Meena Circuits Pvt. Ltd, Vadodara V. The ITO, Ward-2(1)(3) Present Juridiction The DCIT, Circle-2(1)(1), Vadodara

ITA 193/AHD/2023

AI Insights

Meena Circuits Private Limited appealed against the order of the CIT(A), National Faceless Appeal Centre, which confirmed the addition of Rs. 44,34,262 under Section 41(1) of the Income Tax Act, 1961, by the Assessing Officer. The addition was based on the premise that the liabilities shown under 'Bills payable' had ceased, which the assessee contested, stating that these were subsisting liabilities and the creditors were non-residents without PAN, thus not required to provide such details. The Tribunal, after reviewing the submissions and evidence, concluded that the additions were unjustified as the liabilities were indeed subsisting and the necessary details had been provided.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 129303 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-05-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 23-05-2023
• Assessment Year: 2017-2018
• Appeal Filed On: 28-03-2023
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 234B

Judgement Text

ITA No.193/Ahd/2023 Assessment Year: 2017-18 Page 1 of 3 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “SMC” BENCH, AHMEDABAD BEFORE Ms. SUCHITRA KAMBLE, JUDICIAL MEMBER ITA No.193/Ahd/2023 Assessment Year: 2017-18 Meena Circuits Private Limited, vs. Income Tax Officer, Survey No.99/1, Ward 2(1)(3), Vadodara. Village – Vadadala, Present Jurisdiction Savli – 391 520 DCIT, Circle – 2(1)(1), [PAN – AABCM 3160 D] Vadodara. (Appellant) (Respondent) Assessee by : Shri Sanjay R. Shah, AR Revenue by : Shri Atul Pandey, Sr. DR Date of hearing : 24.05.2023 Date of pronouncement : 31.05.2023 O R D E R This appeal is filed by the Assessee against order dated 01.02.2023 passed by the CIT(A), National Faceless Appeal Centre (NFAC), Delhi for the Assessment Year 2017-18. 2. The Assessee has raised the following grounds of appeal :- “1 The Learned Commissioner of Income Tax (Appeals) has erred in law as well as on facts in confirming the order of the Learned Assessing Officer who made an addition of Rs.44,34,262/- by way of invoking provisions of section 41(1) of the Income Tax AC, 1961. It is submitted that provision of section 41(1) are not at all applicable to the facts of the case. 1.1 The appellant submits that, the liability to pay Rs.44,34,262/- is a subsisting liability during the year under consideration and there is no such case of cessation or remission and therefore, the amount cannot be added as a cessation of liability u/s.41(1) of the Act. The Learned Commissioner of Income Tax (Appeals) erred in law in confirming the addition of Rs.44,34,262/- u/s.41(1) of the Act. 1.2 The Learned Assessing Officer as well as the Learned Commissioner of Income Tax (Appeals) failed to appreciate that both the parties to whom total amount of Rs.44,34,262/- is payable are non-residents whose confirmations with addresses have been on record and since they are non-residents, they do not have PAN. The Learned Assessing Officer as well as the Learned Commissioner of Income Tad (Appeals), therefore, wrongly held that the appellant has not provided details of such creditors. It is submitted that the addition made u/s. 41(1) on the basis of such wrong finding be deleted. ITA No.193/Ahd/2023 Assessment Year: 2017-18 Page 2 of 3 2. Your appellant, therefore, prays to delete the addition of Rs.44,34,262/- confirmed by Learned Commissioner of Income Tax (Appeals) under Section 41(1) of the Act. 3. The Learned Assessing Officer as well as the Learned Commissioner of income Tax (Appeals) erred in charging interest under section 234B and interest u/s.234C for Rs.1,27,184/- and Rs.1,00,535/- respectively. It is submitted that in the facts and circumstances of the case, such interest is not at all chargeable. The same may please be directed to be deleted.” 3. The assessee is a company engaged in the business of manufacturing of printed circuit boards. The return of income for the Assessment Year 2017-18 was filed on 29.11.2017 showing total income at Rs. Nil. The case was selected for scrutiny and the Assessing Officer called for various details after issuing statutory notices. The assessee filed certain details from time to time. The Assessing Officer observed that under the heads Bills payable, it was shown by the assessee that the same is payable to Amitron Corporation for Rs. 9,53,593 from 1.4.2012, Rs. 1,61,171 from 31.03.2014, Rs. 2132 from 19.09.2014 and similarly in the case of Electro circuit manufacturing company, same is payable of Rs. 24,33,972 from 2.11.2009, Rs. 52,381 and Rs. 8,31,013 from 22.11.2009 totalling to Rs. 44,34,262/-. The assessee filed its reply. The Assessing Officer after taking cognizance of the reply made addition of Rs. 44,34,262 for cessation of liability u/s 41(1) of the Income Tax Act, 1961. 4. Being aggrieved by the assessment order, the assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee. 5. The Ld. AR submitted that the provisions of Section 41(1) of the Act is not applicable to the facts of the assessee’s case as the liability to pay Rs. 44,34,262 is a subsisting liability during the year under consideration and there is no such case of cessation or remission and therefore, the amount cannot be added as a cessation of liability u/s 41(1) of the Act. The Ld. AR further submitted that both the parties to whom total amount of Rs. 44,34,262 is payable are non-residents whose confirmation with addresses was submitted to the Assessing Officer and them being non-residents do not have PAN details. The Ld. AR submitted that the finding of the Assessing Officer and the CIT(A) that no details filed was totally wrong. The assessee has not written off those liabilities therefore cessation of liability will not be applicable in the present case and provisions of Section 41(1) will not be applicable. ITA No.193/Ahd/2023 Assessment Year: 2017-18 Page 3 of 3 6. The Ld. DR submitted that the assessee has never stated what the dispute between these two parties was and why the said amount cannot be recovered within the time. The Ld. DR relied upon the assessment order and the order of the CIT(A). 7. Heard both the parties and perused all the relevant material available on record. It is pertinent to note that the assessee has not claimed cessation of liability under Section 41(1) of the Act. In fact the assessee has paid the some dues in 2017 itself. When the assessee has not written off its dues, then Section 41(1) will not come in picture. Besides this the observations of the Assessing Officer and the CIT(A) that the assessee has not given details of Amitron Corporation and Electro circuit manufacturing company is not correct as per the records and therefore, the addition made by the Assessing Officer and confirmed by the CIT(A) was not justifiable. Hence, appeal of the assessee is allowed. 8. In result, appeal filed by the assessee is allowed. Order pronounced in the open Court on this 31 st day of May, 2023. Sd/- (SUCHITRA KAMBLE) Judicial Member Ahmedabad, the 31 st day of May, 2023 PBN/* Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY Assistant Registrar Income Tax Appellate Tribunal Ahmedabad benches, Ahmedabad