Shri Sattarbhai S.Sarvaiya, SILVASSA V. The ACIT., Valsad

ITA 1533/AHD/2011

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 6981 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 6 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-12-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 01-12-2014
• Assessment Year: 1999-2000
• Appeal Filed On: 31-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SONIA KUMAR
• Keywords: Unexplained expenditure; Question of law
• Section: 69C

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD 0 0 , 0 0 , BEFORE SHRI G.C. GUPTA, VICE PRESIDENT AND SHRI N.S. SAINI , ACCOUN TANT ./ ITA NO S . 1533 & 1534 /AHD/ 2011 [ [ / ASSESSMENT YEAR : 1999 - 2000 & 2000 - 01 SHRI SATTARBHAI S. SARVAIYA, PROP. OF BOMBAY BUILDERS, BAVIS FALIA, UMARKUI ROAD, SILVASSA PAN : ADZPS 8296 G VS THE ACIT, VALSAD / (APPELL ANT) / (RESPONDENT) ASSESSEE(S) BY : SHRI BHUPENDRA SHAH , AR REVENUE BY : SMT. SONIA KUMAR, SR. DR. / DATE OF HEARING : 01 / 12 /2014 / DATE OF PRONOUNCEMENT: 05 / 12 /2014 / O R D E R PE R SHRI N.S. SAINI, ACCOUNTANT MEMBER: THESE ARE THE APPEALS FILED BY THE ASSESSEE AGAINST THE SEPARATE ORDER OF THE COMMISSIONER OF INCOME - TAX (APPEALS), VALSAD, BOTH DATED 17.03.2011, PASSED IN ASSESSMENT YEARS 1999 - 2000 AND 2000 - 01. 2. IN BOTH THE AP PEALS, THE COMMON GROUND OF APPEAL TAKEN BY THE ASSESSEE IS THAT THE CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.32,12,416/ - IN ASSESSMENT YEAR 1999 - 2000 AND RS.7,07,953/ - IN ITA NOS. 1533 & 1534/AHD/2011 SHRI SATTARBHAI S. SARVAIYA - AY S 1999 - 2000 & 2000 - 2001 - 2 - ASSESSMENT YE AR 2000 - 01, MADE ON ACCOUNT OF SUNDRY CREDITORS AS UNEXPLAINED EXP ENDITURE U/S 69C OF THE ACT. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS SHOWN IN THE BALANCE - SHEET SUNDRY CREDITORS FOR EXPENSES RS.32,12,416/ - IN THE ASSESSMENT YEAR 1999 - 2000 AND RS.7,07,953/ - IN THE AS SESSMENT YEAR 2000 - 01. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE COULD NOT PRODUCE THE CREDITORS FOR EXAMINATION, NOR FURNISHED DOCUMENTARY EVIDENCE TO ESTABLISH THE GENUINENESS OF THE TRANSACTIONS. THEREFORE, HE ADDED THE SUNDRY CREDITORS SHOWN BY THE ASSESSEE IN THE BALANCE - SHEET AS UNEXPLAINED EXPENDITURE U/S 69C OF THE ACT. 4. ON APPEAL, THE CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER ON THE GROUND THAT THE ASSESSEE DID NOT PRODUCE ANY DETAILS BEFORE THE ASSESSING OFFICER OR DURING THE APPELLATE PROCEEDINGS. 5. BEFORE US, THE AR OF THE ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER HAS MADE ADDITION OF SUNDRY CREDITORS U/S 69C OF THE ACT WHICH HE CANNOT DO, AS SECTION 69C DEALS WITH UNEXPLAINED EXPENDITURE MADE BY THE ASSESSEE, WHEREAS IN THE CASE OF THE ASSESSEE, THESE ARE SUNDRY CREDITORS FOR EXPENSES BROUGHT FORWARD FROM EARLIER YEARS AND SHOWN IN THE BALANCE - SHEET BY THE ASSESSEE. IF ANY DISALLOWANCE HAS TO BE MADE, THE SAME SHOULD BE MADE IN THE EARLIER YEAR S WHEN THE EXPENSES WERE INCURRED BY THE ASSESSEE. HE ARGUED THAT FURTHER IF IT I S ASSUMED THAT THE ADDITION WAS MADE BY THE ASSESSING OFFICER BY INVOKING PROVISIONS OF SECTION 41(1) OF THE ACT, THEN ALSO THE ISSUE WAS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF JURISDI CTIONAL HIGH COURT IN THE CASE OF CIT V. PURIDEVI MAHENDRAKUMAR