MR. HITESH D. SHAH, MUMBAI V. ITO 25(2)(1), MUMBAI

ITA 1445/MUM/2011

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 0925 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 3 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-06-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: H
• Next Hearing Date: 23-12-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 18-02-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: M SUBRAMANIAN
• Keywords: Search and seizure; Non-deduction of tax; Accommodation entries; Onus to prove
• Section: 6; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUM BAI , , BEFORE SHRI JOGINDER SINGH, JM AND SHRI SANJAY ARO RA, AM ./I.T.A. NO. 1438/MUM/2011 ( / ASSESSMENT YEAR: 2007-08) ITO 25(2)(1), C-11, BLDG., ROOM NO. 107, P.K.BHAVAN, B.K.C., BANDRA(E), MUMBAI-51 / VS. MR. HITESH D. SHAH, B-69, PUSHPA PARK, 3 RD FLOOR, S.V.ROAD, BORIVALI(W), MUMBAI-400092 ./ ./PAN/GIR NO. BDZPS7755N ( ! /APPELLANT ) : ( '#! / RESPONDENT ) ./I.T.A. NO. 1445/MUM/2011 ( / ASSESSMENT YEAR: 2007-08) MR.HITESH D. SHAH, B-69, PUSHPA PARK, 3 RD FLOOR, S.V.ROAD, BORIVALI(W), MUMBAI-400092 / VS. ITO 25(2)(1), C-11, BLDG., ROOM NO. 107, P.K.BHAVAN, B.K.C., BANDRA(E), MUMBAI-51 ./ ./PAN/GIR NO. BDZPS7755N ( ! /APPELLANT ) : ( '#! / RESPONDENT ) % & / REVENUE BY : SHRI JITENDRA KUMAR ()*+ , & / ASSESSEE BY : SHRI M.SUBRAMANIAN (% & , / /DATE OF HEARING : 11.03.2015 & , / / DATE OF PRONOUNCEMENT : 09.06.2015 ITA NO. 1438 & 1445/M/2011 MR. HITESH D. SHAH 2 / O R D E R PER SANJAY ARORA, A. M.: THESE ARE CROSS APPEALS, I.E., BY THE ASSESSEE AND THE REVENUE, DIRECTED AGAINST THE ORDER BY THE COMMISSIONER OF INCOME TAX (APPEAL S)-35, MUMBAI (CIT(A) FOR SHORT) DATED 20.12.2010, PARTLY ALLOWING THE ASSESS EES APPEAL CONTESTING ITS ASSESSMENT U/S.143(3) OF THE INCOME TAX ACT, 1961 ( THE ACT HEREINAFTER) FOR ASSESSMENT YEAR (A.Y.) 2007-08. 2. THE PRINCIPAL ISSUE ARISING IN THESE APPEALS IS THE MAINTAINABILITY OR OTHERWISE IN LAW OF THE DISALLOWANCE OF THE PURCHASE BY THE A SSESSEE INDIVIDUAL, A TRADER IN DIAMONDS, IN THE SUM OF RS. 2,79,17,345/-, IN THE F ACTS AND CIRCUMSTANCES OF THE CASE, AND WHICH STANDS MODIFIED BY THE FIRST APPELLATE AU THORITY BY ESTIMATING THE ASSESSEES INCOME FOR THE RELEVANT YEAR AT 4% OF TH E ADMITTED SALES OF RS. 636.45 LAKHS, SO THAT BOTH THE ASSESSEE AND THE REVENUE AR E IN APPEAL. 