TaxTMI 
TaxTMI 
2010 (5) TMI 420
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....t. The Department conducted search and enquiry on the genuineness of the claim of depreciation. The respondent was also heard and assessment was finalised rejecting the claim for 100 per cent. depreciation towards the cost of the abovesaid equipment along with certain other claims. 2. The assessee-respondent feeling aggrieved preferred an appeal before the Commissioner of Income-tax (Appeals), Thiruvananthapuram. The first appellate authority, though allowed the appeal partly, confirmed the assessment order so far as it relate to the denial of depreciation of the abovesaid equipment along with certain other deductions and allow- ances. 3. The respondent-assessee preferred a second appeal before the Income- tax Appellate Tribunal, Kochi. The appellant herein preferred cross-objec- tion so far as the first appellate order went against it. Before the Appellate Tribunal three grounds were urged by the respondent. The first ground is relating to the depreciation in respect of the abovementioned equipment. When the appeal came up for hearing, on behalf of the respondent- assessee it was submitted that the first ground was not pressed, but an alternative ground was rai....
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....not a loss by way of loss of capital assets' and are not the findings wrong, erroneous and against facts and realities ? (3) Whether, on the facts and in the circumstances of the case the assessee is entitled to claim deduction of the loss in the assessment year 1996-97 and the Tribunal is right in law in giving a direction to the officer to that effect ? 5. The first question of law raised is regarding the error in the procedure adopted by the Appellate Tribunal after arriving at a finding regarding the alleged business loss. The second question of law is the one pertaining to the actual dispute. So, the first question of law arises only if we arrive at a finding in favour of the respondent regarding the second question of law. The third question of law raised is also one incidental to the second ques- tion of law. Hence, we are considering the second question of law first. 6. Going by the assessment order and the first appellate order, we find that the Assessing Officer as well as the first appellate authority considered the claim urged by the respondent threadbare and arrived at a finding against the respondent that the purchase of machinery mention....
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.... it appear that the bogus transaction had taken place and to avoid payment of tax in the form of a claim of business loss which the Appellate Tribunal found as a complementary issue to the main issue of 100 per cent. depreciation and answered in favour of the respondent with an observation that no enquiry regarding the facts are called for to adjudicate the additional grounds. 8. The learned senior counsel on behalf of the appellant would argue that since the Assessing Officer as well as the first appellate authority had found that the story of purchase of the equipment mentioned earlier and transport of the same to the lessee and the lease transactions were found bogus, the respondent is not entitled to claim any deduction as business loss. There cannot be any loss on a transaction that never occurred, so sub- mitted. On the other hand, advocate Shri A. Kumar, the learned counsel appearing for the respondent submitted that whatever may be the finding of the Assessing Officer as well as the first appellate authority, a transac- tion occurred whereby the respondent spent a sum of Rs. 3,60,19,500 and on realizing that it was a case of deception, forgery, falsification of ac....
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....he assessee and the so-called lessee. Neither is there any finding that the finding of the Assessing Officer or the first appellate authority that the alleged lease transaction is bogus is unsustainable nor that there was any lease transaction established. Without basing any document, the Appellate Tribunal accepted the assessee's version that there is loss out of the lease transaction and allowed the appeal in the manner stated earlier. That finding without the support of any document is illegal and unsus- tainable. 10. Before us 16 documents (annexures R 1 to R 16) along with a counter- affidavit were filed. Of these, annexures R 1 to R 5 were concurrently rejected by the authorities below and no argument was advanced touching those documents. Many of the documents produced are not legible here and there. Some are even incomplete. So, those documents are not enter- tainable in this third appeal. However, we have carefully gone through annexures R 6 to R 15. It is seen that annexure R 6 complaint was filed on behalf of the respondent against one S. R. Jain and four others alleging offences under sections 120B, 409, 468, 470, 471 and 473 of the Indian Penal Code and the s....
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....any authority to interfere with the investigation either by an order withdrawing the complaint or otherwise. Withdrawal of the complaint under section 257 the Criminal Procedure Code is permissible only in respect of offences triable under Chapter XX of the Criminal Procedure Code. If the allegation is true, the offences alleged being triable under Chapter XIX, the complaint is not liable to be withdrawn under section 257 of the Criminal Procedure Code. So, the contention of the respondent that the payment was made by the alleged accused in pursuance of a settlement agreement and with- drawing the complaint are not at all convincing and not legally entertain- able. It appears that the so-called complaint and the settlement thereon, etc., are only further attempts made by the respondent to create documents to make it appear that a transaction which was found bogus by the Assess- ing Officer as well as the first appellate authority and confirmed in second appeal had occurred. It is also very pertinent to note that the Appellate Tribunal without going to the merits or admissibility of the documents in support of the additional ground urged in the appeal arrived at a conclu- sion that ....
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....dra's case [2006] 280 ITR 462 (Guj) a false shipping document was created and money was collected. In T. A. Quereshi's case [2006] 287 ITR 547 (SC) the assessee had manufactured heroin illegally and the heroin was seized by the authorities and thus loss was sustained to the assessee. Here, in this case there is no such transaction, but, the assessee had made documents as if equipment were purchased and the lease trans- actions had taken place and payments were made. All documents were rejected by all the authorities below. So, the dictum laid down in those cases cannot be applied to the facts of this case. 14. To conclude, the claim of business loss is not at all entertainable in view of the fact that the finding of the Assessing Officer as well as the first appellate authority that the lease transaction alleged based upon which the 100 per cent. depreciation was claimed is a bogus one. We concur with the first appellate authority and find that no lease transaction in respect of the equipment mentioned earlier had taken place in between the respondent and M/s. Prakash Industries Ltd., as alleged by the respondent. So, there cannot be any business loss on account of that b....