The ITO, Ward-1, Bharuch V. Shri Narendrasingh C.Saini, Bharuch

ITA 1985/AHD/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 63146 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-11-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 08-11-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 08-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T SANKAR SR D R MS URVAS
• Section: 143(3)

Judgement Text

, , , , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD , ! '#, $% $ & BEFORE SHRI MUKUL KR.SHRAWAT, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER ./ I.T.A. NO.1985/AHD/2010 ( ! ) ! ) ! ) ! ) / / / / ASSESSMENT YEAR : 2007-08) DY.CIT BHARUCH CIRCLE BHARUCH ! ! ! ! / VS. SHRI NARENDRASINGH C.SAINI PROP. OF M/S.AMRIT CRANGE & AMRIT CONST. 4, MANGALAM SHOPPING CENTRE DAHEJ BY-PASS ROAD BHARUCH * $% ./+, ./ PAN/GIR NO. : AHXPS 1400 J ( *- / // / APPELLANT ) .. ( ./*- / RESPONDENT ) *- 0 $ / APPELLANT BY : SHRI T.SANKAR, SR.D.R. ./*- 1 0 $ / RESPONDENT BY : MS. URVASHI SHODHAN, A.R. !2 1 % / / / / DATE OF HEARING : 08.11.2012 34) 1 % / DATE OF PRONOUNCEMENT : 23.11.12 $5 / O R D E R PER SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER : THIS IS AN APPEAL FILED BY THE REVENUE ARISING FRO M THE ORDER OF THE LD.CIT(A)-VI, BARODA DATED 10.03.2010 PASSED FOR A. Y. 2007-08 BY RAISING FOLLOWING GROUNDS:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LEARNED CIT(A) ERRED IN DELETING THE ADDITION O F RS.3,87,421/- ON ACCOUNT OF CESSATION OF LIABILITY U/S.41(1) OUT OF VARIOUS CREDITORS APPEARING IN THE BOOKS OF THE ASSESSEE. ITA NO.1985/AHD /2010 DY.CIT VS. SHRI NARENDRASINGH C.SAINI ASST.YEAR - 2007-08 - 2 - 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LEARNED CIT(A) ERRED IN DELETING THE DISALLOWAN CE OF RS.2,90,621/- ON ACCOUNT OF EXCE3SS CLAIM OF DIESEL EXPENSES. 2. APROPOS TO GROUND NO.1, FACTS IN BRIEF AS ALSO THE ISSUE EMERGED FROM THE CORRESPONDING ASSESSMENT ORDER PASSED U/S. 143(3) DATED 23.11.2009 WERE THAT THE ASSESSEE IS A SUPPLIER OF HYDRO -MOBILE CRANES AND JCB. OUT OF THE LIST OF THE CREDITORS AS PER THE BALANCE-SHEET OF THE ASSESSEE, IT WAS NOTED BY THE AO THAT THERE WERE SI X SUNDRY CREDITORS APPEARED IN THE ACCOUNTS. THE ASSESSEE HAS INFOR MED THAT IN RESPECT OF TRADING LIABILITY THE NAMES HAVE APPEARED AND CARRI ED OVER IN THE ACCOUNTS. AS PER AO, THE OUTSTANDING LIABILITY WA S APPEARING IN THE BOOKS AS AN OUTSTANDING LIABILITY FOR MORE THAN THR EE YEARS. IN HIS OPINION, THE LIABILITY CEASED TO EXIST BECAUSE THE SAME WAS BARRED BY LIMITATION. BY REFERRING BENNETT COLEMAN & CO. LT D. (113 CTR 391) AND INDIAN MOTORS TRANSPORT CO. (201 ITR 1021), THE AO HAD INVOKED THE PROVISIONS OF SECTION 41(1) OF IT ACT AND ADDED THE SAID AMOUNT IN THE TAXABLE INCOME. 3. BEFORE LD.CIT(A), THE ASSESSEE HAS REFERRED FOLL OWING DECISIONS:- (1) NEW COMMERCIAL MILLS CO.LTD. VS. DCIT, 73 TTJ 893. (2) CIT VS. BHARAT IRON & STEEL INDUSTRIES, 199 I TR 67. (3) CIT VS. SUGAULI SUGAR WORKS (P) LTD., 236 ITR 518 3.1. THE LD.CIT(A) HAS REVERSED THE ACTION OF THE AO IN THE FOLLOWING MANNER:- 3.3. I HAVE CONSIDERED THE SUBMISSION OF THE LD. A R AND FACTS OF THE CASE. IT IS TRUE THAT THE LIABILITIES EXISTED FOR MORE THAN THREE ITA NO.1985/AHD /2010 DY.CIT VS. SHRI NARENDRASINGH C.SAINI ASST.YEAR - 2007-08 - 3 - YEARS. THERE IS NO FINDING BY THE ASSESSING OFFICE R THAT IN THESE CASES THERE HAS BEEN EITHER REMISSION OF LIABILITY BY THE CONCERNED CREDITORS OR THERE WAS NOTHING ON RECORD TO SHOW TH AT THE CREDITORS HAD WAIVED THEIR RIGHT TO RECEIVE THE AMOUNTS. MER ELY BECAUSE THE LIABILITIES CONTINUED TO EXIST FOR A PERIOD WHICH A CCORDING TO THE ASSESSING OFFICER WAS UNJUSTIFIED, IT CANNOT BE ARB ITRARILY SAID THAT THERE WAS A CESSATION OF LIABILITY OR REMISSION OF LIABILITY AND AS SUCH THE ADDITION MADE BY THE ASSESSING OFFICER IN SUCH CIRCUMSTANCES CANNOT BE SUSTAINED. THUS THIS GROUN D OF APPEAL IS ALLOWED. 4. HAVING HEARD THE SUBMISSIONS OF BOTH THE SIDES, WE ARE OF THE CONSIDERED VIEW THAT IN THE ABSENCE OF ANY COGENT E VIDENCE TO BELIEVE THAT THE LIABILITIES IN QUESTION HAVE ACTUALLY CEAS ED TO EXIST, IT WAS UNJUSTIFIABLE ON THE PART OF THE AO TO ASSUME ON HI S OWN THAT THE SAME HAVE BECOME BARRED BY LIMITATION BEING APPEARING IN THE BOOKS OF ACCOUNTS FOR MORE THAN THREE YEARS. RATHER, IN THE CASE OF CIT VS. SILVER COTTON MILLS COMPANY 125 TAXMAN 741(GUJ.), THE HON BLE COURT HAS HELD THAT THE LIABILITIES IF APPEARING IN THE BOOKS OF ACCOUNTS SHOULD SUBSIST ALTHOUGH IT MIGHT NOT BE ENFORCEABLE ON ACC OUNT OF SOME PROVISIONS OF LAW OF LIMITATION UNLESS AND UNTIL IT WAS LEGALLY HELD SO. WE THEREFORE HOLD THAT UNPAID LIABILITY CANNOT BE ADDE D IN THE TOTAL INCOME OF THE ASSESSEE BY INVOKING SECTION 41(1) OF IT ACT ME RELY BECAUSE THE LIABILITY REMAINED UNPAID FOR FEW YEARS UNLESS AND UNTIL THERE IS AN EVIDENCE TO SHOW THAT EITHER BY OPERATION OF LAW OR THE CREDITOR HAD REMITTED THE DEBT. CONSIDERING THE FACTS OF THE C ASE, WE HEREBY APPROVE THE VIEW TAKEN BY THE LD.CIT(A) AND DISMISS THIS GR OUND OF THE REVENUE. 5. APROPOS TO GROUND NO.2, IT WAS NOTED BY THE AO T HAT DURING THE YEAR UNDER CONSIDERATION, THERE WAS AN INCREASE IN THE DIESEL EXPENSES ITA NO.1985/AHD /2010 DY.CIT VS. SHRI NARENDRASINGH C.SAINI ASST.YEAR - 2007-08 - 4 - COMPARING THE LAST YEAR. FOR THE YEAR UNDER CONSI DERATION, ASSESSEE HAS CLAIMED DIESEL EXPENSES AT RS.58,12,421/- AS AGAI NST RS.34,26,083/- OF THE PAST. IN THIS REGARD, ASSESSEE HAS FURNISHED C OMPARATIVE FIGURES AND INFORMED THAT THERE WAS PRICE HIKE, HENCE THERE WAS INCREASE IN THE DIESEL EXPENSES. HOWEVER, AO HAS DISALLOWED 5% O F THE DIESEL EXPENSES AND ADDED AN AMOUNT OF RS.2,90,621/- IN T HE TAXABLE INCOME OF THE ASSESSEE. LD. CIT(A) HAS CONSIDERED THE A SSESSEES CONTENTION AND THEREAFTER HELD AS UNDER:- 4.3. I HAVE CONSIDERED THE SUBMISSIONS OF THE LD. AR AND FACTS OF THE CASE. IT IS SENT HAT IN SOME CASES, IN TERMS O F THE CONDITIONS OF THE CONTRACT, DIESEL IS SUPPLIED BY CUSTOMER AND IN OTHER CASES, THE DIESEL EXPENSES ARE BORNE BY THE APPELLANT. IT IS ALSO MENTIONED THAT DIESEL EXPENSES ARE BORNE BY THE APPELLANT. I T IS ALSO MENTIONED THAT DIESEL PRICE HAS INCREASE BY 7.19% A S COMPARED TO THE PRECEDING YEAR. IN VIEW OF THESE PARAMETERS AN D ALSO IN VIEW OF THE FACT THAT THE CONTENTION OF THE APPELLANT WA S NOT COUNTERED BY THE ASSESSING OFFICER BY COGENT MATERIAL THE PLE A OF THE AR IS ACCEPTABLE. IT IS ALSO A FACT THAT NO SPECIFIC DEF ECTS WERE POINTED OUT BY THE ASSESSING OFFICER, WHERE THE AO HAS MAD E THE ADDITION ON AD HOC BASIS. IN THE GIVEN FACTUAL MATRIX, I AM OF THE OPINION THAT THERE IS NO JUSTIFICATION FOR AD HOC DISALLOWA NCE OUT OF DIESEL EXPENSES. THE ADDITION IS THEREFORE DIRECTED TO BE DELETED. 6. HAVING HEARD THE SUBMISSION OF BOTH THE SIDES AN D ALSO CONSIDERING THE FACTUAL ASPECT OF THE CASE IN THE LIGHT OF COMP ARATIVE CHART PLACED ON RECORD, WE HAVE NOTED THAT THE ADMITTED FACTUAL POS ITION WAS THAT THERE WAS INCREASE IN THE PRICE OF THE DIESEL BY 7.04% AN D THAT WAS STATED TO BE ONE OF THE REASONS FOR THE IMPUGNED INCREASE IN THE DIESEL EXPENDITURE. IT HAS ALSO BEEN EXPLAINED BY LD.AR THAT CONSIDERIN G THE BREAK-UP OF THE ITA NO.1985/AHD /2010 DY.CIT VS. SHRI NARENDRASINGH C.SAINI ASST.YEAR - 2007-08 - 5 - TRANSPORT RECEIPT IT WAS FOUND THAT THE DIESEL EX PENDITURE INCURRED BY THE ASSESSEE FOR RUNNING THE MACHINERY WAS HIGHER I N COMPARISON TO THE PAST YEARS SINCE THE CUSTOMERS HAVE CONTRIBUTED DI ESEL LESS THAN THE PAST YEAR. ALL THESE FACTS HAVE, THEREFORE, DULY EXPL AINED THE REASON FOR INCREASE IN DIESEL EXPENSES FOR THE YEAR UNDER CONS IDERATION, HENCE WE HEREBY UPHOLD THE VIEW TAKEN BY THE LD.CIT(A) AND D ISMISS THIS GROUND OF THE REVENUE. 7. IN THE RESULT, REVENUES APPEAL IS DISMISSED . SD/- SD/- ( ! '# ) ( ) $% ( ANIL CHATURVEDI ) ( MUKU L KR. SHRAWAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 23 / 11 /2012 6..!, .!../ T.C. NAIR, SR. PS $5 1 .7 8$7) $5 1 .7 8$7) $5 1 .7 8$7) $5 1 .7 8$7)/ COPY OF THE ORDER FORWARDED TO : 1. *- / THE APPELLANT 2. ./*- / THE RESPONDENT. 3. 9 / CONCERNED CIT 4. 9() / THE CIT(A)-VI, BARODA 5. 7<= .! , , / DR, ITAT, AHMEDABAD 6. = >2 / GUARD FILE. $5! $5! $5! $5! / BY ORDER, /7 . //TRUE COPY// ? ?? ?/ // / + + + + ( DY./ASSTT.REGISTRAR) , , , , / ITAT, AHMEDABAD