ACIT 25(3), MUMBAI V. M/S. NATIONAL LEATHER CLOTH MFG. CO., MUMBAI

ITA 2005/MUM/2011

• Counselvise Citation: 200519914 RSA 2011
• Duration Of Justice: 3 year(s) 8 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-11-2014
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: H
• Next Hearing Date: 16-09-2014
• Assessment Year: 2005-2006
• Appeal Filed On: 11-03-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: JEETENDRA KUMAR
• Assessee Lawyers: NIRAJ SHETH

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNALH BENCH, MUMB AI , , BEFORE SHRI JOGINDER SINGH, JM AND SHRI D. KARUNAKARA RAO, AM ITA NOS.2005/MUM/2011 ASSESSMENT YEARS-2005-06 THE ACIT - 25(3), C-11, R. NO.308, PRATYAKSHKAR BHAVAN, BANDRA KURAL COMPLEX, BANDAR(EAST), MUMBAI-400051 / VS . M/S NATIONAL LEATHER CLOTH MFG. COMPANY PLOT B, BEHIND NATIONAL AVENUE, AKURLI ROAD, KANDIVALI(E), MUMBAI-400101 ! ./ PAN :AAAFM2938F ( '#!$ / APPELLANT ) .. ( %&!$ / RESPONDENT ) '#!$' ( / ASSESSEE BY: SHRI JEETENDRA KUMAR - DR %&!$ ' ( / RESPONDENT BY : SHRI NIRAJ SHETH ) *+ ' , - / DATE OF HEARING 17/11/2014 ./ ' , - / DATE OF PRONOUNCEMENT : 17/11/2014 1 / O R D E R PER JOGINDER SINGH, JM: THE REVENUE IS AGGRIEVED BY THE IMPUGNED ORDER DATE D 04/01/2011 OF THE LD. FIRST APPELLATE AUTHORITY, MU MBAI, ON THE GROUND THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN DIRECTING THE ASSESSING OFFICER TO DELETE THE ADDITION 2 M/S. NATIONAL LEATHER CLOTH MFG.CO. REGARDING CEASED LIABILITY OF THE ASSESSEE AMOUNTIN G TO RS.90,83,431/- WITHOUT APPRECIATING THE FACT THAT N O TRANSACTIONS HAVE BEEN MADE BY THE ASSESSEE WITH IT S CREDITORS AND FURTHER THE ASSESSEE DID NOT FURNISH ANY CONFIRMATION FROM THEM AND THAT TOO WITHOUT CONDUCT ING PROPER VERIFICATION OF THE CREDITOR HIMSELF OR REMA NDING THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER. 2. AT THE TIME OF HEARING, THE LD. DR, SHRI JEETEND RA KUMAR, ADVANCED HIS ARGUMENTS, WHICH ARE IDENTICAL TO THE GROUND RAISED BY SUPPORTING THE ASSESSMENT ORDER. ON THE OTHER HAND, SHRI NIRAJ SHETH, LD. COUNSEL FOR THE A SSESSEE, THOUGH, DEFENDED THE CONCLUSION DRAWN BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS), ALSO FILED LI ST OF CERTAIN CREDITORS OUTSTANDING AS ON 31/03/2007 AND THEIR POSITION AS ON 31/03/2014, WHICH IS A NEW EVIDENCE. 2.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND P ERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS IN BRI EF ARE THAT THE ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN THE B USINESS OF MANUFACTURE OF ARTIFICIAL LEATHER CLOTH. DURING AS SESSMENT PROCEEDINGS, IT WAS NOTICED BY THE ASSESSING OFFICE R THAT AN AMOUNT OF RS.90,83,431/- WAS OUTSTANDING, AGAINST V ARIOUS SUNDRY CREDITORS, FOR THE LAST THREE YEARS. BEFORE THE LD. ASSESSING OFFICER, IT WAS CLAIMED BY THE ASSESSEE T HAT THE SAME ARE STILL PAYABLE AND FURTHER SAME COULD NOT B E PAID AS THE ASSESSEE INCURRED LOSSES. THIS CONTENTION OF TH E ASSESSEE 3 M/S. NATIONAL LEATHER CLOTH MFG.CO. WAS NOT ACCEPTED BY THE ASSESSING OFFICER AND HE MA DE ADDITION U/S 41(1) OF THE INCOME-TAX ACT, 1961. B EFORE THE LD. COMMISSIONER OF INCOME TAX (APPEALS), IT WAS HE LD THAT THE ASSESSING OFFICER HAS TO PROVE THE FACTUM OF CE SSATION OR REMISSION AND THUS THE AMOUNT CANNOT BE TAXED U/S 4 1(1) MERE BECAUSE THE SAME ARE OUTSTANDING MORE THAN THR EE YEARS. IT HAS BEEN OBSERVED BY THE LD. COMMISSIONE R OF INCOME TAX (APPEALS) THAT THE ASSESSING OFFICER DID NOT CONDUCT ANY VERIFICATION REGARDING THE GENUINENESS OF THE CREDITS AND ALSO WHETHER THE LIABILITIES CEASED DUR ING THE YEAR. HOWEVER, WE NOTE THAT THE LD. COMMISSIONER O F INCOME TAX (APPEALS) ALSO NEITHER MADE SUCH VERIFICATION H IMSELF NOR CALLED REMAND REPORT FROM THE ASSESSING OFFICER. BE FORE US, THE ASSESSEE HAS FILED A NEW EVIDENCE IN THE FORM LIST OF CREDITORS OUTSTANDING AS ON 31/03/2007 AND THEIR PO SITION AS ON 31/03/2014, THEREFORE, WE ARE OF THE VIEW THA T THIS CLAIM OF THE ASSESSEE NEEDS VERIFICATION/EXAMINATIO N BY THE ASSESSING OFFICER, CONSEQUENTLY, WE SET-ASIDE THE O RDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) AND REMAND THIS FILE TO THE FILE OF ASSESSING OFFICER FOR FRESH ADJ UDICATION IN ACCORDANCE WITH LAW FOR WHICH DUE OPPORTUNITY OF BE ING HEARD BE PROVIDED TO THE ASSESSEE. THE ASSESSEE IS ALSO AT LIBERTY TO FURNISH EVIDENCE, IF ANY, AND MORE SPECI FICALLY THE AFOREMENTIONED LIST OF CREDITORS AND THEIR POSITION AS ON 31/03/2014. THE ASSESSING OFFICER IS DIRECTED TO E XAMINE THE FACTUAL POSITION AND THEN DECIDE AS PER THE PRO VISIONS OF 4 M/S. NATIONAL LEATHER CLOTH MFG.CO. THE LAW. THE APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES ONLY. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT, IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF HEARING ON 17/11/2014. SD/- SD/- D.KARUNAKARA RAO JOGINDER SINGH ACCOUNTANT MEMBER J UDICIAL MEMBER ) 2+ MUMBAI; 3 * DATED.- 17/11/2014 F{X~{T? P.S/. * . . !' #'$ / COPY OF THE ORDER FORWARDED TO : 1. '#!$ / THE APPELLANT 2. %&!$ / THE RESPONDENT. 3. ) 4, ( '# ) / THE CIT(A)- CONCERNED, MUMBAI 4. ) 4, / CIT CONCERNED, MUMBAI 5. 56 %,*7 , '#- '7 , ) 2+ / DR, ITAT, MUMBAI E BENCH 6. 8 9+ / GUARD FILE. % / BY ORDER, &5#, %, //TRUE COPY// & / %' ( (DY./ASSTT. REGISTRAR) , ) 2+ / ITAT, MUMBAI.