ITO, New Delhi V. M/s. Opera House Exports Ltd., New Delhi

ITA 2453/DEL/2015

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 3004 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 10 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2010-2011
• Appeal Filed On: 27-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SSH ASHISH GOEL; NISHCHAY KANTO
• Keywords: Unexplained cash credit; Business income; Corroborative evidences; TDS
• Section: 143(3); 68

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL, DELHI BENCH F, NEW DELHI BEFORE : SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI L.P. SAHU, ACCOUNTANT MEMBER ITA NO. 2453/DEL/2015 ASSESSMENT YEAR: 2010-11 INCOME - TAX OFFICER, WARD 19(2), NEW DELHI. (APPELLANT) VS. OPERA HOUSE EXPORTS LTD., 1408/A-2, GOVIND PURI, KALKAJI, NEW DELHI. (PAN- AAACO0020F (RESPONDENT) APPELLANT BY SH. J.K. MISHRA, CIT/DR RESPONDENT BY SH. VED JAIN, ADVOCATE & S/SH. ASHISH GOEL, & NISHCHAY KANTOOR, CA ORDER PER L.P. SAHU, A.M.: THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE CITI(A) DATED 24.02.2015 FOR THE ASSESSMENT YEAR 2010-11 ON THE FOLLOWING GROUNDS : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.3,44,26,263 MA DE BY A.O. ON ACCOUNT OF UNEXPLAINED CASH CREDIT U/S. 68 OF THE IT ACT, 1961. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.4,18,46,093/- MADE BY A.O. ON ACCOUNT OF CASH CREDIT U/S. 68 OF THE IT ACT, 1961. DATE OF HEARING 19.02.2019 DATE OF PRONOUNCEMENT 27.02.2019 ITA NO. 2453/DEL/2015 2 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE OF RS.4,84,53,92 3/- ON ACCOUNT OF SUNDRY CREDITORS U/S. 41(1) OF THE INCOME TAX ACT, 1961. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E COMPANY FILED ITS RETURN OF INCOME DECLARING A LOSS OF RS.16,02,414/-. DURING T HE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER ASKED THE ASSESSE E TO FURNISH THE DETAILS OF SUNDRY CREDITORS FOR YEAR UNDER CONSIDERATION AS WE LL AS THE PRECEDING TWO YEARS, WHICH THE ASSESSEE FILED BEFORE THE ASSESSIN G OFFICER. ON EXAMINATION OF THE LIST, THE ASSESSING OFFICER NOTICED THAT THERE WAS A CREDIT BALANCE OF RS.7,62,72,356/- AS ON 31.03.2010 IN THE NAME OF OP ERA GLOBAL P. LTD., A SISTER CONCERN OF THE ASSESSEE COMPANY AND BEING ASSESSED WITH THE SAME ASSESSING OFFICER. THE AO FURTHER NOTICED THAT THIS AMOUNT IS NOT BEING SHOWN AS OUTSTANDING IN THE BALANCE SHEET OF OPERA GLOBAL P. LTD. THE ASSESSING OFFICER, THEREFORE, ASKED THE ASSESSEE TO EXPLAIN THIS INCON SISTENCY. THE ASSESSEE SUBMITTED A REPLY EXPLAINING THAT THIS CREDIT IS AP PEARING ON ACCOUNT OF THE REPAYMENT OF SECURED LOAN TAKEN BY IT FROM SBI AND SIDBI TO WHOM PAYMENTS HAVE BEEN MADE BY OPERA GLOBAL P. LTD. ON BEHALF OF THE ASSESSEE COMPANY. BEING NOT SATISFIED WITH THE REPLY OF ASSESSEE, THE ASSESSING OFFICER MADE ADDITION OF RS.3,44,26,263/- BEING THE CREDIT DURIN G THE YEAR. THE AO FURTHER MADE AN ADDITION OF RS.4,18,46,093/- BEING THE DIFF ERENCE IN THE BALANCE OUTSTANDING AS ON 31.03.2010 (RS.7,62,72,356/- MINU S RS.3,44,26,263/-) UNDER SECTION 68 OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). THE ASSESSING OFFICER FURTHER MADE AN ADDITION OF RS.4, 84,53,923/- ON ACCOUNT OF THE SUNDRY CREDITORS OUTSTANDING IN THE BOOKS OF THE AS SESSEE AS ON 31.03.2010 ON THE GROUND THAT THESE ARE LOANS OUTSTANDING CREDITO RS BY INVOKING THE PROVISION ITA NO. 2453/DEL/2015 3 OF SECTION 41(1) OF THE ACT. AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER, THE ASSESSEE APPEALED BEFORE THE CIT(A), WHO AFTER CONS IDERING THE FACTS OF THE CASE, SUBMISSIONS OF BOTH THE PARTIES AND THE ASSESSMENT ORDER, DELETED ALL THE THREE ADDITIONS MADE BY THE ASSESSING OFFICER VIDE IMPUGN ED ORDER DATED 24.02.2015. AGGRIEVED BY THE ORDER OF THE CIT(A), THE REVENUE I S IN APPEAL BEFORE THE TRIBUNAL. 3. IT WAS SUBMITTED BY THE LD. DR THAT THIS ADDITIO N HAS BEEN DELETED BY THE CIT(A) IGNORING THE FINDINGS REACHED BY THE ASSESSI NG OFFICER. THE LD. DR HAS ALSO FILED A WRITTEN SYNOPSIS WHICH READS AS UNDER: - IN THIS CASE, THE AO MADE AN ADDITION OF RS.3,44,2 6,263/- ON ACCOUNT OF UNEXPLAINED CREDITOR M/S OPERA GLOBAL P. LTD. AS N OTED IN PARA 4 ON PAGE 2 OF THE ASSESSMENT ORDER, THE ASSESSEE HAS SHOWN M/S OPERA GLOBAL P. LTD. AS SUNDRY CREDITORS FOR AN AMOUNT OF RS.7,62,72,356/- AS ON 31.03.2010 AS AGAINST RS.4,18,46,093/- AS ON 31.03.2009 AND THERE WAS AN INCREASE OF RS.3,44,26,263/- DURING THE RELEVANT ASSESSMENT YEA R. ON PERUSAL OF THE ABOVE BALANCE SHEET OF M/S OPERA GLOBAL P. LTD. AS ON 31.10.2010, IT WAS NOTED BY THE AO THAT THE ASSESSEE M/S OPERA HOUSE E XPORTS LTD. IS NOT APPEARING AS DEBTOR IN THE BOOKS OF M/S OPERA GLOBA L P. LTD. THE ASSESSEE COULD NOT SATISFACTORILY EXPLAIN THE ABOVE CREDIT O F RS.3,44,26,263/- AND THE SAID AMOUNT WAS ADDED TO TOTAL INCOME OF THE ASSESS EE UNDER SECTION 68 OF THE ACT. 2. IN PARA 5.6 OF HER ORDER, THE LD. CIT(A) OVERLOOK ED THE ABOVE FACT AND FINDING OF THE AO. IN CASE M/S OPERA GLOBAL P. LTD. HAS REPAID LOANS TO SBI AND SIDBI ON BEHALF OF THE ASSESSEE, THE SAID AMOUN T SHOULD APPEAR IN THE LEDGER ACCOUNT OF THE ASSESSEE IN THE BOOKS OF THE AFORESAID COMPANY AS SUNDRY DEBTOR. THE ASSESSEE HAS NOT BEEN ABLE TO EXP LAIN THE ABOVE FINDING OF THE AO AS REGARDS UNEXPLAINED CREDIT OF RS.3,44,26, 263/-. 3. THE AO MADE AN ADDITION OF RS.4,84,53,923/- ON AC COUNT OF SUNDRY TRADE CREDITORS, BEING STATIC FOR A LONG PERIOD OF TIME. THIS AMOUNT HAS NOT BEEN ITA NO. 2453/DEL/2015 4 CLAIMED BY THE CREDITORS FOR A LONG PERIOD OF TIME AND THIS AMOUNT HAS BECOME INCOME OF THE ASSESSEE IN TERMS OF SECTION 2 8(IV) READ WITH SECTION 2(24) OF THE ACT. ALTHOUGH THE LIABILITIES ARE PERT AINING TO EARLIER YEARS THE SAME ARE BEING SHOWN AS OUTSTANDING IN THE BOOKS OF THE CURRENT YEAR. NECESSARY CONFIRMATIONS