3. THE FACTS OF THE CASE IN BRIEF ARE THAT THE ASSE SSING OFFICER (A.O.), IN THE COURSE OF VERIFICATION PROCEEDINGS UNDER THE ACT, C ALLED FOR THE DETAILS OF PURCHASES FROM THREE PARTIES, FROM WHOM PURCHASES, IN AGGREGA TE, AT THE IMPUGNED SUM OF RS. 279.17 LACS STOOD MADE, IN THE FORM OF CONFIRMATION S ALONG WITH THE BANK STATEMENT, COPIES OF RETURNS, BALANCE SHEET, ETC. THE ASSESSEE FAILING TO FURNISH THE SAME, WITH EVEN THE NOTICES TO THE PARTIES COMING BACK UNSERVE D, HE DEPUTED HIS INSPECTOR TO MAKE A SPOT VERIFICATION, AND WHO REPORTED UNAVAILA BILITY OF THE CREDITORS AT THE STATED ADDRESS, THE SAME BEING LOCKED. THE ONUS TO PROVE I TS RETURN/CLAIM WAS ON THE ASSESSEE, AND WHICH HAD NOT BEEN DISCHARGED. A MERE DEBITING OF A SUM TO THE PROFIT & LOSS ACCOUNT AS EXPENDITURE WOULD NOT BY ITSELF E NTITLE THE ASSESSEE TO A DEDUCTION OF THE SAME OR ESTABLISH THE SAME AS GENUINE. HE, A CCORDINGLY, DISALLOWED THE SAID PURCHASES FROM THE FOLLOWING THREE PARTIES AS UNDER :- ITA NO. 1438 & 1445/M/2011 MR. HITESH D. SHAH 3 S.NO. NAME OF THE PARTY PURCHASES (RS.) 1 M/S. YASH IMPEX (SURAT) 2512672 2 M/S. YASH IMPEX, OPERA HOUSE 10315020 3 M/S. GYAN EXPORTS, SURAT 15089653 TOTAL: 2 7917345 IN APPEAL, THE ASSESSEE PLEADING FOR SHORTAGE OF T IME DURING THE ASSESSMENT PROCEEDINGS TO ADDUCE THE RELEVANT DETAILS, AND FUR NISHING FRESH ADDRESSES OF THE CREDITORS, THE MATTER WAS REMANDED BACK TO THE FILE OF THE AO FOR VERIFICATION. SUMMONS WERE ISSUED AT THE NEW ADDRESSES, WHICH AGA IN CAME BACK UNSERVED, AND WHICH WERE EXPLAINED BY THE ASSESSEE AS ON ACCOUNT OF THE ADDRESSES GIVEN BY THEM TO THEIR BANK AS INCOMPLETE. INQUIRIES BY THE AO FOUND THAT MANY BANK ACCOUNTS WERE OPENED FOR THE SAME ADDRESS IN THE NAMES OF DIFFERE NT CONCERNS. CASH WAS WITHDRAWN FROM THESE BANK ACCOUNTS, TO PROVIDE ACCOMMODATION ENTRIES TO DIFFERENT PARTIES, INCLUDING THE ASSESSEE. THE MONEY PAID TO THE CREDI TORS, VIZ. M/S. GYAN EXPORTS AND M/S. YASH IMPEX, STOOD ULTIMATELY WITHDRAWN FROM TH E BANK IN CASH. THUS, THIS WAS DONE THROUGH THE PROCESS OF LAYERING TO AVOID DETEC TION. THE IMPUGNED PURCHASES WERE THUS CLEARLY BOGUS, LIABLE FOR DISALLOWANCE. I N THE VIEW OF THE LEARNED CIT(A) THE INVESTIGATION CARRIED OUT BY THE AO HAD SUFFICI ENTLY PROVED THE APPELLANT TO BE PROVIDING ACCOMMODATION ENTRIES TO DIFFERENT PARTIE S THROUGH LAYERING. SO, HOWEVER, THERE WAS NO JUSTIFICATION FOR DISALLOWANCE OF THE ENTIRE PURCHASES FROM THESE PARTIES INASMUCH AS, ADMITTEDLY, THE CORRESPONDING SALES HA D BEEN MADE, AND AT A PROFIT. BESIDES, STOCK REGISTER STANDS MAINTAINED. THE DISA LLOWANCE OF THE PURCHASES, AS MADE BY THE AO, WOULD RESULT IN THE ASSESSEES PROFIT RA TE TO BE TO THE TUNE OF 50%. IN HIS VIEW, THEREFORE, THE FACTS AND CIRCUMSTANCES WARRAN TED A REJECTION OF THE ASSESSEES BOOKS OF ACCOUNTS AS UNRELIABLE, AND ESTIMATION OF INCOME, WHICH HE MADE AT 4% OF THE SALES, I.E., BY ADOPTING THE PROFIT RATE AS APP LIED IN THE CASE OF ONE, SHRI NILESH SURYAKANT JINADRA (PAN: ACOPI 1344A) VIDE ORDER U/S . 144 DATED 29.12.2009. AGGRIEVED BOTH THE ASSESSEE AND REVENUE ARE IN APPE AL. 4. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. 4.1 THE ISSUES ARISING FOR OUR CONSIDERATION ARE: ITA NO. 1438 & 1445/M/2011 MR. HITESH D. SHAH 4 (A) WHETHER ANY ADJUSTMENT TO THE ASSESSEES RETURN ED INCOME ON ACCOUNT OF PURCHASES IS TO BE MADE, OR THE ASSESSEE HAS PROVED THE SAME; AND WHERE NOT SO, (B) WHICH OF THE TWO, I.E., THE COURSE FOLLOWED BY THE AO OR THE LD. CIT(A) IS SUPERIOR IN THE FACTS AND CIRCUMSTANCES OF THE C ASE, AND IS TO BE THEREFORE ADOPTED, INCLUDING THE QUANTIFICATION ASPECT. AS WOULD BE APPARENT FROM THE FORGOING NARRATION OF EVENTS, WHICH ARE NOT IN DISPUTE, THE PURCHASES UNDER REFERENCE, RATHER THAN BEING PROVED AS GENUINE, STAND DISPROVED BY THE REVENUE. WITHOUT DOUBT, THEREFORE, AN ADJUSTMENT TO THE RETURNED INCOME ON THAT ACCOUNT WOULD HAVE TO BE MADE. THOUG H, STRICTLY SPEAKING, AS EXPLAINED IN SEVERAL DECISIONS, AS IN VISP (P) LTD. VS. CIT [2004] 265 ITR 202 (M.P.); INDIAN WOOLEN CARPET FACTORY VS. ITAT AND OTHERS [2002] 260 ITR 658 (RAJ.); CIT VS. LA MEDICA , 250 ITR 575 (DEL.), ETC., THIS WOULD WARRANT A DISALLOWANCE OF THE IMPUGNED PURCHASES, WE DO NOT C ONSIDER THE SAME AS APPROPRIATE IN THE FACTS AND CIRCUMSTANCES OF THE CASE. THIS IS AS THE REVENUE HAS ITSELF FOUND THE TRANSACTIONS TO, DESPITE PAYMENT THROUGH THE BANKIN G CHANNEL, AS NOT REPRESENTING ANY PURCHASES OF GOODS, BUT ONLY ACCOMMODATION ENTRIES. THAT IS, THE INFERENCE OF THE PURCHASE BEING NOT GENUINE AND BOGUS, WHILE THE COR RESPONDING SALES, DULY RECORDED IN THE BOOKS, INCLUDING STOCK RECORD, BEING SO, WHI CH ASSUMPTION UNDERLIES THE DISALLOWANCE OF PURCHASES, IS NOT VALID. FOR ALL WE KNOW THE ASSESSEE MAY HIMSELF BE ONLY PROVIDING ACCOMMODATION ENTRIES TO ANOTHER . THE IMPUGNED PURCHASES, IT NEEDS TO BE APPRECIATED, WORK TO NEARLY 50% OF THE TOTAL PURCHASES. THE INFERENCE OF THE ASSESSEE BOOKS, THUS, AS NOT YIELDING CORRECT INCOM E, IS UNMISTAKABLE, AND FOLLOWS AS A NATURAL COROLLARY, RESULTING IN THEIR REJECTION, INVOKING SECTION 145(3) OF THE ACT. THE REVENUE HAS NOT, AS WE OBSERVE, TAKEN ITS INVE STIGATION TO ITS LOGICAL END. WHAT IS THE NORMATIVE PROFIT/VALUE ADDITION IN THE RELEVANT TRADE ? WHAT IS THE PURPOSE UNDERLYING UNDERTAKING SUCH NEFARIOUS ACTIVITIES, A S, FOR EXAMPLE, SAVING ON TAXES ? A TRADER WOULD NORMALLY RESORT TO INFLATION OF AN EXP ENSE (AS PURCHASES), TO SUPPRESS THE ADDITIONAL PROFITS, SCALING THE BOOK PROFIT DOWN TO A NORMATIVE LEVEL, WHILE IN THE PRESENT CASE THE ASSESSEE HAS DISCLOSED AN ABYSMALL Y LOW PROFIT ONLY 0.67% (GROSS) AND 0.16% (NET) OF SALES. ITA NO. 1438 & 1445/M/2011 MR. HITESH D. SHAH 5 WE, ACCORDINGLY, ARE OF THE CLEAR VIEW THAT THE RE JECTION OF ACCOUNTS AND THE ESTIMATION OF INCOME IS THE ONLY PROPER COURSE TO B E FOLLOWED IN THE FACTS AND CIRCUMSTANCES OF THE CASE. THE QUESTIONS (A) & (B), POSED ABOVE, ARE ANSWERED ACCORDINGLY. 4.2 AS REGARDS THE QUANTIFICATION, THE LD. CIT(A) H AS APPLIED THE RATE OF 4%, I.E., AS FOUND REASONABLE IN ANOTHER CASE. THIS, IN OUR VIEW , IS NOT PROPER WITHOUT ALLOWING PROPER OPPORTUNITY TO THE REVENUE TO PRESENT ITS CA SE IN THE MATTER. THE REASON IS SIMPLE. THE REVENUE HAD ALL ALONG PROCEEDED ON THE BASIS OF THE ASSESSEE BEING CALLED UPON TO DISCHARGE THE BURDEN OF PROVING ITS CLAIM QUA THE IMPUGNED PURCHASES. THE ONUS IN THE CASE OF ESTIMATION OF INCOME, ON TH E OTHER HAND, SHIFTS TO THE AO, WHO IS TO TAKE ALL THE RELEVANT MATERIAL AND INFORM ATION INTO ACCOUNT, AND WHICH WOULD REQUIRE EXTENSION OF PROPER OPPORTUNITY. IT N EEDS TO BE APPRECIATED THAT IT IS ONLY ON ACCOUNT OF THE PAINSTAKING EFFORTS OF THE R EVENUE, AT CONSIDERABLE EXPENDITURE ON TIME AND RESOURCES, THAT IT CAME TO LIGHT THAT THE PURCHASES WERE ONLY MANAGED TRANSACTIONS, CONCEALED THROUGH THE PROCESS OF LAYERING, I.E., A TRANSFERS TO B, WHO IN TURN DOES TO C, TO D, AND SO ON, WITH T HE FINAL BENEFICIARY D (SAY) WITHDRAWING THE MONEY IN CASH FOR PAYMENT TO THE A, THE SOURCE. THIS IS DONE TO, AS STATED, AVOID DETECTION. THE LD. CIT(A) ON THEREFOR E HAVING FOUND THE ASSESSEES PURCHASES AS ONLY ACCOMMODATION ENTRIES AND, FURTHE R, HIS BOOKS AS UNRELIABLE, OUGHT TO HAVE SOUGHT THE A.OS INDULGENCE IN THE MATTER O F ESTIMATION OF INCOME, WHICH CAN BY NO MEANS BE REGARDED AS A MECHANICAL TASK, WITH THE LAW ENJOINING THE ASSESSING AUTHORITY TO MAKE A BEST ESTIMATION UPON GATHERING OF ALL THE RELEVANT INFORMATION. OR, HE COULD HAVE IN THE ALTERNATIVE UNDERTAKEN THE EXE RCISE HIMSELF. HOW ALL HE DOES, HOWEVER, IS TO ADOPT THE RATIO FOUND SUITABLE IN AN OTHER CASE, WITHOUT EVEN SHOWING THE BASIS OF COMPARABILITY, WHICH IS EXACTLY THE RE VENUES GRIEVANCE, WHICH WE FIND AS JUSTIFIED. WE, THEREFORE, ONLY CONSIDER IT FIT A ND PROPER TO RESTORE THE MATTER WITH REGARD TO THE ESTIMATION OF INCOME BACK TO THE FILE OF THE AO FOR ADJUDICATION AFRESH, BY ISSUING DEFINITE FINDINGS OF FACT, AND AFTER ALL OWING PROPER OPPORTUNITY TO THE ASSESSEE TO MEET THE REVENUES CASE. WE DECIDE ACCO RDINGLY. ITA NO. 1438 & 1445/M/2011 MR. HITESH D. SHAH 6 5. THE SECOND ISSUE, WHICH ARISES IN THE REVENUES APPEAL, IS QUA THE ADDITION OF RS. 20,31,025/- MADE BY THE AO INVOKING SECTION 41( 1) OF THE ACT, I.E., ON