SURESH G. JETHANI, MUMBAI V. ASST CIT CIR 17(3), MUMBAI

ITA 1860/MUM/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9735 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 25-07-2017
• Assessment Year: 2012-2013
• Appeal Filed On: 16-03-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: M HEMALATHA
• Assessee Lawyers: KETAN L VAJANI
• Keywords: Opportunity of being heard; Additional evidence
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC, MUMBAI BEFORE SHRI G.S.PANNU, ACCOUNTANT MEMBER ITA NO.1860/MUM/2017 (AY. 2012-13) SHRI SURESH G. JETHANI, 409,SHARDA CHAMBERS NO.1, 31, KESHAVJI NAIK ROAD, BHAT BAZAR, MUMBAI 400 009 PAN:AABPJ7179G ...... APPELLANT VS. THE ACT,CIRCLE 17 (3), AAYKAR BHAVAN, MK ROAD, MUMBAI 400 020. .... RESPONDENT APPELLANT BY : SHRI KETAN L. VAJA NI RESPONDENT BY : MS. M. HEMALATHA DATE OF HEARING : 25/07/2017 DATE OF PRONOUNCEMENT : 31/07/2017 ORDER THE CAPTIONED APPEAL FILED BY THE ASSESSEE PER TAINING TO ASSESSMENT YEAR 2012-13 IS DIRECTED AGAINST AN ORDER PASSED BY CIT(A)-28, MUMBAI DATED 01/12/2016, WHICH IN TURN, ARISES OUT OF OR DER PASSED BY THE ASSESSING OFFICER UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) DATED 30/03/2015. 2. IN BRIEF, THE RELEVANT FACTS ARE THAT THE APPELL ANT IS AN INDIVIDUAL ENGAGED IN THE BUSINESS OF MANUFACTURE AND EXPORT O F JEWELLERY. IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFF ICER NOTED THAT THE FOLLOWING AMOUNTS WERE OUTSTANDING FOR MORE THAN TH REE YEARS AND, 2 ITA NO.1860/MUM/2017 (AY. 2012-13) THEREFORE, HE INVOKED SECTION 41(1) OF THE ACT AND ADDED THE SUM TO THE RETURNED INCOME AS CESSATION OF LIABILITY:- (1) G M INTERNATIONAL PVT. LTD. - RS.18,36,139 /- (2) TANVI GEMS PVT. LTD. - RS. 6,00,000/- TOTAL: - RS.24,36,139/- THE PLEA OF THE ASSESSING OFFICER WAS FOUNDED ON TH E BASIS THAT DESPITE LAPSE OF THREE YEARS THE SAID PARTIES WERE NOT CLAIMING THE AMOUNTS WHICH PROVED THAT NO LIABILITY EXISTED TO PAY SUCH AMOUNTS. 3. BEFORE THE CIT(A) ASSESSEE CHALLENGED THE ADDITI ON ON VARIED GROUNDS. APART FROM OTHER GROUNDS ASSESSEE CONTENDED THAT TH E LIABILITIES WERE SUBSISTING AND ALSO FURNISHED CONFIRMATIONS ISSUED BY THE CREDITORS TO PROVE THAT THE LIABILITIES EXISTED. THE CIT(A) HAS REFER RED TO SUCH CONFIRMATIONS BUT NOTED THAT THE SAME WERE IN THE NATURE OF ADDITIONA L EVIDENCES , WHICH WERE NOT BEFORE THE ASSESSING OFFICER . THE CIT(A) ALSO NOTICED THAT NO SPECIFIC PETITION WAS MOVED BY THE ASSESSEE SEEKING ADMISSIO N OF ADDITIONAL EVIDENCES AND, THEREFORE, HE REFUSED TO ADMIT SUCH ADDITIONAL EVIDENCE. ACCORDINGLY, THE CIT(A) CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER. AGAINST SUCH AN ORDER OF THE CIT(A) ASSESSEE IS IN FURTHER APPEAL BEFORE THE TRIBUNAL. 4. BEFORE ME, THE LD. REPRESENTATIVE FOR THE ASSESS EE HAD REFERRED TO THE PAPER BOOK TO POINT OUT THAT THERE WAS NO JUSTIFICA TION FOR HOLDING THAT THE IMPUGNED LIABILITIES HAD CEASED TO EXIST. THE LD. REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT IN THE CASE OF ONE OF THE P ARTIES NAMELY, G.M. INTERNATIONAL PVT. LTD. THE ENTIRE AMOUNT HAS BEEN REPAID THROUGH BANKING CHANNELS IN JUNE, 2014, WHICH WAS MUCH BEFORE THE I MPUGNED ASSESSMENT 3 ITA NO.1860/MUM/2017 (AY. 2012-13) PROCEEDINGS WERE FINALIZED BY THE ASSESSING OFFICER . IN