M/s HIMUDA, Shimla V. Addl. CIT, Shimla

ITA 28/CHANDI/2009

• Counselvise Citation: [2019] 111 COUNSELVISE.COM (IT) 9662 (ITAT-CHANDIGARH)
• Duration Of Justice: 10 year(s) 10 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-12-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 11-12-2019
• Assessment Year: 2005-2006
• Appeal Filed On: 15-01-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARVIND SUDARSHAN SR DR
• Keywords: Opportunity of being heard; Set aside
• Section: 43B

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BE NCH A, CHANDIGARH .., !' '# $, % &' BEFORE: SHRI. N.K.SAINI, VP & SHRI , SANJAY GARG, J M ITA NO. 28/CHD/2009 ASSESSMENT YEAR : 2005-06 M/S HIMUDA NIGAM VIHAR SHIMLA CIT(A) SHIMLA PAN NO: AAALH0034K APPELLANT RESPONDENT !' ASSESSEE BY : SHRI SUDHIR SEHGAL, ADVOCATE #!' REVENUE BY : SHRI ARVIND SUDARSHAN, SR. DR $ %! & DATE OF HEARING : 11/12/2019 '()*! & DATE OF PRONOUNCEMENT : 11/12/2019 &(/ ORDER PER N.K. SAINI, VICE PRESIDENT THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER D T. 04/11/2008 OF LD. CIT(A), SHIMLA(H.P). 2. FOLLOWING GROUNDS HAS BEEN RAISED IN THIS APPEAL: 1. THAT THE LD. CIT(A) HAS ERRED IN SUSTAINING THE ADDITION ON ACCOUNT OF OLD LIABILITIES AS OUTSTANDING IN THE BALANCE SHEET AS ON 31.03.2005 U NDER THE HEAD 'CURRENT LIABILITIES & PROVISION PRIOR TO ASSESSMENT YEAR 2003-2004. 2. THAT THE LD. CIT(A) HAS ERRED IN SUSTAINING THE ADDITION ON ACCOUNT OF VERY OLD SUNDRY CREDITORS AS OUTSTANDING IN THE BALANCE SHEET PRIOR TO ASSESSMENT YEAR 2003-2004. 3. THAT THE LD. CIT(A) HAS ERRED I SUSTAIN THE ADDITION OF RS. 3,85,230/- OF OUTSTANDI NG EPF U/S 43-B OF THE INCOME TAX ACT, 1961. 3. VIDE GROUND NO. 1 & 2 THE GRIEVANCE OF THE ASSESSEE RELATES TO THE SUSTENANCE OF ADDITION MADE BY THE A.O. ON ACCOUNT OF LIABILITIES APPEARING UNDER THE HEAD CURRENT LIABILITIES AND PROVISIONS AND THE SUNDRY CRE DITORS. 2 4. FACTS RELATED TO THE ISSUE IN BRIEF ARE THAT THE AS SESSEE HAS BEEN CONSTITUTED VIDE HIMACHAL PRADESH HOUSING BOARD (HPHB), 1972 ENACTED BY THE HIMACHAL PRADESH ASSEMBLY, AND ITS MAIN FUNCTION IS TO DEVELOP HOUSING AC COMMODATION FACILITY IN THE STATE OF H.P. DURING THE YEAR UNDER CONSIDERATION THE AS SESSEE CREATED A PROVISION FOR ANTICIPATED WORKS OF VARIOUS HOUSING COLONIES AMOUNTING T O RS. 1,52,66,861/-. THE A.O. ASKED THE ASSESSEE TO GIVE JUSTIFICATION FOR THE SAM E. IN RESPONSE THE ASSESSEE SUBMITTED THAT IT WAS DEVELOPING HOUSING COLONIES ON NO PROFIT NO L OSS BASIS AND THAT THE PROVISIONS OF VARIOUS COLONIES WERE TO BE MADE FOR ANTICIPATED WORKS / ARBITRATION ETC. HOWEVER THE A.O. HELD THAT THE LIABILITY OF THE PROVISION HAD SEIZ ED TO EXIST AND AS SUCH THOSE LIABILITIES WERE NOT GENUINE. HE THEREFORE MADE THE ADD ITION OF RS. 1,52,66,861/- TO THE INCOME OF THE ASSESSEE. THE A.O. ALSO MADE THE ADDITION OF RS. 3,36,182/- WHICH WAS OUTSTANDING AS SUNDRY CREDITORS BY OBSERVING THAT THE AS SESSEE WAS NOT ABLE TO GIVE THE NAME AND ADDRESS OF THOSE CREDITORS AS WELL AS REASON F OR NON CLEARANCE. 5. BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) AND SUBMITTED THAT ALL THE PROVISIONS HAD BEEN MADE AGAINST THE GENUINE C RYSTALLIZED EXPENDITURE TO BE INCURRED AND THE PROVISIONS WERE MADE PRIOR TO 01/ 04/2003 I.E; PRIOR TO THE AMENDMENT IN SECTION 10(20A) AND WERE AKIN TO RESERVES. IT WAS ALSO STATED THAT AS THE INCOME OF THE ASSESSEE WAS EXEMPT UNDER SECTION 10(20A) OF THE ACT, PRIOR TO 01/04/2003, THE ADDITION MADE BECOMES BLUNTLY ILLEGAL AND FACTUALLY WRONG, SINCE THE CORRESPONDING EXPENDITURE BOOKED HAD NOT BEEN CHARGED TO THE REVENUE AND THERE WAS NO LOSS TO THE REVENUE IN THE PRIOR PERIOD PARTICUL ARLY WHEN THE A.O. HIMSELF ADMITTED THAT THE ENTIRE AMOUNT WAS PERTAINING TO THE PER IOD PRIOR TO A.Y. 2003-04 AND THE ASSESSEE WAS DEVELOPING COLONIES ON NO PROFIT NO LOS S BASIS. 6. AS REGARDS TO THE ANOTHER ADDITION ON ACCOUNT OF SUNDRY CREDITORS THE ASSESSEE SUBMITTED THAT THE ADDITION MADE BY THE A.O. WAS LEAST WARRANTED WHEN THE ASSESSEE IS A GOVERNMENT BODY AND SECONDLY THE CORRESPONDING DEBIT HAD NOT RESULTED IN THE LOSS TO THE REVENUE AS THE SAME WAS PERTAINING TO THE PE RIOD PRIOR TO 01/04/2003. 7. LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF TH E ASSESSEE SUSTAINED THE ADDITION BY OBSERVING IN PARA 3(IV) AND 4(IV) AS UNDER : 3 3(IV) I HAVE PERUSED THE SUBMISSION OF THE APPELLANT, ASSES SMENT ORDER AND COMMENTS OF THE ID. A.O. ON THE ISSUE. THE ASSESSEE'S PLEA THAT THE PROVISIONS CREATED FOR ANTICIPATED WORKS OF VARIOUS COLONIES RELATES TO PERIOD PRIOR T O 01/04/2003 I.E. PRIOR TO THE AMENDMENT IN SECTION 10(20A) ARE AKIN TO RESERVES AND ALL INC OME OF THE ASSESSEE WAS EXEMPT U/S 10(20A) PRIOR TO 01/04/2003. HOWEVER, THE ASSESSEE APPELLANT HAS FAILED TO PROVIDE ANY DOCUMENTARY EVIDENCE TO PROVE THAT THE PROVISIONS R ELATE TO EARLIER PERIOD. ANNEXURE 'A' FILED DURING THE APPEAL IS UNSIGNED AND HAS NO EVID ENTIARY VALUE. THEREFORE, THE ADDITION MADE BY THE LD. A.O. IS CONFIRMED AND THIS GROUND O F APPEAL IS DISMISSED. 