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M/s. Trans Air, 118, Ansal Bhawan, Kasturba Gandhi Mar, New Delhi 110 001. vs. DCIT, Central Circle 12, New Delhi.
December, 18th 2013
                  (DELHI BENCH `H' : NEW DELHI)


                             ITA No.646/Del./2013
                        (ASSESSMENT YEAR : 2003-04)

M/s. Trans Air,                                     vs.    DCIT, Central Circle 12,
118, Ansal Bhawan,                                         New Delhi.
Kasturba Gandhi Mar,
New Delhi ­ 110 001.

       (PAN : AAAFT2744C)

       (APPELLANT)                                         (RESPONDENT)

                      ASSESSEE BY : Shri Ashwani Kumar, CA
                      REVENUE BY : Shri Sameer Sharma, Senior DR



       This appeal filed by the assessee emanates from the order of CIT (Appeals)-XXXI,

New Delhi dated 31.12.2012.

2.     In this case, a notice u/s 148 of the Income-tax Act, 1961 was issued on 31.03.2010

after recording the satisfaction as per the requirement of law. The information received

from Enforcement Directorate that a Mercedes Benz car bearing registration no.DL-3CQ

1010 was purchased by M/s. Trans Air. The investigation conducted by the Enforcement

Directorate revealed that the car was actually used by Shri Jagat Singh, son of Shri Natwar

Singh and it was under his absolute control and dominion.           As per the statement

reproduced in the reasons recorded, we find that Shri Chetan Gupta had stated on
                                             2                   ITA No.646/Del./2013

05.05.2006 that the car was purchased in April/May 2002 and it was used for a short while

and after which Shri Jagat Singh, s/o Shri Natwar Singh, 19, Teen Murti Lane, New Delhi

borrowed it from him and then he has been using this car up to September / October, 2005.

The Assessing Officer disallowed the depreciation and petrol expenses on the car as the

same was not being used for business purposes of the assessee and an addition of

Rs.7,30,294/- was made. The CIT (A) has confirmed this addition by holding as under :-

       "3.1.6          I have considered the submissions of the AR and facts of the
       case. It is not correct to say that depreciation is allowable merely on the
       ground of ownership of the asset. The car must be used for the purpose of
       assessee's business. The asset in question may be in the name of the
       assessee firm. However, it has been proved sufficiently beyond doubt that
       the said Mercedes Benz car was only in possession and use of Shri Jagat
       Singh who is not connected to the assessee firm. I find that there is no merit
       in the AR's argument that he was not confronted with the findings of the
       ED. The facts were made known to the assessee very much in the
       beginning of the assessment proceedings. The assessee had requested for
       and collected the reasons recorded while issuing notice u/s 148. In these
       reasoning, the facts have all been made very clear. Further when notice
       under 143(2) and 142(1) were issued calling for the firm's reply, as to why
       depreciation should not be disallowed for the said reasons, the firm has
       chosen to remain silent. Therefore, this is not a case of not providing
       opportunity or not allowing cross examination by the A.O. The assessee
       never demanded it nor gave any explanation during the assessment
       proceedings. In fact, in the regular assessment for the year, assessee has
       claimed that all books have been burnt in fire. Hence the allegation of
       violation of the principle of natural justice is not found acceptable.
       Sufficient opportunity has been given to the appellant to put across his
       views or lead evidences in support of its claim during the assessment stage.
       The firm never asked for cross-examination of Shri Jagat Singh during the
       assessment proceedings. Hence, making it one of the issue before appellate
       authority is not on permissible.

       3.2   Considering all the facts, I do not find any merit in the appeal. The
       ground raised is rejected."

3.     Now, the assessee is in appeal before us by taking the following ground:-

       "That the order dated 31-12-2012 passed u/s 250 of the Income-tax Act,
       1961 by the Learned Commissioner of Income-Tax (Appeals) XXXI, New
       Delhi is against law and facts on the file in as much as he was not justified
       in upholding the action of the Learned Assessing Officer in disallowing car
       depreciation of Rs.4,74,542/- and car expenses of Rs.2,55,752/- (totaling
                                               3                   ITA No.646/Del./2013

        Rs.7,30,294/-) on the ground that the car was not used by the Appellant
        Firm for business purpose which is arbitrary, unjustified and against the
        facts and provisions of law."

4.     We have heard both the sides on the issue and also perused the record available.

We find that the statement of Shri Chetan Gupta recorded by the Enforcement Directorate

and the other evidences collected by the Enforcement Directorate have not been confronted

with the assessee with regard to the use of the car. We do not agree with the view of CIT

(A) that assessee had never asked for cross examination of Shri Jagat Singh. Even when

assessee does not ask for then also all evidence used against assessee must have been

confronted. Therefore, in the interest of justice and equity, we find it appropriate to restore

the issue to the file of the Assessing Officer so that assessee can be provided with the copy

of statement recorded by the Enforcement Directorate as well as with other material which

was used while making such addition. Therefore, we set aside the orders of the authorities

below and restore the issue to the file of the Assessing Officer to decide the issue de novo

after providing an opportunity of being heard to the assessee.

5.     In the result, the appeal of the assessee is allowed for statistical purposes.

     Order pronounced in open court on this 11th day of December, 2013.

                  Sd/-                                           sd/-
             (U.B.S. BEDI)                                   (B.C. MEENA)
          JUDICIAL MEMBER                                ACCOUNTANT MEMBER

Dated the 11th day of December, 2013/TS
Copy forwarded to:
       4.CIT(A)-XXI, New Delhi.
       5.CIT(ITAT), New Delhi.                                              AR, ITAT
                                                                         NEW DELHI.
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