FROM RESPECTIVE CREDITORS A RE REQUIRED TO BE FURNISH TO ESTABLISH THE GENUINENESS OF THE CREDIT BALANCES . IT IS ALWAYS BENEFICIAL TO THE ASSESSEE NOT TO RIGHT BACK THE CREDIT BALANCES IN THE PROFIT LOSS ACCOUNT TO AVOID TAX INCIDENCE ON SUCH CREDIT AMOUNT. THE ASSES SEE CAN KEEP THE CREDIT BALANCES IN THE BOOKS AND ENJOY THE SAME AS OWNER W ITHOUT ANY LIABILITY. HENCE, IT IS TO BE SEEN WHETHER THE LIABILITY SHOWN IN THE BOOKS FOR DECADES BECOME INCOME OF THE ASSESSEE. BECAUSE OF NON EXIST ING LIABILITIES, THE AMOUNT OF ASSETS AS PER BALANCE SHEET IS IN EXCESS OF OVER LIABILITIES AND THEREBY THE DIFFERENCE IS TO BE TAXED AS INCOME FOR THE YEAR. IN THIS REGARD, RELIANCE IS MADE ON THE FOLLOWING JUDGMENTS:- 1. CIT VS. TV SUNDARAMIYENGER& SONS LTD. 222 ITR 344 ( SC) [1996] IN THE ABOVE CASE, THE HONBLE SUPREME COURT RELIED ON THE DECISION OF THE JAYS- THE JEWELLERS LTD. LTD. V. COMMISSIONER OF I NLAND REVENUE 29 TC 274 IN WHICH THE COMMONSENSE PRINCIPLE WAS LAID DOWN BY ATKINSON J. IN THE INSTANT CASE ALSO, THE CREDITS HAD ARISEN OUT OF OR DINARY TRADING TRANSACTIONS AND THE SAME ACCUMULATED OVER THE YEARS WHICH REMAI NED UNCLAIMED. THE AMOUNTS REMAINED WITH THE ASSESSEE FOR A LONG PERIO D UNCLAIMED BY THE TRADE PARTIES. BY LAPSE OF TIME THE AMOUNT BECAME T HE ASSETS OF THE ASSESSEE AND COMMONSENSE DEMANDED THAT THE AMOUNT SHOULD B E ENTERED IN THE PROFIT AND LOSS ACCOUNT AND BE TREATED AS TAXABLE I NCOME. THE HONBLE SUPREME COURT HELD THAT:- IN OTHER WORDS, THE PRINCIPLE APPEARS TO BE THAT I F AN AMOUNT IS RECEIVED IN COURSE OF TRADING TRANSACTION, EVEN THOUGH IT IS NO T TAXABLE IN THE YEAR OF RECEIPT AS BEING OF REVENUE CHARACTER, THE AMOUNT C HANGES ITS CHARACTER WHEN THE AMOUNT BECOMES THE ASSESSEES OWN MONEY B ECAUSE OF LIMITATIONS OR BY ANY OTHER STATUTORY OR CONTRACTUAL LIGHT. WHE N SUCH A THING HAPPENS, COMMONSENSE DEMANDS THAT THE AMOUNT SHOULD BE TREAT ED AS INCOME OF THE ASSESSEE. APPLYING THE PRINCIPLE OF COMMONSENSE, THE AO HAS R IGHTLY TAXED THE ACCUMULATED UNCLAIMED LIABILITY AS INCOME OF THE AS SESSEE FOR THE RELEVANT ASSESSMENT YEAR. IN THIS REGARD, PROVISIONS OF SECT ION 28(IV) READ WITH SECTION 2(24) OF THE ACT ARE APPLICABLE. ITA NO. 2453/DEL/2015 5 2. CIT VS. KARAM CHAND THAPAR 222 ITR 112 (SC)[1996] 3.ROLLATAINERS LTD. VS. CIT 339 ITR 54 (DELHI) (MAG.) [2011] 4. CIT VS. RAMANIYAM HOMES (P.) LTD. 384 ITR 530 (MAD RAS) [2016] 5. SOLID CONTAINERS LTD. VS. DCIT 308 ITR 417 (BOMBAY ) [2009] 6.CIT VS. ARIES ADVERTISING PVT. LTD. 255 ITR 510 (M AD.) 4. THE LEARNED AR OF THE ASSESSEE, ON THE OTHER HAN D, SUBMITTED THAT THE ASSESSING OFFICER HAS MADE THE ADDITIONS WITHOUT AP PRECIATING THE FACTS OF THE CASE IN RIGHT PERSPECTIVE. THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS HAS SUBMITTED COMPLETE DETAILS AS REQUIRED BY THE ASSES SING OFFICER. THE ASSESSEE IS A PRIVATE LIMITED COMPANY AND ENGAGED IN THE BUSINE SS OF JOB WORK OF GARMENT EXPORTER. DURING THE YEAR UNDER CONSIDERATION, M/S OPERA GLOBAL PVT. LTD, ASSESSEES SISTER CONCERN, HAD MADE VARIOUS PAYMENT S IN THE NATURE OF LOAN REPAYMENTS, ESIC PAYMENTS, ETC., ON ITS BEHALF. DUR ING THE COURSE OF ASSESSMENT PROCEEDINGS, LD. ASSESSING OFFICER REQUIRED THE ASS ESSEE TO FURNISH JUSTIFICATION FOR INCREASE IN THE CREDIT BALANCE OF M/S OPERA GLO BAL PVT. LTD BY RS. 3,44,26,263 DURING THE YEAR UNDER CONSIDERATION. THE ASSESSEE EXPLAINED VIDE LETTER DATED 08.03.2013 (PB PAGE NO 29-31) THAT M/S OPERA GLOBAL PVT. LTD HAD MADE VARIOUS PAYMENTS ON ITS BEHALF WHICH LED TO THE INCREASE IN THE CREDIT BALANCE. FURTHER, VIDE LETTER DATED 25.03.2013 (PB PAGE NO 62), ASSES SEE FILED DOCUMENTS IN THE FORM OF LEDGER ACCOUNTS OF SBI AND SIDBI LOAN ACCOU NT, DETAILS OF PAYMENT RECEIVED FROM M/S OPERA GLOBAL PVT. LTD AND BANK ST ATEMENT OF M/S OPERA GLOBAL PVT. LTD (PB PAGE NO 63-101). PERUSAL OF THE SE DOCUMENTS WOULD CLEARLY REVEAL THAT M/S OPERA GLOBAL PVT. LTD HAS REPAID TH E LOANS TO SBI AND SIDBI ON BEHALF OF THE ASSESSEE . HOWEVER, DISREGARDING THE SUBMISSIONS MADE BY THE ASSESSEE, THE AO MADE THE ADDITION HOLDING THE INCR EASE IN THE CREDIT BALANCE AS UNEXPLAINED CREDIT BALANCE U/S 68 OF THE ACT. ITA NO. 2453/DEL/2015 6 5. THE LD. AR FURTHER SUBMITTED THAT IT IS PERTINEN T TO NOTE THAT THE IDENTITY CANNOT BE DOUBTED AS M/S OPERA GLOBAL PVT. LTD IS A LSO AN ASSESSEE WITH THE SAME ASSESSING OFFICER AS STATED BY THE LD. ASSESSI NG OFFICER AT PARA 4 PAGE 2 OF THE ASSESSMENT ORDER. FURTHER, BALANCE SHEET OF M/S OPERA GLOBAL PVT. LTD. REVEALS THAT IT HAS SUFFICIENT OWN FUNDS TO THE TUN E OF RS. 4,86,85,437/- TO TAKE CARE OF THE PAYMENT ON BEHALF OF THE ASSESSEE AND E STABLISHES HIS CREDITWORTHINESS. WITH REGARD TO THE ALLEGATION OF THE LD. ASSESSING OFFICER THAT THAT THERE IS NO CORRESPONDING DEBIT BALANCE SHOWIN G THE ASSESSEE AS A DEBTOR IN THE BALANCE SHEET OF M/S OPERA GLOBAL PVT. LTD., TH E LD. AR SUBMITTED THAT IT IS PERTINENT TO PERUSE THE DETAILS OF CURRENT LIABILIT IES OF OPERA GLOBAL PVT. LTD PLACED AT (PB PAGE NO 125-128). PERUSAL OF THE SAME WOULD REVEAL THAT THE CURRENT LIABILITIES HAVE BEEN REDUCED BY THE DEBIT BALANCE OF THE SUM OWED BY THE ASSESSEE TO M/S OPERA GLOBAL PVT. LTD. AND THE NET BALANCE AFTER ADJUSTMENT IS REFLECTING IN THE BALANCE SHEET FOR THE YEAR UND ER CONSIDERATION (PB PAGE NO 102-124). THUS THERE CANNOT BE ANY DOUBT AS TO THE GENUINENESS OF TRANSACTION. 