The ITO, Ward-1., Rajahmundry V. M/s Ratna Trading Co,

ITA 343/VIZ/2008

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 0729 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 11 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-06-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2005-2006
• Appeal Filed On: 16-06-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUBRATA SARKAR
• Keywords: Business income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI BR BASKARAN, ACCOUNTANT MEMBER ITA NO.343/VIZAG/2008 ASSESSMENT YEAR : 2005-06 ITO WARD-1 RAJAHMUNDRY M/S. RATNA TRADING CO. RAJAHMUNDRY (APPELLANT) VS. (RESPONDENT) PAN NO.ACCFR 6292B CO NO.25/VIZAG/2008 ASSESSMENT YEAR : 2005-06 M/S. RATNA TRADING CO. RAJAHMUNDRY ITO WARD-1 RAJAHMUNDRY (APPELLANT) VS. (RESPONDENT) APPELLANT BY: SHRI SUBRATA SARKAR, DR RESPONDENT BY: SHRI G.V.N. HARI, CA ORDER PER SHRI S.K. YADAV, JUDICIAL MEMBER:- THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST T HE ORDER OF THE CIT(A) ON VARIOUS GROUNDS WHICH ARE AS UNDER:- 1. THE ORDER OF THE CIT(A) IS ERRONEOUS AS TO FACT AND IN LAW. 2. THE CIT(A) OUGHT TO HAVE APPRECIATED THAT THE WRITI NG BACK OF RS.85,93,048/- TO PARTNERS INDIVIDUAL ACCOUNTS WOUL D MEAN UNILATERAL REMISSION IN THE HANDS OF THE FIRM AND O NCE THE LIABILITY SO REMITTED THE SAME IS TAXABLE UNDER SECTION 41(1) OF THE I.T. ACT. 3. THE CIT(A) OUGHT TO HAVE APPRECIATED THAT THE AMOUN T OF RS.6,00,867/- WRITTEN BACK REPRESENTS UNILATERAL RE MISSION IN THE HANDS OF THE FIRM AND THE LIABILITY SO REMITTED IS TAXABLE UNDER SECTION 41(1) OF THE I.T. ACT. 4. THE CIT(A) HAD ERRED IN ACCEPTING THE FACT THAT THE AMOUNT OF RS.85,93,048/- HAVE NOT BEEN CLAIMED IN TRADING AND PROFIT & LOSS ACCOUNT. THE CIT(A) OUGHT TO HAVE APPRECIATED THAT THESE AMOUNTS REPRESENTS TRADE CREDITORS ONLY AS THEY WER E INTRODUCED IN THE YEAR OF PURCHASE. 5. THE CIT(A) OUGHT TO HAVE APPRECIATED THAT THE FIRM IS SEPARATE TAXABLE ENTITY UNDER I.T. ACT, 1962 AND THE UNILATER AL ACT OF WRITING BACK OF DUES TO CREDITORS TO PARTNERS ACCOUNT IS TA XABLE UNDER SECTION 41(1) OF THE I.T. ACT IN THE HANDS OF FIRM. 2 6. ANY OTHER GROUND THAT MAY BE URGED AT THE TIME OF H EARING. 7. THE APPELLANT/AO CRAVES LEAVE TO ADD, AMEND OR ALTE R ANY OF THE GROUNDS AS THE CASE MAY ARISE. 2. THE ASSESSEE HAS ALSO FILED THE CROSS OBJECTIONS ASSAILING THE ORDER OF THE CIT(A) ON THE GROUND THAT CIT(A) HAS ERRED IN C ONFIRMING THE ADDITION OF RS.53,867/- U/S 41(1)(E) OF THE ACT. 3. SINCE THE APPEAL AND THE C.O. WERE HEARD ALTOGET HER THEY ARE BEING DISPOSED OFF THROUGH THIS CONSOLIDATED ORDER. 