Amar Kant Agarwal , Kolkata V. ITO, Ward - 43(1), Kolkata , Kolkata

ITA 1887/KOL/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 5314 (ITAT-KOLKATA)
• Duration Of Justice: 8 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-05-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 05-03-2019
• Assessment Year: 2013-2014
• Appeal Filed On: 31-08-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C J SHAH JCITSRDR
• Assessee Lawyers: MIRAJ D. SHAH
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH SMC KOLKATA BEFORE SHRI S.S, GODARA, JUDICIAL MEMBER ITA NO.1887/KOL/2018 ASSESSMENT YEAR:2013-14 AMAR KANT AGARWAL PROP: RUCHIRA CHEMICAL CORPORTION, 9, RAM SEVAK MULLICK LANE, KOLKATA-700007 [ PAN NO.ACYPA 7815 P ] / V/S . INCOME TAX OFFICER, WARD-43(1), 3, GOVT. PLACE (WEST), KOLKATA-001 /APPELLANT .. /RESPONDENT /BY APPELLANT SHRI MIRAJ D SHAH, ADVOCATE /BY RESPONDENT SHRI C.J. SHAH, JCIT-SR-DR /DATE OF HEARING 05-03-2019 /DATE OF PRONOUNCEMENT 15-05-2019 /O R D E R THIS ASSESSEES APPEAL FOR ASSESSMENT YEAR 2013-14 , ARISES AGAINST THE COMMISSIONER OF INCOME-TAX (APPEALS)-13, KOLKATAS ORDER DATED 24.07.2017 PASSED IN CASE NO.312/CIT(A)-13/KOL/2014-15, INVOLVING PRO CEEDINGS U/S. 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT. HEARD BOTH THE PARTIES. CASE FILE PERUSED. 2. THE SOLE SUBSTANTIVE DISPUTE THAT AROSE FOR MY A PT ADJUDICATION IN THE INSTANT APPEAL IS OF CORRECTNESS OF SEC.41(1) CESSATIONAL L IABILITY ADDITION OF 5 LAC IN RESPECT OF ASSESSEES ALLEGED SUNDRY CREDITORS M/S R.K. TRA DING CO. U/S 41(1) OF THE ACT. THE CIT(A)S DETAILED DISCUSSION CONFIRMING THE IMPUGNE D ADDITION READS AS UNDER:- 4. DECISION:- I HAVE GONE THROUGH THE CONTENTION OF THE ASSESSEE, THE ORDER PASSED BY THE AO AND THE SUBMISSIONS MADE BY THE APPELLANT. THE DECISION OF THIS APPEAL IS GIVEN AS UNDER:- CONTINUED TO SHOW THE AMOUNTS AS LIABILITY IN HIS B ALANCE SHEET. THERE IS NO CESSATION OF LIABILITY. HON. MADRAS HIGH COURT IN CIT V. TAMILNA DU WAREHOUSING CORPORATION (2007) 292 ITR 310 HAD HELD - THE ASSESSEE HAD CONTINUED TO SHOW THE ADMITTED AMOUNT OF RS.8/22/925J- AS LIABILITY IN THE BALANCE SHEET. TH E UNDISPUTED FACT WAS THAT IT WAS A LIABILITY REFLECTED IN THE BALANCE SHEET. ONCE IT WAS SHOWN A S LIABILITY BY THE ASSESSEE, THE ITA NO.1887/KOL/2018 A.Y. 201 3-14 AMAR KANT AGARWAL VS. ITO WD-43(1), K OL. PAGE 2 COMMISSIONER WAS WRONG IN HOLDING THAT IT WAS ASSES SABLE UNDER SECTION 41(1) OF THE ACT. UNLESS AND UNTIL THERE IS CESSATION OF LIABILITY SE CTION 41(1) IS NOT APPLICABLE IN THE CASE OF PR. CIT V. MAHURAPRASAD C. PANDEY (2 015) 377 ITR 363, THE AO MADE AN ADDITION OF RS.56,96,645/- INVOKING SECTION 41(1) O F THE ACT DOUBTING SUNDRY CREDITORS APPEARING IN THE BALANCE SHEET OF THE ASSESSEE FOR THE PAST SEVERAL YEARS. THE ADDITION WAS DELETED BY THE TRIBUNAL. ON DEPARTMENTAL APPEAL THE GUJRAT HIGH COURT HELD - 'THAT THE SUNDRY CREDITORS MENTIONED IN THE BALANCE SHEET OF THE ASSESSEE WERE SHOWN AS SUNDRY CREDITORS FOR SEVERAL YEARS BEFORE THE RELEVANT ASS ESSMENT YEAR. THERE WAS NO REMISSION OR CESSATION OF THE LIABILITY DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION. THE DELETION OF ADDITION WAS JUSTIFI ED' THE SUPREME COURT OF INDIA HAD DEALT WITH THE CESSA TION OF TRADING LIABILITY IN CHIEF CIT V. KESARIA TEA CO. LTD. (2002) 254 ITR 434, WHEREIN P ROVISION MADE BY THE ASSESSEE TOWARDS PURCHASE TAX LIABILITY (ALLOWED IN THE EARLIER YEAR S WAS WRITTEN BACK ASSESSEE IN THE YEAR UNDER CONSIDERATION. THE APEX COURT HELD THE UNILA TERAL ACT ON THE PART OF THE ASSESSEE BY WRITING OFF THE LIABILITY IN THE ACCOUNTS DID NOT N ECESSARILY MEAN THAT THE LIABILITY CEASED IN THE EYE OF LAW. 4.2.2 THE AFORESAID FACTS WERE SHOWN TO THE AO FOR HIS COMMENTS. THE AO VIDE HIS REPORT DATED 15-03-17 HAS REPORTED AS UNDER - 'AT THE APPELLATE STAGE THE ASSESSEE CLAIMED VIDE L ETTER DATED 09/01/2017 BEFORE THE LD. CIT(A)-13 KOLKATA AND LETTER DATED 28/02/2017 B EFORE THE UNDERSIGNED AS UNDER:- DURING SCRUTINY PROCEEDINGS A.D. FOUND THAT ASSESSE E MADE UNDISCLOSED PURCHASE OF RS.4,40,436/- FROM THIS CONCERN. THE ASSESSEE WAS D ULY INFORMED AND ASKED TO ATTEND HEARING BEFORE THE A.D. THE ASSESSEE IGNORED THE IS SUE AND REMAINED SILENT WHEN SHOW CAUSED BY THE A.D. REGARDING THE ISSUE. THEREF ORE THE A.O. HAD NO OTHER OPTION BUT TO ADD BACK THE SUM OF RS.4,40,436/- TOTAL INCO ME OF THE ASSESSEE. AT THE APPELLATE STAGE THE ASSESSEE HAS FILED A RECONCILIATION OF AC COUNTS. ON GOING THROUGH THE RECONCILIATION AND THE EXPLANATION PROVIDED ALONG W ITH IT THE CONTENTION OF THE .ASSESSEE APPEARS VALID.' 4.2.3 PERUSAL OF REMAND REPORT IN CASE OF R.K. TRAD ING COMPANY AND SUBMISSION OF THE APPELLANT SHOWS THAT THE AFORESAID LIABILITY WAS LY ING FOR MANY YEARS. THE APPELLANT WAS NOT ABLE TO PROVIDE THE CURRENT ADDRESS OF THE SUNDRY C REDITOR. THE APPELLANT COME WITH NEW PLEA BEFORE THE A.D. DURING REMAND PROCEEDING THAT THE G OODS HAVE BEEN RETURNED TO THE PARTY AS THEY WERE NOT UPTO THE MARKS. THE APPELLANT SUBMITT ED TRANSPORT BILL, BUT NO NEW ADDRESS OF THE PARTY 'AND CURRENT ADDRESS WAS SUBMITTED. THE R OAD TRANSPORT AND THE BILL OF THE AFORESAID PURCHASE SUBMITTED BY THE APPELLANT DOES NOT SHOW A NY CORRESPONDING TRANSPORTATION CHALLAN, TAX PAYMENT AND CONFIRMATION OF CREDITORS. THE APPE LLANT HAS ALSO NOT PROVIDED ANY CURRENT ADDRESS OF THE PARTY. TRANSPORTATION BILL OF THE AF ORESAID MATERIAL AND ORIGINAL PURCHASE BILL WERE ALSO NOT SUBMITTED. THE APPELLANT HAS NOT GIVE N QUANTITATIVE, SALE & PURCHASE ALONG WITH