5.1 ON GROUND NO.2, THE LD. AR SUBMITTED THAT THE A SSESSING OFFICER HAS MADE ADDITION OF RS. 4,18,46,093/- BY TREATING THE BALAN CE OF M/S OPERA GLOBAL PVT. LTD AS ON 31.03.2009 AS UNEXPLAINED CREDIT U/S 68 OF TH E ACT. THE ASSESSING OFFICER WHILE MAKING THIS ADDITION HAS ALLEGED THAT THE ENT IRE CREDIT BALANCE OF RS. 7,62,72,356/- PERTAINING TO M/S OPERA GLOBAL PVT. L TD REMAINS UNEXPLAINED AS THERE IS NO CORRESPONDING DEBIT BALANCE SHOWING THE ASSESSEE AS A DEBTOR IN THE BALANCE SHEET OF M/S OPERA GLOBAL PVT. LTD. 5.2 IT WAS NEXT CONTENDED THAT THE SUM HAS BEEN REC EIVED DURING PRECEDING YEARS WHICH IS EVIDENT FROM PARA 4 PAGE 2 OF THE AS SESSMENT ORDER U/S 143(3) WHEREIN BALANCE OF M/S OPERA GLOBAL PVT. LTD AS ON 31.03.2009 AS RS. ITA NO. 2453/DEL/2015 7 4,18,46,093/- IS STATED AND ACCORDINGLY THIS ADDITI ON HAS BEEN MADE IN RESPECT OF SUCH OPENING BALANCE. IT WAS FURTHER CONTENDED THAT FIRSTLY NO ADDITION U/S 68 CAN BE MADE IN RESPECT OF SUCH OPENING BALANCE IN T HE YEAR UNDER CONSIDERATION AND SECONDLY, EVEN OTHERWISE, THE ALLEGATION OF THE ASSESSING OFFICER THAT THERE IS NO CORRESPONDING DEBIT BALANCE SHOWING THE ASSES SEE AS A DEBTOR IN THE BALANCE SHEET OF M/S OPERA GLOBAL PVT. LTD. IS INCO RRECT SINCE THE DEBIT BALANCE IN RESPECT OF ASSESSEE HAS BEEN ADJUSTED AGAINST THE C REDITORS AMOUNT AND THE NET CREDITORS ARE DULY REFLECTED IN THE CURRENT LIABILI TIES OF M/S OPERA GLOBAL PVT. LTDS BALANCE SHEET AS ON 31 ST MARCH, 2010. 5.3 AS REGARDS GROUND NO.3, THE LD. AR SUBMITTED T HAT THE AO HAS MADE ADDITION OF RS. 4,84,53,923/- MERELY ON THE BASIS THAT THE SAID AMOUNT WAS NOT CLAIMED BY THE CREDITORS FOR A LONG TIME AND ACCORD INGLY THE SAME SHOULD BE ADDED TO THE INCOME U/S 41(1) OF THE ACT AS CESSATI ON OF TRADING LIABILITY. THE LD. AR SUBMITTED THAT IT IS PERTINENT TO NOTE THAT THE FACT THAT THE BALANCES WERE STANDING AS CREDITORS AND DULY REFLECTING IN THE BA LANCE SHEET AND THE FACT THAT SUCH BALANCES WERE NOT WRITTEN OFF WAS NOT DOUBTED BY THE LD. AO. FURTHER, THE GENUINENESS OF THE CREDITORS HAS ALSO NOT BEEN DOUB TED BY THE ASSESSING OFFICER. IT WAS SUBMITTED THAT WHEN THE COMPANY STILL ACKNOW LEDGES ITS DEBT AND NO BENEFIT HAS ACCRUED TO IT, ADDITION COULD NOT HAVE BEEN MADE MERELY BECAUSE THE BALANCES WERE UNCLAIMED FOR A LONG TIME. THE LD. AR PLACED RELIANCE UPON THE JUDGMENT OF HONBLE JURISDICTIONAL HIGH COURT IN TH E CASE OF CIT VS SHRI VARDHMAN OVERSEAS 343 ITR 408 (DEL.), WHEREIN THE H ONBLE COURT HAS HELD THAT SINCE THE AMOUNT PAYABLE TO THE SUNDRY CREDITORS WA S NOT CREDITED TO ASSESSEES PROFIT AND LOSS ACCOUNT FOR THE YEAR, AND AS THE AM OUNT WAS STILL SHOWN AS OUTSTANDING AT THE END OF THE RELEVANT YEAR, THE PR OVISIONS OF SECTION 41(1) OF THE ITA NO. 2453/DEL/2015 8 ACT COULD NOT BE ATTRACTED. FURTHER RELIANCE IS PLA CED ON THE JUDGMENT OF KARNATAKA HIGH COURT IN THE CASE OF CIT VS. ALVARES & THOMAS [ITA NO. 658/2015 DATED 24-03-2016] WHEREIN THE JUDGMENT OF DELHI HIG H COURT IN THE CASE OF CIT VS SHRI VARDHMAN OVERSEAS (SUPRA) HAS BEEN FOLLOWED . 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE GON E THROUGH THE ENTIRE MATERIAL AVAILABLE ON RECORD INCLUDING THE ORDERS O F AUTHORITIES BELOW AND THE CASE LAWS CITED AND WE RENDER OUR DECISION ON EACH GROUND OF APPEAL IN THE FOLLOWING PARAGRAPHS. 7. GROUND NO.1 IS REGARDING DELETION OF ADDITION O F RS.3,44,26,263/- MADE BY THE AO ON ACCOUNT OF UNEXPLAINED CASH CREDIT UND ER SECTION 68 OF THE ACT. THE ASSESSING OFFICER MADE THIS ADDITION ON THE PREMISE THAT THIS AMOUNT IS NOT APPEARING AS DEBIT IN THE BALANCE SHEET OF THE SIST ER COMPANY M/S OPERA GLOBAL PVT. LTD. THE CIT(A) HAS DELETED THE SAME HOLDING T HAT THE ASSESSEE HAS LED EVIDENCES TO SHOW THAT OPERA GLOBAL PVT. LTD. HAS R EPAID THE LOANS TO SBI AND SIDBI ON BEHALF OF THE APPELLANT. THE CIT(A) HAS FU RTHER STATED THAT HE HAS EXAMINED THIS WITH THE HELP OF DOCUMENTS WHICH DEMO NSTRATE THAT OPERA GLOBAL PVT. LTD. HAS MADE PAYMENT TO SBI AND SIDBI ON BEH ALF OF THE APPELLANT. AFTER EXAMINATION OF THE DOCUMENTS PLACED IN THE PAPER BO OK, WE ARE OF THE VIEW THAT THE LD. CIT(A) HAS COMMITTED NO ERROR WHILE DELETIN G THE IMPUGNED ADDITION ADDITION. THE AO HAS IGNORED THE REPLY SUBMITTED BY THE ASSESSEE VIDE LETTER DATED 25.03.2013 ALONGWITH THE SUPPORTING EVIDENCES . IN HIS LETTER DATED 25.03.2013, THE ASSESSEE HAS SUBMITTED COPY OF ACCO UNT WITH SBI AND SIDBI ALONGWITH THE BANK STATEMENT AND PHOTOCOPY OF CHEQU ES ISSUED BY THE OPERA GLOBAL PVT. LTD. ON BEHALF OF THE ASSESSEE COMPANY( PLACED AT PAPER BOOK PAGE 63 TO 80). THE ASSESSEE HAS ALSO PLACED COPY OF ACCOUN T WITH DETAILS OF PAYMENT ITA NO. 2453/DEL/2015 9 RECEIVED FROM OPERA GLOBAL PVT. LTD. AT PAPER BOOK PAGE 81 AND 82. THE ASSESSEE HAS ALSO EXPLAINED THAT IN THE BALANCE SHEET OF OPE RA GLOBAL PVT. LTD., ON THE BASIS OF WHICH ADVERSE INFERENCE HAS BEEN DRAWN BY THE AO, THIS AMOUNT IS APPEARING BELOW THE HEAD CURRENT LIABILITIES AT PAP ER BOOK PAGE 115 TO 128 RELEVANT PAGE 128 OF THE PAPER BOOK. THE FIGURES ST ATED AT PAGE 128 AS ON 31.03.2008, 31.03.2009 AND AS ON 31.03.2010 OF THE NET CURRENT LIABILITIES MATCH WITH THE FIGURES STATED ON THE FIRST PAGE OF THE BA LANCE SHEET AT PAPER BOOK PAGE 115. THE TOTAL CURRENT LIABILITIES AS ON 31.03.2010 AS PER THE LIST WAS RS.12,24,92,114.64/- WHICH AFTER DEDUCTION OF DEBIT BALANCE OF OPERA HOUSE EXPORT PVT. LTD. I.E. ASSESSEE COMPANY OF RS.7,62,7 2,356.63/- COMES TO RS.4,62,19,758.01/- WHICH IS THE FIGURE MENTIONED A T FIRST PAGE OF THE BALANCE SHEET AS CURRENT LIABILITIES. SIMILARLY, AS ON 31.0 3.2009 THE TOTAL OF THE CURRENT LIABILITY AT PAPER BOOK PAGE 128 COMES TO RS.8,58,5 5,902.48/- WHICH AFTER DEDUCTION OF BALANCE AGAINST ASSESSEE COMPANY OF RS .4,18,46,093.65/- COMES TO RS.4,40,09,808.83/- WHICH MATCHES WITH THE FIGURE A T THE FRONT OF BALANCE SHEET. IN VIEW OF THESE FACTS WE ARE OF THE VIEW THAT ASSE SSING OFFICER WAS NOT JUSTIFIED IN DRAWING ADVERSE INFERENCE AGAINST THE ASSESSEE. THE ASSESSEE HAS LED SUFFICIENT EVIDENCES WHICH ARE SUPPORTED BY BANK ST ATEMENT OF OPERA GLOBAL PVT. LTD. AND ITS BALANCE SHEET READ WITH THE SCHEDULES ATTACHED THERETO. HENCE, THE CIT(A) WAS CORRECT IN DELETING THE ADDITION. ACCORD INGLY, WE UPHOLD THE ORDER OF THE CIT(A) ON THIS SCORE AND GROUND NO.1 OF THE REV ENUE APPEAL DESERVES TO BE DISMISSED. 8. GROUND NO.2 IS REGARDING DELETION OF ADDITION OF RS.4,18,46,093/- IN RESPECT OF THE OPENING BALANCE OF OPERA GLOBAL PVT. LTD. THIS ADDITION HAS BEEN MADE ON THE SAME REASONING AS DISCUSSED IN GROUND N O.1. THE AO HAS ADDED THE ITA NO. 2453/DEL/2015 10 OPENING BALANCE IN THE NAME OF OPERA GLOBAL PVT. LT D. ON THE GROUND THAT SAME IS NOT REFLECTED IN THE BALANCE SHEET OF THE OPERA GLO BAL PVT. LTD. IN GROUND NO.1, WE HAVE HELD THAT THE BALANCE IN THE TWO ACCOUNTS B ETWEEN ASSESSEE AND OPERA GLOBAL PVT. LTD. MATCHES ON EXAMINATION OF THE BALA NCE SHEET WITH A SCHEDULES ATTACHED THERETO OF OPERA GLOBAL PVT. LTD. FURTHER, WE ARE IN AGREEMENT WITH THE CONTENTION OF THE LD. AR, ADDITION UNDER SECTION 68 CAN BE MADE ONLY WITH RESPECT TO ANY CREDIT DURING THE YEAR. FROM THE FAC TS IT IS EVIDENT THAT THIS AMOUNT WAS NOT THE CREDIT OF THE YEAR UNDER CONSIDE RATION. ON THIS REASONING ALSO THIS ADDITION IS FOUND NOT TENABLE IN THE EYE OF LAW. THUS, THE LD. CIT(A) HAS RIGHTLY DELETED THIS ADDITION TOO. ACCORDINGLY, G ROUND NO.2 OF THE REVENUES APPEAL ALSO DESERVES TO BE DISMISSED. 9. GROUND NO.3 IS REGARDING DELETION OF ADDITION OF RS.4,84,53,923/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF SUNDRY CREDITOR S BY INVOKING THE PROVISIONS OF SECTION 41(1) OF THE ACT. THE AO HAD CALLED FOR THE DETAILS OF CREDITORS FOR THE LAST 3 YEARS. ON THE BASIS OF THIS LIST, THE AO HEL D THAT CREDITORS ARE NOT BEING PAID SINCE LONG AND AS SUCH THE SAME HAS BECOME INCOME O F THE ASSESSEE UNDER SECTION 41(1) OF THE ACT AND ADDED ALL THE CREDITOR S AS INCOME OF THE ASSESSEE. THE CIT(A) HAS DELETED THE ADDITION HOLDING THAT TH ESE CREDITORS HAVE BEEN CONTINUED TO BE PAYABLE IN THE BOOKS OF THE ASSESSE E AND THE SAME HAVE NOT BEEN WRITTEN OFF, HENCE THERE IS NO REMISSION OR CESSATI ON OF THE LIABILITY AND ACCORDINGLY, SECTION 41(1) CANNOT BE INVOKED. THE M AIN ARGUMENT OF THE LD. DR BEFORE US WAS THAT SINCE THE ASSESSEE HAS NOT PAID FOR LONG, IT SHOULD BE ASSUMED THAT THESE AMOUNTS ARE NO MORE PAYABLE AND HENCE, I T HAS BECOME INCOME OF THE ASSESSEE. IT WAS CONTENDED BY THE LD. DR THAT THOUG H SECTION 41(1) MAY NOT BE APPLICABLE IN THIS CASE BUT SECTION 28(IV) WILL BE APPLICABLE AS THIS IS THE BENEFIT ITA NO. 2453/DEL/2015 11 WHICH THE ASSESSEE HAS DERIVED FROM ITS BUSINESS. W E ARE OF THE VIEW THAT BOTH SECTION 41(1) AND SECTION 28(IV) WILL NOT BE APPLIC ABLE IN THE FACTS OF THE PRESENT CASE. FROM THE ASSESSMENT ORDER, IT IS EVIDENT THAT THE ASSESSEE COMPANY HAS FILED AN APPLICATION UNDER SECTION 15(1) OF THE SIC K INDUSTRIAL COMPANIES (SPECIAL PROVISION) ACT, 1985. THE ASSESSEE COMPANY ON BEING QUESTIONED BY THE AO HAD GIVEN THE REASONING AS TO WHY THESE CREDITORS HAVE NOT BEEN PAID SO FAR. IT WAS EXPLAINED THAT THE COMPANY HAS BECOME