The Income-tax Officer, Jalandhar V. M/s. Simran Engg. Works, Jalandhar

ITA 345/ASR/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 0514 (ITAT-AMRITSAR)
• Duration Of Justice: 2 year(s) 1 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-07-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 24-05-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 28-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A N MISRA
• Assessee Lawyers: J S BHASIN
• Section: 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR BEFORE SH. A.D.JAIN, JUDICIAL MEMBER AND SH. T.S. KAPOOR, ACCOUNTANT MEMBER I.T.A NO.345(ASR)/2014 ASSESSMENT YEAR: 2009-10 INCOME TAX OFFICER, WARD-II(2), JALANDHAR. VS. M/S. SIMRAN ENG. WORKS, C-102, INDUSTRIAL DEVELOPMENT COLONY, JALANDHAR. PAN:AASFS5186R (APPELLANT) (RESPONDENT) APPELLANT BY: SH. A.N.MISRA (DR.) RESPONDENT BY: SH. J.S. BHASIN (ADV.) DATE OF HEARING: 24.05.2016 DATE OF PRONO UNCEMENT: 13.07.2016 ORDER PER T. S. KAPOOR (AM): THIS IS AN APPEAL FILED BY REVENUE AGAINST THE ORDE R OF LEARNED CIT(A), JALANDHAR, DATED 18.03.2014 FOR ASST. YEAR: 2009-10. 2. THE REVENUE IS AGGRIEVED WITH THE ACTION OF LEAR NED CIT(A), BY WHICH HE HAD DELETED THE ADDITION WHICH WAS MADE BY ASSESSING OFFICER U/S 41(1) OF THE INCOME TAX ACT, 1961 AND U/S 28(IV ) OF THE INCOME TAX ACT,1961. 3. THE LEARNED DR, AT THE OUTSET, EXPLAINED THE FA CTS OF THE CASE AND SUBMITTED THAT THE ASSESSEE HAD DECLARED CREDIT BAL ANCES IN RESPECT OF CERTAIN PARTIES AND ON CONFIRMATION FROM THESE PART IES THE ASSESSING ITA NO.345 (ASR)/2014 ASST. YEAR : 2009-10 2 OFFICER HAD OBSERVED THAT THEY HAD NOT DECLARED THE BALANCE IN THEIR BALANCE SHEETS AND THEREFORE, ASSESSING OFFICER HAD RIGHTLY MADE THE ADDITION AS THE LIABILITIES DECLARED BY ASSESSEE AR E DEEMED TO HAVE CEASED AND SIMILARLY HE SUBMITTED THAT THE OTHER ADDITION WAS ALSO CORRECTLY MADE AS THE PARTIES DID NOT FILE REPLY TO THE NOTIC ES ISSUED BY THE DEPARTMENT. 4. THE LEARNED AR, ON THE OTHER HAND, HEAVILY PLACE D HIS RELIANCE ON THE ORDER OF LEARNED CIT(A) AND INVITED OUR ATTENTI ON TO LEARNED CIT(A)S ORDER WHEREIN HE HAS MENTIONED A NUMBER OF CASE LAW S RELIED UPON BY LEARNED AR. 5. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE TH ROUGH THE MATERIAL PLACED ON RECORD. WE FIND THAT ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADING AND MANUFACTURING OF METAL & NO N FERROUS ALLOYS. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OF FICER OBSERVED THAT ASSESSEE HAD DECLARED IN ITS BALANCE SHEET THE NAME S OF M/S. JAIN AGENCIES, M/S. GARG FASTNERS, LUDHIANA AND M/S AMBA Y TRADERS & M/S BHAWA WIRES PRODUCTS AS SUNDRY CREDITOR. THE ASSESS ING OFFICER SOUGHT INFORMATION FROM THE ABOVE PARTIES AND FROM THE REP LIES RECEIVED FROM ABOVE PARTIES, THE ASSESSING OFFICER OBSERVED THAT THESE PARTIES HAD NOT DECLARED THE AMOUNT AS RECEIVABLE FROM ASSESSEE IN THEIR BALANCE SHEETS AND IN COPY OF ACCOUNTS OF ASSESSEE AND THEREFORE, HE CONSIDERED THE LIABILITIES DECLARED BY ASSESSEE TO HAVE CEASED AND MADE ADDITIONS U/S ITA NO.345 (ASR)/2014 ASST. YEAR : 2009-10 3 41(1) OF THE ACT. SIMILARLY, IN RESPECT OF M/S HARS HIT METAL, REWARI & M/S INDUSTRIAL IMPORTERS, DELHI, THE ASSESSING OFFICER OBSERVED THAT THE DEPARTMENTAL REGISTERED NOTICES ISSUED TO THESE PAR TIES WERE NOT REPLIED AND ASSESSEE HAD ALSO NOT FILED ANY CONFIRMATIONS, THEREFORE, THE ASSESSING OFFICER TREATED THESE AMOUNTS AS INCOME U /S 28(IV) OF THE ACT AND MADE ADDITION ACCORDINGLY. 6. AGGRIEVED WITH THE ADDITION THE ASSESSEE FILED A PPEAL BEFORE THE LEARNED CIT(A) AND LEARNED CIT(A) ALLOWED RELIEF TO THE ASSESSEE BY HOLDING AS UNDER: 8.4 I HAVE CONSIDERED THE OBSERVATION OF THE ASSES SING OFFICER AS MADE BY HIM IN THE ASSESSMENT ORDER AS WELL AS IN THE OTHER SUBMISSIONS FILED BY HIM DURING THE COURSE OF APPELLANT PROCEEDINGS. I H AVE ALSO CONSIDERED THE WRITTEN SUBMISSION OF THE ASSESSEE AS WELL AS OTHER MATERIAL BROUGHT ON RECORD. I HAVE FURTHER CONSIDERED VARIOUS JUDICIAL PRONOUNCEMENTS RELIED UPON BY THE ASSESSEE ON CAREFULL CONSIDERATION OF THE ASSESSEE. ON CAREFUL CONSIDERATION OF THE ASSESSMENT ORDER, IT HAS BEEN NOTICED THAT THE ASSESSING OFFICER HAS MADE THE ADDITION OF RS.24,22 ,659/- BY INVOKING THE PROVISIONS OF SECTION 41(1) OF THE ACT AS THE RESPE CTIVE CREDITORS NAMELY NAMELY M/S JAIN AGENCIES, CHENNAI, M/S GARG FASTENE RS, LUDHIANA (AND M/S GARG SONS, LUDHIANA) HAVE SHOWN NIL BALANCE DUR ING THE YEAR UNDER REFERENCE IN THE ACCOUNT OF THE ASSESSEE IN THEIR B OOKS OF ACCOUNT WHEREAS THE ASSESSEE HAS SHOWN THE LIABILITY IN ITS BOOKS O F ACCOUNT TO THE EXTENT OF ADDITION MADE. ANOTHER ADDITION OF RS.8,57,463/- HA S BEEN MADE BY THE ASSESSING OFFICER UNDER THE PROVISIONS OF SECTION 2 8(IV) OF THE ACT AS EITHER THE NOTICE ISSUED TO THE RESPECTIVE CREDITORS NAMEL Y M/S AMBAY TRADERS, M/S BHAWNA WIRES PRODUCTS, M/S HARSHIT METALS, REWA RI AND M/S INDUSTRIAL IMPORTERS, DELHI U/S 133(6) OF THE ACT W AS RECEIVED BACK UN- SERVED OR THERE WAS NO RESPONSE FROM THE RESPECTIVE CREDITOR IN SPITE OF THE FACT THAT THE NOTICE HAS BEEN SERVED. DURING THE CO URSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER DULY CONFRONTED THE DISCREPANCIES NOTICED BY HIM IN THE ACCOUNTS OF THESE CREDITORS T O THE ASSESSEE AND EXPLANATION FILED BY THE ASSESSEE WITH REGARD TO TH E DISCREPANCIES HAS DULY BEEN CONSIDERED WHILE FRAMING THE ASSESSMENT. ON THE OTHER HAND, THE ASSESSEE DURING THE COURSE OF APPELLATE PROCEED INGS HAS VEHEMENTLY ARGUED THAT THE PROVISIONS OF SECTION 41(1) AND 28( IV) OF THE ACT ARE NOT APPLICABLE IN ITS CASE AS NEITHER THERE IS CESSATIO N OR REMISSION OF LIABILITY DURING THE YEAR UNDER CONSIDERATION NOR THE ASSESSE E HAS RECEIVED ANY BENEFIT DURING THE YEAR UNDER CONSIDERATION WHICH C AN BE BROUGHT TO TAX ITA NO.345 (ASR)/2014 ASST. YEAR : 2009-10 4 DURING THE YEAR. IN SUPPORT OF ITS CLAIM, THE ASSES SEE HAS RELIED UPON VARIOUS JUDICIAL PRONOUNCEMENTS, THE PARTICULARS OF WHICH HAVE BEEN GIVEN IN THE WRITTEN SUBMISSIONS REPRODUCED ABOVE. WITH R EGARD TO THE ADDITION OF RS.24,22,659/- MADE BY THE ASSESSING OFFICER UND ER THE PROVISIONS OF SECTION 41(1) OF THE ACT, IT HAS BEEN SUBMITTED BY THE ASSESSEE THAT THERE IS NO CESSATION OR REMISSION OF LIABILITY DURING THE Y EAR UNDER CONSIDERATION AS THE ASSESSE HAS SHOWN THE LIABILITY AS OUTSTAND ING IN ITS BOOKS OF ACCOUNT. SIMILARLY, WITH REGARD TO THE ADDITION OF RS.8,57,463/- MADE BY THE ASSESSING OFFICER UNDER THE PROVISIONS OF SECTI ON 28(IV) OF THE ACT, IT HAS BEEN SUBMITTED THAT THE ASSESSEE HAS NOT GOT AN Y BENEFIT OR NOT RECEIVED ANY PERQUISITE, THE VALUE OF WHICH CAN BE BROUGHT TO TAX DURING THE YEAR UNDER CONSIDERATION BY INVOKING THE PROVIS IONS OF SECTION 28(IV) OF THE ACT. IN SUPPORT OF ITS SUBMISSIONS WITH REGARD TO ADDITIONS MADE BY THE ASSESSING OFFICER, THE ASSESSEE HAS RELIED ON THE F OLLOWING DECISIONS THE RELEVANT PARAS OF WHICH HAVE BEEN REPRODUCED BY THE ASSESSEE IN ITS WRITTEN SUBMISSIONS:- (I) CHIEF CIT VS KESARIA TEA CO. LIMITED 254 ITR 434 (S C) (II) CIT VS LAI TEXTILE FINISHING MILLS (P) LIMITED 180 ITR 45 (P & (III) CIT VS SMT. SITA DEVI JUNEJA 325 ITR 593 (P & H) (IV) ITO VS BANSI LAI GUPTA 113 TTJ (ASR) 898 [ITAT , AMRITSAR] (IV) CIT VS NITIN S GARG 22 TAXMAN.COM 59 (GUJ) (V) SHRI VARDHMAN OVERSEAS LIMITED VS ACIT 24 SOT 393 [ITAT, DELHI] (VII) VICTOR CYCLE (P) LIMITED VS ACIT 90 TTJ 776 [ITAT, CHANDIGARH]. CIT VS. BHOGILAL RAMJIBHAI ATARA [ITA NO. 588 OF 2013 ORDER DATED 04.02.2014]. 8.5 ON CAREFUL CONSIDERATION OF THE ASSESSMENT ORDE R, WRITTEN SUBMISSIONS OF THE ASSESSEE AND VARIOUS JUDICIAL PRONOUNCEMENTS RELIED UPON BY THE ASSESSEE AND THE ASSESSING OFFICER, I AM OF THE CON SIDERED OPINION THAT NEITHER THE PROVISIONS OF SECTION 41(1) NOR SECTION 28(IV) OF THE ACT ARE ATTRACTED IN THE CASE OF THE ASSESSEE. M/S JAIN AGE NCIES CHENNAI HAS SHOWN NIL BALANCE IN THE ACCOUNT OF THE ASSESSEE S INCE 08.12.2006 AND THERE IS NO TRANSACTION WITH THIS PARTY THEREAFTER. IN C WORDS, THERE IS NO LIABILITY OF THE ASSESSEE TOWARDS M/S JAIN AGENCIES SINCE 1 2006-07 [A.Y. 2007-08]. IF AT ALL IT IS TO BE TAKEN THAT THERE IS NO LIABILITY OF \ ASSESSEE TOWARDS M/S JAIN AGENCIES THAN ACTION WAS REQUIRED TO BE TAKEN BY TL ASSESSING OFFICER IN A.Y. 2007-08 OR IN EARLIER YEA RS AS APPLICABLE AND NOT IN TH YEAR UNDER CONSIDERATION AS THE CESSATION OR REMISSION OF LIABILITY IN THIS CASE IF ANY HAS TAKEN PLACE IN A.Y. 2007-08 OR IN ANY EARLIER YEAR. SIMILARLY, M/S GARG FASTENERS, LUDHIANA HAS SHOWN N IL BALANCE IN THE ACCOUNT OF THE ASSESSEE SINCE 25.02.2008 AND THERE IS NO TRANSACTION WITH THIS PARTY THEREAFTER. IN OTHER WORDS, THERE IS NO LIABILITY OF ASSESSEE TOWARDS M/S GARG FASTENERS SINCE F.Y. 2007-08 [A.Y. 2008-09]. THEREFORE, ITA NO.345 (ASR)/2014 ASST. YEAR : 2009-10 5 IF AT ALL IT IS TO BE TAKEN THAT THERE IS NO LIABIL ITY OF THE ASSESSEE TOWARDS M/S GARG FASTENERS, LUDHIANA THAN ACTION WAS REQUIR ED TO BE TAKEN BY THE ASSESSING OFFICER IN A.Y. 2008-09 OR IN EARLIER YEARS AS THE CASE MAY BE AND NOT IN THE YEAR UNDER CONSIDERATION AS THE C ESSATION OR REMISSION OF LIABILITY IF ANY IN THIS CASE HAS TAKEN PLACE IN A. Y. 2008-09 OR IN ANY EARLIER YEAR. AS REGARDS THE ADDITION MADE BY THE A SSESSING OFFICER U/S 28(IV) OF THE ACT, I AM ALSO OF THE CONSIDERED OPIN ION THAT THE ASSESSEE HAS NOT RECEIVED ANY BENEFIT OR PERQUISITE DURING THE Y EAR UNDER CONSIDERATION AND THE ASSESSING OFFICER IS NOT JUSTIFIED IN MAKIN G THE IMPUGNED ADDITION UNDER THE RELEVANT SECTION. AS THE LIABILITY IN THE CASE OF M/S AMBAY TRADERS, M/S BHAWNA WIRES PRODUCTS, M/S HARSHIT MET ALS, REWARI AND M/S INDUSTRIAL IMPORTERS, DELHI HAS ARISEN IN EARLI ER YEARS, THE ACTION IF ANY WAS REQUIRED TO BE TAKEN IN EARLIER YEARS AND N OT IN THE YEAR UNDER CONSIDERATION. 8.6 IN THESE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, I AM OF THE OPINION, THAT THERE IS LOT OF FORCE IN THE ARGUMENTS OF THE ASSESSEE THAT NEITHER THE PROVISIONS OF SECTION 41(1) NOR SECTION 28(IV) OF T HE ACT ARE ATTRACTED IN THE CASE OF THE ASSESSEE. I AM, THEREFORE, HAVING NO HESITATION IN HOLDING TH AT THE ASSESSING OFFICER IS NOT JUSTIFIED IN MAKING THE IMPUGNED ADDITIONS I N THE YEAR UNDER CONSIDERATION. THE JUDICIAL PRONOUNCEMENTS RELIED U PON BY THE ASSESSEE ALSO SUPPORTS ITS CASE. I AM ALSO OF THE OPINION TH AT THE FACTS OF THE CASE RELIED UPON BY-THE ASSESSING OFFICER HAVE ENTIRELY DIFFERENT FROM THAT OF THE FACTS OF THE CASE OF THE ASSESSEE AND THE RATIO OF THE DECISION CANNOT BE APPLIED TO THE FACTS OF THE CASE OF THE ASSESSEE. T HE ADDITIONS OF RS.24,22,659/- AND OF RS.8,57,463/- MADE BY THE ASSESSING OFFICER BY INVOKING THE PROVISIONS OF SECTION 41(1) AND 28(IV) OF THE ACT RESPECTIVELY ARE, THEREFORE, DELETED. IN THE RESULT, GROUNDS NO. 4 TO 10 OF APPEAL TAKEN BY THE ASSESSEE ARE ALLOWED. THE ABOVE ORDER OF LEARNED CIT(A) IS QUITE EXHAUST IVE. THE LEARNED CIT(A) HAS HELD THAT THERE WAS NO TRANSACTION WITH THESE P ARTIES DURING THE YEAR UNDER CONSIDERATION AND THE ASSESSEE HAD BROUGHT FO RWARD THESE LIABILITIES FROM EARLIER YEARS. THE LEARNED CIT(A) HAS RIGHTLY HELD THAT NEITHER PROVISIONS OF SEC.41(1) NOR THE PROVISIONS OF SEC.28(IV) OF THE ACT WERE APPLICABLE TO THE ASSESSEE. THE LEARNED CIT(A) HAS HELD THAT M/S JAIN AGENCIES, M/S GARG GASTNERS, LUDHIANA HAS SHOW N NIL BALANCES SINCE 8.12.2006 AND 25.02.2008 RESPECTIVELY AND SI MILARLY HE HAS HELD THAT M/S GARG FATNERS, LUDHIANA HAS SHOWN NIL BALAN CE IN THE BALANCE ITA NO.345 (ASR)/2014 ASST. YEAR : 2009-10 6 SHEETS SINCE 25.02.2008, THEREFORE, HE HAS RIGHTLY HELD THAT THE ACTION IF ANY COULD BE TAKEN AGAINST THE ASSESSEE WAS NOT THI S YEAR AND RATHER IT WAS IN EARLIER YEARS. SIMILARLY IN RESPECT OF ADDIT ION U/S 28(IV) OF THE ACT LEARNED CIT(A) HAS RIGHTLY HELD THAT ASSESSEE HAD N OT RECEIVED ANY BENEFIT OR PERQUISITE DURING THE YEAR UNDER CONSIDERATION A ND THEREFORE, HE HAS RIGHTLY DELETED THE ADDITION. IN VIEW OF THE ABOVE , WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LEARNED CIT(A) AND THEREF ORE, THE APPEAL FILED BY REVENUE IS DISMISSED. 7. IN VIEW OF THE ABOVE, THE APPEAL FILED BY REVENU E IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 13 .07.2016. SD/ - SD/- (A.D. JAIN) (T. S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 13.07.2016. /PK/ PS. COPY OF THE ORDER FORWARDED TO: (1) THE ASSESSEE: (2) THE (3) THE CIT(A), (4) THE CIT, (5) THE SR DR, I.T.A.T., TRUE COPY BY ORDER