L/h Mohanlal B. Shah, Late Naresh B.Shah, Sangli V. Income-tax Officer, Ward - 2 (2), Sangli

ITA 1550/PUN/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 0816 (ITAT-PUNE)
• Duration Of Justice: 8 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-06-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 03-10-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Set aside

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC, PUNE VIRTUAL COURT BEFORE SHRI R.S. SYAL, VICE PRESIDENT . . , . / ITA NO. 1549 /PUN/201 9 / ASSESSMENT YEAR : 20 0 8 - 0 9 SHRI MOHANLAL B S HAH (PROP. NARESH TEXTILE CORPORATION) CHHAJED BUILDING, SOMWAR PETH, AT POST: MADHAVNAGAR, DIST. SANGLI 416406 PAN : A DWPS0872K VS. ITO, WARD 2(2), SANGLI APPELLANT RESPONDENT . / ITA NO. 1 550 /PUN/201 9 / ASSESSMENT YEAR : 20 0 8 - 0 9 SHRI MOHANLAL BADARMAL SHAH LEGAL HEIR OF LATE NARESH B SHAH (PROP. DINESH FABRICS) CHHAJED BUILDING, SOMWAR PETH, AT POST: MADHAVNAGAR, DIST. SANGLI 416406 PAN : A D QPS7436P VS. ITO, WARD 2(2), SANGLI APPELLANT RESPONDENT / ORDER PER R.S.SYAL, VP : TH ESE TWO APPEALS BY DIFFERENT BUT CONNECTED ASSESSEE S ARISE OUT OF SEPARATE ORDER S PASSED BY THE LD. CIT(A) - 1 , APPELLANT BY SHRI BHUVANESH KANKANI RESPONDENT BY MS. NISHTHA TIWARI & SHRI PRATHAMESH J.LAWAND DATE OF HEARING 11 - 06 - 20 20 DATE OF PRONOUNCEMENT 11 - 06 - 20 20 ITA NO S . 1549 & 1550 /PUN/201 9 MOHANLAL B SHAH & ANR 2 KOLHAPUR ON 15.10.2018 FOR THE CAPTIONED YEAR . SINCE COMMON ISSUE IS RAISED IN BOTH THE APPEALS , I AM, THERE FORE, PROCEEDING TO DISPOSE THEM OFF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 2. THESE APPEALS ARE TIME BARRED BY 290 DAYS . A N AFFIDAVIT HAS BEEN FILED BY THE ASSESSEE S STATING THE REASONS WHICH LED TO THE LATE FILING OF THE APPEAL S . I AM SATISFIED WITH SUCH REASONS. THE DELAY IS CONDONED AND THE APPEALS ARE ADMITTED FOR HEARING ON MERITS. 3. THE ONLY ISSUE RAISED IN ITA NO.1549/PUN/2019 IS AGAINST CONFIRMATION OF ADDITION OF RS.1,78,417/ - U/S 41(1) OF THE INCOME TAX ACT , 1961 (H EREINAFTER CALLED AS THE ACT) . 4. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL, ENGAGED IN TRADING OF CLOTH. FROM THE DETAILS ON RECORD , THE AO OBSERVED THAT A CREDIT BALANCE OF RS.1,78,417/ - WAS APPEARING IN THE NAME OF M/S. MANGA LDEEP SYNTHETICS NAVASA R I (GUJRATH) FOR LAST MORE THAN THREE CONSECUTIVE YEARS. H E TREATED SUCH AMOUNT AS TRADING LIABILITY, WHICH CEASED TO BE PAYABLE. INVOKING THE PROVISIONS OF SECTION 41(1) OF THE ACT, T HE AO MADE THE ADDITION FOR SAID SUM . THE LD. CIT(A) ECHOED THE ADDITION. ITA NO S . 