SICK AND IT H AS APPROACHED BIFR FOR RESTRUCTURING OF ITS LIABILITIES. THIS, IN OUR OPIN ION, WAS PLAUSIBLE REASON FOR DELAY IN PAYMENT OF THE CREDITORS. SECTION 41(1) IS APPLICABLE WHEN THE TRADE CREDITORS ARE WRITTEN OFF AS NOT PAYABLE. IN THE PR ESENT CASE, IT IS NOT THE CASE OF THE ASSESSEE THAT THESE TRADE CREDITORS ARE NOT PAY ABLE. IT IS ALSO NOT THE CASE OF THE AO THAT THESE CREDITORS HAVE BEEN WRITTEN OFF BY THE ASSESSEE. THESE CREDITORS CONTINUE TO BE PAYABLE IN THE BOOKS OF AC COUNTS OF THE ASSESSEE. THE ASSESSEE HAS ALSO EXPLAINED THE REASON FOR THE DELA Y IN MAKING PAYMENT TO THESE CREDITORS. IN THESE CIRCUMSTANCES, THE ASSUMPTIONS BY THE AO THAT THESE CREDITORS HAD BECOME INCOME OF THE ASSESSEE CANNOT BE SUSTAINED. ON THE CONTRARY, THE CIRCUMSTANCES DO EXPLAIN THE DELAY IN PAYMENT OF THESE CREDITORS. IN THESE FACTS, PROVISIONS OF SECTION 41(1) CANNOT BE INVOKED. SIMILARLY, THE CONTENTION OF THE LD. DR FOR INVOKING PROVISION OF SECTION 28(IV) IS MISPLACED AS SECTION 28(IV) IS REGARDING VALUE OF ANY BENEFIT OR PERQUISITE ARISING FROM BUSINESS IS CHARGEABLE TO TAX. THESE TRADE CREDITOR S ARE PAYABLE AND BY NO STRETCH OF IMAGINATION IT CAN BE SAID THAT ASSESSEE HAS RECEIVED ANY BENEFIT OR PERQUISITE. WE HAVE ALSO GONE THROUGH THE VARIOUS C ASE LAWS RELIED UPON BY THE LD. DR AND AFTER GOING THROUGH THE SAME WE ARE OF T HE VIEW THAT THE SAME ARE ON DIFFERENT SET OF FACTS AND ARE NOT APPLICABLE TO TH E FACTS OF THIS CASE. AS AGAINST ITA NO. 2453/DEL/2015 12 THIS, THE JUDGMENT OF JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. SHRI VARDHMAN OVERSEAS LTD.343 ITR 408 (DEL.) IS DIRECT ON THIS ISSUE WHEREIN HONBLE COURT HAS DIFFERENTIATED THE SCOPE OF SECTI ON 28(IV) AND SECTION 41(1) OF THE ACT AND HELD THAT SECTION 28(IV) WOULD APPLY GE NERALLY TO ALL BENEFITS OR PERQUISITES WHICH ARISE TO THE ASSESSEE FROM THE BU SINESS CARRIED OUT BY HIM. THE BENEFIT WHICH HE OBTAINS BY WAY OF REMISSION OR CESSATION OF A TRADING LIABILITY IN A LATER YEAR, IN RESPECT OF WHICH HE H AS OBTAINED A DEDUCTION IN AN EARLIER YEAR IN COMPUTING THE BUSINESS INCOME, SHOU LD BE GOVERNED BY SECTION 41(1) WHICH IS THE SPECIFIC PROVISION GOVERNING THE FACTUAL SITUATION AND NOT THE SECTION 28(IV) OF THE ACT. IN VIEW OF THE ABOVE JUD GMENT IT IS CLEAR THAT THAT PROVISIONS OF SECTION 28(IV) ARE NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. ACCORDINGLY, GROUND NO.3 OF THE REVENUES APPEAL IS ALSO DISMISSED SANS MERIT. 10. GROUND NO.4 IS GENERAL IN NATURE AND NEED NO AD JUDICATION. 11. IN VIEW OF WHAT HAS BEEN DISCUSSED ABOVE, WE AR E OF THE CONSIDERED OPINION THAT THE LD. CIT(A) WAS JUSTIFIED IN DELETI NG ALL THESE ADDITIONS, BEING NOT TENABLE IN LAW. 12. IN THE RESULT APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 27.02.2019. SD/- SD/- (AMIT SHUKLA) (L.P. S AHU) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 27.02.2019 *AKS*