NAOZER BEJON BALDAWALA, MUMBAI V. ASSISTANT COMMISSIONER OF INCOME TAX 19(2), MUMBAI

ITA 3150/MUM/2019

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 7917 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-01-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 10-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: THARIAN OOMMEN LD
• Assessee Lawyers: ANUJ KISNADWALALD
• Section: 143(3); 133(6)

Judgement Text

ITA NO.3150/MUM/2019 NAOZER BEJON BALDAWALA ASSESSMENT YEAR: 2012-13 1 IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI , , BEFORE HONBLE SHRI MAHAVIR SINGH, VP AND HONBLE SHRI MANOJ KUMAR AGGARWAL, AM (HEARING THROUGH VIDEO CONFERENCING MODE) ./ I.T.A. NO.3150/MUM/2019 ( / ASSESSMENT YEAR: 2012-13) NAOZER BEJON BALDAWALA 27, KAILASH DARSHAN KENNEDY BRIDGE, NANA CHOWK MUMBAI-400 007. / VS. A CIT - CIRCLE - 19(2) ROOM NO.207, 2 ND FLOOR, MATRU MANDIR, TARDEO MUMBAI-400 007. !' ./ ./PAN/GIR NO. AACPB-7254-K ( '$ /APPELLANT ) : ( %&'$ / RESPONDENT ) ASSESSEE BY : SHRI ANUJ KISNADWALA-LD. AR REVENUE BY : SHRI THARIAN OOMMEN- LD. DR / DATE OF HEARING : 14/01/2021 / DATE OF PRONOUNCEMENT : 14/01/2021 / O R D E R MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. AFORESAID APPEAL BY ASSESSEE FOR ASSESSMENT YEAR (AY) 2012-13 CONTESTS THE ORDER OF LD. COMMISSIONER OF I NCOME-TAX (APPEALS)-30, MUMBAI, [IN SHORT REFERRED TO AS CIT (A)], APPEAL NO.CIT(A)-30/ACIT-19(2)/722/15-16 DATED 11/03/2019 ON FOLLOWING GROUNDS OF APPEAL:- ITA NO.3150/MUM/2019 NAOZER BEJON BALDAWALA ASSESSMENT YEAR: 2012-13 2 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE ADDITION OF RS.63,01,823/- U/S 41(1) OUT OF RS.93,8 1,118/- MADE BY THE LEARNED ASSESSING OFFICER. 2. THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) ERRED IN CONFIRMING THE ADDITION OF RS.63,01,823/- U/S 41(1) DESPITE THE FA CT THAT THE SAID CREDITORS WERE OUTSTANDING AS AT THE DATE OF THE BALANCE SHEET AND HAD NOT BEEN WRITTEN BACK AND CONSEQUENTLY THE PROVISION OF SECTION 41(1) DID NOT APPLY. 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) ERRED IN NOT APPRECIATING THAT THE CREDITORS LIABILITY WAS APPEARING IN THE B OOKS OF ACCOUNT OF THE APPELLANT AND HIS FINANCIAL STATEMENTS, AND THEREFORE ACTION OF A SSESSING OFFICER WAS TOTALLY UNWARRANTED. 4. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN STATING THAT THERE IS NO DISPUTE ABOUT THE APPLICABILITY OF SECT ION 41(1), WHEN THE SAME HAS BEEN STRONGLY CONTESTED BY THE APPELLANT IN THE ASSESSME NT AND APPELLATE PROCEEDINGS. 5. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE ADDITION U/S. 41(L) WITHOUT APPRECIATING THE SUBMIS SION MADE BY THE APPELLANT, AND THE RATIO OF VARIOUS JUDICIAL PRONOUNCEMENTS RELIED ON AND REFERRED TO IN THE SAID SUBMISSION. AS EVIDENT, THE ASSESSEE IS AGGRIEVED BY CONFIRMATI ON OF CERTAIN ADDITION U/S. 41(1) FOR RS.63.01 LACS ON ACCOUNT OF ALLEGED REMISSION OR CESSATION OF TRADING LIABILITY. 2. WE HAVE CAREFULLY HEARD THE RIVAL SUBMISSIONS AN D PERUSED RELEVANT MATERIAL ON RECORD INCLUDING DOCUMENTS PLA CED IN THE PAPER-BOOK. OUR ADJUDICATION TO THE SUBJECT MATTER OF APPEAL WOULD BE AS GIVEN IN SUCCEEDING PARAGRAPHS. 3. THE MATERIAL FACTS ARE THAT THE ASSESSEE BEING R ESIDENT INDIVIDUAL STATED TO BE ENGAGED AS CONTRACTOR & TRADER WAS ASS ESSED U/S. 143(3) ON 12/03/2015 WHEREIN IT WAS SADDLED WITH AN ADDITION OF RS.93.81 LACS U/S. 41(1). THE SAME STEM FROM THE FA CT THAT CERTAIN CREDITORS WERE OUTSTANDING FOR 3-4 YEARS IN ASSESSE ES FINANCIAL STATEMENTS. THE ASSESSEE DEFENDED BY SUBMITTING THA T THE CREDITORS COULD NOT BE PAID DUE TO SHORTAGE OF FUND S AND THE ASSESSEE WAS NOT IN A POSITION TO PAY THE SAME. THU S THE OUTSTANDING LIABILITIES WERE ONLY ON ACCOUNT OF COM MERCIAL EXPEDIENCY. HOWEVER, NOTICES ISSUED U/S 133(6) COUL D NOT BE ITA NO.3150/MUM/2019 NAOZER BEJON BALDAWALA ASSESSMENT YEAR: 2012-13 3 SERVED AT THE ADDRESSES PROVIDED BY THE ASSESSEE. T HUS FORMING AN OPINION THAT THE LIABILITY AGAINST THESE CREDITO RS CEASED TO EXIST, AN AGGREGATE AMOUNT OF RS.93.81 LACS WITH RESPECT T O 5 CREDITORS WAS ADDED TO ASSESSEES INCOME INVOKING THE PROVISI ONS OF SEC.41(1). 4. UPON FURTHER APPEAL, LD. CIT(A) CONFIRMED ADDITI ON TO THE EXTENT OF RS.63.01 LACS AGAINST 3 CREDITORS BY OBSE RVING THAT THE ASSESSEE COULD NOT ADDUCE ANY CORRESPONDENCE, LEGAL OR OTHERWISE, WITH THESE CREDITORS TO ESTABLISH THAT T HE LIABILITY SUBSISTS. AGGRIEVED, THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 5. BEFORE US, LD. AR HAS PLEADED THAT THE LIABILITI ES WERE EXISTING DURING THE IMPUGNED AY AND THE SAME WERE VERY MUCH PAYABLE BY THE ASSESSEE. HOWEVER, IN THE ALTERNATIVE, OUR ATTE NTION WAS DRAWN TO THE FACT THAT THE AGGREGATE AMOUNT OF RS.93.81 L ACS WAS ALREADY OFFERED TO TAX BY THE ASSESSEE DURING FINANCIAL YEA R 2018-19. IN SUPPORT OF THE SAME, COMPUTATION OF INCOME AS WELL AS FINANCIAL STATEMENTS FOR FINANCIAL YEAR 2018-19 HAS BEEN PLAC ED ON RECORD. UPON PERUSAL OF THE SAME, WE FIND THAT THE ASSESSEE HAS CREDITED AN AMOUNT OF RS.94.02 LACS TO THE PROFIT OF LOSS AC COUNT BY WAY OF SUNDRY BALANCE WRITTEN BACK. THIS SUM INCLUDES RS.93.81 LACS DUE TOWARDS FIVE CREDITORS. THE SAME IS EVIDENT FROM PO INT NO.6 OF NOTE 8-NOTES TO THE ACCOUNTS FOR THE YEAR ENDING 31/03/2 019. SINCE THE AMOUNT HAS ALREADY BEEN OFFERED TO TAX AND THE ASSE SSEE HAS POSITIVE INCOME IN BOTH THE YEARS AND THUS THERE WO ULD ULTIMATELY BE NO LOSS TO THE REVENUE, WE ARE INCLINED TO DELET E THE ADDITION FOR THIS YEAR. THE CONFIRMATION OF THE SAME WOULD RESUL T INTO DOUBLE ITA NO.3150/MUM/2019 NAOZER BEJON BALDAWALA ASSESSMENT YEAR: 2012-13 4 TAXATION OF THE SAME AMOUNT. HENCE, WE DELETE THE I MPUGNED ADDITION OF RS.63.01 LACS AND ALLOW THE APPEAL. 6. THE APPEAL STANDS ALLOWED IN TERMS OF OUR ABOVE ORDER. ORDER PRONOUNCED ON 14 TH JANUARY, 2021. SD/- SD/- (MAHAVIR SINGH) (MANOJ KUMAR AGGARWAL) / VICE PRESIDENT / ACCOUNTANT MEMBER MUMBAI; DATED : 14/01/2021 SR.PS, JAISYVARGHESE / COPY OF THE ORDER FORWARDED TO : 1. '$ / THE APPELLANT 2. %&'$ / THE RESPONDENT 3. - ( ) / THE CIT(A) 4. - / CIT CONCERNED 5. ./% ( 0 , 0 , / DR, ITAT, MUMBAI 6. /123 / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.