M/S Devka Bai Velji, West Singhbhum V. ACIT, Ranchi

ITA 260/RAN/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 0248 (ITAT-RANCHI)
• Duration Of Justice: 5 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-03-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2016-2017
• Appeal Filed On: 01-10-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 143(3); 22; 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RANCHI BENCH SMC RANCHI BEFORE SHRI S.S, GODARA, JUDICIAL MEMBER ITA NO.260/RAN/2019 ASSESSMENT YEAR:2016-17 M/S DEVKA BAI VELJI BARAJAMDA, WEST SINGHBHUM, JHARKHAND- 833221 [ PAN NO.AACFD 2730 L ] / V/S . ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1, 7 TH FLOOR, MAHABIR TOWRE, RANCHI-834001 /APPELLANT .. /RESPONDENT /BY APPELLANT SHRI DEVESH PODDAR, ADVOCATE /BY RESPONDENT SRI AJOY KUMRA, ADDL. CIT-DR /DATE OF HEARING 06-03-2020 /DATE OF PRONOUNCEMENT 06-03-2020 /O R D E R (ORAL) THIS ASSESSEES APPEAL FOR ASSESSMENT YEAR 2016-17 , ARISES AGAINST THE COMMISSIONER OF INCOME-TAX (APPEALS)-3, PATNAS ORD ER DATED 26.08.2019 PASSED IN CASE NO. 318/CIT(A)-3/PAT/2018-19, INVOLVING PROCE EDINGS U/S. 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT. HEARD BOTH THE PARTIES. CASE FILE PERUSED. 2. THE ASSESSEES SOLE SUBSTANTIVE GRIEVANCE RAISED IN THE INSTANT LIS SEEKS TO REVERSE BOTH THE LOWER AUTHORITIES ACTION MAKING SE C. 41(1) CESSATION OF TRADING LIABILITY ADDITION OF 33,25,056/- IN THE RELEVANT PREVIOUS YEAR. THE REVE NUES CASE AS PER BOTH THE LOWER AUTHORITIES FINDINGS IS THAT THE ASSESSEE FAILED TO GET THE CONCERNED PARTY(IES) VERIFY DURING THE COURSE OF SCRUTINY AND ALSO THAT THE MERE FACT OF VERY ITA NO.260/RAN/2019 A.Y. 2016-17 M/S DEVKA BAI VELJI VS. ACIT, C.C.1 RNC PAGE 2 LIABILITY(IES) TO HAVE BEEN CONTINUING SINCE LONG W OULD NOT IPSO FACTO AMOUNT TO ACCEPTANCE FOR ALL ASSESSMENT YEARS TO COME. I FIND NO MERIT IN REVENUES INSTANT STAND SINCE THIS TRIBUNALS CO-ORDINATE BENCH DECISION IN SHRI SWAPAN KUMAR SARKAR VS. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-3, JAM SHEDPUR ITA NO. 05/RAN/2017 DECIDED ON 15.02.2019 TAKES NOTE REVENUES VERY STA ND AS UNDER:- 2. THE SOLE SUBSTANTIVE QUESTION THAT ARISES FOR O UR APT ADJUDICATION IN THE INSTANT APPEAL IS AS TO WHETHER BOTH THE LOWER AUTHORITIES HAVE RIGHTLY INVOKED CESSATION OF LIABILITY ADDITION U/S 41(1) OF THE ACT REGARDING T HE SUM OF RS.65.50 LAC CLAIMED AS SUNDRY CREDITORS LIABILITY IN BOOKS OF ACCOUNT SINC E 2009-10. THEN IS NO DISPUTE BETWEEN THE PARTIES THE VERY AMOUNT STOOD ALLOWED A S A LIABILITY IN THE PAST VERY MANY ASSESSMENT YEARS INVOLVING BOTH SUMMARY AS WELL AS REGULAR ASSESSMENTS. THE ASSESSEES BOOKS HAVE ALSO NOT INDICATED THE IMPUGN ED SUM AS A CASE OF CESSATION OF LIABILITY. WE NOTICE IN THIS BACKDROP OF FACTS THAT TRIBUNALS CO-ORDINATE BENCH DECISION IN ACIT VS. M/S SOORAJMULL NAGARMULL IN ITA NO.1907/KOL/2016 DECIDED ON 20.07.2018 HOLDS AS UNDER:- 3 . WE HAVE HEARD BOTH THE PARTIES REITERATING THEIR RESPECTIVE STANDS AGAINST AND IN SUPPORT OF IMPUGNED SECTION 41(1) REMISSION / CESSATION OF LIABILITY INVOLVING THE AMOUNT OF RS.12,97,47,322/-. THE INST ANT PROCEEDINGS APPEAR TO BE SECOND ROUND OF LITIGATION BETWEEN THE PARTIES QUA THE VERY ISSUE BEFORE THIS TRIBUNAL. EARLIER CO-ORDINATE BENCH HAD REMITT ED THE INSTANT ISSUE BACK TO THE ASSESSING AUTHORITIES FOR AFRESH ADJUDICATION ( SUPRA). 4 . THE ASSESSING OFFICER TOOK UP CONSEQUENTIAL PROCE EDINGS. THERE IS NO DISPUTE ABOUT THE ASSESSEE TO HAVE BEEN CARRYING FO RWARD THE IMPUGNED LIABILITY IN ITS BOOKS FOR A TIME SPAN OF ALMOST TH REE DECADES. IT IS AN ADMITTED FACT THAT THE DEPARTMENT DID NOT RAISE ANY ISSUE IN ALL INTERVENING ASSESSMENT YEARS IN QUESTION. IT EMERGES THAT ASSESSING OFFICE R HAD ISSUED SUMMONS TO SIX DIRECTORS OF THE CONCERNED ENTITIES ON TEST CHE CK BASIS IN THE INSTANT SECOND ROUND. FOUR OF THE SAID SIX ENTITIES DIREC TORS PUT IN APPEARANCE. THEY EXPRESSED THEIR IGNORANCE ABOUT ANY SUCH TRADING TR ANSACTIONS WITH THE ASSESSEE IN THEIR RESPECTIVE STATEMENTS. THIS MADE THE ASSESSING OFFICER TO ISSUE A SHOW-CAUSE DATED 12.03.2015 PROPOSING TO TR EAT THE ABOVE SUM AS A MERE BOOK ENTRY AS CEASED U/S 41(1) OF THE ACT. THE ASSESSEE STATED REITERATED THE FACT OF HAVING CLAIMED THE IMPUGNED LIABILITY IN ITS BOOKS ALMOST THREE DECADES EARLIER FOR THE FIRST TIME FOLLOWED B Y SIMILAR TREATMENT IN THE INTERVENING ASSESSMENT YEARS WITHOUT ANY CHANGE REL EVANT IN FACTS. ITS CASE WAS THAT NONE OF ITS CREDITORS HAD EVER REMITTED TH EIR RESPECTIVE SUMS SO AS TO ATTRACT SECTION 41(1) OF THE ACT. IT HIGHLIGHTED TH E FACT THAT ABOVE RANDOM CREDITORS HAD SUPPORTED ITS CASE AS PER THEIR WRITT EN REPLIES IN RESPONSE TO THE RESPECTIVE SUMMONS. ALL THIS FAILED TO CONVINCE THE ASSESSING OFFICER. HE NOTICED THAT ONE OF THE SAID WRITTEN REPLIES DID NO T CONTAIN EVEN CONCERNED PARTYS SIGNATURES. HE THEREAFTER NARRATED THE ENTI RE BACKDROP AND QUOTED FOUR OF THE TESTED CHECK PARTIES STATEMENTS TO CONCLUDE THAT THE IMPUGNED LIABILITY WAS NOT GENUINE ONE SO AS TO BE TAKEN AS SUBSISTING UPTO IMPUGNED ASSESSMENT YEAR. HE TOOK COGNIZANCE OF THE FACT THE THAT SAID FOUR DIRECTORS HAD EXPRESSED THEIR COMPLETE IGNORANCE ABOUT ANY CO RRESPONDING TRANSACTIONS TO HAVE TAKEN PLACE IN THE PAST. RELEV ANT INTERVENING PERIOD HAD ALSO NOT SEEN ANY PAYMENT FROM THE TAXPAYERS SIDE FOR A VERY LONG PERIOD OF TIME AS PER THE ASSESSING OFFICER. HE WAS THEREFORE OF THE VIEW THAT NEITHER ITA NO.260/RAN/2019 A.Y. 2016-17 M/S DEVKA BAI VELJI VS. ACIT, C.C.1 RNC PAGE 3 THE CREDITORS IN QUESTION HAD TAKEN ANY STEPS TO RE COVER THEIR RESPECTIVE DUES NOR THE INSTANT TAXPAYER HAD DISCHARGED EVEN A SING LE PENNY OF THE IMPUGNED LIABILITY. ALL THIS FORMED SUFFICIENT REASON FOR HI M TO OPINE THAT THE ASSESSEE HAD NO INTENTION TO PAY THAT MONEY IN QUESTION. HE ALLEGED CREDITORS NON CONFIRMATION AS WELL AS LACK OF THEIR IDENTITY IN H IS ASSESSMENT ORDER BASED ON AN ASSUMPTION THAT THEY HAD EITHER VANISHED OR THER E WAS NO EFFORT AT THEIR BEHEST TO CLAIM THIS LIABILITY SUM. THE ASSESSING O FFICER WAS FURTHER OF THE OPINION THAT HON'BLE DELHI HIGH COURTS DECISION IN CIT VS. CHIPSOFT TECHNOLOGY PVT. LTD. ON 20.07.2012 IN ITA NO. 598/2011 HAD MADE IT CLEAR THAT SECTION 41(1) EXPLANATION SUFFICIENTLY INDICATED THE SAME T O BE INCLUSIVE PROVISION SINCE THE LEGISLATURE HAD NOT USED MEANS CLAUSE THEREIN. HE THEREFORE MADE THE IMPUGNED ADDITION U/S 41(1) ON CESSATION OF TRA DING LIABILITY OF RS12,97,47,322/- IN QUESTION. 5 . THE ASSESSEE PREFERRED APPEAL. THE CIT(A) HAS REV ERSED THE ASSESSING OFFICERS ACTION IN HIS ABOVE EXTRACTED DETAILED DI SCUSSION. THIS LEAVES THE REVENUE AGGRIEVED. 6 . LEARNED DEPARTMENTAL REPRESENTATIVE VEHEMENTLY AR GUES IN THE LIGHT OF ASSESSING OFFICERS FINDINGS THAT ASSESSEES IMPUGN ED LIABILITY IS NOT A GENUINE ONE FIRST OF ALL AS PER THE FOUR PARTIES D IRECTORS STATEMENTS. HE THEREAFTER SUBMITS THAT IT CAN BE SAFELY ASSUMED TH AT THE LIABILITY IN QUESTION AS CEASED U/S. 41(1) OF THE ACT. WE DO NOT FIND MER IT IN EITHER OF THESE TWO ARGUMENTS. CASE FILE REVEALED THAT THE ASSESSEE HAS THROUGHOUT BEEN CLAIMING THE IMPUGNED LIABILITY FOR A TIME SPAN OF ALMOST THREE DECADES WITHOUT ANY SUCH OBJECTION FROM DEPARTMENT. RELEVAN T SUNDRY CREDITORS LIST RUNS INTO 96 PARTIES; AMOUNT AND ADDRESS-WISE, PART ICULARLY IN PAPER BOOK PAGES 55 TO 56 AS ON 31.03.2001. THE ASSESSEE PARTL Y PAID THE SUM IN CASE OF FIVE OF THE SAID PARTIES INVOLVING GROSS AMOUNT OF RS21,95,04,000/-. PAPER BOOK PAGES 93 TO 95 AND 57 TO 59 CONTAINS THE SUMMA RIZED STATEMENT OF LIABILITY IN QUESTION AS TO 31.03.2000 AND FROM 01. 04.1989 TO 31.03.2013 INVOLVING THE SUM OF RS12,87,24,079/-; RESPECTIVELY . 7 . CASE FILE FURTHER SUGGESTS THAT THE IMPUGNED LIAB ILITY CLAIM HAS NOWHERE BEEN DOUBTED IN PRECEDING OR SUCCEEDING ASSESSMENT YEARS INVOLVING REGULAR ASSESSMENT AT LEAST IN ASSESSMENT YEARS 1998-99, 20 00-01, 2003-04 AND 2004-05. THE CIT(A)S CLINCHING FINDINGS THAT FOUR DIRECTORS OF CORRESPONDING ENTITIES HAVE BEEN APPOINTED IN FINANCIAL YEAR 2001 -02 ONLY WHEREAS THE IMPUGNED LIABILITY DATES BACK TO ALMOST 30 YEARS; H AVE GONE UNREBUTTED FROM THE REVENUE SIDE. WE THEREFORE DO NOT SEE ANY MERIT IN REVENUES ABOVE TWIN SUBMISSIONS. ITS FORMER PLEA THAT THE IMPUGNED LIABILITY IS NOT GENUINE AT THIS BELATED STAGE CARRIES NO WEIGHT. HON'BLE KARNA TAKA HIGH COURTS DECISION IN CIT VS. ALVARES & THOMAS (2010) 69 TAXMAN 257 (KAR) HOLDS THAT MERE NONE VERIFICATION OF SUCH A LIABILITY FOR OR FOR TH AT ANY DOUBT RAISED THEREUPON DOES NOT ATTRACT CESSATION OF LIABILITY PRINCIPLE U /S 41(1) OF THE ACT AS THE SAME HAS TO BE A CASE OF CESSATION IN LAW ONLY. HON'BLE GUJARAT HIGH COURTS JUDGMENT IN CIT VS. NITIN S GARG (2012) 22 TAXMAN 59 (GUJ) HAS PLACED RELIANCE ON MUCH A CELEBRATE JUDGMENT OF HON'BLE AP EX COURT IN CIT VS. SUGAULI SUGAR WORKS (P) LTD. (1999) 236 ITR 518 (SC) TO HOLD THAT THE MERE FACT OF A LIABILITY HAVING CONTINUED TO BE SHOWN FO R VERY MANY YEARS WOULD NOT ATTRACT SECTION 41(1) SINCE IT IS FOR THE ASSESSING OFFICER HAS WHO HAS TO SHOW THAT CONCERNED ASSESSEE HAS DRAWN ANY BENEFIT BY WA Y OF CESSATION OR REMISSION THEREOF. WE FURTHER MAKE IT CLEAR THAT CI T(A)S ABOVE EXTRACTED DETAILED DISCUSSION HAS EXAMINED ALL THE FACTS AS W ELL AS THE RELEVANT LEGAL POSITION AT LENGTH WHICH HAS NOWHERE BEEN REBUTTED FROM THE REVENUE SIDE. ITA NO.260/RAN/2019 A.Y. 2016-17 M/S DEVKA BAI VELJI VS. ACIT, C.C.1 RNC PAGE 4 WE THEREFORE CONCLUDE THAT THE CIT(A) HAS RIGHTLY R EVERSED THE ASSESSMENT FINDINGS HOLDING THE AMOUNT IN QUESTION OF RS.12,97 ,47,322/- TO BE A CASE OF CESSATION OF LIABILITY U/S 41(1) OF THE ACT. WE ADOPT THE DETAILED DISCUSSION MUTATIS MUTANDIS T O CONCLUDE THAT THE IMPUGNED ADDITION REGARDING ASSESSEES SUNDRY CREDITORS LIAB ILITY INCOME CASE OF M/S XYZ & CO. IS NOT SUSTAINABLE. THE SAME IS DELETED. I ADOPT THE ABOVE DETAILED REASONING MUTATIS MUTAND IS AND DIRECT THE ASSESSING OFFICER TO DELETE THE IMPUGNED ADDITION. 3. THIS ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT AT THE CLOSE OF HEAR ING ON FRIDAY , 6 TH MARCH, 2020 SD/- ( #) (S.S. GODARA) JUDICIAL MEM BER *DKP/SR.PS % - 06/03/2020 / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-M/S DEVKA BAI VELJI BARAJAMDA, WEST SING HBHUM, PIN-833221 2. /RESPONDENT-ACIT, CENTRAL CIRCLE-1, 7 TH FL, MAHABIR TOWR, RANCHI-834001 3. ) , / CONCERNED CIT 4. , - / CIT (A) 5. - ) , ) / DR, ITAT, RANCHI 6. 1 / GUARD FILE. BY ORDER/ , SR. PRIVATE SECRETARY/P.S (ON TOUR) ),