4. FACTS IN BRIEF BORNE OUT FROM THE RECORD ON THE IMPUGNED ISSUE ARE THAT ASSESSEE IS A PARTNERSHIP FIRM CONSISTING 3 PA RTNERS, ENGAGED IN THE BUSINESS, MAINLY OF COMMISSION AGENCIES IN ONION AN D POTATOES AND ALSO TRADING IN SUCH PRODUCTS. DURING THE SCRUTINY ASSE SSMENT PROCEEDINGS FOR THE RELEVANT ASSESSMENT YEAR, THE A.O. NOTICED THAT THE CAPITAL OF THE FIRM AS ON 31.3.2004 STOOD AT A NEGATIVE BALANCE OF RS.(-)1,03 ,40,134/- BUT AFTER A GAP OF 1 YEAR AS ON 31.3.2005, SUCH CAPITAL STOOD AT A POSITIVE BALANCE OF RS.40,89,975/-. THE A.O. SOUGHT A CLARIFICATION FR OM THE ASSESSEES IN THIS REGARD. IN RESPONSE THERETO, IT WAS EXPLAINED THAT THE CREDIT BALANCE IN RESPECT OF (A) ICICI BANK LOAN OF RS.87,61,595/- (B) PRINCIPALS OF RS.85,93,408/- AND (C) FRIENDS AND RELATIVES OF RS. 6,00,867/- WERE TRANSFERRED TO AND TAKEN OVER BY THE 3 PARTNERS AS ELABORATELY REFLECTED IN THE CHART WHICH IS AS UNDER: DEBIT IN LEDGER ACCOUNT AMOUNT CORRESPONDING CREDIT IN CAPITAL ACCOUNT OF PARTNERS I. KURMA RAO I. KESAVA RAO I. RATNAVATHI 1 2 3 4 5 A) ICICI BANK LOAN A/C 8761594 3066558 2628478 3066558 B) VARIOUS PRINCIPALS A/CS (396 A/CS) 8593408 3432798 5160610 C) OTHER A/CS (20 A/CS) 600867 600867 3 5. IT WAS FURTHER EXPLAINED THAT SUCH TRANSFER ADJUS TMENT WAS MADE WITH THE OBJECTIVE OF PROJECTING A NEAT AND HEALTHY FINA NCIAL PICTURE TO THE OUTSIDER CREDITORS AND DEBTORS PARTICULARLY TO THE FINANCIAL INSTITUTIONS. ON OBSERVING THAT SUCH LIABILITIES OF THE FIRM HAD CEASED TO EXI ST CONSEQUENT TO BEING WRITTEN OFF IN ITS ACCOUNTS, THE ASSESSING OFFICER SOUGHT TO INVOKE THE PROVISIONS OF SECTION 41(1)(A) OF THE ACT FOR TAXIN G THE CESSATION OF LIABILITY AS PROFITS AND GAINS OF BUSINESS OF THE ASSESSEE FIRM OF THAT RELEVANT PREVIOUS YEAR. OPPOSING SUCH PROPOSAL IT WAS EXPLAINED ON B EHALF OF THE ASSESSEE THAT THE ACTION OF WRITING OFF THE LIABILITIES WAS ONLY UNILATERAL ACTION OF THE PARTNERS WITHOUT CONSENT FROM THE BANK, THE PRINCIP AL AND THE FRIENDS AND RELATIVES. THUS THE OBLIGATION TO REPAY THE LOANS/ LIABILITIES CONTINUE DESPITE SUCH UNILATERAL ACTION AND AS SUCH IT CANNOT BE SAI D THAT THERE IS CESSATION OF LIABILITY IN THE HANDS OF THE FIRM. IT WAS FURTHER CONTENDED THAT ALL SUCH LIABILITIES WRITTEN BACK HAVING NOT CLAIMED AS AN A LLOWANCE AND DEDUCTION IN THE PROFIT AND LOSS ACCOUNT OF THE RESPECTIVE EARLI ER ASSESSMENT YEARS IN WHICH THEY WERE RECORDED IN THE BOOKS OF ACCOUNTS, THE PROVISIONS OF SECTION 41(1)(A) OF THE ACT CANNOT BE INVOKED IN THE ASSESS EES CASE. IN SUPPORT OF HIS CONTENTION, HE HAS PLACED A RELIANCE UPON THE J UDGEMENT OF THE APEX COURT IN THE CASE OF CIT VS. SUGAULI SUGAR WORKS (P ) LTD. (236 ITR 518), WHEREIN IT WAS HELD THAT THE MERE FACT THAT ASSESSE E HAD MADE AN ENTRY OF TRANSFER IN ITS ACCOUNTS UNILATERALLY HE WILL NOT E NABLE THE DEPARTMENT TO SAY THAT SECTION 41(1) WOULD APPLY AND THE AMOUNT SHOUL D BE INCLUDED IN THE TOTAL INCOME OF THE ASSESSEE. BEING NOT CONVINCED WITH THE EXPLANATIONS OF THE ASSESSEE, THE A.O. INVOKED THE PROVISIONS OF SE CTION 41(1) OF THE ACT AND BROUGHT THE LIABILITIES SO WRITTEN OFF TO THE EXTEN T OF RS.91,94,275/- TO TAX AS BUSINESS INCOME OF THE ASSESSEES FOR THE IMPUGNED A SSESSMENT YEAR. 6. THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT( A) AND CLARIFIED THE ACCOUNTING ENTRIES IN RESPECT OF COMMISSION BUSINES S BY PLACING A DETAILED CHART WITH THE SUBMISSION THAT THE GOODS RECEIVED O N CONSIGNMENT IS NOT DEBITED TO THE TRADING AND PROFIT & LOSS ACCOUNT EV EN THOUGH THE BALANCE SHEET DISCLOSES OUTSTANDING CREDITS ON ACCOUNT OF M ONIES PAYABLE TO THE CONCERNED PRINCIPALS. ON THE OTHER HAND, UNDER NOR MAL TRADING ACTIVITY, ALL GOODS PURCHASED WILL HAVE TO BE DEBITED TO TRADING AND PROFIT & LOSS ACCOUNT AND CORRESPONDING OUTSTANDING BALANCE PAYABLE TO TH E SUPPLIER OF THE GOODS 4 ARE REFLECTED IN THE BALANCE SHEET UNDER THE HEAD ` TRADE CREDITORS. THUS IN THE ACCOUNTS OF COMMISSION AGENT, NO DEDUCTION WHAT SOEVER IS MADE ON ACCOUNT OF GOODS RECEIVED ON CONSIGNMENT EVEN THOUG H THE CORRESPONDING OUTSTANDING BALANCE HAVE TO APPEAR IN THE BALANCE S HEET UNDER THE HEAD `CONSIGNOR TRADERS/TRADE CREDITORS. THEREFORE, IN RESPECT OF OUTSTANDING CREDIT BALANCE PERTAINING TO THE PRINCIPALS, NO DED UCTION HAVE BEEN CLAIMED BY NOT DEBITING THEM TO THE P&L ACCOUNT OF THE RESP ECTIVE ASSESSMENT YEARS IN WHICH SUCH LIABILITIES ACCRUED AND NO DEDUCTION OR ALLOWANCE HAVING BEEN MADE OR ALLOWED RESPECTIVELY, THEREOF, THE WRITING OFF OF SUCH LIABILITIES WOULD NOT RESULT IN TERM OF SUCH LIABILITY AS INCOME FROM BUSINESS OF THE RELEVANT ACCOUNTING YEAR, IN WHICH IT WAS WRITTEN OFF, AS EN VISAGED U/S 41(1)(A) OF THE ACT. SIMILARLY, THE LIABILITIES TO THE EXTENT OF R S.6,00,867/- REPRESENTS LOANS AND DEPOSITS FROM FRIENDS AND RELATIVES AND NOT TRA DE LIABILITIES. THE DETAILS OF LOANS WERE ALSO FURNISHED BY THE CIT(A). SUCH LOAN S AND DEPOSITS HAVING NOT BEEN DEBITED TO RESPECTIVE TRADING AND PROFIT & LOS S ACCOUNT IN THE YEARS IN WHICH THEY WERE INTRODUCED IN THE BOOKS AND THERE B EING NO DEDUCTION CLAIMED OR ALLOWED THEREOF, THE PROVISIONS OF SECTI ON 41(1)(A) ONCE AGAIN CANNOT BE INVOKED. 7. CIT(A) RE-EXAMINED THE ISSUE AND BEING CONVINCED WITH THE EXPLANATIONS OF THE ASSESSEES HE HAS CONCLUDED THAT NO DOUBT THE BENEFITS BY WAY OF REMISSION OR CESSATION OF SUCH LIABILITY HAS ACCRUED IN THE HANDS OF THE ASSESSEES BUT THEN THERE BEING NO RELATABLE EXPENDI TURE, THE CESSATION OF LIABILITY THERE OF COULD NOT BE TERMED AS PROFIT U/ S 41(1)(A) OF THE ACT IN THE HANDS OF THE ASSESSEE DURING THE RELEVANT ACCOUNTIN G YEAR. 8. THE CIT HOWEVER, CONFIRMED THE ADDITION OF RS.50 ,861/- ON THE GROUND THAT IT WAS A CREDIT BALANCE IN THE NAME OF R. SATH I RAJU & SONS WHICH IS BROUGHT FORWARD AS ON 1.4.1994 APPEARS TO BE A TRAD E CREDIT BALANCE IN RESPECT OF SAME PURCHASES DEBITED IN THE TRADING AN D PROFIT & LOSS ACCOUNT PRIOR TO 1.4.1994. THE REQUIRED DETAILS WITH REGAR D TO THE ACCRUAL OF SUCH LIABILITY WAS NOT FURNISHED BY THE ASSESSEES AND TH E CIT(A) FINALLY TREATED THE LIABILITY OF THIS AMOUNT AS CEASED AND IS DEEME D TO BE PROFIT AND GAINS FROM BUSINESS OF THE RELEVANT ASSESSMENT YEAR U/S 4 1(1)(A) OF THE ACT. THIS 5 ORDER OF THE CIT(A) IS CHALLENGED BEFORE THE TRIBUN AL BY THE REVENUE AS WELL AS THE ASSESSEES THROUGH CROSS OBJECTIONS. 9. THE LD. D.R. BESIDES PLACING A HEAVY RELIANCE UP ON THE ORDER OF THE A.O., HAS SUBMITTED THAT THE ASSESSEE HAS GOT THE B ENEFIT OF CESSATION OF LIABILITY, THEREFORE, THE BENEFIT SHOULD BE A DEEME D PROFIT FROM THE BUSINESS ACTIVITIES OF THE ASSESSEES U/S 41(1)(A) OF THE ACT . 10. LD. COUNSEL FOR THE ASSESSEE ON THE OTHER HAND PLACED A HEAVY RELIANCE ON THE ORDER OF CIT(A). WITH REGARD TO TH E ADDITION OF RS.53,867/-, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THOUGH THIS AMOUNT WAS A CREDIT BALANCE IN THE NAME OF M/S. R. SATHI RAJU & SONS, BUT IT WAS NEVER DEBITED TO THE P&L ACCOUNT IN THE RELEVANT YEARS BU T NO EVIDENCE IN THIS REGARD ARE PLACED BEFORE US. 11. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFUL LY EXAMINED THE ORDER OF THE LOWER AUTHORITIES AND WE FIND THAT UNDISPUTE DLY THESE LIABILITIES WERE SHOWN IN THE HANDS OF THE ASSESSEES AS ON 31.3.2004 BUT DURING THE RELEVANT YEAR ALL THESE LIABILITIES WERE TAKEN OVER BY ITS P ARTNERS. THE NATURE OF LIABILITIES ARE BASICALLY LOANS AND ADVANCES AND TH E CREDIT BALANCES. THESE LIABILITIES WERE NEVER DEBITED TO THE P&L ACCOUNT D URING THE RELEVANT ASSESSMENT YEAR IN WHICH THEY WERE ACCRUED. THEREF ORE, THE BASIC QUALIFICATION FOR INVOKING THE PROVISIONS OF SECTIO N 41(1)(A) WAS NOT FULFILLED. THE ASSESSEE HAS EXPLAINED IN DETAIL AS TO HOW THE CREDIT BALANCE APPEARED IN ITS BOOKS OF ACCOUNT AND AS TO WHY THEY WERE TAKEN OVER BY ITS PARTNERS IN THEIR OWN NAME, THOUGH WITHOUT THE CONSENT OF THE C REDITORS. THESE CONTENTIONS OF THE ASSESSEES WAS NOT DISPUTED BY TH E REVENUE, THEREFORE, UNLESS AND UNTIL THE LIABILITIES ARE CEASED IN THE HANDS OF THE ASSESSEES, IT CANNOT BE CONVERTED INTO A PROFIT U/S 41(1)(A) OF