SUPPORT A REFERENCE HAS BEEN MADE TO THE RELEVANT PAGES OF THE PAPER BO OK DEPICTING SUCH PAYMENT. APART THEREFROM, A REFERENCE HAS ALSO MADE TO THE CONFIRMATION OF ACCOUNT ISSUED BY TANVI GEMS PVT. LTD., AND IT I S SOUGHT TO BE CANVASSED THAT THE LIABILITY TO PAY THE CREDITOR EXISTED. TH E LD. REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT AT THE PRESENT STAGE ASSE SSEE WILL BE SATISFIED IF THE MATTER IS RESTORED BACK TO THE FILE OF ASSESSING OF FICER TO CONSIDER THE AFORESAID MATERIAL AND, THEREAFTER DECIDE ON THE IS SUE OF APPLICABILITY OF SECTION 41(1) OF THE ACT. EVEN ON THE POINT OF LAW , THE LD. REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT THE EXPIRY OF THE PER IOD OF LIMITATION PROVIDED IN THE LIMITATION ACT DOES NOT EXTINGUISH A DEBT, A S HELD BY THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. SUGAULI SUGAR WORKS (P) LTD., 236 ITR 518(SC). IT WAS, THEREFORE, CONTENDED THAT THE VE RY PRESUMPTION OF THE ASSESSING OFFICER THAT DUE TO LAPSE OF TIME THE LI ABILITY HAD CEASED TO EXIST IS ON A WRONG FOOTING. 5. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESEN TATIVE HAS NOT SERIOUSLY OPPOSED THE PLEA OF THE ASSESSEE FOR REMA NDING THE MATTER TO THE FILE OF THE ASSESSING OFFICER. 6. HAVING CONSIDERED THE RIVAL STANDS, IN MY CONSID ERED VIEW, BOTH THE AUTHORITIES BELOW HAVE REACHED TO THE CONCLUSION ON INADEQUATE FACTS. THE ASSESSMENT ORDER REVEALS THAT THE AMOUNT OUTSTANDIN G TO THE TWO CREDITORS HAS BEEN HELD TO BE ASSESSABLE UNDER SECTION 41(1) OF THE ACT ON ACCOUNT OF CESSATION OF LIABILITY BY MERELY NOTICING THAT THE SAME WERE OUTSTANDING FOR A PERIOD OF THREE YEARS. ADMITTEDLY, THERE IS NO MAT ERIAL OR EVIDENCE REFERRED BY THE ASSESSING OFFICER TO REACH TO THE CONCLUSION OF CESSATION OF LIABILITY. 4 ITA NO.1860/MUM/2017 (AY. 2012-13) OSTENSIBLY, THE RELEVANT MATERIAL WAS SOUGHT TO PUT -FORTH BY THE ASSESSEE BEFORE THE CIT(A) WHICH HAS NOT BEEN ENTERTAINED B Y HIM. IN FACT, IN THE STATEMENT OF FACTS FILED WITH THE APPEAL MEMO TO T HE CIT(A) ASSESSEE DETAILED THE CIRCUMSTANCES IN WHICH THE ASSESSMENT WAS FINALIZED ON THE SAID ISSUE WITHOUT CONFRONTING THE ASSESSEE. CLEARLY TH IS WAS A CASE WHERE CIT(A) OUGHT TO HAVE BEEN MORE CIRCUMSPECT IN REJECTING AN ADDITIONAL EVIDENCE CONSIDERING THE AVERMENTS IN THE STATEMENT OF FACTS , AND ERRED IN REJECTING IT BY NOTICING ABSENCE OF ANY FORMAL PETITION FOR ADM ISSION OF ADDITIONAL EVIDENCE. BE THAT AS IT MAY, IT WOULD BE IN THE FI TNESS OF THINGS THAT THE MATTER IS REMANDED BACK TO THE FILE OF ASSESSING OF FICER WHO SHALL RE-EXAMINE THE ISSUE IN THE CONTEXT OF APPLICABLE FACTS AND CI RCUMSTANCES WHICH THE ASSESSEE WOULD BE ENTITLED TO PRODUCE BEFORE HIM. NEEDLESS TO MENTION, THE ASSESSING OFFICER SHALL ALLOW THE ASSESSEE A REASON ABLE OPPORTUNITY OF BEING HEARD AND ONLY THEREAFTER PASS AN ORDER AFRESH ON T HIS ASPECT AS PER LAW. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOW ED FOR STATISTICAL PURPOSES, AS ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 31/07/2017 SD/- (G.S. PANNU) ACCOCUNTANT MEMBER MUMBAI, DATED 31/07/2017 VM , SR. PS 5 ITA NO.1860/MUM/2017 (AY. 2012-13) COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT , 2. THE RESPONDENT. 3. THE CIT(A)- 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI