PREMIER INTERMEDIATES P.LTD, MUMBAI V. ITO 9(2)4, MUMBAI

ITA 2402/MUM/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 100668 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 4 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-08-2015
• Appeal Filed By: Assessee
• Bench Allotted: C
• Next Hearing Date: 01-01-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 28-03-2013
• Court: TRIBUNAL
• Department Lawyers: LATA SUNDER
• Assessee Lawyers: KIRIT S SANGHVI
• Section: 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA, JUDICIAL MEMBER I.T.A. NO. 2402/M/2013 (AY: 2009 - 2010 ) M/S. PREMIER INTERMEDIATES PVT LTD, 11/124 RAM KRISHNA NAGAR, S.V. ROAD, KHAR (W), MUMBAI - 52. / VS. ITO - 9(2)(4), MUMBAI. ./ PAN : AAACP4731C ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : SHRI KIRIT S. SANGHVI / RESPONDENT BY : MS. LATA SUNDER, DR / DATE OF HEARING : 27.07.2015 / DATE OF PRONOUNCEMENT : 05 .08.2015 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE ASSESSEE ON 28.3.2013 IS AGAINST THE ORDER OF THE CIT (A) - 20, MUMBAI DATED 25.2.2013 FOR THE ASSESSMENT YEAR 2009 - 10. IN THIS APPEAL, ASSESSEE RAISED THE FOLLOWING SOLITARY GROUND WHICH READS AS UNDER: THE LD CIT (A) ERRED ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW IN CONFIRMING THE ADDITION OF RS. 48,04,043/ - APPLYING SECTION 41(1) OF THE ACT. 2. AT THE OUTSET, LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ISSUE RAISED IN THE APPEAL RELATES TO THE ADDITION OF RS. 48,04,043/ - U/S 41(1) OF THE ACT. BRINGING OUR ATTENTION TO THE CONTENTS OF PARA 5 OF THE ASSESSMENT ORDER, LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE SAID AMOUNTS ARE OUTSTANDING PAYABLE TO A COUPLE OF PARTIES, NAMELY; M/S. PREMIER DYECHEM INDUSTRIES PVT LTD (RS. 8,32,243/ - ) AND M/S. TRANSWORLD TRADERS (RS. 29,71, 243/ - ). CONSIDERING THE FAILURE OF THE ASSESSEE IN FURNISHING THE PURPOSE / NATURE / EXISTENCE OF LIABILITY, THE AO HELD THAT THE LIABILITY CEASED TO EXIST AS PER SECTION 41(1) OF THE ACT. IN FACT, ASSESSEE FURNISHED THE LEDGER EXTRACT EVIDENCING THE EXI STENCE OF LIABILITIES. MATTER TRAVELLED TO THE FIRST APPELLATE AUTHORITY. 3. DURING THE PROCEEDINGS BEFORE THE FIRST APPELLATE AUTHORITY, ASSESSEE DEMONSTRATED THAT THE SAID LIABILITIES EXIST IN THE BOOKS OF ACCOUNT OF THE ASSESSEE 2 AND OPPOSED THE ADDITIO N MADE BY THE AO. CIT (A) REFERRED TO THE FACTS OF THE ISSUE AS EVIDENT FROM THE CONTENTS OF PARA 5 OF HIS ORDER, AND MENTIONED THAT THE LIABILITY INVOLVING TRANSWORLD TRADERS IS WRITTEN BACK FOR AY 2011 - 12 AND THE LIABILITY INVOLVING M/S. PREMIER DYECHEM INDUSTRIES P LTD IS PAID PARTLY IN SUBSEQUENT YEARS. HOWEVER, THE CIT (A) CONFIRMING THE AOS ADDITION BY STATING THAT THE PARTIES FAILED TO COMPLY WITH THE NOTICE U/S 133(6) OF THE ACT DURING THE REMAND PROCEEDINGS. 4. DURING THE PROCEEDINGS BEFORE US, LD COUNSEL FOR THE ASSESSEE FILED FEW DOCUMENTS TO SUPPORT THE ARGUMENTS THAT THE LIABILITIES ARE EITHER WRITTEN BACK OR RECEIVED PARTLY IN LATER ASSESSMENT YEARS. ON PERUSAL OF THE SAME, WE FIND THAT THE INVOKING OF SECTION 41(1) OF THE ACT IS NOT LEGALL Y SUSTAINABLE ON THE LIABILITIES STILL EXIST IN BOOK OF THE ASSESSEE. THEY ARE NOT WRITTEN OFF AND THE SAID WRITTEN OFF IS A MANDATORY CONDITION FOR INVOLVING THE SAID PROVISIONS OF SECTION 41(1) OF THE ACT. AS SUCH, THE AO HAS NOT CONTROVERTED THE ASSES SEES CLAIM THAT THEY ARE IN THE NATURE OF TRADE CREDITORS. FURTHER, WE FIND THAT THE LIABILITIES ARE EITHER WRITTEN BACK AS INCOME OF THE ASSESSEE IN LATER ASSESSMENT YEAR OR ACTUALLY RECEIVED AND CREDITED TO THE P & L ACCOUNT OF THE ASSESSEE. ON THESE FACTS, IN OUR OPINION, THE ADDITION OF RS. 48,04,043/ - IS UNSUSTAINABLE LEGALLY. HOW CAN AO MAKE ADDITION OF THE AMOUNTS, WHICH ARE ALREADY TAXED IN THE LATER ASSESSMENT YEARS AND THE LIABILITIES EXISTS IN THE BOOKS OF THE ASSESSEE. 5. AFTER HEARING BOTH THE PARTIES, WE FIND THE PROVISIONS ARE WRONGLY APPLIED BY THE AO. HOWEVER, CONSIDERING THE PAPERS FILED BEFORE US, THE ISSUE SHOULD BE REMANDED TO THE FILE OF THE AO FOR FRESH ADJUDICATION, AFTER HEARING THE ASSESSEE. AO IS DIRECTED TO ADMIT THE PAPERS, IF ANY, FILED BEFORE US IN THE INTEREST OF ADMINISTRATION OF JUSTICE. IN REMANDING PROCEEDINGS, AO SHALL NOT APPLY SECTION 41(1) OF THE ACT UNLESS THE CONDITIONS ARE SATISFIED S . ACCORDINGLY, THE GROUNDS RAISED IN THE APPEAL ARE ALLOWED FOR STATISTICAL P URPOSES. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUN CED IN THE OPEN COURT ON 05 TH AUGUST, 2015. SD/ - SD/ - (AMIT SHUKLA) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; 5 .8 .2015 3 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI