ITO, Ward -36(2), Kolkata, Kolkata V. M/s. S.P. Industries (India), Kolkata

ITA 1299/KOL/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 8085 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-10-2012
• Appeal Filed By: Department
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 07-10-2011
• Court: TRIBUNAL
• Department Lawyers: D K RAKSHIT
• Assessee Lawyers: H N DUBEY
• Keywords: Corroborative evidences
• Section: 143(3)

Judgement Text

, A , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOL KATA () BEFORE , /AND , . . !' ) [BEFORE SHRI MAHAVIR SINGH, JM & SHRI C. D. RAO, AM ] # # # # / I.T.A NO. 1299/KOL/2011 $% &' $% &' $% &' $% &'/ // / ASSESSMENT YEAR: 2007-08 INCOME-TAX OFFICER, WD-36(2), KOLKATA. VS. M/S. S. P. INDUSTRIES (INDIA) (PAN: AAQFS2663F) ()* /APPELLANT ) (+,)*/ RESPONDENT ) DATE OF HEARING: 23.10.2012 DATE OF PRONOUNCEMENT: 25.10.2012 FOR THE APPELLANT: S/SHRI D. K. RAKSHIT & A. K. SINGH FOR THE RESPONDENT: SHRI H. N. DUBEY !- / ORDER PER MAHAVIR SINGH, JM ( , , , , ) THIS APPEAL BY REVENUE IS ARISING OUT OF ORDER OF C IT(A)-XX, KOLKATA IN APPEAL NO. 85/CIT(A)-XX/WARD 36(2)/10-11/KOL DATED 12.07.2011. ASSESSMENT WAS FRAMED BY ITO, WD- 36(2), KOLKATA U/S. 143(3) OF THE INCOME-TAX ACT, 1 961 (HEREINAFTER REFERRED TO AS THE ACT) FOR ASSESSMENT YEAR 2007-08 VIDE HIS ORDER DATED 11.12. 2009. 2. THE ONLY ISSUE IN THIS APPEAL OF REVENUE IS AGAI NST THE ORDER OF CIT(A) DELETING THE ADDITION MADE BY AO IN RESPECT TO OUTSTANDING LIABI LITIES NOT PROVEN. FOR THIS, REVENUE HAS RAISED FOLLOWING GROUND NOS. 2 TO 4: 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED BY OVERLOOKING THE FACT THAT MOST OF THE CREDITORS/LIABILITIES WER E RE-PAID BY THE ASSESSEE EITHER IN CASH OR REPAID TO ITS SISTER CONCERN AND NATURE OF TRANS ACTION WITH SISTER CONCERN AND OTHER LIABILITIES COULD NOT BE EXPLAINED EVER. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN NOT APPRECIATING THAT ALL THE CREDITORS/LIABILITIES NEV ER COULD BE VERIFIED. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN NOT GOING THROUGH THE STATE OF AFFAIRS AS ORGANIZED BY THE AS SESSEE TO AVOID TAXATION BY CREATING UN- EXISTING LIABILITIES. 3. BRIEF FACTS LEADING TO THE ABOVE ISSUE ARE THAT THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTICED THAT THERE IS OUTSTANDING LIABI LITY OF RS.57,85,399/- IN THE BALANCE SHEET FOR 2 ITA 1299/K/2011 S. P. INDUSTRIES (INDIA) A.Y. 07-0 8 THE RELEVANT ASSESSMENT YEAR 2007-08. THE AO REQUI RED THE ASSESSEE TO PRODUCE THE EVIDENCES TO SUBSTANTIATE THE EXISTENCE AND GENUINENESS OF TH E LIABILITY. AS THE ASSESSEE COULD NOT PRODUCE ANY EVIDENCE, AO TREATED THE LIABILITY AS BOGUS AND ADDED THE SAME TO THE RETURNED INCOME U/S. 41(1) OF THE ACT. AGGRIEVED, ASSESSEE PREFERRED AP PEAL BEFORE CIT(A), WHO DELETED THE ADDITION AFTER TAKING EVIDENCES FROM THE ASSESSEE, WHICH WER E REFERRED TO AO FOR REMAND REPORT AND AO SENT HIS REMAND REPORT, ON THE BASIS OF DOCUMENTS A ND EVIDENCES. THE CIT(A) DELETED BY GIVING FOLLOWING FINDING IN PARA 9: 9. THE APPELLANT HAS CONTINUED TO SHOW THE AMOUNTS AS ADMITTED LIABILITY IN THE BALANCE SHEET. THE AO HAS BROUGHT NO MATERIAL ON RE CORD TO SHOW THAT THERE IS ANY CESSATION OF LIABILITY. ALSO, THERE IS NO MATERIAL ON RECORD TO SHOW THAT THE APPELLANT HAS PAID OFF THE LIABILITY FROM ITS UNACCOUNTED SOU RCES AND THAT IT NO LONGER EXISTS. ON THE CONTRARY, THE LIABILITY WAS PAID IN THE SUBSEQU ENT YEARS WHICH HAS BEEN VERIFIED BY THE AO IN COURSE OF THE REMAND PROCEEDINGS. THE ISS UES RAISED BY THE AO WERE ALSO SATISFACTORILY EXPLAINED ON BEHALF OF THE APPELLANT . IN THIS FACTUAL BACKGROUND, THE AO WAS NOT JUSTIFIED IN ADDING THE OUTSTANDING LIABILI TY ON ACCOUNT OF ITS CESSATION, WITHOUT ANY BASIS, AND, WITHOUT BRINGING ANY SUPPORTING MAT ERIAL ON RECORD. IF THE AO FELT THAT THE ADMITTED LIABILITY, SHOWN IN THE AUDITED BALANC E SHEET OF THE APPELLANT, HAD CEASED TO EXIST, THE ONUS WAS ON HIM TO BRING POSITIVE MAT ERIAL ON RECORD TO ESTABLISH THAT THE LIABILITY HAD ACTUALLY CEASED TO EXIST. I FIND SUBS TANCE IN THE ARGUMENT THAT THE PROVISIONS OF SECTION 41(1) HAVE NO APPLICATION IN THE PRESENT CASE. THE LEGAL PRONOUNCEMENTS IN THIS REGARD ALSO SUPPORT THE CASE OF THE APPELLANT. IN VIEW OF THE ABOVE, I AM OF THE OPINION THAT THE AO WAS NOT JUST IFIED IN ADDING THE OUTSTANDING LIABILITY APPEARING IN THE BALANCE SHEET. THE ADDIT ION OF RS.57,85,399/- IS DIRECTED TO BE DELETED. GROUND NO. 1 IS ALLOWED. 4. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND FROM THE RECORDS I.E. BOOKS OF ACCOUNT AND OTHER DOCUMENTS, THAT OUTSTANDING LIABILITY COMPRISES OF SUNDRY CREDITORS OF RS.35,54,167/-, OU TSTANDING LIABILITY OF RS.19,45,184/-, ADVANCE FROM SUPPLIERS RS.12,000/-, SALES TAX DEPOS IT RS.1,04,301/- AND OTHER LIABILITIES AT RS.1,69,746/-. THE ASSESSEE FILED COMPLETE DETAILS OF LIABILITIES RELATING TO FY 2007-08, 2008- 09 AND 2009-10. THE ASSESSEE ALSO FILED PURCHASE B ILLS AND PAYMENTS MADE THROUGH BANKING CHANNEL IN RESPECT TO OUTSTANDING LIABILITIES. THE SE ALL DETAILS WERE SENT TO AO BY CIT(A) FOR REMAND REPORT AND AO IN HIS REMAND REPORT REPORTED (WHICH IS NARRATED IN THE ORDER OF CIT(A) THAT AFTER VERIFYING THE RELEVANT BOOKS OF ACCOUNT, THE AO HAS REPORTED THAT THE SUNDRY CREDITORS FOR GOODS AMOUNTING TO RS.35,54,167.63 WA S REPAID IN THE SUBSEQUENT YEARS; AND, ARE ALSO GROUND RECORDED IN THE CASH BOOK. THE AO HAS ALSO ACKNOWLEDGED THAT CONFIRMATIONS FROM DIFFERENT CREDITORS WERE FILED. HOWEVER, THE AO NOTED THAT S P TRADING CO NO LONGER EXISTS AT THE GIVEN ADDRESS; SAHA AGENCY AND HARISH SHAH & CO HAVE CLOSED THEIR BUSINESS; AND, NO TRANSACTION WAS MADE WITH OMNI INTERNATIONA L IN FINANCIAL YEAR 2006-07. THE AO HAS FURTHER REPORTED THAT THE OUTSTANDING LIABILITY OF RS.19,45,187.71 RELATES TO SISTER CONCERNS WHICH WAS REPAID IN THE SUBSEQUENT YEARS. THE LIAB ILITY TOWARDS ADVANCE OF RS.12,000/- AND 3 ITA 1299/K/2011 S. P. INDUSTRIES (INDIA) A.Y. 07-0 8 TOWARDS RENT OF RS.1,69,746/- WAS ALSO REPAID IN TH E SUBSEQUENT YEARS. HOWEVER, NO SUPPORTING EVIDENCE WAS PRODUCED TO SUPPORT THE CONTENTION IN RESPECT OF SALES TAX LIABILITY OF RS.1,04,301.42. BUT, THE ASSESSEE FILED THE COMPLETE DETAILS, WHIC H ARE PLACED IN ASSESSEES PAPER BOOK AT PAGES 103 TO 106 I.E. COPIES OF BILLS PURCHASES MADE FROM S. P. TRADING CO., AT PAGES 107 TO 113 I.E. PURCHASES MADE FROM SAHA AGEN CY AND HARISH SAHA & CO. OTHER DETAILS LIKE SALES TAX LIABILITY AS WELL AS ADVANCE FROM SU PPLIERS AND ALSO ALL CONFIRMATIONS. IN VIEW OF THE ABOVE FACTS, WE ARE OF THE VIEW THAT THE CIT(A) HAS RIGHTLY DELETED THE ADDITION THAT THESE ARE EXISTING LIABILITY AND IN NO WAY THIS CAN BE C ALLED BOGUS OR INGENUINE, WE CONFIRM THE ORDER OF CIT(A). THIS ISSUE OF REVENUES APPEAL IS DISMI SSED. 5. IN THE RESULT, THE APPEAL OF REVENUE IS DISMISSE D. 6. ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH OCTOBER, 2012. SD/- SD/- . . !' , (C. D. RAO) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER ( ' ' ' ') )) ) DATED : 25TH OCTOBER, 2012 ./ $01 2 JD.(SR.P.S.) 4 ITA 1299/K/2011 S. P. INDUSTRIES (INDIA) A.Y. 07-0 8 !- 3 +4 5!4&6- COPY OF THE ORDER FORWARDED TO: 1 . )* / APPELLANT ITO, WARD-36(2), KOLKATA. 2 +,)* / RESPONDENT M/S. S. P. INDUSTRIES (INDIA), 34, N . S. ROAD, KOLKATA- 700 001. 3 . -$ ( )/ THE CIT(A), KOLKATA 4. 5. -$ / CIT KOLKATA 4<= +$ / DR, KOLKATA BENCHES, KOLKATA ,4 +/ TRUE COPY, !-$>/ BY ORDER, 1 /ASSTT. REGISTRAR .