M/s. Ess Kay Furnishers, New Delhi V. ACIT, New Delhi

ITA 3060/DEL/2010

• Counselvise Citation: 306020114 RSA 2010
• Duration Of Justice: 1 year(s) 3 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 09-08-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 17-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R S NEGI SENIOR
• Keywords: Additional evidence

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH B : NEW DELHI) SHRI RAJPAL YADAV, JUDICIAL MEMBER AND BEFORE SHRI B.C. MEENA, ACCOUNTANT MEMBER ITA NO.3060/DEL./2010 (ASSESSMENT YEAR :2006-07) M/S. ESS KAY FURNISHERS, VS. ACIT, CIRCLE 27 (1) , 1/69, W.H.S. TIMBER BLOCK, NEW DELHI. KIRTI NAGAR, NEW DEHI-110 015. (PAN : AAAFE2927Q) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI ANIL KUMAR GUPTA, CA REVENUE BY : SHRI R.S. NEGI, SENIOR DR ORDER PER B.C. MEENA, ACCOUNTANT MEMBER : THIS APPEAL FILED BY THE ASSESSEE ARISES OUT OF THE ORDER OF CIT (APPEALS)-XXIV, NEW DELHI DATED 19.03.2010 FOR THE ASSESSMENT YEAR 2006- 07. THE GROUNDS OF APPEAL READ AS UNDER :- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-XXIV, NEW DELHI HAS LEGALLY ERRED IN CONFIRMING THE ADDITIONS OF RS.76,98,446/- U/S 41(1) OF THE INCOME-TAX ACT AS U NCLAIMED CREDIT BALANCES OF SUNDRY CREDITORS. 2. THE ASSESSEE FIRM HAS RIGHT TO ADD, AMEND, ALTER , RECTIFY, GROUNDS OF APPEAL. ITA NO.3060/DEL./2010 2 2. THE ASSESSEE IS A FIRM ENGAGED IN THE BUSINESS O F WORK CONTRACT OF INTERIOR FURNISHING AND ALLIED WORKS. THE ASSESSEE IS ALSO A MANUFACTURE OF FURNITURE. THE ONLY ISSUE INVOLVED IN THE APPEAL I S CONFIRMING THE ADDITION OF RS.76,98,446/- U/S 41(1) OF INCOME-TAX ACT OUT OF U NCLAIMED CREDIT BALANCE UNDER THE HEAD SUNDRY CREDITORS. THE AO INQUIRED ABOUT THE LONG OUTSTANDING BALANCE FROM 77 PARTIES SINCE 1998-99 U NDER THE HEAD SUNDRY CREDITORS. THE ASSESSEE SUBMITTED THAT THE AMOUNT HAS BEEN ADDED BACK TO THE INCOME U/S 41 OF THE INCOME-TAX ACT IN OF A.Y. 2008-09. ASSESSEE FILED APPLICATION UNDER RULE 29 OF ITAT RULES FOR ADMISSI ON OF ADDITIONAL EVIDENCE. AFTER HEARING BOTH SIDES, WE ADMIT THE S AME FOR THE SUBSTANTIAL CAUSE OF JUSTICE. 3. THE LEARNED AR SUBMITTED THAT THERE ARE TWO PART NERS IN ASSESSEES FIRM, NAMELY, SHRI RAMESH CHAND SHARMA AND SMT. LAJ JAWATI SHARMA. THE AMOUNT OF RS.76,98,446/- WAS PERTAINING TO THE YEAR 1998. THIS AMOUNT WAS WRITTEN BACK TO INCOME U/S 41 OF THE INCOME-TAX ACT IN THE A.Y. 2008-09 AS THE LIABILITY NO LONGER REQUIRED TO BE REPAID. TH E SAME WAS REFLECTED IN PROFIT & LOSS ACCOUNT FOR THE PERIOD ENDING ON 31.3.2008. IT IS PLEADED THAT THE AMOUNT OF SUB-CONTRACTORS AND SUPPLIERS WAS OUTSTAN DING SINCE 31.03.1998. ONE OF THE DEBTORS, M/S. PERTECH COMPUTER LIMITED C OULD NOT PAY THE AMOUNT. ALL THESE SUB-CONTRACTORS AND SUPPLIERS (CREDITORS) WHOSE BALANCE WAS OUTSTANDING EXECUTED OR SUPPLIED THE MATERIALS TO M /S. PERTECH COMPUTER ITA NO.3060/DEL./2010 3 LIMITED AND THIS COMPANY - M/S. PERTECH COMPUTER LI MITED WAS NOT IN OPERATION SINCE 1999 DUE TO MIS-MANAGEMENT OF FINAN