CHAUDHARY, [2014] 41 TAXMANN.COM 329 (GUJARAT), WHEREIN IT WAS HELD THAT THE ASSESSIN G OFFICER WOULD HAVE TO PROVE ITA NOS. 1533 & 1534/AHD/2011 SHRI SATTARBHAI S. SARVAIYA - AY S 1999 - 2000 & 2000 - 2001 - 3 - THAT THE ASSESSEE HAD OBTAINED BENEFIT IN RESPECT OF SUCH TRADING LIABILITY B Y WAY OF REMISSION OR CESSATION THEREOF. MERELY BECAUSE, THE ASSESSEE OBTAINED BENEFIT OF DEDUCTION IN THE EARLIER YEARS AND BALANCE WAS CARRIED FORWARD IN THE SUBSEQUENT YEAR, IT WOULD NOT PROVE THAT THE TRADING LIABILITIES OF THE ASSESSEE HAD BECOME NON EXISTENT. 6. FURTHER, HE SUBMITTED THAT HE HAS FILED BEFORE THE LOWER AUTHORITIES THE LEDGER COPY OF THE SUNDRY CREDITORS SHOWING PAYMENTS MADE TO THEM IN SUBSEQUENT YEARS BY WAY OF CASH AND CHEQUE. THIS ALSO SHOWS THAT THE LIABILITIES SHOWN IN THE BALA NCE - SHEET WERE GENUINE AND EXISTING IN THE YEARS UNDER APPEAL. HENCE, HE PRAYED THAT THE ADDITION MADE SHOULD BE DELETED. 7. ON THE OTHER HAND, THE DR SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES. 8. WE HAVE HEARD THE RIVAL SUBMISS IONS AND PERUSED TH E ORDERS OF THE LOWER AUTHORITIES AND MATERIAL AVAILABLE ON RECORD. THE UNDISPUTED FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER ADDED SUNDRY CREDITORS FOR EXPENSES OF RS.32,12,416/ - AND RS.7,07,953/ - IN THE ASSESSMENT YEARS 1999 - 2000 AND 2000 - 01 RESPEC TIVELY U/S 69C OF THE ACT AS IN THE CONFIRMATION FILED BY THE ASSESSEE, PAN OF THE CREDITORS WAS NOT GIVEN AND THE ASSESSEE HAS NOT PRODUCED THE CREDITORS . 9. ON APPEAL, THE CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER ON THE GROUND THAT THE ASS ESSEE COULD NOT PRODUCE THE DETAILS EITHER BEFORE THE ASSESSING OFFICER OR BEFORE HIM IN THE APPELLATE PROCEEDINGS. ITA NOS. 1533 & 1534/AHD/2011 SHRI SATTARBHAI S. SARVAIYA - AY S 1999 - 2000 & 2000 - 2001 - 4 - 10. THE CONTENTION OF THE AR OF THE ASSESSEE IS THAT THE ADDITION U/S 69C OF THE ACT CANNOT BE MADE IN THIS YEAR SINCE THESE CREDITORS ARE THE BALANCE BROUGHT FORWARD ED FROM EARLIER YEARS AND IF ANY DISALLOWANCE HAS TO BE MADE U/S 69C, THEN THE SAME SHOULD BE MADE IN THE YEAR OF INCURRING OF THE EXPENDITURE S AND NOT IN THE YEARS UNDER CONSIDERATION. 1 1 . FURTHER, THE ASSESSEE HAS FILED COPY OF THE LEDGER ACCOUNT S OF THE CREDITORS, COPY OF WHICH HAS BEEN FILED BEFORE US AT PAGE NOS.16 - 75 OF THE PAPER - BOOK SHOWING THAT THEY ARE BALANCES BROUGHT FORWARD ED FROM EARLIER YEARS AND IN MOST OF THE CASES PAYMENTS WERE MADE BY CASH AND CHEQUE IN SUBSE QUENT YEARS AND THE ASSESSEE HAS ALSO APPENDED A CERTIFICATE TO THE PAPER - BOOK THAT THESE WERE AVAILABLE BEFORE THE ASSESSING OFFICER AND THE CIT(A). FURTHER, THE CONTENTION OF THE AR OF THE ASSESSEE IS THAT NO DISALLOWANCE U/S 41(1) OF THE ACT CAN ALSO B E MADE IN VIEW OF THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT V. PURIDEVI MAHENDRAKUMAR CHAUDHARY (SUPRA), WHEREIN IT WAS HELD AS UNDER: - 4. IN THE CASE OF NITIN S. GARG (SUPRA) THIS COURT HAS OBSERVED AND HELD AS UNDER: IT HAD N OT BEEN ESTABLISHED THAT THE ASSESSEE HAD WRITTEN OFF THE OUTSTANDING LIABILITIES IN THE BOOKS OF ACCOUNT. THE TRIBUNAL WAS JUSTIFIED IN TAKING THE VIEW THAT THE ASSESSEE HAD CONTINUED TO SHOW THE ADMITTED AMOUNTS AS LIABILITIES IN THE BALANCE SHEET, THE S AME COULD NOT BE TREATED AS CESSATION