ACCOUNT OF CESSATION OF LIABILITY IN RESPECT OF THE FOLLOWING TWO PARTIES: SR. NO. NAME OF THE PARTY PURCHASES (RS.) 1. M/S. R.SHARDA IMPEX PVT.LTD. 15,82,365/- 2. M/S. KNY JEWELS 4,48,660/- TOTAL 20,31,025/- THE ASSESSEE FAILING TO PROVIDE THE RELEVANT DETAIL S, VIZ. THE PERIOD FROM WHICH THE AMOUNT WAS OUTSTANDING, THE AO CAUSED INQUIRY THROU GH HIS INSPECTOR, WHO FOUND THAT A CONCERN BY THE NAME, M/S. DESIRE JEWELS PVT. LTD., EXISTS AT THE STATED ADDRESS, COMMON FOR BOTH THE PARTIES. HE INFERRED THE PARTIE S AND, CONSEQUENTLY, THE CREDITS AS BOGUS, ADDING THE SAME AS INCOME U/S. 41(1). THE LD . CIT(A) WAS OF THE VIEW THAT THE AO HAD NOT PROVED THE FACTUM OF THE CESSATION OF TH E LIABILITY; UNLESS HE DOES SO HE COULD NOT BRING THE AMOUNT TO TAX U/S. 41(1). RELIA NCE IN THIS CONTEXT WAS PLACED BY HIM ON THE DECISION BY THE TRIBUNAL IN DY. CIT VS. ALLIED LEATHER FINISHERS PVT. LTD . [2009] 32 SOT 549 (LUCK). HE HAD, HE CONTINUED, IN ANY CASE, ESTIMATED THE INCOME AT 4% OF THE SALES, SO THAT THERE WAS NO WARRANT FO R A SEPARATE ADDITION U/S. 41(1). 6. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. THE CASE OF BOTH THE PARTIES BEFORE US REMAINS THE SAME, I.E., AS BEFORE THE FIRST APPELLATE AUTHORITY, WHOSE LINE OF REASONING, WE ARE AFRAID, WE ARE UNABLE TO APPRECIATE. THE CONCERN, DESIRE JEWELS PVT. LTD., WAS EXISTING AT T HE GIVEN ADDRESS FOR THE LAST 4-5 YEARS (AND WHICH WOULD HAVE ONLY INCREASED BY THE T IME THE MATTER TRAVELLED BEFORE THE LD. CIT(A)), AND WAS NOT AWARE OF THESE TWO CON CERNS, AND WHICH IT WOULD NORMALLY, NAY, MOST CERTAINLY, BE THE CASE, I.E., H AD THE SAID FIRMS EXISTED THEREAT. NO MATERIAL STANDS BROUGHT ON RECORD TO ESTABLISH THE EXISTENCE OF THESE PARTIES, WHICH BECOMES EXTREMELY SUSPECT AND DOUBTFUL UNDER THE CI RCUMSTANCES. THE ASSESSEE ITSELF WAS NOT AWARE OF THEIR PRESENT ADDRESSES, I.E., ASS UMING THESE AS GENUINE BUSINESS CONCERNS, WHO HAD CHANGED THEIR ADDRESSES. EVEN NO FRESH ADDRESSES WERE FURNISHED, NOR, IN FACT, THE NAME/S OR PARTICULAR/S OF THE PER SON/S OPERATING THE SAID CONCERNS, ITA NO. 1438 & 1445/M/2011 MR. HITESH D. SHAH 7 EVEN IN THE REMAND PROCEEDING, WHEREAT, AGAIN, VERI FICATION EXERCISE WAS UNDERTAKEN BY THE REVENUE. THE INFERENCE OF THEIR BEING BOGUS BECOMES, UNDER THE CIRCUMSTANCES, UNMISTAKABLE. THE ASSESSEE CLAIMS OF HAVING PAID THE AMOUNT IN F.Y. 2008-09. HOW, ONE WONDERS, SUCH A CLAIM COULD BE ENTERTAINED UNDER THE CIRCUMSTANCES ? WHY WAS THE SAID (OR SUCH A) CLAIM NOT MADE BEFOR E THE AO, WHO SHOW-CAUSED THE ASSESSEE IN THE MATTER VIDE NOTICES SERVED ON 27.11.2009 AND 11.12.2009 (REFER PARA 6.1 OF THE ASSESSMENT ORDER). RATHER , THIS WOULD BE THE FIRST THING THAT AN ASSESSEE OR ANY REASONABLE PERSON WOU LD STATE OR CLARIFY. NEEDLESS TO ADD, THERE IS NOTHING TO SHOW THE EXISTENCE OF ANY DISPUTE, STATED TO BE THE REASON FOR THE PAYMENTS BEING OUTSTANDING FOR LONG AND, FURTHE R, OF THE SAME HAVING BEEN SINCE RESOLVED. A GENUINE CLAIM WOULD RESULT IN SERIOUS S TEPS BEING UNDERTAKEN BY THE PARTIES AGAINST THE ASSESSEE, WHO IS SOLVENT. THE I NFERENCE OF THE LIABILITY BEING NON- EXISTENT OR BOGUS, WHICH IS A FINDING OF FACT, IS U NMISTAKABLE. THE LD. CIT(A), WITHOUT DISPUTING THE SAME, NEVERT HELESS, CONSIDERS THE AO TO HAVE NOT PROVED CESSATION OR REMISSION OF LIABILITY . HE, IN OUR VIEW, MISLEADS HIMSELF WHEN HE STATES SO. WHERE IS THE QUESTION OF REMISSION OR CESSATION OF A LIABILITY WHICH IS NON-EXISTING OR BOGUS ? JUST AS THE PURCHASES FOR THE CURRENT YEAR HAVE B EEN FOUND AS BOGUS, I.E., AS NOT ACTUALLY REPRESENTING PURCHA SES, SO THAT THEY COULD NOT LEAD TO ANY ACTUAL LIABILITY, THE SAME COULD EQUALLY BE THE CASE FOR THE RELEVANT YEAR, I.E., THE YEAR OF THE PURCHASE/EXPENSE RESULTING IN THE SAID LIABILITY. A LIABILITY COULD ALSO BE NON-EXISTING WHERE, THOUGH REPRESENTING AN ACTUAL E XPENDITURE, WAS SINCE PAID, THOUGH NOT REFLECTED IN THE BOOKS OF ACCOUNT. IN EI THER CASE, IT HAS NOTHING TO DO WITH THE PROFIT OR THE INCOME FOR THE CURRENT YEAR, UNLE SS OF COURSE IT IS FOUND OR IS PROVED TO HAVE BEEN PAID OUT OF BOOKS DURING THE CURRENT Y EAR, WHICH IS NOBODYS CASE. THIS EMPHASIZES OR UNDERLIES THE FALLACY IN THE APPROACH OF THE LD. CIT(A) . IN FACT, THE TRIBUNAL IN THE CASE OF MUNI RAI V. ACIT (IN I.T.A. NOS. 29 & 30/PAT/2012 DATED 28/5/2015),RELYING ON THE DECISION OF THE CAS E OF CIT VS. DEVI PRASAD VISHWANATH PRASAD [1969] 72 ITR 194 (SC) AND CIT VS. MANICK SONS [1979] 74 ITR 1(SC), CLARIFIED THAT THE ARGUMENT THAT BECAUSE INC OME HAS BEEN ESTIMATED, REJECTING THE BOOKS OF ACCOUNT, NO ADDITION ON ACCOUNT OF UNE XPLAINED CREDIT COULD BE MADE, IS BOTH FACTUALLY AND LEGALLY UNTENABLE. THE SAME WOUL D EXTEND TO A CREDIT ON ACCOUNT ITA NO. 1438 & 1445/M/2011 MR. HITESH D. SHAH 8 OF A BROUGHT FORWARD TRADE LIABILITY AS WELL. THE S AME HAS, IN ANY CASE, NOTHING TO DO WITH THE CURRENT YEARS INCOME, HAVING BEEN FOUND A S BOGUS OR NON-EXISTING. FURTHER, IT MAY BE ARGUED THAT HOW COULD THE ADDITI ON BE MADE FOR THE CURRENT YEAR WHEN A TRADE LIABILITY HAS BEEN FOUND AS BOGUS , SO THAT IT DOES NOT REPRESENT AN ACTUAL LIABILITY IN THE FIRST PLACE. THE ARGUMENT, IMPRESSIVE AT FIRST BLUSH, IS WITHOUT MERIT. THIS IS AS THE SAME HAVING BEEN CLAIMED AND ALLOWED AS AN ACTUAL LIABILITY ON BEING INCURRED, IN FACT, ACCEPTED FOR THE SUBSEQU ENT YEAR/S AS WELL, IT IS NOT OPEN FOR THE ASSESSEE TO TURN AROUND AND CLAIM THAT IT WAS N EVER A LIABILITY, SO THAT IT CANNOT BE BROUGHT TO TAX FOR THE YEAR FOR WHICH IT IS ACTUALL Y FOUND AS NOT SO. THAT IS, YOU ACCEPTED MY LIE, NOW YOUR HANDS ARE TIED, AS FAMOUS LY OBSERVED BY THE APEX COURT. THE PRINCIPLE OF APPROBATE AND REPROBATE WOULD APPL Y. IN FACT, THE LIABILITY BEING THUS REQUIRED TO BE CONSIDERED AS GENUINE AS AT THE CLOS E OF THE IMMEDIATELY PRECEDING YEAR, I.E., AT THE END OF THE BEGINNING OF THE CURR ENT YEAR, WHILE FOUND AS NOT EXISTING AS AT ITS END, IS PRECISELY THE REASON FOR IT BEING LIABLE TO BE CONSIDERED AS HAVING CEASED TO BE SO DURING THE CURRENT YEAR, BRING IT W ITHIN THE CHARGE OF SECTION 41(1); CEASURE OR EXISTENCE OF A LIABILITY AS ON A PARTICU LAR DATE BEING ESSENTIALLY A MATTER OF FACT. THE DECISION IN THE CASE OF ALLIED LEATHER FINISHERS PVT. LTD .(SUPRA) WOULD THUS HAVE NO BEARING IN THE FACTS OF THE CASE. WE MAY, O N THE CONTRARY, PLACE RELIANCE ON THE DECISIONS BY THE TRIBUNAL, AS IN THE CASE OF KALYANI MAAN SINGH V. ITO [2013] 37 CCH 0259 (MUM-TRIB) AND ITO V. SAJJAN KUMAR DIDWANI (IN ITA NOS. 7716/MUM/2012, ETC., DATED 28/5/2014), EXPLAINING T HE ISSUES INVOLVED IN THE APPLICATION OF SECTION 41(1) IN SOME DETAIL, WHILE ALSO DWELLING ON CASE LAW. WE, ACCORDINGLY, HAVE NO HESITATION IN CONFIRMING THE A CTION OF THE AO. WE DECIDE ACCORDINGLY, AND THE REVENUE SUCCEEDS. 7. THE LAST ISSUE RAISED IN THE REVENUES APPEAL IS THE DISALLOWANCE U/S. 40(A)(IA) MADE IN VIEW OF THE NON-DEDUCTION OF TAX ON PROFESS IONAL FEES AT RS. 1,15,817/-. THE LD. CIT(A) HAS, UPON EXAMINATION OF THE ASESSEES A CCOUNTS, FOUND THE ASSESSEE TO HAVE DEDUCTED TAX AT SOURCE ON THE SAID AMOUNT, STA TED TO BE BROKERAGE, ALLOWED TO ONE, SHRI MAYUR M. JHAVERI, ON 15.03.2007, AT RS. 5 987/-. THE SAID FINDING HAVING NOT BEEN REBUTTED BY THE REVENUE IN ANY MANNER, WE ARE UNABLE TO SEE ANY BASIS FOR THE REVENUES APPEAL, WHICH FAILS ON THIS GROUND. W E DECIDE ACCORDINGLY. ITA NO. 1438 & 1445/M/2011 MR. HITESH D. SHAH 9 8. IN THE RESULT, THE ASSESSEES APPEAL IS PARTLY A LLOWED AND THE REVENUES APPEAL IS PARTLY ALLOWED AND PARTLY ALLOWED FOR STATISTICA L PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON JUNE 09 , 201 5 SD/- SD/- (JOGINDER SINGH) (SANJAY ARORA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; 5( DATED : 09.06.2015 ( . ./SHARWAN . PS ! '#$% &%# / COPY OF THE ORDER FORWARDED TO : 1. ! / THE APPELLANT 2. '#! / THE RESPONDENT 3. 6, ( ) / THE CIT(A) 4. 6, / CIT - CONCERNED 5. 7%8 ',() , / ) , / DR, ITAT, MUMBAI 6. * / GUARD FILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI