be completed by disallowing the claim of depreciation, based on which, the AO had completed the assessment and passed the assessment order dated 19.02.2001. The order sheet had also been signed by the appellant along with the auditor and the Director of M/s.R.D. Enterprises (P) Ltd., the seller in the invoice. The relevant portion of the order is extracted hereunder:- "From the above statement, it could be seen that Mr.Gopal Damani has only issued sale invoices without actually supplying the machinery. The modus operandi adopted by the assessee Company to claim bogus depreciation is cheques received from the financiers was deposited in M/s.R.D.Enterprises (P) Ltd., and Mr.Gopal Damani withdraws this money to be handed over ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,48,000 to M/s.H.M.Bros. (P) Ltd., as if machinery was sold to it (Annexure 10). He has further stated in his letter that he neither manufactured these machineries nor purchased from anybody and hence there is no question of supplying this machinery to M/s.H.M.Bros (P) Ltd. Since there is no alternative to the assessee Company, they have finally admitted that the assessment can be completed by disallowing the claim of depreciation. Mr.B.K.Bagdi of H.M.Bros. (P) Ltd., Mr.Gopal Darmani of M/s.R.D.Enterprises (P) Ltd and Mr.Raghunath, C.A., have all signed this Order sheet on 19.2.2001 (Annexure 11-Order sheet). In view of the above, the claim of depreciation on the machinery is disallowed and the assessment is completed." 24. In the further appeal preferred by the assessee in I.T.A.No.14/2001-02, the appellate authority by order dated 07.06.2002 had allowed the appeal and had deleted the disallowance in respect of depreciation claim on machinery. The CIT (Appeals) had allowed the appeal on the ground that when the matter was remanded back to the AO he was only directed to give the appellant an opportunity to place all materials relating to depreciation and decide on the basis of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellant and since no records were submitted to him, a sworn statement was recorded on 22.12.2000. 28. However the assessee had not submitted the invoice for the purchase of machinery or any other materials and had been taking contrary stands. In order to complete the proceedings, the AO proceeded to visit the finance company for collecting a copy of invoice and from the invoice, it came to light that the seller in the invoice is not dealing with the products mentioned as supplied. Based on the sworn statement recorded from the Director of the supplier, the modus operandi of the assessee who had obtained an invoice without actual supply of the machinery for the purpose of availing finance surfaced and also the further bogus claim for depreciation on the machinery was also ascertained. 29. The appellant was also afforded an opportunity to cross-examine the Director of the seller company, who had given a sworn statement that no such machinery was supplied. But the appellant gave a written statement that they do not wish to cross-examine him and thereby they were not ready to avail the opportunity to controvert the evidence and further they have admitted the non-supply and subm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before the appellate authority. As the submission alone was made that too only before the Tribunal alleging that the AO had resorted to coercion, the same was also dealt with by the Tribunal and rejected as in spite of ample opportunity for the appellant to submit evidence, the same was not availed and the AO had only the limited role to enquire and pass a speaking order in the remand proceedings. The relevant portion of the order of ITAT is extracted hereunder:- "12. We support the above opinion because the assessee admittedly accepted before the Assessing Officer in writing and should not have any grievance in contesting the issue. The allegation that Assessing Officer resorted to coercion etc. cannot be accepted as the Assessee got enough opportunity to submit evidence /make its claim in the scrutiny proceedings, but not availed. It is also not search proceedings /original assessment proceedings. These are remand proceedings and the Assessing Officer had limited powers to enquire and make a speaking order. Considering the issue in that context the assessee's allegation that there was a promise by the AO for not initiating the penalty proceedings before surrender, can not b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied on the decision of this Court in the case of Ramanlal Kamdar Vs. Commissioner of Income Tax reported in (1977) 108 ITR 0073 (Madras), wherein a reference was sought for by the Tribunal, the Division Bench of this Court held that only if an assessee was aggrieved by the order of the ITO, he had the right to file an appeal before the appellate authority and once the assessment was made pursuant to the statement made by the partner, the assessee could not have any grievance and in such circumstances, even the appeal before the appellate authority was incompetent and consequently the further appeal to the Tribunal was also incompetent. Paragraph 3 of the decision reads as follows: "3. We are of the opinion that the appeals to the AAC and to the Tribunal, by the assessee, were incompetent. We have already referred to the fact that one of the partners of the assessee, viz., Shri Chandulal Kamdar, appeared before the ITO on 27th Oct., 1967, and stated that the assessee had no objection to the proposed revision. Once the assessee had stated that it had no objection to the proposed revision and the ITO had also revised the original assessment as proposed by him, the assessee could not ..... X X X X Extracts X X X X X X X X Extracts X X X X
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