The Income Tax Oficer, Ward-4, Gandhinagar V. M/s. Uma Cotton Co., Gandhinagar

ITA 1443/AHD/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 0602 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 4 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-09-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 19-09-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 15-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH (BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER & SHRI S. S. GODARA, JUDICIAL MEMBER) ITA. NO: 1443/AHD/2013 (ASSESSMENT YEAR: 2009-10) INCOME-TAX OFFICER, WARD- 4, GANDHINAGAR V/S M/S. UMA COTTON CO. OPP. VADILAL INDUSTRIES AT. PUNDHRA, ETAL-ANSA, DIST. GANDHINAGAR-382830 (APPELLANT) (RESPONDENT) PAN: AABFU2158C APPELLANT BY : SHRI K. MADHUSUDAN, SR. D. R. RESPONDENT BY : NONE ( )/ ORDER DATE OF HEARING : 19 -09-201 6 DATE OF PRONOUNCEMENT : 21 -09-2016 PER N.K. BILLAIYA, ACCOUNTANT MEMBER: 1. THIS APPEAL BY THE REVENUE IS PREFERRED AGAINST THE ORDER OF LD. CIT(A), GANDHINAGAR, AHMEDABAD DATED 06.02.2013 PER TAINING TO A.Y. 2009-10. ITA NO. 1443 /AHD/2013 . A.Y. 2009- 10 2 2. THE ONLY GRIEVANCE OF THE REVENUE IS THAT THE LD. C IT(A) ERRED IN DELETING THE DISALLOWANCE MADE BY THE A.O. U/S. 41( 1) OF THE ACT AMOUNTING TO RS. 65,54,568/- ON ACCOUNT OF NON-GENU INE/NON-EXISTENT CREDITORS. 3. NONE APPEARED ON BEHALF OF THE ASSESSEE IN SPITE OF THE SERVICE OF NOTICE. WE DECIDED TO PROCEED EX-PARTE, AFTER HAVIN G HEARD THE LD. D.R. AT LENGTH, WE HAVE GIVEN A THOUGHTFUL CONSIDER ATION TO THE ORDERS OF THE AUTHORITIES BELOW. 4. THE FACTS OF THE CASE ARE THAT THE ASSESSEE DECLARE D TOTAL LOSS OF RS. 21,675/-. THE RETURN WAS SELECTED FOR SCRUTINY ASSE SSMENT UNDER CASS AND ACCORDINGLY STATUTORY NOTICES WERE ISSUED AND S ERVED UPON THE ASSESSEE. 5. DURING THE COURSE OF THE SCRUTINY ASSESSMENT PROCEE DINGS AND IN VIEW OF VERIFICATION OF GENUINENESS OF OUTSTANDING LIABI LITY SHOWN BY THE ASSESSEE IN THE BALANCE-SHEET, THE A.O. ISSUED LETT ERS U/S. 133(6) TO THE FOLLOWING PARTIES:- SR. NO. NAME OF THE PARTY O/S. BALANCE AS ON 31/0 3/2009 1 SAIKRUPA FREIGHT FORWARDERS PVT. LTD. 481414 2 SHRI RAMKRISHNA ENERGY INDUSTRIES 400000 3 CHANDRAMUKHI COTTON PVT. LTD. 295152 4 DHANDUKA RAMPURA COTTON PROCESSORS PVT. LTD. 26 5490 5 MPM TEXTILES PVT. LTD. 765857 6 SESHANKDEV COTTON CO. 1942055 7 BALAJI INDUSTRIES 301830 8 UMA INDUSTRIES 2056996 9 RAJVI COTTON 386496 10 J.G. PUJARA & SONS 3586478 ITA NO. 1443 /AHD/2013 . A.Y. 2009- 10 3 6. OUT OF THE ABOVE PARTIES, ONLY TWO PARTIES CONFIRME D THE BALANCE NAMELY BALAJI INDUSTRIES AND UMA INDUSTRIES AND IN RESPECT OF OTHER PARTIES, ON RECEIVING NO CONFIRMATION, THE A.O. PRO CEEDED TO MAKE ADDITIONS U/S. 41(1) OF THE ACT. THE ADDITIONS WERE MADE IN RESPECT OF THE FOLLOWING PARTIES:- TOTAL LOSS AS PER RETURN OF INCOME (-) RS. 21,675/- ADD: ON ACCOUNT OF NON GENUINE SUNDRY CREDITORS 1) RAJVI COTTON RS. 3,86,496/- 2) M/S. J.G. PUJARA & CO. RS. 9,18,796/- 3) SAI KRUPA FREIGHT FORWARDERS PVT. LTD. RS. 4,81,41 4/- 4) SHRI RAMKRISHNA ENERGY INDUSTRIES RS. 4,00,000/- 5) CHANDRAMAULI COTTON PVT. LTD. & SESHANKDEV COTTON CO. RS. 22,37,217/- 6) DHANDUKA RAMPURA COTTON PROCESSORS PVT. LTD. & MPM TEXTILES PVT. LTD. RS. 10,31,347/- 7) M/S. DRIDICH CEMENPLUS & CHINA NATIONAL COTTON GROUP RS. 15,67,495/- 7. AGGRIEVED BY THE ASSESSMENT, ASSESSEE CARRIED THE M ATTER BEFORE THE LD. CIT(A). 