ACIT, New Delhi V. Smt. Vibha Puri, New Delhi

ITA 3926/DEL/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 58854 (ITAT-DELHI)
• Duration Of Justice: 6 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-03-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 12-03-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 25-08-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C B SINGH
• Assessee Lawyers: SANJEEV BAJAJ
• Keywords: Corroborative evidences
• Section: 143(3); 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH `H : NEW DELHI) BEFORE SHRI U.B.S. BEDI, JUDICIAL MEMBER AND SHRI K.G. BANSAL, ACCOUNTANT MEMBER ITA NO.3926/DEL./2011 (ASSESSMENT YEAR : 2007-08) ACIT, CIRCLE 27(1), VS. VIBHA PURI, NEW DELHI. G-53, 2 ND FLOOR, KIRTI NAGAR, NEW DELHI. (PAN/GIR NO.AAEPP8263A) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SANJEEV BAJAJ, CA. REVENUE BY : SHRI C.B. SINGH, SR.DR ORDER PER U.B.S. BEDI, J.M. THIS APPEAL OF THE DEPARTMENT IS DIRECTED AGAINST T HE ORDER PASSED BY CIT(A)- XXIV, NEW DELHI DATED 11.01.2010 RELEVANT TO ASSESS MENT YEAR 2007-08, WHEREBY DELETION OF ADDITION OF RS.19,54,030/- MADE BY THE ASSESSING OFFICER BY INVOKING THE PROVISIONS OF SECTION 41(1) OF THE I.T. ACT, 1961 H AS BEEN CHALLENGED. 2. THE ASSESSING OFFICER HAS MADE AN ADDITION OF RS .19,54,030/- ON ACCOUNT OF CESSATION OF LIABILITIES U/S 41(1) OF THE ACT VIDE ORDER U/S 143(3) DATED 24.12.2009 AS ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS SHOW N AN AMOUNT OF RS.77,41,318/- AS SUNDRY CREDITORS IN HER BALANCE SHEET. THE ASSESSI NG OFFICER ISSUED A LETTER DATED 11.12.2009 TO THE ASSESSEE ASKING HER TO GET VERIFI ED AUTHENTICITY OF SEVEN CREDITORS. THE ASSESSEE REPLIED THAT SHE WAS INTO THE BUSINESS OF EXPORT OF HANDICRAFTS, CONSTUME/IMITATION JEWELLERY ETC. FOR WHICH SHE HAS TO APPROACH SMALL ARTISANS AND SUPPLIERS LOCATED IN REMOTE AREAS AND VILLAGES. SH E FURTHER STATED THAT THE LIABILITIES OUTSTANDING HAD EITHER BEEN PAID BACK OR WRITTEN BA CK IN SUCCEEDING YEARS, ON WHICH DUE I.T.A. NO.3926/DEL./2011 (A.Y. : 2007-08) 2 TAXES WERE PAID. THE ASSESSING OFFICER MADE AN AD DITION OF RS.19,54,030/- WHICH REPRESENTS AMOUNTS OUTSTANDING AGAINST 26 SUNDRY CR EDITORS AS CESSATION OF LIABILITIES. 3. THE ASSESSEE TOOK UP THE MATTER IN APPEAL BEFORE FIRST APPELLATE AUTHORITY AND SUBMITTED THAT THE ASSESSING OFFICER ACTED ARBITRAR ILY IN ADDING RS.19,54,030/- U/S 41(1) OF THE ACT. SHE STATED THAT THE ADDITION HAS BEEN MADE DESPITE SUFFICIENT MATERIAL BEING AVAILABLE ON RECORD AS THE ASSESSEE HAD FILED CONFI RMATIONS, DULY QUOTING PANS OF SUNDRY CREDITORS TO THE TUNE OF RS.18,37,583/- OUT OF A TO TAL OF RS.19,54,030/-. FURTHER, SHE SUBMITTED THAT THE ASSESSING OFFICER HAD ISSUED SUM MONS U/S 131 TO ONE OF THE CREDITORS M/S SAR HANDICRAFTS, WHO RESPONDED POSITIVELY AND C ONFIRMED THE ACCOUNT. AS REGARDS, THE BALANCE PARTIES WHOSE TOTAL BALANCE AMOUNTED TO RS.1,16,446/-, THE ASSESSEE HAD SUBMITTED THAT IN THESE CASES THE PAYMENTS WERE MAD E IN THE SUCCEEDING YEARS AND THE INFORMATION REGARDING THE SAME WAS PROVIDED TO THE ASSESSING OFFICER. IN ONE CASE OF M/S CAREY ACCESSORIES (FOREIGN BUYER), THE AMOUNT O F RS.12,906/- WAS AN ADVANCE RECEIVED AGAINST ORDER. IN THREE CASES, THERE WERE NEGATIVE BALANCES AND IN A COUPLE OF CASES THERE HAVE BEEN TRANSACTIONS IN SUCCEEDING YE ARS. 3.2 THE ASSESSEE HAS AVERRED THAT IN VIEW OF SUCH M ATERIAL AVAILABLE ON RECORD, THE ASSESSING OFFICER WAS NOT JUSTIFIED IN INVOKING SEC TION 41(1) OF THE ACT AND MAKING ADDITIONS ON ACCOUNT OF CESSATION OF LIABILITY. 4. THE CIT(A) WHILE CONSIDERING AND ACCEPTING THE P LEA OF THE ASSESSEE HAS CONCLUDED TO DELETE THE IMPUGNED ADDITION AS PER PA RAS.5, 5.1, 5.2 & 5.3 OF THE ORDER. 5. AGGRIEVED BY THIS ORDER, THE DEPARTMENT HAS COME UP IN APPEAL AND IT WAS SUBMITTED THAT SINCE ASSESSEE WAS UNABLE TO PROVE T HE BONAFIDE OF THE CLAIM REGARDING OUTSTANDING LIABILITIES, THEREFORE, ASSESSING OFFIC ER WAS JUSTIFIED IN MAKING THE ADDITION AND CIT(A) HAS JUST DELETED THE IMPUGNED ADDITION W ITHOUT GIVING APPROPRIATE AND COGENT REASON. SO, IT WAS PRAYED FOR REVERSAL OF THE ORDE R OF CIT(A) AND RESORTING THAT OF THE ASSESSING OFFICER. 6. LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT THERE WAS NO OCCASION FOR THE ASSESSING OFFICER TO MAKE THE ADDITION DESPITE SUFF ICIENT MATERIAL BEING AVAILABLE ON RECORD AS THE ASSESSEE HAD FILED CONFIRMATIONS DULY QUOTING PANS OF SUNDRY CREDITORS TO THE TUNE OF RS.18,37,583/- OUT OF THE TOTAL ADDITIO N AND ON ASSESSING OFFICERS HAVING SUMMONED U/S 131 OF THE ACT, TO ONE OF THE CREDITOR S M/S SAR HANDICRAFTS, WHO I.T.A. NO.3926/DEL./2011 (A.Y. : 2007-08) 3 RESPONDED POSITIVELY AND CONFIRMED THE ACCOUNT. AS REGARDS THE BALANCE PARTIES WHOSE TOTAL BALANCE AMOUNTED TO RS.1,16,446/-, THE ASSESS EE HAD SUBMITTED THAT IN THESE CASES PAYMENTS WERE MADE IN THE SUCCEEDING YEAR AND INFOR MATION REGARDING THE SAME WAS PROVIDED TO THE ASSESSING OFFICER AND IN THE CASE O F M/S CAREY ACCESSORIES (FOREIGN BUYER), THE AMOUNT OF RS.12,906/- WAS AN ADVANCE RE CEIVED AGAINST THE ORDER. IN THREE CASES, THERE WERE NEGATIVE BALANCES AND IN COUPLE O F CASES, THERE HAVE BEEN TRANSACTIONS IN SUCCEEDING YEARS. THEREFORE, IN VIEW OF SUCH MA TERIAL AVAILABLE ON RECORD BEFORE THE ASSESSING OFFICER, HE WAS NOT JUSTIFIED IN INVOKING THE PROVISIONS OF SECTION 41(1) AND MAKING IMPUGNED ADDITION ON ACCOUNT OF CESSATION OF LIABILITIES. THEREFORE, CIT(A) IS FULLY JUSTIFIED IN DELETING THE IMPUGNED ADDITION W HOSE ACTION REQUIRES TO BE CONFIRMED, WHICH MAY BE CONFIRMED. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS IN THE LIGHT OF FACTS AVAILABLE ON RECORD AND FIND THAT JUST AND APPROPRIATE EXPLANATION HAS BEEN FURNISHED BY THE ASSESSEE ALONG WITH SUPPORTING EVIDENCE BEFORE THE ASSESSING OFFIC ER IN RELATION TO SUNDRY CREDITORS AND LD.CIT(A) WHILE CONSIDERING THE FACTS IN THE LIGHT OF MATERIAL AVAILABLE ON RECORD IS FOUND TO HAVE TAKEN A CORRECT VIEW TO DELETE THE IM PUGNED ADDITION AND MOREOVER, NO CONTRARY MATERIAL HAS BEEN FILED NOR ANY INFIRMITY OR ANY FLAW HAS BEEN POINTED OUT OR NOTICED. WE DO NOT FIND ANY REASONABLE BASIS TO INT ERFERE IN THE ORDER PASSED BY THE CIT(A). THEREFORE, THE ORDER OF CIT(A) IS CONFIRME D AND APPEAL OF THE REVENUE BEING DE VOID OF ANY MERITS, IS DISMISSED. 6. AS A RESULT, THE APPEAL GETS DISMISSED. ORDER PRONOUNCED IN OPEN COURT SOON AFTER THE CONC LUSION OF THE HEARING ON 12 TH MARCH, 2012. SD/- SD/- (K.G. BANSAL) ACCOUNTANT MEMBER (U.B.S. BEDI ) JUDICIAL MEMBER DATED : MARCH 12, 2012 SKB I.T.A. NO.3926/DEL./2011 (A.Y. : 2007-08) 4 COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A)-XXIV, NEW DELHI. 5. CIT(ITAT) DEPUTY REGISTRAR, ITAT