4(IV) I HAVE PERUSED THE RIVAL SUBMISSIONS OF THE APPELLANT AS WELL AS DEPARTMENT. THE APPELLANT'S CLAIM IS THAT THE SUNDRY CREDITORS RELA TE TO PERIOD PRIOR TO 01/04/2003 WHEN THE INCOME OF THE APPELLANT WAS EXEMPT. HOWEVER, THE A PPELLANT HAS FAILED TO PROVIDE ANY RELIABLE DOCUMENTARY EVIDENCE TO PROVE ITS PLEA. TH E OTHER PLEA OF THE ASSESSEE APPELLANT THAT THE ADDITION IS NOT WARRANTED BECAUSE THE ASSE SSEE IS A GOVT. BODY ALSO HAS NO FORCE KEEPING IN VIEW THE FACT THAT INCOME-TAX ACT HAS HO WEVER EXEMPTED HOUSING BOARDS FROM TAX. THEREFORE, THE ACTION OF THE LD. A.O. IS CONFI RMED AND THIS GROUND OF APPEAL IS DISMISSED. 8. NOW THE ASSESSEE IS IN APPEAL. 9. LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISS IONS MADE BEFORE THE AUTHORITIES BELOW AND FURTHER SUBMITTED THAT NEITHER TH E A.O. NOR THE LD. CIT(A) APPRECIATED THE FACTS IN RIGHT PERSPECTIVE THEREFORE T HE ADDITION MADE BY THE A.O. AND SUSTAINED BY THE LD. CIT(A) WAS NOT JUSTIFIED. 10. IN HIS RIVAL SUBMISSIONS THE LD. SR. DR STRONGLY SU PPORTED THE ORDERS PASSED BY THE AUTHORITIES BELOW AND REITERATED THE OBSERVATIONS MADE BY THEM IN THEIR RESPECTIVE ORDERS. 11. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTI ES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. IN THE PRESENT CASE IT IS NOTICED THAT THE LD. CIT(A) SUSTAINED THE ADDITION BY OBSERVING THAT ASSESSEE FAI LED TO PROVIDE ANY RELIABLE DOCUMENTARY EVIDENCE AND THAT THE DOCUMENTS WHICH WERE FIL ED BEFORE HIM DURING THE COURSE OF ASSESSMENT PROCEEDINGS WERE UNSIGNED AND HA D NO EVIDENTIARY VALUE. HOWEVER IT IS NOT CLEAR WHICH DOCUMENTS WERE FURNISHED BEFORE THE LD. CIT(A) AND HOW THOSE WERE NOT RELIABLE. WE THEREFORE IN THE ABSENCE OF C LEAR FACTS ON RECORD DEEM IT APPROPRIATE TO SET ASIDE THIS ISSUE BACK TO THE FILE OF THE LD. CIT(A) TO ADJUDICATED AFRESH IN ACCORDANCE WITH LAW AFTER PROVIDING DUE AND REASONA BLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 4 12. THE ANOTHER ISSUE RAISED BY THE ASSESSEE IN GROUND NO. 3 RELATES TO THE SUSTENANCE OF ADDITION OF RS. 3,85,230/- MADE BY THE A .O. ON ACCOUNT OF OUTSTANDING EPF UNDER SECTION 43-B OF THE ACT. 13. THE FACTS RELATED TO THIS ISSUE IN BRIEF ARE THAT T HE A.O. MADE THE IMPUGNED ADDITION BY OBSERVING THAT THE AUDIT REPORT REVEALED THA T DATE OF PAYMENT HAD NOT BEEN MENTIONED AND SPACE WAS KEPT BLANK. 14. BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) AND SUBMITTED THAT THE PROVISION OF SECTION 43B WERE NOT APPLICABLE AS THE LIABILITY WAS NOT ON ACCOUNT OF REGULAR EPF BUT HAD ARISEN BECAUSE OF DISPUTE AS T O THE APPLICABILITY OF PF ON DAILY WAGERS. IT WAS FURTHER SUBMITTED THAT THE AMOUNT WAS PERTAINING TO PERIOD PRIOR TO A.Y. 2003-04 AND THAT THE AMOUNT HAD BEEN REVERSED IN THE SUBSEQ UENT YEARS. 15. LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF T HE ASSESSEE SUSTAINED THE ADDITION BY OBSERVING AS UNDER: 5(V). I HAVE PERUSED THE RIVAL SUBMISSIONS OF THE APPELLANT AS WELL AS DEPARTMENT. THE ASSESSEES PLEA IS THAT THE AMOUNT PERTAINS TO THE P ERIOD PRIOR TO ASSESSMENT YEAR 2003-04. THE LIABILITY AROSE DUE TO DISPUTE AS TO THE APPLIC ABILITY OF P.F. OF DAILY WAGERS. NO DEPOSIT OF E P F DUES WAS MADE FOR THE PERIOD 01/04/1988 TO 31/03/2001 AS NO DEDUCTION WAS MADE FOR THE PERIOD 01/04/988 TO 31/3/2001 AS NO DE DUCTION WAS MADE FROM DAILY WAGERS. IT WAS ONLY IN RESPONSE TO DEMAND FOR RS.9,72,232/- FROM P F COMMISSIONER THAT DEMAND WAS DEPOSITED IN 2003-04. LATER ON AN ADJUSTMENT E NTRY OF THE SAID AMOUNT WAS CARRIED OUT BY DEBITING THE SAME TO THE HEAD 'E P F RECOVER ABLE FROM EMPLOYEES' AND CREDITING THE SAME TO 'E P F A/C OF STAFF. THIS ADJUSTMENT EN TRY WAS RECTIFIED LATER AFTER RECONCILIATION OF EPF A/C WITH P F COMMISSIONER. KEEPING IN VIEW T HE FACT THAT AS ON THE DATE OF RETURN AND ASSESSMENT THE AMOUNT PAYABLE U/S 43B STOOD OUT STANDING IN THE BOOKS OF THE APPELLANT AND TILL DATE NO DOCUMENTARY EVIDENCE OF PAYMENT HAS BEEN FURNISHED BY THE APPELLANT, THE ACTION OF THE ID. A. O. DISALLOWING RS.3,85,230/- U/S 43B OF THE ACT IS CONFIRMED AND THIS GROUND OF APPEAL IS DISMISSED. 16. NOW THE ASSESSEE IS IN APPEAL. 17. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SU BMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND FURTHER SUBMITTED THAT NEITHER TH E A.O. NOR THE LD. CIT(A) APPRECIATED THE FACTS IN RIGHT PERSPECTIVE PARTICULAR LY THIS FACT THAT THE AMOUNT WAS SPECIFICALLY RECTIFIED AND REVERSED IN THE SUBSEQUENT Y EARS HAD NOT BEEN CONSIDERED. 18. IN HIS RIVAL SUBMISSIONS THE LD. DR SUPPORTED THE O RDERS OF THE AUTHORITIES BELOW. 5 19. AFTER CONSIDERING THE SUBMISSIONS OF BOTH THE PARTI ES AND THE MATERIAL AVAILABLE ON THE RECORD, WE ARE OF THE VIEW THAT THE CLAIM OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE AMOUNT WAS REVERSED IN SUBSEQUENT YEARS REQUIRES VE RIFICATION PARTICULARLY WHEN THE LD. CIT(A) HAS MENTIONED IN THE IMPUGNED ORDER THAT NO DOC UMENTARY EVIDENCE WAS FURNISHED BEFORE HIM. WE THEREFORE DEEM IT APPROPRIA TE TO SET ASIDE THIS ISSUE ALSO BACK TO THE FILE OF THE LD. CIT(A) TO BE ADJUDICATED AFRES H IN ACCORDANCE WITH LAW AFTER PROVIDING DUE AND REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 20. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED FO R STATISTICAL PURPOSES. (ORDER PRONOUNCED IN THE OPEN COURT ON 11/12/2019) SD/- SD/- '# $ .., (SANJAY GARG ) ( N.K. SAI NI) % &'/ JUDICIAL MEMBER / VICE PRESIDENT AG DATE: 11/12/2019 (+! ,-.- COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. $ / CIT 4. $ / 01 THE CIT(A) 5. -2 45&456789 DR, ITAT, CHANDIGARH 6. 8:% GUARD FILE (+ $ BY ORDER, ; # ASSISTANT REGISTRAR