TaxTMI 
TaxTMI 
TaxTMI 
2025 (7) TMI 1433
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....leged excess claim of depreciation by allegedly inflating the WDV of the capital assets and claiming depreciation on alleged capital assets. The said disallowances with respect to which penalty had been levied was made solely on the basis of statement of an unrelated third party recorded u/s. 132(4) in the course of search in another company and therefore the very basis for making the impugned addition falls to the grounds in view of judgment of ITAT, Delhi Bench in the case of Best Infrastructural Pvt. Ltd. 2. The learned Commissioner of Income Tax (Appeals) grossly erred in law and on facts of the case in confirming the action of the AO in imposing the impugned penalty u/s. 271(1)(c) with respect to an addition made on the basis of a statement u/s. 132(4) of an unrelated third person recorded in the course of Search u/s. 132 in the case of another assessee in utter disregard to the ratio of the judgment of the Hon'ble ITAT, Delhi Bench in case Best Infrastructural (India) Pvt. Ltd., Best Realtors (India) Pvt. Ltd., Best City Developer (India) Pvt. Ltd. and Best City Projects (India) Pvt. Ltd. wherein it was held that an addition made on the basis of statement recorded u/s. ....
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....hah an unrelated third party alleged to have been recorded during the search u/s. 132(4) without providing the assessee a copy of such statement and also without providing the appellant an opportunity to crossexamine Shri Akshat Shah, who is not an employee of the appellant company, who is not in any way connected with the appellant company and who is a unrelated third party, stranger to the appellant. The impugned additions have been made in violation of the principle of natural justice. It is therefore prayed that impugned penalty order may please be cancelled. 7. The learned Commissioner of Income Tax (Appeals) grossly erred in law and on facts of the case in confirming the action of the AO in imposing the impugned penalty by placing reliance solely on the assessment order u/s 143(3) r.w.s 153C in utter disregard to the fact that the penalty proceedings are quite distinct and different from the assessment proceedings and the AO is required to record a finding to the effect of commission of default by the assessee for which penalty is sought to be levied. In the order under appeal, the AO has, except for relying on the assessment order, not recorded any finding of fact about th....
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....see in F.Y. 2009-10 and subsequent years from the entities mentioned in the chart seized during search at Claris Life Sciences Ltd. and it was also noted that the assets were accounted for to have been purchased at the higher value recorded in the Column "As per Books". Explanation with regard to the same was sought from the assessee and finding no reasonable explanation being given by the assessee, the AO held that the assets had been accounted for to have been purchased at inflated value and the excess depreciation claimed accordingly, amounting to Rs. 55,32,934/-, was disallowed. 5. Similarly, it was noted that the assessee had purchased assets amounting to Rs. 3,25,97,490/- from various parties, which were not genuine. Inspector, deputed for verifying the genuineness of the assets, did not find the parties at the given addresses. The said parties were found to have been debarred by the VAT Department of Gujarat. Further, Claris Life Sciences Ltd. in its application filed before the Settlement Commission had accepted to have entered into bogus or non-genuine transaction of capital assets from the aforestated party. Also, Shri Akshat Mohit Shah, Assistant Vice-President (Account....
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....ding goods. Specifically, Shri Akshat Shah, an assistant vice president (AVP) at Claris, had made a statement during a search operation at his residence on August 4-5, 2015 under Section 132(4), in which he admitted to organizing accommodation entries for Claris with the assistance of various Angadiyas, where cash was paid in exchange for RTGS transfers, and cheques/RTGS were issued against cash payments. The list of firms involved in these bogus transactions, including JS Enterprise and Jalram Finvest Services, was found on Page 9 of Annexure A-1, as shown in the assessment order. Additionally, M/s Claris Lifesciences Ltd. had acknowledged in its application to the Hon'ble Settlement Commission that it was engaged in non-genuine transactions for capital assets with various parties, including JS Enterprise. Given these findings, the AO disallowed the claim of depreciation of Rs. 18,92,228/- for the year under consideration, as the purchase of the capital assets was from JS Enterprise and the same was held to be non-genuine. 13. In the appellate proceedings before Ld. CIT(Appeals), Ld. CIT(Appeals) was of the view that the assessee did not submit any specific arguments regardi....
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....el for the assessee submitted that the CIT(A) had made an erroneous statement, stating that the assessee had failed to make specific submissions during the appellate proceedings regarding the disallowance of depreciation. In fact, the assessee had submitted detailed arguments on this issue, which were reproduced in the CIT(A)'s order from pages 18-25. On the merits of the case, the Counsel for the assessee submitted that their claim for depreciation was fully justified. The assets purchased from J. S. Enterprise were genuine, had been installed and commissioned, and were in use for business purposes of the assessee. The depreciable assets were recorded in the books of accounts, and the underlying assets were owned by the assessee and already in use. The assessee further argued that the AO had denied their request for a physical verification of the assets. Given these circumstances, the Counsel for the assessee submitted that the impugned addition was unjustified and was liable to be deleted. 15. In response, the Ld. DR placed reliance on the observations made by Ld. CIT(Appeals) in the appellate order. 16. We have heard the rival contentions and perused the material on reco....
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.... assessee that the disallowance made in the present case of depreciation is maintainable on merits itself being covered by the decision of ITAT in the case of Flourish Purefoods Pvt. Ltd. (supra) and, therefore, no question of levy of penalty on the same u/s. 271(1)(c) of the Act. 11. As rightly pointed out by the Ld. DR, in the case of Flourish Purefoods Pvt. Ltd. (supra), the ITAT had dealt solely with the issue of disallowance of depreciation on bogus/non-genuine purchases of assets while in the facts of the present case, the depreciation disallowed is not only with respect to the bogus purchases of assets but also pertaining to the inflated value of assets. Therefore, as far as the disallowance of depreciation on the inflated value of assets is concerned, which in the present case is Rs. 55 Lakhs, the assessee is not benefited in any way by the decision of the ITAT in the case of Flourish Purefoods Pvt. Ltd. (supra). Therefore, with respect to the disallowance of the depreciation pertaining to inflated purchases the argument of Ld. Counsel for the assessee that no penalty is leviable on the same on account of the issue being covered in favour of the assessee in quantum proceed....