M/s Shimmer Textiles Pvt. Ltd., Kolkata V. ITO, WD- 5(1), KOLKATA, Kolkata

ITA 427/KOL/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 0033 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 8 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-12-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 14-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S M SURANA SHR
• Assessee Lawyers: T VARKEY JUDIC IA L M EMBER
• Section: 143(3); 133(6)

Judgement Text

, A , IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH A KOLKATA BEFORE SHRI ABY.T VARKEY, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ITA NO. 427 / KOL / 2016 ASSESSMENT YEAR :2011-12 M/S SHIMMER TEXTILES PVT. LTD., 11/1 IDEAL PLAZA,N- 214, SARAT BOSE ROAD, KOLKATA-20 [ PAN NO.AADCS 8926 J ] V/S . INCOME TAX OFFICER, WARD-5(1), AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, KOLKTA-69 /APPELLANT .. / RESPONDENT /BY APPELLANT SHRI S.M. SURANA, ADVOCATE /BY RESPONDENT SHRI KALYAN NATH, DR /DATE OF HEARING 18-10-2017 /DATE OF PRONOUNCEMENT 06-12-2017 / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER:- THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-2, KOLKATA DAT ED 04.02.2016. ASSESSMENT WAS FRAMED BY ITO WARD-5(1), KOLKATA U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ) VIDE HIS ORDER DATED 26.03.2014 FOR ASSESSMENT YEAR 2010-11. SHRI S.M. SURANA, LD. ADVOCATE APPEARED ON BEHALF O F ASSESSEE AND SHRI KALYAN NATH, LD. DEPARTMENTAL REPRESENTATIVE APPEAR ED ON BEHALF OF REVENUE. 2. THE ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS OF APPEAL:- 1. FOR THAT THE ORDER OF THE LD. CIT(A) IS ARBITRAR Y, ILLEGAL AND BAD IN LAW. 2. FOR THAT THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.26,13,757/- WHEN THERE WAS NO CESSATION OF LIABILITY, THE ASSES SEE NEVER WRITTEN OFF THE SAME AND CONTINUE TO CONFIRM THE SAID LIABILITY. ITA NO.427/KOL/2016 A.Y. 2011-1 2 M/S SHIMMER TEXTILES PVT. LTD. VS. ITO WD-5( 1), KOL. PAGE 2 3. FOR THAT EVEN OTHERWISE THE AMOUNT OF RS.26,13,7 57/- WAS A LOAN TAKEN AND THE SAID AMOUNT WAS NEVER ALLOWED AS DEDUCTION AS L OSS, EXPENDITURE OR TRADING LIABILITY. 4. FOR THAT ON THE FACTS AND CIRCUMSTANCES OF THE C ASE THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.26,13,757/-. 5. FOR THAT ON THE FACTS AND CIRCUMSTANCES OF THE C ASES THE ORDER OF THE CIT(A) BE MODIFIED AND THE ASSESSEE BE GIVEN THE RELIEF PR AYED FOR. 6. FOR THAT THE ASSESSEE CRAVES LEAVE TO ADD, ALTER OR AMEND ANY GROUND BEFORE OR AT THE TIME OF HEARING. 3. THE EFFECTIVE ISSUE RAISED BY ASSESSEE IN ALL TH E GROUNDS OF APPEAL IS THAT LD. CIT(A) ERRED IN CONFIRMING THE ORDER OF AS SESSING OFFICER BY SUSTAINING THE DISALLOWANCE OF 26,13,757/- ON ACCOUNT OF CESSATION OF LIABILITY. 4. BRIEFLY STATED FACTS ARE THAT ASSESSEE IS A PRIV ATE LIMITED COMPANY AND DERIVING ITS INCOME FROM INVESTMENT AND HOUSE PROPE RTY. THE ASSESSEE IN ITS BALANCE-SHEET HAS SHOWN A LOAN OF 26,13,757/- ONLY M/S LAHAR COMMODITIES PVT. LTD. (LCPL FOR SHORT). ON ENQUIRY ABOUT THE VE RACITY OF LOAN, THE AO CAME TO KNOW THAT THE NAME OF M/S LCPL HAS BEEN STRUCK O FF FROM THE RECORD OF ROC/MCA ON 19.03.2014. THEREFORE, THE AO WAS OF THE VIEW THE LIABILITY CEASED TO EXIST IN THE BOOKS OF THE ASSESSEE. ACCOR DINGLY, THE ADDITION OF RS. 26,13,757.00 ON ACCOUNT OF CESSATION OF LIABILITY W AS MADE BY THE AO TO THE TOTAL INCOME OF ASSESSEE. 5. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE L D. CIT(A) WHO CONFIRMED THE ORDER OF AO EX-PARTE AFTER CONSIDERIN G THE MATERIALS AVAILABLE ON RECORD BY OBSERVING AS UNDER:- 4.1 IT APPEARS THAT THE ASSESSEE-COMPANY HAD SHOWN A LIABILITY FOR LOAN OF RS.26,13,757/- WITH M/S LAHAR COMMODITIES PVT. LTD. IN ITS BOOKS, THOUGH THE SAME WAS NOT REQUIRED TO BE PAID AS ASSESSEE STROKE D OFF THAT LIABILITY. THEREFORE, THE AO WAS RIGHT IN ADDING BACK THAT AMO UNT FOR CESSATION OF LIABILITY. THERE IS NOTHING ON RECORD TO CONTROVERT THE DECISION OF THE AO. HENCE, THE ADDITION OF RS.26,13,757/- IS CONFIRMED. BEING AGGRIEVED BY THIS ORDER OF LD. CIT(A) ASSESSE E CAME IN SECOND APPEAL BEFORE US. 6. LD. AR BEFORE US SUBMITTED THAT THE LOAN LIABILI TY WAS COMING FROM THE EARLIER YEAR AND THE SAME HAS NOT BEEN WRITTEN OFF IN THE BOOKS OF ACCOUNT IN THE YEAR UNDER CONSIDERATION. THEREFORE, THE SAME C ANNOT BE ADDED TO THE ITA NO.427/KOL/2016 A.Y. 2011-1 2 M/S SHIMMER TEXTILES PVT. LTD. VS. ITO WD-5( 1), KOL. PAGE 3 TOTAL INCOME OF THE ASSESSEE. LD. AR BEFORE US IN S UPPORT OF ASSESSEES CLAIM FILED THE COPY OF LEDGER OF LCPL FOR THE EARLIER YE AR WHICH IS PLACED ON RECORD. ON THE OTHER HAND, LD. DR SUBMITTED THAT A NOTICE W AS ISSUED BY THE AO U/S 133(6) OF THE ACT WHICH WAS RETURNED AS UN-SERVED. SIMILARLY, IT IS ALSO EVIDENT THAT THE NAME OF ASSESSEE-COMPANY HAS BEEN STRUCK O FF FROM THE RECORDS OF ROC/MCA, THEREFORE IT IS PROVED THAT LIABILITY HAS BEEN CEASED TO EXIST. HE VEHEMENTLY RELIED ON THE ORDER OF AUTHORITIES BELOW . IN REJOINDER, LD. AR SUBMITTED THAT THE NAME OF LCP L WAS NOT STRUCK OFF IN THE YEAR UNDER CONSIDERATION. THUS, IT CANNOT BE CONCLU DED THAT THE COMPANY IS NOT IN EXISTENCE IN THE YEAR UNDER CONSIDERATION. 7. WE HAVE HEARD THE RIVAL CONTENTIONS & PERUSED TH E MATERIAL AVAILABLE ON RECORD. THE ISSUE IN THE INSTANT RELATES TO THE ADD ITION MADE BY THE AO ON ACCOUNT OF CESSATION OF LIABILITY FOR RS.26,17,757. 00 ONLY. THE ASSESSEE HAS SHOWN LOAN LIABILITY OF RS.26,13,757.00 IN THE NAME OF LCPL IN ITS BALANCE SHEET AS ON 31 ST MARCH 2011. THIS LOAN LIABILITY WAS COMING FROM TH E EARLIER YEARS AS DETAILED UNDER: SHIMMER TEXTILES PVT. LTD. 2, CLIVE GHAT STREET, 8 TH FLOOR, KOLKATA-001 GENERAL LEDGER : 01/04/2001 -31/ 03/2002 BALANCE C/D : CREDIT BAL ANCE CODE USLL 01 NAME :LAHARCOMMODITIES PVT LTD. 01/04/2001 OPENING BALANCE 28/08/2001 BV 1 ORIENTAL BANK OF COMMERCE 20,0002 29/08/2001 BV 2 ORIENTAL BANK OF COMMERCE 30,3200 03/09/2001 BV 1 ORIENTAL BANK OF COMMERCE 30,0000 08/02/2001 BV 3 ORIENTAL BANK OF COMMERCE 40,0000 02/09/2001 BV 3 ORIENTAL BANK OF COMMERCE 30,0000 02/09/2001 BV 6 ORIENTAL BANK OF COMMERCE 30,0000 13/09/2001 BV 1 ORIENTAL BANK OF COMMERCE 35,0000 15/09/2002 BV 1 ORIENTAL BANK OF COMMERCE 10,0200 18/03/2002 JV 2 INTEREST 25,00 00 30/01/2002 JV 5 T.D.S.ON INTEREST PAYABLE 41968 .00 FROM THE ABOVE COPY OF THE LEDGER WE NOTE THAT THE LOAN LIABILITY SHOWN BY THE ASSESSEE COMPRISES OF PRINCIPAL AMOUNT AS WELL AS I NTEREST AMOUNT AS DEPICTED ABOVE. THE UNDISPUTED FACT IS THAT THE LOAN LIABILITY WAS VERY MUCH REFLECTING IN THE BALANCE SHEET OF THE ASSESSEE AS ON 31.3.2011. THER E IS ALSO NO AMBIGUITY ITA NO.427/KOL/2016 A.Y. 2011-1 2 M/S SHIMMER TEXTILES PVT. LTD. VS. ITO WD-5( 1), KOL. PAGE 4 THAT THE NAME OF LCPL WAS STRUCK OFF FROM THE LIST OF COMPANY MAINTAINED IN ROC/MCA. IN THIS REGARD IT WAS BROUGHT TO OUR NOTICE THAT TH E NAME OF THE COMPANY WAS STRUCK OFF ON 19.3.2014. THEREFORE AS PER THE AR TH E QUESTION OF TAXING THE IMPUGNED LIABILITY IN THE YEAR UNDER CONSIDERATION DOES NOT ARISE. HOWEVER, WE FURTHER NOTE THAT THE LEARNED CIT(A) HA S PASSED EX PARTE ORDER AS THE ASSESSEE FAILED TO APPEAR BEFORE HIM ON THE DATE OF HEARING. WE ALSO FIND THAT THE LEARNED AR BEFORE US HAS FILED THE CO PIES OF THE LEDGERS FROM THE TIME OF THE LOAN TAKEN FROM LCPL WHICH ARE PLACED O N RECORD. ON PERUSAL OF THE SAME WE NOTE THAT THESE DOCUMENTS/ COPIES OF LE DGERS WERE NOT FILED BEFORE THE LOWER AUTHORITIES. THEREFORE WE ARE OF T HE VIEW THAT THE COPIES OF THE LEDGERS FILED BY THE LEARNED AR NEEDS TO BE VER IFIED BY THE AO. WE THEREFORE ARE INCLINED TO RESTORE THE ISSUE TO THE FILE OF AO FOR FRESH ADJUDICATION IN ACCORDANCE WITH THE LAW. HENCE, THE GROUND OF APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 8. IN THE RESULT, ASSESSEES APPEAL STANDS ALLOWED FOR STATI STICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT 06/12/2017 SD/- SD/- (ABY. T. VARKEY) (WASEEM AHMED) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) KOLKATA, *DKP #- 06 / 12 /201 7 / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-M/S SHIMMER TEXTILES PVT. LTD., RAJESH MOHA N & ASSOCIATES UNIT NO. 18, 5 TH FLOOR, BAGATI HOUSE, 34, GANESH CHANDRA AVENUE, KOLKA TA-13 2. /RESPONDENT-ITO WARD-5(1), AAYAKAR BHAWAN, P-7, CHO WRNGHEE SQ. KOLKATA-69 3. / 0 / CONCERNED CIT KOLKATA 4. 0- / CIT (A) KOLKATA 5. 3 66/, /, / DR, ITAT, KOLKATA 6. 9 / GUARD FILE. BY ORDER/ , /TRUE COPY/ SR. PRIVATE SECRETARY, HEAD OF OFFICE/DDO /,