CIAL MATTERS AND LITIGATION WITH THE CREDITORS. LIQUIDATION AND WIN DING UP PROCEEDINGS WERE PENDING IN THE COURT. ONLY IN THE YEAR 2007, THE P ARTNERS OF THE ASSESSEE CAME TO UNDERSTAND THAT THE AMOUNT IS NOT RECOVERABLE. THEREFORE, PARTNERS DECIDED TO WRITE OFF THE BALANCE OF THE DEBTORS AND CORRESP ONDING SUNDRY CREDITORS AS THE SAME WERE TIME BARRED. ALL THE PARTIES WHOSE A MOUNTS WERE OUTSTANDING AGAINST THE ASSESSEE WERE IN RESPECT OF THE CONTRAC T EXECUTED AND MATERIAL SUPPLIED TO PERTECH COMPUTER LIMITED. AS IT WAS NO T POSSIBLE TO PAY OFF, HENCE THE AMOUNT WAS WAIVED OFF IN THE BOOKS OF ASS ESSEE AND THE LIABILITY TO PAY WAS WRITTEN BACK IN THE BOOKS OF ACCOUNT. THERE FORE, THE REVENUE AUTHORITIES WERE NOT JUSTIFIED IN MAKING AND SUSTAI NING THE ADDITION IN ASSESSMENT YEAR 2006-07. LEARNED AR PRAYED TO SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND GRANT RELIEF TO ASSESSEE. LE ARNED DR RELIED ON THE ORDERS OF THE AUTHORITIES BELOW. 3. WE HAVE HEARD BOTH THE SIDES ON THE ISSUE. ON T HE PERUSAL OF THE PROFIT AND LOSS ACCOUNT FOR THE PERIOD FROM 1.4.2007 TO 31 .03.2008, WE NOTE THAT THE LIABILITY OF RS.78,89,023.73 WERE WRITTEN BACK AS L IABILITY NO LONGER REQUIRED. IN THE SAME PROFIT & LOSS ACCOUNT, THE AMOUNT HAS B EEN DEBITED OF RS.1,38,81.141.30 AS BAD DEBT. AS PER THE ASSESSEE S CLAIM, THE SUNDRY CREDITORS LISTING TO 77 NUMBERS WERE IN RESPECT OF THE WORK DONE AT THE ITA NO.3060/DEL./2010 4 PREMISES OF PERTECH COMPUTER LIMITED AND THE SAME W ERE PENDING SINCE MARCH, 1998. AS ASSESSEE HAD WRITTEN BACK THE AMOU NT IN THE ASSESSMENT YEAR 2008-09 BUT IT IS NOT PROVED THAT AMOUNT WAS PAYABL E DURING THE RELEVANT PERIOD TO ASSESSMENT YEAR 2006-07 WHICH IS UNDER CO NSIDERATION BEFORE US. THE ASSESSEE HAS NOT FILED THE CONFIRMATION FROM TH ESE CREDITORS TO ESTABLISH THAT THE LIABILITY WAS IN EXISTENCE AS ON 31.03.200 6. THE ADDITION CANNOT BE DELETED ONLY ON THE BASIS OF THE FACT THAT IT WAS W RITTEN BACK IN THE YEAR 2008- 09. IT IS FOR THE ASSESSEE TO ESTABLISH THAT THE L IABILITY OUTSTANDING IN ITS BOOKS WERE PAYABLE AS ON 31.03.2006. THE CLAIMING OF BAD DEBT IN RESPECT OF DEBTOR IN THE YEAR 2008-09 WILL ALSO NOT BE SUFFICIENT TO JUSTIFY ITS CLAIM. THE FACTS, THAT THESE CREDITORS SUPPLIED THE MATERIAL TO PERTE CH COMPUTER LTD., ARE ALSO NOT ESTABLISHED. THUS, ALL THESE ASPECTS ARE RELEV ANT FACTORS FOR ADJUDICATING THE CONTROVERSY. THEREFORE, IN THE INTEREST OF JUS TICE AND EQUITY, WE RESTORE THE ISSUE TO THE FILE OF THE AO FOR RE-ADJUDICATION. H OWEVER, OBSERVATIONS MADE BY US WILL NOT IMPAIR OR INJURE THE CASE OF AO OR W OULD NOT CAUSE ANY PREJUDICE TO THE DEFENCE/EXPLANATION OF THE ASSESSE E. 4. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON THIS 30 TH DAY OF SEPTEMBER, 2011. SD/- SD/- (RAJPAL YADAV) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED THE 30 TH DAY OF SEPTEMBER, 2011/TS ITA NO.3060/DEL./2010 5 COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-XXIV, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.