1983 (9) TMI 102 - AT - Income Tax

Tribunal allows appeal despite filing delay, Commissioner disallows depreciation, Tribunal upholds intervention

The Tribunal condoned the delay in filing the appeal due to the principal officer's illness, allowing the appeal to proceed. The Commissioner intervened, ... Condonation of delay - jurisdiction under section 263 - reference to the IAC under section 144B - non-merger of orders of ITO and IAC - allowability of depreciation after transfer of businessCondonation of delay - Whether the assessee's six-day delay in filing the appeal was to be condoned - HELD THAT: - The Tribunal found that the appeal was filed six days late. The assessee explained that the principal officer responsible for taxation matters was confined to bed from 9-2-1981 to 28-2-1981, a fact supported by a medical certificate, and that steps to obtain a challan and file the appeal were taken immediately after recovery. On these facts the Tribunal exercised discretion to condone the delay and admit the appeal for hearing. [Paras 1, 2]Delay of six days in filing the appeal was condoned and the appeal was admitted for hearing.Jurisdiction under section 263 - reference to the IAC under section 144B - non-merger of orders of ITO and IAC - allowability of depreciation after transfer of business - Whether the Commissioner could invoke section 263 to revise the allowance of depreciation when part of the depreciation issue had been referred to the IAC under section 144B, and whether depreciation was allowable given the assets were taken over by the State Electricity Board - HELD THAT: - The Tribunal held that the principle that an item referred to the IAC under section 144B is insulated from subsequent interference by the Commissioner applies only to the particular item so referred. The East Coast Marine Products decision was interpreted to mean that there is no merger of the ITO's order with the IAC's order; accordingly the Commissioner retains jurisdiction under section 263 to examine and interfere with items in the assessment which were not the subject of the specific 144B reference. In the present case the reference to the IAC was confined to depreciation on service lines amounting to a specified sum; the larger allowance of depreciation on other items was not referred to the IAC. The Tribunal therefore held the Commissioner had jurisdiction to revise that allowance. On the merits, since the assessee's assets for manufacture and distribution of electricity had been taken over by the State Electricity Board in August 1975, the company could not claim depreciation for the assessment year under consideration; the Commissioner's order disallowing depreciation was accordingly confirmed. [Paras 6, 7, 8]Commissioner had jurisdiction under section 263 to interfere with the allowance of depreciation not referred to the IAC under section 144B; on merits, no depreciation was allowable after the takeover of assets, and the Commissioner's order was confirmed.Final Conclusion: Delay in filing the appeal was condoned; the Tribunal upheld the Commissioner's exercise of jurisdiction under section 263 to revise the allowance of depreciation that was not the subject of a specific section 144B reference, and confirmed that no depreciation was allowable after the takeover of the assessee's assets by the State Electricity Board. Issues:1. Condonation of delay in filing appeal.2. Disallowance of depreciation by the assessing officer.3. Jurisdiction of the Commissioner under section 263 to interfere in the assessment order.Detailed Analysis:1. The issue of condonation of delay in filing the appeal arose as the appeal was filed six days late. The assessee provided reasons for the delay, citing the illness of the principal officer who was handling taxation matters. The officer was confined to bed from 9-2-1981 to 28-2-1981, as supported by a medical certificate. The appeal fee was paid on 3-3-1981, immediately after the officer's recovery. The Tribunal, considering these facts, condoned the delay and proceeded to hear the appeal.2. The assessing officer disallowed depreciation of Rs. 47,712 on service lines in the draft assessment order. The matter was referred to the Income-tax Appellate Tribunal (ITAT) under section 144B of the Income-tax Act, 1961. The ITAT confirmed the disallowance. However, the Commissioner initiated proceedings under section 263, deeming the assessment prejudicial to revenue. The Commissioner held that the assessee, after the takeover of the electricity business, was not entitled to any depreciation. The Commissioner directed the modifying of the assessment order accordingly.3. The jurisdiction of the Commissioner under section 263 to interfere in the assessment order was contested. The assessee argued that since the matter of depreciation was referred to the Income-tax Appellate Tribunal under section 144B, the Commissioner had no authority to interfere. However, the departmental representative contended that the Commissioner's jurisdiction was not excluded concerning the depreciation on other items not subject to the reference to the Income-tax Appellate Tribunal. The Tribunal agreed with the departmental representative, holding that the Commissioner had the authority to interfere in the allowance of depreciation not referred to the Income-tax Appellate Tribunal. The Tribunal confirmed the Commissioner's order, dismissing the appeal.