PRICE DURING THE RELEVANT YEAR. THE APPELLANT DURIN G THE ASSESSMENT PROCEEDINGS DID NOT SUBMIT ANY CURRENT ADDRESS OF THE APPELLANT NOR QUA LITY OF -GOODS WAS CHALLENGED. HOWEVER AT REMAND STAGE THE APPELLANT PRESENTED BILL OF HOWRAH AND HYDERABAD BEFORE THE AO CLAIMING IT AS RESEND TO THE SUPPLIERS. PERUSAL OF SUCH BILL S SHOW THAT THE BILL IS NOT HAVING ANY CORRESPONDING RECEIPT OF THE AFORESAID PARTIES. ONL Y APPELLANT'S CREDIT NOTE, DEBIT NOTE FOUND TO BE PRODUCED. THESE ARE NOT SELF-SUFFICIENT EVIDE NCES AS THESE ARE NOT IN CONFIRMATION OF ACTION OF THE SUPPLIERS. WHEN THEIR CURRENT WHEREAB OUTS IS NOT KNOW/ HOW THE GOODS HAVE BEEN SENT BACK TO THE SUPPLIERS. THERE IS NO RECEIP T PROOF OF THE AFORESAID GOODS. NEITHER APPELLANT HAS MADE CLAIM THAT THE GOODS WERE SOLD I N THE SUBSEQUENT YEAR AND THE AO HAS ACCEPTED THE SAME. KEEPING IN VIEW THE AFORESAID FA CT, THE ADDITION OF RS.14,66,247/- ON ACCOUNT OF SRI SAI SHYAM INDUSTRIES IS HEREBY DELE TED. ITA NO.1887/KOL/2018 A.Y. 201 3-14 AMAR KANT AGARWAL VS. ITO WD-43(1), K OL. PAGE 3 3. THE ASSESSEES ONLY CASE DURING THE COURSE OF HE ARING IS THAT HE HAD RETURNED THE GOODS IN ISSUE FOLLOWED BY THE CONSEQUENTIAL RE VERSAL OF THE AMOUNT WHICH HAD NEVER BEENWRITTEN OFF IN HIS BOOKS SO AS TO ATTRACT SEC. 41(1). THE REVENUE ON THE OTHER HAND STRONGLY SUPPORTS ASSESSEES DETAILED DISCUSSI ON NOT ACCEPTING THE SAME AS PER ASSESSING OFFICERS REMAND REPORT. I FIND NO REASON TO CONCUR WITH THE CIT(A)S ACTION UNDER CHALLENGE. THE ASSESSEES PAPER BOOK MAKES IT CLEAR THAT HE HAS PLACED PURCHASES BILLS IN CASE OF M/S R.K. TRADING CO., LE DGERS OF THE SAID ENTITY AS ON 31.03.2011 SHOWING CREDIT BALANCES AS ON 31.03.201 1, THE VERY FACTUAL POSITION CONTINUING UPTO IN ASSESSMENT YEARS 2012-13 TO 2013 -14, DEBIT NOTE OF 5,01,662/- (NO.46) RETURNED AFTER REJECTION OF THE MATERIAL CO VERED UNDER BILL NO.294 DATED 12.02.2011, WAY BILL SENT ALONG WITH RETURN MATERIA L DATED 17.02.2017 AS WELL AS LEDGER OF M/S R.K. TRADING CO. AS ON 31.03.2017 SH OWING NIL BALANCE; RESPECTIVELY ON RECORD. I THEREFORE CONCLUDE THAT THE IMPUGNED L IABILITY HAD NEVER SEIZED TO EXIST SO AS TO ATTRACT SEC. 41(1) OF THE ACT. I ACCORDINGLY DIRECT THE ASSESSING OFFICER TO DELETE THE IMPUGNED ADDITION OF 5 LAC. U/S 41(1) OF THE ACT. 4. THIS ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 15/05/2019 SD/- (S.S. GODARA) JUDICIAL M EMBER KOLKATA, *DKP/SR.PS - /05/2019 / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-AMAR KANT AGARWAL, PROP: RUCHIRA CHEMICA L CORPORATION, 9, RAM SEVAK M ULLICK LANE, KOLKATA-007 2. /RESPONDENT-ITO WARD-43(1), 3, GOVT. PLACE (WEST), KOLKATA-001 3. ' % / CONCERNED CIT 4. % - / CIT (A) 5. & ))' , ' / DR, ITAT, KOLKATA 6. + / GUARD FILE. BY ORDER/ , /TRUE COPY/ ',