M/s Swetha Chemicals Pvt. Ltd., Visakhapatnam V. The ACIT, Circle-4(1), Visakhapatnam

ITA 396/VIZ/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 56776 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 1 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-08-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 29-03-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 30-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: TH L PETER
• Assessee Lawyers: K J D SRINIVAS
• Section: 69

Judgement Text

ITA NO396/V/2010 SWETHA CHEMICALS PVT. LTD., VSKP. 1 IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI BR BASKARAN, ACCOUNTANT MEMBER ITA NO. 396 /VIZAG/ 20 10 ASSESSMENT YEAR : 2006 - 07 M/S. SWETHA CHEMIC ALS PVT. LTD VISAKHAPATNAM VS. ACIT CIRCL E - 4(1) VISAKHAPATNAM (APPELLANT) (RESPONDENT) PAN NO.AADCS 1421M APPELLANT BY: SHRI K.J.D. SRINIVAS, CA RESPONDENT BY: SHRI TH.L. PETER, CIT(DR) ORDER PER SHRI S.K. YADAV, JUDICIAL MEMBER:- THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A) ON VARIOUS GROUNDS WHICH ARE AS UNDER: 1. THE ORDER PASSED BY THE AO IS ARBITRARY AND UNJUSTI FIABLE. 2. THE AO IS NOT JUSTIFIED IN MAKING ADDITION OF RS.1, 86,000/- STANDING TO THE CREDIT OF MR. RAMANA, UNSECURED LOAN CREDITO R WITH A PLEA THE ASSESSEE COULD NOT SUBSTANTIATE WITH EVIDENCE T HIS CREDIT, ALSO AO WAS NOT JUSTIFIED IN TREATING THIS CREDIT AS UN- EXPLAINED INVESTMENT IN TERMS OF SECTION 69 OF THE IT ACT. 3. THE AO IS NOT JUSTIFIED IN TREATING TRADE/SUNDRY CR EDITORS OF RS.23,85,308/- AS CESSATION OF LIABILITY, BROUGHT T O TAX U/S 41(1) OF THE IT ACT, THIS AMOUNT REPRESENT FROM VARIOUS CRED ITORS OF VERY LONG RELATION WITH THE ASSESSEE COMPANY, THE RELATI ON WITH THE ASSESSEE COMPANY STILL CONTINUING, THEREFORE, NO CE SSATION OF LIABILITY AND HENCE, THE ADDITION OF RS.22,85,308/- IS LIABLE TO BE DELETED IN THE HANDS OF THE ASSESSEE COMPANY. 4. THE ASSESSEE COMPANY HAS FILED A PETITION TO WITH D RAW THE APPEAL BEFORE THE CIT(A), HAVING BONAFIDE REASONS TO BELIE F THAT THE CIT(A) HAD ALLOWED THE REQUEST OF THE ASSESSEE COMP ANY, AND HENCE, NOT JUSTIFIED IN REJECTING THE REQUEST OF TH E ASSESSEE COMPANY WITH OUT GIVING ANY FURTHER OPPORTUNITY, TH EREFORE, THE ORDER PASSED BY THE CIT(A) IS BAD IN LAW. 2. DURING THE COURSE OF HEARING, IT WAS POINTED OUT BY THE LD. COUNSEL FOR THE ASSESSEE THAT THE CIT(A) DID NOT ALLOW THE ASSE SSEE TO WITHDRAW ITS APPEAL. INSTEAD OF DECIDING THE APPEAL ON MERIT, H E CONFIRMED THE ORDER OF THE ASSESSING OFFICER. THE LD. COUNSEL FOR THE ASS ESSEE FURTHER CONTENDED THAT HE MOVED A REQUEST BEFORE THE CIT(A) FOR THE W ITHDRAWAL OF APPEAL ON ITA NO396/V/2010 SWETHA CHEMICALS PVT. LTD., VSKP. 2 AN UNDERSTANDING THAT PENALTY PROCEEDINGS U/S 271(1 )(C) WOULD NOT BE INITIATED AGAINST THE ASSESSEES. BUT NOW WHEN THE A.O. HAS INITIATED THE PENALTY PROCEEDINGS U/S 271(1)(C), HE INTENDS TO DE FEND HIS CASE EFFECTIVELY BEFORE THE APPELLATE FORUM. THE LD. D.R. ON THE OT HER HAND HAS SUBMITTED THAT ONCE THE ASSESSEE HAS OPTED TO WITHDRAW ITS AP PEAL, THE CIT(A) WAS JUSTIFIED TO CONFIRM THE ORDER OF THE ASSESSING OFF ICER BY DISMISSING THE APPEAL. 3. HAVING HEARD THE RIVAL SUBMISSIONS AND FROM A CA REFUL PERUSAL OF RECORD, WE FIND THAT THE CIT(A) ONCE DECIDED NOT TO ALLOW THE ASSESSEE TO WITHDRAW THE APPEAL, HE SHOULD HAVE DISPOSED THE AP PEAL ON MERIT BUT HE DID NOT DO SO. SINCE THE CIT(A) HAS NOT DECIDED THE AP PEAL ON MERIT, WE SET ASIDE THE ORDER OF THE CIT(A) AND RESTORE THE MATTE R TO HIS FILE FOR THE ADJUDICATION OF THE APPEAL ON MERIT. 4. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 3.8.2011 SD/- SD/- (BR BASKARAN) (SUNIL KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER VG/SPS VISAKHAPATNAM, DATED 3 RD AUGUST, 2011 COPY TO 1 M/S . SWETHA CHEMICALS PVT. LTD., PLOT NO.14, MIG, MARR IPALEM, VUDA LAYOUT, NAD POST, VISAKHAPATNAM 2 ACIT, CIRCLE - 4(1), VISAKHAPATNAM 3 THE CI T, VISAKHAPATNAM 4 THE CIT (A) , VISAKHAPATNAM 5 THE DR, ITAT, VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM