ACIT, Circle-16(2), Hyderabad V. Shri D.Y.Das, Hyderabad

ITA 1338/HYD/2011

• Counselvise Citation: [2011] 119 COUNSELVISE.COM (IT) 7116 (ITAT-HYDERABAD)
• Duration Of Justice: 4 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-11-2011
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 18-07-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: K J RAO
• Assessee Lawyers: M KRISHNAMURTHY

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBE R. ITA NO.1338/HYD/2011 : ASSESSMENT YEAR 2008-09 ASST. COMMISSIONER OF INCOME - TAX, CIRCLE 16(2) HYDERABAD V/S SHRI D.Y.DAS, HYDERABAD (PAN - AAZPD 4222 E ) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K.J.RAO RESPONDENT BY : SHRI M.KRISHNA MURTHY DATE OF HEARING 17 11.2011 DATE OF PRONOUNCEMENT 22.11.2011 O R D E R PER ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME-TAX(APPEALS)-V, HYDERABA D DATED 3.5.2011 FOR THE ASSESSMENT YEAR 2008-09. 2. EFFECTIVE GRIEVANCE OF THE REVENUE IN THIS APPEAL R ELATES TO AN ADDITION OF RS.12,51,718 MADE BY THE ASSESSIN G OFFICER IN TERMS OF S.41(1)(A), WHICH HAS BEEN DELETED BY THE CIT(A) BY THE IMPUGNED ORDER. 3. ASSESSEE IS A DIRECTOR IN MERRITRONIX (P)L TD., AND ALSO ENGAGED IN THE BUSINESS OF SELLING CABLE CLEANING L IQUID UNDER THE NAME LAND STYLE OF AMAR ELECTRONICS. FOR THE ASSESSME NT YEAR 2008-09, ASSESSEE FILED RETURN OF INCOME ON 30.9.2008, ADMIT TING A TOTAL INCOME OF RS.4,54,470. ASSESSMENT WAS COMPLETED UNDER S.1 43(3) OF THE ACT, VIDE ORDER DATED 28.12.2010, ON A TOTAL INCOME OF R S.1,99,88,822. WHILE THUS COMPLETING THE ASSESSMENT, THE ASSESSING OFFICER MADE ITA NO.1338/HYD/2011 SHRI D.Y.DAS, HYDERABAD 2 INTER-ALIA AN ADDITION OF RS.12,51,718 UNDER S.41(1 ) OF THE ACT, IN THE FOLLOWING MANNER- PROFITS & GAINS OF BUSINESS U/S. 41(1): IN THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 2008-09, THE ASSESSEE HAS SHOWN THE FOLLOWING SUNDRY CREDITORS AS OUTSTANDING AS ON 31.3.2008: BALAJI TELE PRODUCTS RS.2,44,489 MERRITRO PRODUCTS (P)LIMITED RS.3,29,805 PROFESSIONAL PETROLEUM PRODUCTS RS.6,05,254 SANGHI PACKAGING (P)LIMITED RS. 11,960 SHILPA PLASTICS RS. 60,210 TOTAL RS.12,51,718 THE ASSESSEE WAS ASKED TO PRODUCE CONFIRMATION FROM THE CREDITORS. HOWEVER, TILL DATE THE ASSESSEE FAILED TO PRODUCE THE CONFIRMATION FROM ANY OF THE ABOVE PERSONS. AS SUCH , THE BENEFIT ACCRUED TO THE ASSESSEE AS A RESULT OF CESS ATION OF THIS LIABILITY SHALL BE DEEMED TO BE PROFITS AND GAINS O F BUSINESS CHARGEABLE TO TAX AS PER THE PROVISIONS OF SECTION 41(1)(A) OF THE INCOM E TAX ACT ACCORDINGLY, THE AMOUNT OF RS.12,51,718 IS BROUGHT TO TAX. 4. AGGRIEVED INTER-ALIA BY THE ABOVE ADDITION, ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A). THE CIT(A) HAS DELETED THE SAID ADDITION MADE BY THE ASSESSEE WITH THE FOLLOWING OB SERVATIONS- 5.1 FROM THE ABOVE REASONS, I FIND THAT THE ORDER WITH RESPECT TO THIS ADDITION IS NOT AT ALL A SPEAKING O RDER. THE ASSESSING OFFICER MERELY PRESUMED THAT THE LIABILIT Y AMOUNTING TO RS.12,51,718/0-P HAS ENDED DURING THE FINANCIAL YEAR. NEITHER HAS THE APPELLANT DECLARED THE CESSATION OF LIABILITY, NOR IS THERE ANY INFORMATION ON RECORD TO INDICATE THIS FACT. IN FACT, THE ASSESSING OFFICER HAD MERELY ASKED THE APPELLAN T TO PRODUCE CONFIRMATION FROM THE CREDITORS AS ABOVE. FURTHER, DURING APPEAL PROCEEDINGS, THE APPELLANT ALSO CONFI RM ED THAT THERE WAS NO CESSATION OF LIABILITY DURING THE YEAR IN QUESTION AND LATER ON IN THE YEAR 2009-10 THE AMOUNT HAD BEE N PAID BACK. I FIND THAT WITHOUT THERE BEING ANY INFORMATI ON ABOUT CESSATION OF LIABILITY, THE PRESUMPTION MADE BY THE ASSESSING OFFICER IS INCORRECT. THE ASSESSING OFFICER DID NOT EVEN BOTHER TO FIND OUT HOW OLD THE SUNDRY CREDITORS WERE. THEREFO RE, I DO NOT FIND ANY MERIT IN THE ADDITION MADE AND THE SAME IS ORDERED TO BE DELETED. 5. AGGRIEVED BY THE RELIEF GRANTED BY THE CIT(A), REVENUE IS IN APPEAL BEFORE US. ITA NO.1338/HYD/2011 SHRI D.Y.DAS, HYDERABAD 3 6. WE HEARD BOTH THE PARTIES. WE HAVE ALSO GON E THROUGH THE PAPER-BOOK FILED BY THE ASSESSEE AND OTHER MATERIAL ON RECORD. IT IS THE CONTENTION OF THE REVENUE BEFORE US THAT THE AS SESSEE HAS FAILED TO PRODUCE THE CONFIRMATIONS FROM ANY OF THE SUNDRY CR EDITORS DESPITE AMPLE OPPORTUNITY GIVEN BY THE ASSESSING OFFICER FO R THAT PURPOSE. ASSESSEE COULD NOT EVEN FILE ANY PROOF OF THE REPAY MENT OF THE AMOUNTS CLAIMED TO BE DUE TO THE SUNDRY CREDITORS, TILL THE TIME OF COMPLETION OF THE ASSESSMENT. THE ASSESSEE, HAVING CLAIMED THE AMOUNT OF RS.12,51,718 AS DUE TO VARIOUS CREDITORS, WHEN CALLED UPON BY THE ASSESSING OFFICER, THE ASSESSEE IS OBLIGED T O SUBSTANTIATE THE CLAIM. IT IS ON ACCOUNT OF ABSENCE OF COMPLIANCE F ROM THE ASSESSEE IN THAT BEHALF, BY FILING THE NECESSARY CONFIRMATION L ETTERS FROM THE CREDITORS, THAT THE AMOUNT OF RS.12,51,718 REPRESEN TING THE AMOUNTS SHOWN AGAINST SUNDRY CREDITORS WAS DISBELIEVED AND BROUGHT TO TAX UNDER S.41(1) OF THE ACT. WE FIND THAT THE CIT(A) HAS TAKEN NOTE OF THE SUBMISSION OF THE ASSESSEE THAT THERE WAS NO CE SSATION OF LIABILITY DURING THE YEAR UNDER CONSIDERATION, AND LATER ON I N THE YEAR 2009- 2010, THE AMOUNTS IN QUESTION HAD BEEN PAID BACK, D ELETED THE ADDITION MADE BY THE ASSESSING OFFICER. CONSIDERI NG TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE AND THE SUBMISSIONS O F THE PARTIES BEFORE US, WE FIND IT FAIR AND REASONABLE TO SET AS IDE THE ORDER OF THE CIT(A) AND RESTORE THE MATTER TO THE FILE OF THE AS SESSING OFFICER, WITH A DIRECTION TO VERIFY THE CLAIM OF THE ASSESSEE THAT THE AMOUNTS IN QUESTION, CLAIMED AS DUE TO BE PAID TO THE RESPECTI VE SUNDRY CREDITORS WERE IN FACT REPAID IN THE YEAR 2009-2010, AS CLAIM ED BY THE ASSESSEE BEFORE THE CIT(A), THE SAME , HAVING NOT CEASED TO BE THE LIABILITIES OF THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION. T HE ASSESSING OFFICER IS ACCORDINGLY DIRECTED TO DECIDE THE ISSUE AFRESH IN ACCORDANCE WITH LAW AFTER GIVING REASONABLE OPPORTUNITY OF HEA RING TO THE ASSESSEE. ITA NO.1338/HYD/2011 SHRI D.Y.DAS, HYDERABAD 4 7. IN THE RESULT, APPEAL OF THE REVENUE IS ALLOWE D FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 22.11.2011 SD/- SD /- (CHANDRA POOJARI) (ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER. JUDICIAL MEMBER. DT/- 22ND NOVEMBER, 2011 COPY FORWARDED TO: 1. SHRI D.Y.DAS, DIRECTOR, MERRITRONIX (P) LIMITED, C/O. AMAR ELECTRONICS, 9A ELECTRONIC COMPLEX, KUSHA IGUDA, HYDERABAD 2. ASST COMMISSIONER OF INCOME - TAX , CIRCLE 16(2) , HYDERABAD 3. COMMISSIONER OF INCOME - TAX(A) - V HYDERABAD 4. COMMISSIONER OF INCOME - TAX IV , HYDERABAD 5. THE D.R., ITAT, HYDERABAD. B.V.S.