T HE ACT. CIT(A) HAS ADJUDICATED THE ISSUE IN DETAIL IN ITS ORDER IN THE LIGHT OF RELEVANT PROVISIONS AND EXPLANATIONS FURNISHED BY THE ASSESSEE. FOR TH E SAKE OF REFERENCE, WE EXTRACT THE RELEVANT PORTION OF THE OBSERVATION OF THE CIT(A) AS UNDER:- 6 AFTER HEARING THE LEARNED AUTHORIZED REPRESENTATIVE AND ON A CAREFUL CONSIDERATION OF THE FACTS RELATING TO THE ISSUE, T HE FOLLOWING OBSERVATIONS MADE AND DECISIONS TAKEN:- (I) UNDER THE SCHEME OF SECTION 41(1)(A), CERTAIN CONDITIONS ARE REQUIRED TO BE CUMULATIVELY FULFILLED SO AS TO REND ER THE LIABILITY WRITTEN OFF AS DEEMED PROFIT CHARGEABLE TO TAX AS THE INCOME OF TH E PREVIOUS YEAR, IN WHICH IT IS WRITTEN OFF. THE CONDITIONS ARE:- (A) THE LIABILITY, WHETHER BROUGHT FORWARD FROM EAR LIER YEARS OR PERTAINING TO THE CURRENT ACCOUNTING YEAR, MUST BE IN EXISTENCE; (B) THE EXPENDITURE OR LOSS IN RESPECT OF SUCH LIAB ILITY MUST HAVE BEEN ALLOWED DEDUCTION IN THE ASSESSMENT YEAR, IN WHICH IT ACCRUED; THE CONCERNED ASSESSEE MUST DERIVE SOME BENEFIT W HETHER IN CASH, OR BY WAY OF REMISSION OR CESSATION THEREOF, OR IN ANY OTHER MANNER, WHATSOEVER; AND (D) SUCH LIABILITY CEASES TO EXIST IN THE ACCOUNTS AFTER BEING WRITTEN OFF. IF ALL THE ABOVE CONDITIONS ARE CUMULATIVELY FULFILL ED, THEN THE BENEFIT EITHER BY WAY OF CASH OR CESSATION OF SUCH LIABILIT IES WOULD BE DEEMED AS THE PROFITS AND GAINS FROM BUSINESS OF THE PREVIOUS YEA R, IN WHICH SUCH BENEFIT IS DERIVED. (II) APPLYING THE AFORESTATED POSTULATION TO THE FA CTS AND CIRCUMSTANCES OF THE APPELLANTS CASE, IT COULD BE OBSERVED THAT NOT ALL CONDITIONS HAVE BEEN CUMULATIVELY SATISFIED, IN AS MUCH AS, NO DEDUCTION BY WAY OF THE MONEYS PAYABLE TO THE PRINCIPALS AGGREGATING TO RS.85,93,4 08 HAVE EVER BEEN CLAIMED NOR ALLOWED DEDUCTION IN THE RESPECTIVE TRADING AND PROFIT & LOSS ACCOUNT OF THE RELEVANT EARLIER ASSESSMENT YEARS. NO DOUBT, T HE BENEFIT BY WAY OF REMISSION OR CESSATION OF SUCH LIABILITY HAS ACCRUE D IN THE HANDS OF THE APPELLANT, BUT THEN THERE BEING NO RELATABLE EXPEND ITURE, THE CESSATION OF LIABILITY THEREOF COULD NOT BE TERMED AS PROFIT U/S 41(1)(A) OF THE ACT IN THE HANDS OF THE APPELLANT DURING THE RELEVANT ACCOUNTI NG YEAR. (III) AS REGARDS THE WRITING OFF OF LIABILITIES OF RS.6,00,867, ON A TEST CHECK OF THE NATURE OF THE LIABILITIES FROM THE BOOKS OF ACCOUNTS OF THE EARLIER YEARS, IN WHICH THE LIABILITIES ACCRUED, IT COULD BE OBSER VED THAT 18 OUT OF 20 INDIVIDUAL ITEM OF LIABILITIES REPRESENT CASH CREDI TS INTRODUCED IN THE BOOKS OF ACCOUNTS BETWEEN 1994 TO 1999, AND MOST OF THE ENTR IES RELATE TO THE YEAR 1995-96. THE 19 TH ITEM OF CREDIT OF RS.30,000 RELATE TO THE OUTSTAND ING