GINNI FILAMENTS LTD.,GAUTAM BUDH NAGAR V. DCIT CIRCLE 1(1)(1), AGRA

SA 1/AGR/2025

AI Insights

The case involves Ginni Filaments Ltd., which faced an outstanding tax demand of Rs.11,98,25,063/- for the Assessment Year 2020-21, arising from an addition of Rs.34,45,60,149/- under section 41(1) of the Income Tax Act, 1961, concerning sundry creditors. The Assessing Officer had added this amount as a cessation of liability, which was confirmed by the CIT(A). The assessee contested this addition, arguing that the liabilities were genuine and provided additional documentation during the proceedings under section 263 of the Act, which was initially not submitted during the assessment. The Tribunal considered the circumstances, including the public limited status of the company and its impact on business operations, and decided in favor of granting a stay on the demand.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 711556 (ITAT-AGRA)
• Appeal Type: Stay Application
• Pronouncement Date: 24-07-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2020-2021
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUKESH KUMAR JAIN
• Assessee Lawyers: R.S. SINGHVI
• Keywords: Revision of order; Application of stay; Bogus
• Section: 143(3); 263; 68; 6; 2

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH ‘DB’ AGRA (Through Physical/Virtual Hearing) BEFORE SHRI SUNIL KUMAR SINGH, JUDICIAL MEMBER AND SHRI BRAJESH KUMAR SINGH, ACCOUNTANT MEMBER SA No.01/Agr/2025 (Arising out of ITA No.64/Agr/2025 [Assessment Year: 2020-21] Ginni Filaments Ltd. D-196, Sector-63, Noida, Uttar Pradesh-201307 Vs DCIT, Circle-1(1)(1), Aayakar Bhawan, Sanjay Place, Uttar Pradesh-282002 PAN-AABCG0942K Appellant Respondent Appellant by Shri R. S. Singhvi, CA Respondent by Shri Sukesh Kumar Jain, CIT(DR) Date of Hearing 18.07.2025 Date of Pronouncement 24.07.2025 ORDER PER BRAJESH KUMAR SINGH, AM, The present stay application filed by the assessee is against the outstanding demand of Rs.11,98,25,063/- in the case of the assessee for Assessment Year 2020-21 arising out of assessment order u/s 143(3) r.w.s. 144B of the Income Tax Act, 1961 (hereinafter referred as ‘the Act’) dated 22.09.2022. 2. The assessment in this case was completed by the assessee u/s 143(3) r.w.s. 144B of the Act dated 22.09.2022 after making an addition of Rs.34,45,60,149/- u/s 41(1) of the Act in respect of outstanding balance of sundry creditors resulting in demand (tax liability) of Rs.15,51,70,840/-. Printed from counselvise.com 2 SA No.01/Agr/2025 The assessee in its stay application submitted that out of the said amount of Rs.15,51,70,840/-, an amount of Rs.3,17,45,777/- being 20% of the outstanding demand was paid (Rs.25 lakhs on 29.03.2023 and Rs.2,92,45,777/- on 28.02.2024) and produced the necessary challan in support of the same. 3. The Assessing Officer while making the above addition noted that the assessee was asked to prove the identity of the creditors and the genuineness of the transaction multiple times and also to submit the balance confirmation/ledger of the creditors. The Assessing Officer noted that the assessee only submitted the ledgers of 138 parties out of 257 sundry creditors above Rs.1 lakhs as on 31.03.2020. The Assessing Officer noted that mere submission of invoices/bills does not prove the existence of liability as on 31.03.2020. The Assessing Officer also noted the fact that it was not established by the assessee despite ample opportunities given that these liability were repaid in subsequent years. Finally, the Assessing Officer noted that the assessee had provided only the PAN of the parties and not confirmation/copies of sample bills or bank extract to show that these liabilities were not bogus. The Assessing Officer further noted that the onus in this respect was squarely on the assessee to establish the genuineness of such amounts shown as payable in its balance sheet which it failed to discharge. In view of these facts, the Assessing Officer added a sum of Rs.34,45,60,149/- u/s 41(1) of the Act as cessation of liability and taxed it accordingly. Printed from counselvise.com 3 SA No.01/Agr/2025 4. Aggrieved with the said order, the assessee filed an appeal before the Ld. CIT(A), which was dismissed by the ld. CIT(A) by endorsing the reasoning given by the Assessing Officer. 5. During the hearing of the Stay Application before us, the ld. AR submitted that after completion of the assessment, the PCIT-1, Agra issued a show-cause notice dated 27.11.2024 u/s 263 of the Act, wherein, after noting the finding of the Assessing Officer, he observed that it could easily be inferred that against bogus liabilities of Rs.34,45,60,149/- unexplained assets of same amount of Rs.34,45,60,149/- were adjusted by the assessee and hence the addition of Rs.34,45,60,149/- should have been made by the Assessing Officer u/s 68 r.w.s. 115BBE of the Act, which was not done by the Assessing Officer making the assessment erroneous and prejudicial to the interest of the Revenue. The Ld. AR submitted that the assessee in response thereto filed a reply dated on 11th December, 2024 and further submitted by filing the screenshot of e-proceedings in the case of the assessee claimed that the said proceedings u/s 263 of the Act was dropped by the ld. PCIT, Agra on 30.03.2025. On this basis, the ld. AR submitted that the addition of Rs.34,45,60,149/- made u/s 41(1) of the Act by the Assessing Officer was not justified and requested for the stay of the balance demand of Rs.11,98,25,063/-. 6. The ld. DR supported the order of the Assessing Officer and the Ld. CIT(A) and also stated quoting Rule 35A of the ITAT Rules stating that the assessee should have first approached the authorities in the Department for the stay of demand before approaching the Tribunal. Further, he submitted Printed from counselvise.com 4 SA No.01/Agr/2025 that since 20% outstanding tax demand has been paid by the assessee, the stay petition may be considered as per law. 7. We have heard both the parties and perused the relevant material on record. In this case, the Assessing Officer made the addition of Rs.34,50,60,149/- u/s 41(1) of the Act for the reasons as discussed above, which according to show cause notice dated 27.11.2024 of the ld. PCIT should have been made u/s 68 of the Act. Therefore, in either case, the quantum of disallowance u/s 41(1) of the Act made by the Assessing Officer and confirmed by the ld. CIT(A) or which in the opinion of ld. PCIT should have been made u/s 68 of the Act remains unchanged. Even if, the submission of the assessee is accepted that proceedings u/s 263 of the Act initiated by the Ld. PCIT-1, Agra, vide show-cause notice dated 27.11.2004 was dropped then also the addition of Rs.34,50,60,149/- made by the Assessing Officer and confirmed by the Ld. CIT(A) stands as on date. Thus, there is an outstanding tax demand of Rs.11,98,25,063/- in the case of the assessee after the payment of Rs.3,17,45,277/- being 20% of the demand of Rs.15,51,70,840/- raised vide order u/s 143(3) r.w.s. 144B dated 22.09.2022. The perusal of the assessment order and the order of the Ld. CIT(A), notes the fact that mere submission of invoices/bills does not prove the existence of liability and that the identity of the creditors and their confirmations was not submitted by the assessee. Further, the Assessing Officer also noted the fact that despite ample opportunities given it was not established by the assessee that these liabilities were repaid in subsequent years. Printed from counselvise.com 5 SA No.01/Agr/2025 7.1. In this regard, on perusal of the reply dated 27.11.2024 by the assessee in reply to the show-cause notice u/s 263 of the Act dated 29.11.2024 by the Ld. PCIT-1, Agra, the assessee inter-alia in order to establish the genuineness of the trading liability submitted the following details:- 1. Confirmation of Balances 2. Ledger Copies of all Sundry creditors 3. Detail of Payment released in subsequent Period 4. Copy of purchase bills of all sundry Creditors amounting to Rs.34,45,60,149/- 7.2. The above details furnished by the assessee during the course of proceedings u/s 263 of the Act, prima facie submit the details/document which was not submitted by the assessee during the assessment proceeding for which the addition was made by the Assessing Officer. However, the said details/documents are subject to adjudication in the quantum appeal filed by the assessee against the order of the Ld. CIT(A) before this Tribunal in ITA No.64/Agr/2025. The above details provide the identity of the said creditors alongwith their addresses and their confirmations and therefore the assessee has made out a prima facie case in its favour. Further, it has also submitted the details of payments released in subsequent period, which the Assessing Officer had noted in his assessment order that it was not submitted before him during the assessment proceedings. 7.3. Further, it is also contended by the assessee that it is a public limited company and was engaged in the business of manufacturing Cotton Yarn, Knitted Fabrics having PAN India operations and is playing an active role in boosting the overall exports of India and in such a situation the recovery of Printed from counselvise.com 6 SA No.01/Agr/2025 demand will prejudice the regular business operations and would cause unnecessary hardship causing irreparable damage to the assessee. This submission of the assessee in the given facts and circumstances of the case is found to be reasonable and acceptable. 7.4. For the above reasons, the balance of convenience for granting of stay of balance outstanding demand of Rs.11,98,25,063/- is also in favour of the assessee. We, therefore, on very careful consideration of the facts, grant the stay of outstanding demand of Rs.11,98,25,063/- for the period of 180 days from the date of this order or till the disposal of the appeal, whichever is earlier. 8. In the result, the Stay Application filed by the assessee is allowed. Order pronounced in the open court on 24th July, 2025. Sd/- Sd/- [SUNIL KUMAR SINGH] [BRAJESH KUMAR SINGH] JUDICIAL MEMBER ACCOUNTANT MEMBER Dated 24.07.2025. f{x~{tÜ f{x~{tÜ f{x~{tÜ f{x~{tÜ Copy forwarded to: 1. Appellant 2. Respondent 3. PCIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi, Printed from counselvise.com "