9911796707
TMI Blog1997 (1) TMI 120X X X X Extracts X X X X X X X X Extracts X X X X ..... accounting period triple-shift depreciation was allowed in respect of certain plant machinery but no information regarding number of days of working of factory for such triple-shift was available in the record. He also noticed that the triple-shift depreciation had been allowed on generator also which was not normally allowable. He, therefore, considered the assessment to be erroneous insofar the same was prejudicial to the interest of revenue and issued a show-cause notice to the assessee. In a written submission dated 26-3-1992 it was pointed out by the assessee that an application must have been made for change of previous year. It was also contended that since the Assessing Officer has noted the period of previous year as 18 months' period from 1-4-1985 to 30-9-1986 and has completed the assessment as such, the Assessing Officer must have given his implied consent regarding change of previous year. Regarding the issue of allowance of triple-shift depreciation including the same on generator the assessee emphasised that since the assessment was completed under section 143(3), the Assessing Officer must have applied his mind and scrutinised the number of days of working of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e representative of the assessee it indicates implied permission granted by the Assessing Officer and moreover no assessment for assessment year 1986-87 is made by the department and, therefore, this fact also proves the contention of the assessee. In order to support his contention, he relied on the following decisions in order to prove that once the return is accepted and assessment is made, it is implied that change of previous year is accepted by the Assessing Officer : (i) Karnal Kaithal Co-operative Transport Society Ltd. v. CIT [1972] 84 ITR 46 (Punj. Har.) ; (ii) Rattan Lal Ved Prakash v. CIT [1983] 144 ITR 135/[1982] 11 Taxman 123 (All.). The learned counsel for the assessee drew our attention to the position of business loss placed at page 9(a) of the paper book and contended that the assessment order was not prejudicial to the interest of revenue as there was throughout loss right from the assessment year 1985-86. He again drew our attention to the notice issued by the CIT placed at page-1 of the paper book and pointed out that the order of the CIT suffers from legal infirmities because of non-application of mind on the part of the CIT as indicated in the lette ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat no condition is put by the Assessing Officer while granting the permission as it is evident from the permission placed at page-7 of the paper book. In order to supply his contentions and arguments he relied on the following decisions : (i) Bennett Coleman Co. Ltd. v. Allahiri, ITO [1983] 141 ITR 239/12 Taxman 315 (Bom.) ; (ii) Rampyari Devi Saraogi v. CIT[1968] 67 ITR 84 (SC) ; (iii) CIT v. M.M. Khambhatwala [1992] 198 ITR 144 (Guj.) ; (iv) Addl. CIT v. Mukur Corporation [1978] 111 ITR 312 (Guj.) ; (v) Gee Vee Enterprises v. Addl. CIT [1975] 99 ITR 375 (Delhi). 5. We have carefully considered the rival contentions, the relevant facts and material placed on the record and have also gone through the case laws on which the reliance is placed by both the parties in order to support their contentions and arguments. We find that the contentions and arguments of the learned counsel for the assessee do not hold good nor the case laws cited by him help the cause of the assessee. The contention of the assessee that the excess of depreciation is not mentioned in the show-cause notice is not correct as we find that in para-4 of the notice of CIT has very clearly ment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iously the assessee had not made any application for changing the previous year from the year ending on 31st March to the year ending on 30th September, the voluntary submission by the assessee of returns for the previous year ending on 30th September amounted to application for change of the previous year and the acceptance of those returns by the officer amounted to his consent for the change, and the earlier practice could not be deemed to be continuing." The assessee has also placed reliance on Allahabad High Court decision in the case of Rattan Lal Ved Prakash wherein it was held as under : " Held , that the consent of the ITO under section 3(4) of the Act, had to be implied for the change in the previous year, though no formal application was made by the assessee and no express order was passed by the ITO permitting the assessee to change his previous year. Therefore, the assessment on the basis of the changed previous year was valid." The decision of Punjab and Haryana High Court is in favour of the department and it was held that the ITO was right as the assessee had not applied under section 2(11) of the Act for change of the previous year. In this case, the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer about the change of previous year and about the allowance of triple-shift depreciation allowance on plant and machinery and about the number of working days of factory. The assessee has also relied on Kerala High Court decision in the case of P. Veriah wherein it was held that the Tribunal having granted the investment allowance and extra-shift allowance on the generator relying on Circular No. 1454 of the Central Board of Revenue no question of law arose for reference. Considering that the extra-shift allowance is allowable on generator it is necessary for the ITO to know the number of days the generator has worked. 7. The assessee has also relied on the Madras High Court decision in the case of M.S. Sahadevan but as the facts and circumstances of the instant case are altogether different the ratio of the Madras High Court does not come to the rescue of the assessee. 8. The learned departmental representative on the other hand has contended that there is no mention in the assessment order about the granting of permission to the assessee for the change of previous year and neither the application nor the permission recorded by the ITO is available on the record. Acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an order made by the ITO which could be revised by the CIT under section 263." In the instant case also the Assessing Officer has failed to prescribe the conditions that would offset the loss to the Revenue. On the contrary he has gone one step further and has held that there will be no assessment for the assessment year 1986-87. This has genuinely resulted in loss to the Revenue. 10. Having considered all the facts and circumstances of the case and having gone through all the case laws we come to the conclusion that the CIT was justified in exercising his power under section 263 as the order passed by the Assessing Officer is erroneous insofar as it is prejudicial to the Revenue. We find that in this case although the consent is granted by the Assessing Officer but it is not subject to any conditions and, therefore, the order of the Assessing Officer is erroneous. This simply means that the order lacks the application of mind. It is also noticed that the triple-shift depreciation is allowed without making any enquiry about the number of days of work of factory. In view of this, we hold that the Commissioner was fully justified in passing the order under section 263 of the Ac ..... 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