CAPITAL BALANCE OF A RETIRED PARTNER NAMELY SHRI M. KRISHNA, WHO APPEARS TO HAVE RETIRED WITH EFFECT FROM 1.4.2003. ONLY ONE C REDIT BALANCE OF RS.53,867 IN THE NAME OF M/S. R. SATHI RAJU & SONS, WHICH IS BROUGHT FORWARD AS ON 1.4.1994 APPEARS TO BE A TRADE CREDIT BALANCE IN RE SPECT OF SOME PURCHASES DEBITED IN THE TRADING AND PROFIT & LOSS ACCOUNT PR IOR TO 1.4.1994. WHEN REQUIRED TO FURNISH THE DETAILS OF THE EXACT MONTH AND YEAR OF THE ACCRUAL OF SUCH LIABILITY, THE LEARNED AUTHORIZED REPRESENTATI VE EXPRESSED HIS INABILITY TO FURNISH THE REQUISITE INFORMATION. EXCEPT FOR A CR EDIT BALANCE OF RS.53,867, IN RESPECT OF WHICH, IT COULD SURELY BE SAID THAT IT R EPRESENTS TRADING LIABILITY IN RESPECT OF SOME EXPENDITURE CLAIMED AND ALLOWED IN SOME EARLIER YEAR, THE BALANCE LIABILITIES REPRESENTING CASH CREDITS AND O UTSTANDING CAPITAL BALANCE OF A RETIRED PARTNER AGGREGATING TO RS.5,47,000 DO NOT APPEAR TO HAVE BEEN 7 CLAIMED AND ALLOWED AS EXPENDITURE EITHER DURING TH E RELEVANT YEAR OR DURING THE EARLIER ASSESSMENT YEARS, IN WHICH SUCH LIABILI TIES AROSE. HENCE, WITH REGARD TO THE SAID AMOUNT OF RS.5,47,000, TOO, ALL THE CONDITIONS ENVISAGED U/S 41(1)(A) HAVE NOT BEEN CUMULATIVELY SATISFIED, AND, AS SUCH, THE AMOUNT OF RS.5,47,000 ALSO REMAINS OUT OF THE NET OF SECTI ON 41(1)(A) OF THE ACT. TO SUM UP, ONLY AN AMOUNT OF RS.53,867 IS SUSTAINABLE AS ADDITION MADE U/S 41(1)(A) OF THE ACT, WHICH IS, HEREBY SUSTAINED, AN D THE BALANCE AMOUNT OF RS.91,40,408 IS NOT SUSTAINABLE, WHICH IS, HEREBY D ELETED. 12. SINCE THE CIT(A) HAS EXAMINED THE ISSUE IN DETA IL AND NO INFIRMITY IS POINTED OUT BY THE LD. D.R. DURING THE COURSE OF HE ARING OF THE APPEAL, THEREFORE, WE CONFIRM THE ORDER OF THE CIT(A) ON TH E ISSUE. 13. SO FAR AS ADDITION OF RS.53,867/- ARE CONCERNED , WE FIND THAT THE ASSESSEE HAS NOT PLACED ANY EVIDENCE BEFORE US TO E STABLISH THAT THE CREDIT BALANCE APPEARING IN THE NAME OF M/S. R. SATHI RAJU & SONS WERE NEVER DEBITED TO THE P&L ACCOUNT IN THE YEAR IN WHICH THI S LIABILITY WAS ACCRUED. THEREFORE, WE FIND NO MERIT IN THE CONTENTIONS OF T HE ASSESSEE. ACCORDINGLY, WE CONFIRM THE ORDER OF CIT(A). 14. IN THE RESULT, THE APPEAL OF THE REVENUE AND THE C.O. OF THE ASSESSEE ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON 2.6.2010 SD/- SD/- (BR BASKARAN) (SUNIL KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER VG/SPS VISAKHAPATNAM, DATED 2 ND JUNE, 2010 COPY TO 1 ITO WARD-1, RAJAHMUNDRY 2 M/S. RATNA TRADING COL., D.NO.33-12-88, CENTRAL V EGETABLE MARKET, RAJAHMUNDRY 3 THE CIT, RAJAHMUNDRY 4 THE CIT(A), RAJAHMUNDRY 5 THE DR, ITAT, VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM