Geeta prem Tilwani, Pune V. Deputy Commissioner of Income-tax,

ITA 2388/PUN/2016

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 0447 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 11 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-09-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 24-01-2019
• Assessment Year: 2007-2008
• Appeal Filed On: 10-10-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SHRI
• Assessee Lawyers: DINESH GULBANI
• Section: 143(3)

Judgement Text

] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO.2388/PUN/2016 / ASSESSMENT YEAR : 2007-08 GEETA PREM TILWANI, C/O. DINESH GULABANI, ACTIO LEGEM LAW FIRM, P.W.D. 5/2, ASHOK CINEMA ROAD, PIMPIRI, PUNE 411 017. PAN : AARPT6007H. . / APPELLANT. V/S THE DY.COMMISSIONER OF INCOME TAX , CIRCLE 9, AKURDI. . / RESPONDENT ASSESSEE BY : SHRI DINESH GULBANI. REVENUE BY : SHRI PANKAJ GARG. / ORDER PER ANIL CHATURVEDI, AM : 1. THIS APPEAL FILED BY THE ASSESSEE IS EMANATING OUT OF THE ORDER OF COMMISSIONER OF INCOME TAX (A) 9, PUNE DATED 31.12.2009 FO R THE ASSESSMENT YEAR 2007-08. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON R ECORD ARE AS UNDER :- ASSESSEE IS AN INDIVIDUAL AND STATED TO BE BUILDER AND ALSO DERIVING INCOME FROM RENT AND OTHER SOURCES. ASSESSEE FILED HER RETURN OF INCOME FOR A.Y. 2007-08 ON 31.10.2007 DECLARING TOTAL INCO ME AT RS.64,98,839/-. THE CASE WAS SELECTED FOR SCRUTINY AND TH EREAFTER / DATE OF HEARING : 25.07.2019 / DATE OF PRONOUNCEMENT: 12.09.2019 2 ASSESSMENT WAS FRAMED U/S 143(3) OF THE ACT VIDE ORDER D T.31.12.2009 AND THE TOTAL INCOME WAS DETERMINED AT RS.82,93,939/-. AG GRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE LD.C IT(A), WHO VIDE ORDER DATED 31.12.2009 (IN APPEAL NO.PN/CIT(A)-V/DCIT, CIR- 9/221/2009-10) GRANTED PARTIAL RELIEF TO THE ASSESSEE. A GGRIEVED BY THE ORDER OF LD.CIT(A), ASSESSEE IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUNDS : 1. ON THE FACTS & CIRCUMSTANCES PREVAILING IN THE CASE & AS PER PROVISIONS OF LAW, THE LEARNED ASSESSING OFFICER IS NOT JUSTIFIED IN MAKING ADDITIONS OF RS . 2,50,000/- ON ACCOUNT OF ALLEGED LOW WITHDRAWALS THOUGH THE BOOKS OF ACCOUNTS & DRAWINGS LEDGER WAS SHOWING TOTAL DRAWINGS AT RS. 11,27,603/- & RS . 19,90,765/ - IN POOJA ENTERPRISES & GEETA BUILDERS RESPECTIVELY WHICH IS NOT NOTICED BY THE ASSESSING OFFICER. THE ADDITIONS MADE BY THE LEARNED ASSESSING OFFICER & CONFIRMED BY LD. CIT(A) ARE UNWARRANTED, UNJUSTIFIED, ARBITRARY, IMP ROPER, AD HOCK AND CONTRARY TO PROVISIONS OF THE INCOME TAX ACT, 1961. 2. ON THE FACTS & CIRCUMSTANCES PREVAILING IN THE CASE & AS PER PROVISIONS OF LAW, THE LEARNED ASSESSING OFFICER IS NOT JUSTIF IED I N MAKING ADDITION OF RS.15 , 45,100/- U/S 41(1) ON ACCOUNT OF OUTSTANDING CREDIT ORS FOR MORE THAN TWO YEARS THOUGH IT IS MAINTAINED BY THE LEARN ED ASSESSING OFFICER IN ASSESSMENT ORDER U/S 14(3) THAT BALANCE CONFIRMA TIONS OF THE PARTIES HAVE BEEN SUBMITTED ON THE RECORDS AND OUT OF TOTAL OUTSTANDING CREDITORS AT RS. 51,50,334/- A PERCENTAGE OF 30% IS ADDED TO THE TOTAL INCOME OF THE ASSESSED U/S 41(1) OF THE INCOME TAX ACT , 1961 . THE ADDITIONS MADE BY THE LEARNED ASSESSING OFFICER & C ONFIRMED BY LD. CIT(A) ARE UNWARRANTED, UNJUSTIFIED, ARBITRARY, IMP ROPER, AD HOCK AND CONTRARY TO PROVISIONS OF THE INCOME TAX ACT . 3. 1 ST GROUND IS WITH RESPECT TO THE ADDITION ON ACCOUNT OF LOW WITHDRAWALS. 3.1. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ON THE BASIS OF THE DETAILS OF WITHDRAWALS FURNISHED BY THE ASSESSEE, AO NOTICED THAT THE CASH WITHDRAWALS WAS RS.90,000/- AND OTHER WITHDRAWALS WA S OF RS.1,66,683/-. THE ASSESSEE WAS ASKED TO FURNISH THE DET AILS OF OTHER WITHDRAWALS OF RS.1,66,683/-. AO HAS NOTED THAT ASSESSEE COULD NOT FURNISH THE DETAILS. AO NOTED THAT ASSESSEE WAS HAVING HIGH SOCIAL STATUS, STAYS IN A BUNGLOW, OWNS TWO CARS AND HER SON AND DAUGHTER 3 WERE STUDYING IN ENGINEERING AND MEDICAL COLLEGE, RESPECTIVEL Y. IN SUCH CIRCUMSTANCES, AO CONSIDERED THE CASH WITHDRAWAL OF RS.90,0 00/- AS TO BE TOO LOW. HE ALSO NOTED THAT NONE OF HER FAMILY MEMBER S ARE ADMITTEDLY ASSESSED TO TAX. CONSIDERING THE TOTALITY OF THE FACTS, HE CONCLUDED THAT THE WITHDRAWALS FOR PERSONAL EXPENSES WE RE LOW. HE ACCORDINGLY MADE ADDITION OF RS.2,50,000/- ON ACCOUNT OF LOW WITHDRAWALS. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARR IED THE MATTER BEFORE LD.CIT(A), WHO UPHELD THE ORDER OF AO. AGGRIEVED BY THE ORDER OF LD.CIT(A), ASSESSEE IS NOW BEFORE US. 4. BEFORE US, LD.A.R. REITERATED THE SUBMISSIONS MADE BEFOR E AO AND LD.CIT(A) AND SUBMITTED THAT ASSESSEE IS A PARTNER IN GEE TA BUILDERS AND POOJA ENTERPRISES AND FROM THESE TWO FIRMS, ASSESSEE HAS MADE DRAWINGS OF RS.19.90 LAKHS AND RS.11.27 LAKHS RESPECTIVELY. HE ALSO POINTED TO THE COPY OF THE LEDGER ACCOUNTS OF THE AFORES AID DRAWINGS WHICH ARE PLACED AT PAGE NOS.69 AND 70 OF THE PAPER BOO K. HE THEREFORE SUBMITTED THAT THE CONCLUSION OF THE AO THAT THERE WERE LOW DRAW INGS BY THE ASSESSEE IS INCORRECT. LD.A.R. ALSO POINTED TO THE DET AILS OF DRAWINGS IN A.YS.2005-06, 2006-07 AND 2007-08 WHICH ARE PLACED AT PAGE NO.80 OF THE PAPER BOOK. HE THEREFORE SUBMITTED THAT THE A DDITION MADE BY THE AO BE DELETED. LD. D.R. ON THE OTHER HAND, SUPPORTED THE ORDER OF AO AND LD.CIT(A) AND FURTHER POINTED TO THE DRAWINGS SHOW N IN THE LEDGER ACCOUNTS OF ASSESSEE FROM GEETA BUILDERS AND POOJA ENT ERPRISES WHICH ARE PLACED AT PAGE NOS.69 AND 70 OF THE PAPER BOO K. FROM THE AFORESAID LEDGER ACCOUNTS, HE POINTED TO THE WITHDRAWALS I N CASH AT RS.7,500/- ON 12 OCCASIONS AGGREGATING TO RS.19,000/-. LD. D.R. SUBMITTED THAT THE OTHER DRAWINGS WHICH LD.A.R. REFERRED TO ARE WITH RESPECT TO THE TAX PAYMENTS, PURCHASE OF ELECTRONIC ITE MS AND PAYMENT OF LIC WHICH CANNOT BE CONSIDERED TO BE CASH DRAWINGS T OWARDS OTHER 4 EXPENSES. IN SUCH A SITUATION, HE SUBMITTED THAT AO WAS FULLY JUSTIFIED IN MAKING THE ADDITION. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT GROUND IS WITH RESPECT TO ADDITION ON ACCOUNT OF LOW TAX WITHDRAWALS MADE BY THE ASSESSEE. B EFORE US, IT IS ASSESSEES CONTENTION THAT ASSESSEE HAS MADE DRAWINGS WHICH ARE IN LINE WITH THE DRAWINGS MADE IN EARLIER YEARS AND HER BOOK S OF ACCOUNTS ARE AUDITED. ON THE OTHER HAND, IT IS REVENUES CONTENT ION THAT CONSIDERING THE STATUS OF THE ASSESSEE, THE CASH WITHDRA WALS MADE BY THE ASSESSEE ARE TOO LOW AND IN SUCH A SITUATION, AO BAS ED ON THE BASIS OF ESTIMATION MADE ADDITION. AFTER CONSIDERING THE TOTALITY OF THE FACTS AND THE SUBMISSIONS OF BOTH THE PARTIES, WE ARE OF THE V IEW THAT IN THE PRESENT CASE, THE SUBMISSION OF LD.A.R. AND LD. D.R. CANNOT BE ACCEPTED IN TOTALITY. IN SUCH A SITUATION, WE ARE OF THE VIEW THAT T HE INTEREST OF JUSTICE SHALL BE MET IF ADDITION ON ACCOUNT OF LOW CASH WITHD RAWALS IS UPHELD TO THE EXTENT OF RS.1,25,000/-. WE THUS DIRECT ACC ORDINGLY. THUS, THE GROUND OF THE ASSESSEE IS PARTLY ALLOWED. 6. SECOND GROUND IS WITH RESPECT TO ADDITION U/S 41(1) OF THE ACT. 6.1. DURING THE COURSE OF ASSESSMENT PROCEEDINGS ASSESS EE WAS ASKED TO FURNISH THE DETAILS OF THE CREDITORS OUTSTANDING OVER TWO YEARS. ON THE BASIS OF THE DETAILS FURNISHED BY THE ASSESSEE IT WAS NOTICED THAT THAT THE TOTAL OUTSTANDING AMOUNT PAYABLE TO CREDITORS OVER FOR TWO YEARS WAS RS.51,50,334/-. THE ASSESSEE WAS ASKED THE REASONS FOR OUTSTANDING WHICH WAS NOT PAID BY THE ASSESSEE. ASSESS EE FURNISHED CONFIRMATIONS FROM CREDITORS AMOUNTING TO RS.32,42,790/- A ND IT WAS FURTHER SUBMITTED THAT ALL THE CREDITORS ARE GENUINE. AO NOTED THAT IN 5 CASE OF M/S. SHREEPAD ENTERPRISES, THE AMOUNT THAT WAS PAYABLE WAS RS.30,73,804/-. AO NOTED THAT THE AMOUNT WAS OUTSTANDIN G FOR MORE THAN THREE YEARS AND AS ON 31.12.2009 ALSO THE PAYMEN T WAS NOT DONE. THE SUBMISSION OF THE ASSESSEE OF INFERIOR GOODS BEEN SUP PLIED AND THEREFORE THE PAYMENTS BEING NOT BEEN DONE WAS NOT FULL Y ACCEPTED IN THE ABSENCE OF THE DETAILS ABOUT THE DATE OF PURCHASE AND THE QUANTUM OF PURCHASE MADE BY THE ASSESSEE. AO THEREFORE CONCLUD ED THAT IT IS A CASE OF CESSATION OF LIABILITY OF ATLEAST A PART OF THE OUTST ANDING PAYABLE BY ASSESSEE. HE THEREFORE MADE ADDITION OF 30% OF SUCH OUTSTANDING AMOUNTING TO RS.9,22,141/- U/S 41(1) OF THE ACT. WITH RES PECT TO THE BALANCE CREDITORS OF RS.20,76,530/-, AO NOTED THAT THE C REDITORS BEING OUTSTANDING FOR A PERIOD OF OVER FIVE YEARS, A QUESTION AR ISES ABOUT ITS GENUINENESS. HE WAS OF THE VIEW THAT THERE WAS A CESSA TION OF LIABILITY OF ATLEAST PART OF THE AMOUNT. HE ACCORDINGLY WORKED O UT AND MADE ADDITION OF 30% OF RS.20,76,530/- I.E., RS.6,22,959/- AND MADE A TOTAL ADDITION OF RS.15,45,100/- (RS.9,22,141/- + RS.6,22,959/-). AG GRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE LD.CIT(A), WHO UPHELD THE ORDER OF AO. AGGRIEVED BY THE ORDER OF LD.CIT(A), ASSESSEE IS NOW BEFORE US. 7. BEFORE US, LD.A.R. REITERATED THE SUBMISSIONS MADE BEFORE AO AND LD.CIT(A) AND FURTHER SUBMITTED THAT THE PROVISIONS OF SEC.4 1(1) OF THE ACT ARE NOT ATTRACTED IN THE PRESENT CASE. HE SUBMITT ED THAT THE LIABILITIES ARE STILL BEEN SHOWN AS PAYABLES IN HER BOOKS AND THE AMOUNTS WHICH HAVE BEEN ADDED BY AO HAVE NOT BEEN W RITTEN BACK BY THE ASSESSEE. HE SUBMITTED THAT ASSESSEE HAD ALSO FILED THE CONFIRMATIONS OF THE CREDITORS. WITH RESPECT TO THE CONFIRM ATION OF M/S. SHREEPAD ENTERPRISES, WHO HAS ALSO CONFIRMED AS OUTST ANDING WHICH 6 IS ALSO NOTED BY THE AO IN THE ORDER THAT THERE IS NO C ESSATION OF LIABILITY IN THE CASE OF ATLEAST A PART OF THE OUTSTANDING. HE THE REFORE SUBMITTED THAT NO ADDITION IS CALLED FOR IN THE PRESENT CASE. LD. D.R. ON THE OTHER HAND, SUPPORTED THE ORDER OF AO AND LD.CIT(A). 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE M ATERIAL ON RECORD. THE ISSUE IN THE PRESENT GROUND IS WITH RESPEC T TO ADDITION U/S 41(1) OF THE ACT. SEC.41(1) OF THE ACT CAN BE APPLIED PROV IDED THE FOLLOWING CONDITIONS ARE FULFILLED IN THE ASSESSMENT OF ANY ASSES SEE, ON ALLOWANCE OR DEDUCTION HAS BEEN MADE IN RESPECT OF ANY LOSS, EXPENDITURE OR TRADING LIABILITY INCURRED BY HIM. - ANY AMOUNT IS OBTAINED IN RESPECT OF SUCH LOSS OR EXPEND ITURE; OR ANY BENEFIT IS OBTAINED IN RESPECT OF SUCH TRADING LIABILITY BY WAY OF REMISSION OR CESSION THEREOF; - SUCH AMOUNT OR BENEFIT IS OBTAINED BY ASSESSEE. - SUCH AMOUNT OR BENEFIT IS OBTAINED IN A SUBSEQUENT YEAR. THUS, WHERE A DEBT DUE FROM THE ASSESSEE IS FOREGONE BY THE CREDITOR IN A LATER YEAR, IT CAN BE TAXED U/S 41(1) OF THE ACT IN SUC H LATER YEAR WHEN IT IS FOREGONE. SECTION 41(1) OF THE ACT THEREFORE CONTEMP LATES EXISTENCE OF A DEBT / LIABILITY AND THE REMISSION OR CESSATION THEREOF IN THE YEAR UNDER CONSIDERATION; FOR THE PURPOSE OF TAXING ANY INCOME ON ACCOUNT OF REMISSION OR CESSATION OF LIABILITY, THE AO HAS TO ESTABLISH TH AT THERE WAS AN EXISTING LIABILITY AND THAT THERE WAS REMISSION OR CESSAT ION OF SUCH LIABILITY IN THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT Y EAR IN WHICH SUCH INCOME IS SOUGHT TO BE TAXED. 7 9. IN THE PRESENT CASE, IT IS AN UNDISPUTED FACT THAT T HE CREDITORS ARE SHOWN BY THE ASSESSEE AS PAYABLE MEANING THEREBY THA T ASSESSEE ACKNOWLEDGES HER LIABILITY TO PAY THE CREDITORS AND IT IS N OT A CASE WHERE THE AMOUNT HAS BEEN WRITTEN BACK BY THE ASSESSEE IN THE BOOKS OF ACCOUNTS. WHEN THE LIABILITY IS STILL OUTSTANDING IN THE BALANC E-SHEET OF THE ASSESSEE, THEN THE LIABILITY COULD NOT BE SAID TO HAVE BEEN CEASED IN TERMS OF SEC.41(1) OF THE ACT. MERELY BECAUSE OF THE AM OUNT HAS NOT BEEN PAID AND HAS NOT BEEN WRITTEN BACK, NO ADDITION CA N BE MADE U/S 41(1) OF THE ACT. WE THEREFORE HOLD THAT AO WAS NOT JU STIFIED IN MAKING ADDITION U/S 41(1) OF THE ACT AND THEREFORE, WE DIRECT THE DELETION OF ADDITION MADE BY THE AO. THUS, THE GROUND OF THE ASSESSEE IS ALLOWED. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED ON 12 TH DAY OF SEPTEMBER, 2019. SD/- SD/- ( SUSHMA CHOWLA ) ( ANIL CHATURVEDI ) ! / JUDICIAL MEMBER '! / ACCOUNTANT MEMBER PUNE; DATED : 12 TH SEPTEMBER, 2019. YAMINI #$%&'('% / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. 4. 5 6. CIT(A)-9, PUNE. PR. CIT-5, PUNE. '#$ %%&',) &', / DR, ITAT, B PUNE; $*+,/ GUARD FILE. / BY ORDER // TRUE COPY / -./%0&1 / SR. PRIVATE SECRETARY ) &', / ITAT, PUNE.