8. AFTER CONSIDERING THE FACTS AND THE SUBMISSIONS AND DRAWING SUPPORT FROM THE DECISION OF THE CO-ORDINATE BENCH IN THE C ASE OF BHAVESH PRINTS 142 TTJ 128, THE LD. CIT(A) OBSERVED THAT SE CTION 41(1) CLEARLY STIPULATES OF HAVING OBTAINED ANY BENEFIT BY CASH O R IN ANY OTHER MANNER. THEREFORE, THE ASSESSING OFFICER HAD TO SHO W THAT THE ASSESSEE HAD OBTAINED SUCH BENEFIT IN CASH OR OTHER WISE ONLY DURING THE CURRENT YEAR. THEREFORE, MERELY BECAUSE CERTAIN CREDITORS WERE NOT TRACEABLE OR THEY HAD DENIED ANY LIABILITY AGAINST THE ASSESSEE WOULD NOT SHOW THAT LIABILITY CEASED TO EXIST OR IT WAS R EMITTED BY THE ITA NO. 1443 /AHD/2013 . A.Y. 2009- 10 4 CREDITOR. THE LD. CIT(A) FURTHER FOUND THAT THE A.O . FAILED TO BRING ON RECORD CESSATION OR REMISSION OF LIABILITY. 9. HAVING GIVEN A THOUGHTFUL CONSIDERATION TO T HE FINDINGS OF THE LD. CIT(A), THE HONBLE SUPREME COURT IN THE CASE OF SU GALI SUGAR WORKS PVT. LTD. 236 ITR 518 HAS DECIDED THAT THE CESSATIO N OF THE LIABILITY MAY OCCUR EITHER BY REASON OF THE OPERATION OF LAW, THAT IS, ON THE LIABILITY BECOMING UNENFORCEABLE AT LAW BY THE CRED ITOR AND THE DEBTOR DECLARING UNEQUIVOCALLY HIS INTENTION NOT TO HONOUR HIS LIABILITY WHEN PAYMENT IS DEMANDED BY THE CREDITOR OR A CONTRACT B ETWEEN THE PARTIES, OR BY THE DISCHARGE OF THE DEBT THE DEBTOR MAKING PAYMENT THEREOF TO HIS CREDITOR. THE HONBLE APEX COURT HAS OPINED THAT THE QUESTION WHETHER THE LIABILITY IS ACTUALLY BARRED B Y LIMITATION IS NOT A MATTER WHICH COULD BE DECIDED BY CONSIDERING THE AS SESSEES CASE ALONE BUT IT IS A MATTER WHICH HAS TO BE DECIDED ON LY IF THE CREDITOR IS BEFORE THE CONCERNED AUTHORITY. IN THE ABSENCE OF T HE CREDITOR, IT IS NOT POSSIBLE FOR THE AUTHORITY TO COME TO A CONCLUSION THAT THE DEBT WAS BARRED AND HAD BECOME UNENFORCEABLE. 10. NOTWITHSTANDING OUR OBSERVATIONS HEREINABOVE, THE G ROUND OF THE REVENUE SAYS THAT THE CREDITORS WERE NON-GENUINE/NO N-EXISTENT WHEREAS THE ASSESSMENT ORDER SHOWS THAT THE CREDITO RS WERE OUTSTANDING AND ARE BROUGHT FORWARD BALANCES FROM T HE EARLIER YEARS. IF THE CREDITORS ARE NOT GENUINE/NON-EXISTENT, THEN IN OUR UNDERSTANDING OF THE LAW, PROVISIONS OF SECTION 41( 1) ARE NOT AT ALL APPLICABLE AND THERE IS A SPECIFIC PROVISION IN THE ACT TO DEAL WITH SUCH SITUATION, I.E. SECTION 68. BE THAT AS IT MAY, CON SIDERING THE FACTS IN TOTALITY, IN THE LIGHT OF THE RATIO LAID DOWN BY TH E HONBLE SUPREME COURT AND THE FACTUAL MATRIX ELABORATELY DISCUSSED BY THE FIRST ITA NO. 1443 /AHD/2013 . A.Y. 2009- 10 5 APPELLATE AUTHORITY, WE DO NOT FIND ANY ERROR OR IN FIRMITY IN THE FINDINGS OF THE LD. CIT(A). APPEAL FILED BY THE REV ENUE IS ACCORDINGLY DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 21 - 09- 20 16. SD/- SD/- (S. S. GODARA) (N. K. BILLAIYA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHME DABAD