1549 & 1550 /PUN/201 9 MOHANLAL B SHAH & ANR 3 5. HAVING HEARD THE RIVAL SUBMISSIONS AND GONE THROUGH THE RELEVANT MATERIAL ON RECORD, IT IS SEEN FROM PAGE 5 OF THE IMPUGNED ORDER THAT THE ASSESSEE CATEGORICALLY STATED BEFORE THE LD. CIT(A) THAT THE AMOUNT IN QUESTION WAS A LOAN LIABILITY AND NOT A TRADING LIABILITY AND THE SAME WAS PAYABLE . MY ATTENTION HAS BEEN DRAWN TO WARDS THE ACCOUNT OF M/S. MANGALDEEP SYNTHETICS MILLS FOR FINANCIAL YEARS 1992 - 93 AND 199 3 - 94 , COPY OF WHICH HAS BEEN PLACED ON RECORD . THIS ACCOUNT DIVULGE S THAT THE ASSESSEE RECEIVED AND REPAID CERTAIN AMOUNTS FROM/TO M/S. MANGALDEEP SYNTHETICS MILLS, THEREBY LEAVING THE CLOSING CREDIT BALANCE AS LOAN PAYABLE. IT CAN BE SEEN FROM SUCH ACCOUNT THAT THERE IS NO TRADING TRANSACTION EITHER O N THE DEBIT OR CREDI T SIDE O F THE ACCOUNT. IN OTHER WORDS, BALANCE OF RS.1,78,417/ - APPEARING IN THE BOOKS OF ACCOUNT OF ASSESSEE AS ON LAST DAY OF THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION, IS NOT ON ACCOUNT OF TRADING LIABILITY BUT, MERE A LOAN LIABILITY. THAT BEING THE POSITION, PROVISIONS OF SECTION 41(1) OF THE ACT CANNOT GET TRIGGERED, AS HAS BEEN DONE BY THE AO AND APPROVED IN THE FIRST APPEAL. I, THEREFORE, SET ASIDE THE IMPUGNED ORDER AND DELETE THE ADDITION SO MADE . ITA NO S . 1549 & 1550 /PUN/201 9 MOHANLAL B SHAH & ANR 4 6. IN ITA NO.1550/PU N/2019, FACTS AND CIRCUMSTANCES ARE MUTATIS MUTANDIS SIMILAR. A S UM OF RS.1,10,130/ - WAS APPEARING AS OUTSTANDING IN THE NAME OF M/S. MANGALDEEP SYNTHETIC MILLS, NAVASARI (GUJRATH) AND RS.1,54,724/ - IN THE NAME OF MANGALDEEP TEXTILES, NAVASARI (GUJRATH). THE AO TREATED SUCH AMOUNTS AS COVERED U/S 41(1) OF THE ACT AND MADE THE ADDITION . THE LD. CIT(A) AFFIRMED THE ADDITION. 7. I HAVE HEARD BOTH THE SIDES AND GONE THROUGH THE RELEVANT MATERIAL ON REC ORD, WHICH DEMONSTRATE S THAT THESE TWO AMOUNTS AROSE ON A CCOUNT OF LOAN TRANSACTIONS AND NOT TRADING TRANSACTIONS IN EARLIER YEARS . AS SUCH, PROVISIONS OF SECTION 41(1) OF THE ACT CANNOT BE APPLIED. FOLLOWING THE VIEW TAKEN HEREINABOVE, I ORDER TO DELETE THIS ADDITION AS WELL. 8 . IN THE RESULT, BOTH THE APPEAL S ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH JUNE , 2020 . SD/ - ( R.S.SYAL ) / VICE PRESIDENT PUNE ; DATED : 11 TH JUNE , 2020 GCVSR ITA NO S . 1549 & 1550 /PUN/201 9 MOHANLAL B SHAH & ANR 5 / COPY OF THE ORDER IS FORWARD ED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. ( ) / THE CIT (APPEAL S) - 1 , KOLHAPUR 4. THE PR. CIT - 1, KOLHAPUR 5. , , SMC / DR SMC , ITAT, PUNE; 6. / GUARD F ILE . / BY ORDER, // TRUE COPY // SENIOR PRIVATE SECRETARY , / ITAT, PUNE DATE 1. DRAFT DICTATED ON 11 - 0 6 - 2020 SR.PS 2. DRAF T PLACED BEFORE AUTHOR 11 - 0 6 - 2020 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER -- JM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. -- JM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS 7. DATE OF UPLOADI NG ORDER SR.PS 8 . FILE SENT TO THE BENCH CLERK SR.PS 9 . DATE ON WHICH FILE GOES TO THE HEAD CLERK 10 . DATE ON WHICH FILE GOES TO THE A.R. 1 1 . DATE OF DISPATCH OF ORDER. *