OF LIABILITIES. MERELY BECAUSE, THE LIABILITIES WERE OUTSTANDING FOR LA ST MANY YEARS, IT COULD NOT BE INFERRED THAT THE SAID LIABILITIES HAS CEASED TO EXIST. THE TRIBUNAL HAD RIGHTLY OBSERVED THAT THE ASSESSING OFFICER WOULD HAVE TO PROVE THAT THE ASSESSEE HAD OBTAINED THE BENEFITS IN RESPECT OF SUCH TRADING LIABILITIES BY WAY OF REMISSION OR CESSATION THEREOF . MERELY BECAUSE, THE ASSESSEE OBTAINED BENEFIT OF REDUCTION IN THE EARLIER YEARS AND BA LA NCE WAS CARRIED ITA NOS. 1533 & 1534/AHD/2011 SHRI SATTARBHAI S. SARVAIYA - AY S 1999 - 2000 & 2000 - 2001 - 5 - FORWAR D IN THE SUBSEQUENT YEAR, IT WOULD NOT PROVE THAT THE TRADING LIABILITIES OF THE ASSESSEE HAD BECOME NON EXISTENT.' 5. APPLYING AFORESAID RATIO LAI D DOWN BY THE HO N BLE SUPREME COURT AS WELL AS THIS COURT AND AS THE ADDITION OF RS.51,37,327/ - WAS MADE SO LELY ON THE BASIS THAT SAID LIABILITY IS MORE THAN THREE YEARS, IT CANNOT BE SAID THAT THE LEARNED ITAT HAS COMMITTED ANY ERROR IN DELETING THE ADDITION OF RS. 51,37,327 / - MADE UNDER SECTION 41(1) OF THE ACT. WE SEE NO REASON TO INTERFERE WITH THE IMPUGNED JUDGMENT AND ORDER PASSED BY THE LEARNED TRIBUNAL . NO QUESTION OF LAW MUCH LESS ANY SUBSTANTIAL QUESTION OF LAW ARISES IN THE PRESENT APPEAL . HENCE, PRESENT APPEAL DESERVES TO BE DISMISSED AND IS ACCORDINGLY DISMISSED. 12 . WE FIND THAT THE A SSESSING O FF ICER ADDED RS.32,12,416/ - AND RS.7,07,953/ - TO THE INCOME OF THE ASSESSEE FOR ASSESSMENT YEARS 1999 - 2000 AND 2000 - 2001 RESPECTIVELY , SOLELY ON THE GROUND THAT IN THE CONFIRMATION OF THE CREDITORS FILED BEFORE HIM , PAN OF THE CREDITORS WERE NOT MENTIONED A ND THE ASSESSEE COULD NOT PRODUCE THE CREDITORS BEFORE HIM. WE FIND THAT IT IS NOT IN DISPUTE THAT THE DETAILS OF THE CREDITORS WHICH WERE AVAILABLE WITH THE ASSESSEE WERE FILED BEFORE THE ASSESSING OFFICER. FURTHER, FROM THE COPIES OF THE LEDGER ACCOUNT FILED IT IS FOUND THAT THE PAYMENTS WERE MADE TO THE CREDITORS IN THE SUBSEQUENT YEARS BY THE ASSESSEE EITHER BY CHEQUE OR IN CASH. IN THE ABOVE CIRCUMSTANCES, IN OUR CONSIDERED VIEW, MERELY INABILITY OF THE ASSESSEE TO PRODUCE CREDITORS BEFORE THE ASSESS ING OFFICER OR NON - FURNISHING OF PAN OF THE CREDITORS DOES NOT EMPOWER THE REVENUE TO MAKE ADDITION OF SUCH CREDITORS. IN ABSENCE OF ANY MATERIAL BROUGHT BEFORE US TO SHOW THAT THE CREDITORS CEASED TO EXIST DURING THE YEARS UNDER APPEAL, WE FIND NO JUSTIFI CATION FOR MAKING THE ADDITION DURING THE YEARS UNDER CONSIDERATION. WE, THEREFORE, DELETE THE ADDITION OF RS.32,12,416/ - MADE IN THE ITA NOS. 1533 & 1534/AHD/2011 SHRI SATTARBHAI S. SARVAIYA - AY S 1999 - 2000 & 2000 - 2001 - 6 - ASSESSMENT YEAR 1999 - 2000 AND RS.7,07,953/ - MADE IN THE ASSESSMENT YEAR 2000 - 01 AND ALLOW THE GROUND OF APPEAL OF THE ASS ESSEE FOR BOTH THE ASSESSMENT YEARS . 1 3 . IN THE RESULT, THE APPEALS FILED BY THE ASSESSEE FOR BOTH THE ASSESSMENT YEARS ARE ALLOWED. ORDER PRONOUNCED IN THE COURT ON FRIDAY , THE 5 TH OF DECEMBER , 2014 AT AHMEDABAD. SD/ - SD/ - ( G.C. GUPTA ) VICE PRESIDENT ( N.S. SAINI) ACCOUNTANT MEMBER AHMEDABAD; DATED 05 / 12 /2014 * BIJU T , PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A) - V ALSAD 5. , , / DR, ITAT, AHMEDABAD 6. [ / GUARD FILE . / BY ORDER, //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD