M/S.b.d.p.s. Software Limited v. The Dy. Commissioner Of Income-Tax,Circle 6(1), Mumbai

IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.2639 OF 2009 M/s.B.D.P.S. Software Limited,C/o. Mr.Ramesh Thadani,1301, Royal Resort Building,No.38, Shastri Nagar,Andheri (West), Mumbai – 400 053 ..Appellant. Versus 1)The Dy. Commissioner of Income-tax,Circle 6(1), Mumbai. 2)The Commissioner of Income Tax,City VI, Aayakar Bhavan,Mumbai..Respondents. Mr.Subhash S. Shetty, Amicus Curiae. Mr.Suresh Kumar i/by Mr.Vimal Gupta for the respondents. Mr.Ramesh Thadani, Director of the Appellant present in Court. CORAM : J.P. Devadhar &K.K. Tated, JJ. DATE : 13[th] October 2011 1.Since the advocate for the appellant has consistently remained absent on several occasions, we had asked the representative of the appellant, Mr.Thadani who has been regularly taking adjournment to make alternate arrangements. On the last occasion, the said representative expressed the inability of the appellant to engage any other advocate to argue the case on behalf of the appellant. In these circumstances, we requested Mr.Subhash Shetty to assist the Court as amicus curiae, which he readily agreed. Accordingly, the matter was adjourned so as to enable Mr.Shetty to go through the file and take necessary instructions from the representative of the assessee. 2.Today, we have heard Mr.Shetty for the appellant and Mr.Suresh Kumar for the Revenue. The appeal is admitted on the following substantial question of law. “Whether the Income Tax Appellate Tribunal was right in law in confirming the addition of Rs.3,18,24,076/- on account of depreciation disallowed and on account of late payment of providend fund of Rs.7,53,103/- made during the year ?” 3.By consent, the matter is taken up for final hearing. The assessment year involved herein is AY 2001-2002. 4.The assessee is engaged in the business of computer education and software development. In the assessment year in question, the assessee 3itxa2639-09 filed return of income on 30[th] October 2001 claiming depreciation on computer software and computer hardware at Rs.4,32,96.085/-. There was a survey action at the premises of the assessee on 23[rd] December 2002, wherein statements of the managing director and the chief accountant of the assessee were recorded. In their statements, the managing director and the chief accountant admitted that they have not purchased the computer software and computer hardware and out of the depreciation amounting to Rs.4,32,96,085/- agreed to offer the amount of Rs.3,18,24,076/- for taxation. 5.Accordingly, on 26[th] December 2002, revised return was filed by the assessee withdrawing the depreciation amounting to Rs.3,18,24,076/-. The revised return was accepted on 13[th] January 2003 under Section 143(1) of the Income Tax Act, 1961. Thereafter, the assessee sought to file re-revised return on 15[th] January 2003 along with an affidavit, wherein it was stated that in the revised return filed on 26[th] December 2003 the depreciation amount was erroneously withdrawn and wrongly offered to tax. In the affidavit filed along with the re-revised return the assessee sought to retract the statements recorded during the course of survey action. The re-revised return filed on 15[th] January 2003 could not be obviously entertained once the revised return filed on 26[th] December 2002 was processed on 13[th] January 2003. 6.Thereafter, a notice was issued under Section 143(2) and assessment order under Section 143(3) was passed on 30[th] May 2003, 6.Thereafter, a notice was issued under Section 143(2) and assessment order under Section 143(3) was passed on 30[th] May 2003, wherein the retracted statement of the assessee was disbelieved and the amount of Rs.3,18,24,076/- offered in the revised return was accepted. The assessing officer further disallowed Rs.7,53,103/- being the provident fund dues paid by the assessee belatedly. Challenging the aforesaid order, the assessee filed an appeal before the Commissioner of Income Tax (Appeals). By an order dated 27[th] August 2003, the Commissioner of Income Tax (Appeals) dismissed the appeal filed by the assessee. Further appeal filed by the assessee was also dismissed on 24[th] February 2009. Challenging the aforesaid order, present appeal is filed by the assessee under Section 260A of the Income Tax Act, 1961. 7. Mr.Shetty, amicus curiae submitted that once the statement made during the course of survey has been retracted by filing an affidavit and re-revised return has been filed on 15[th] January 2003 withdrawing the amount of Rs.3,18,24,076/-, the authorities below were not justified in denying the depreciation and making addition of the aforesaid amount. He also submitted that in the light of the judgment of the Apex Court in the case of Commissioner of Income Tax V/s. Alom Extrusions Limited reported in (2009)319 ITR 306 (S.C.), dis-allowance of Rs.7,53,103/- on account of late payment of provident fund cannot be sustained. 8.Mr.Suresh Kumar, learned Advocate appearing on behalf of the Revenue fairly stated that the issue relating to dis-allowance on account of late payment of provident fund dues would have to be decided in favour of the assessee in view of the decision of the Apex Court in the Alom Extrusions Limited (supra). As regards the additions of Rs.3,18,24,076/- is concerned, he submitted that in view of the revised return filed by the assessee, the authorities below were justified in sustaining the addition of Rs.3,18,24,076/-. 9.On careful consideration of the rival submissions, in our opinion, the challenge to the addition of Rs.3,18,24,076/- cannot be sustained. In the present case, though the assessee initially claimed depreciation of Rs.4,31,96,085/-, the assessee admitted during the course of survey that the computer software and hardware has not been purchased by the assessee and the assessee itself filed revised return wherein the claim towards depreciation amounting to Rs.3,18,24,076/- was withdrawn and the said amount was offered to tax. Although the assessee has filed an affidavit retracting the statement recorded during the course of survey, there is no material on record to show that the computer software and computer hardware to the extent of Rs.3.18 crores were actually purchased by the assessee. 10.The Income Tax Appellate Tribunal has recorded a finding of fact that during the course of survey neither the assets were found nor the assessee could establish names of the parties from whom these computer software and computer hardware were purchased. Moreover, the Income Tax Appellate Tribunal has recorded a finding of fact that even the payments were made by bearer cheques and not by account payee cheques. In these circumstances, the decision of the Income Tax Appellate Tribunal in rejecting the claim of the assessee cannot be faulted. 11.As regards the disallowance of Rs.7,53,103/- on account of late payment of provident fund amount is concerned, counsel on both sides agree that in view of the decision of the Apex Court in the case of Alom Extusions Limited (supra), the issue has to be answered in favour of the assessee. 12.Accordingly, the appeal is disposed by upholding the order of the Income Tax Appellate Tribunal in so far as it relates to bringing to tax the amount of Rs.3,18,24,076/- offered to tax by the assessee in its revised return and by setting aside the order of the Income Tax Appellate Tribunal insofar as it relates to disallowing the provident fund dues paid belatedly. circumstances, the decision of the Income Tax Appellate Tribunal in rejecting the claim of the assessee cannot be faulted. 11.As regards the disallowance of Rs.7,53,103/- on account of late payment of provident fund amount is concerned, counsel on both sides agree that in view of the decision of the Apex Court in the case of Alom Extusions Limited (supra), the issue has to be answered in favour of the assessee. 12.Accordingly, the appeal is disposed by upholding the order of the Income Tax Appellate Tribunal in so far as it relates to bringing to tax the amount of Rs.3,18,24,076/- offered to tax by the assessee in its revised return and by setting aside the order of the Income Tax Appellate Tribunal insofar as it relates to disallowing the provident fund dues paid belatedly. 13.The appeal is disposed off accordingly with no order as to costs. 14.Before concluding, we place on record our appreciation of the assistance rendered to the Court by Shri Subhash Shetty as amicus curiae. (K.K. Tated, J.) (J.P. Devadhar, J.)