ACIT, New Delhi V. M/s. Wiltan Telmag (India) Pvt. Ltd., New Delhi

ITA 4421/DEL/2011

• Counselvise Citation: 442120114 RSA 2011
• Duration Of Justice: 2 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-12-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: I
• Assessment Year: 2008-2009
• Appeal Filed On: 04-10-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K MONGA
• Keywords: Additional evidence

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH I NEW DELHI) BEFORE SHRI RAJPAL YADAV AND SHRI A.N. PAHUJA ITA NO. 4421/DEL/2011 ASSESSMENT YEAR: 2008-09 ASSISTANT COMMISSIONER OF IT, VS. WILTAN TELMAG (I NDIA) PVT. LTD. CIRCLE 18(1), 19-NEW MARKET, RAMESH NGR, NEW DELHI. D- 15, NEW DELHI (PAN: AAACW5790Q) (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI AK MONGA, DR RESPONDENT BY: NONE DATE OF HEARING : 07.12.2011 DATE OF PRONOUNCEMENT : 09 .12.2011 ORDER PER RAJPAL YADAV: JUDICIAL MEMBER THE REVENUE IS IN APPEAL BEFORE US AGAINST THE ORD ER OF LEARNED CIT(APPEALS) DATED 19.07.2011 PASSED FOR ASSESSMENT YEAR 2008-09. THE SOLITARY GRIEVANCE OF THE REVENUE IS THAT LEARNED C IT(APPEALS) HAS ERRED IN DELETING THE ADDITION OF RS.50,03,360 BY ENTERTAINI NG ADDITIONAL EVIDENCE IN VIOLATION TO RULE 46A OF THE INCOME-TAX RULES, 1962 . 2. INSPITE OF SERVICE OF NOTICE, NO ONE HAS COME PR ESENT ON BEHALF OF THE ASSESSEE. THEREFORE, WE PROCEED TO DISPOSE OF THIS APPEAL EX PARTE QUA THE ASSESSEE. 2 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE HAS FILED ITS RETURN OF INCOME ELECTRONICALLY ON 30 TH SEPTEMBER, 2008 DECLARING LOSS OF RS.44,42,605. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSMENT AND NOTICE UNDER SEC. 143(2) WAS ISSUED ON 16 TH SEPTEMBER, 2009 WHICH WAS DULY SERVED UPON THE ASSESSEE COMPANY. ASSESSING OF FICER DID NOT TAKE UP THE PROCEEDINGS FOR ALMOST ONE YEAR AND ISSUED A QU ESTIONNAIRE DATED 24.9.2010. HE PASSED THE ASSESSMENT ORDER ON 31.12. 2010. HE NOTED THAT ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF MANU FACTURING OF MAGNETIC CORE. HE MADE AN ADDITION OF RS.50,03,360 BY RECORD ING FOLLOWING FINDINGS: 3. CESSATION OF LIABILITIES U/S 41(S) 3.1 THE ASSESSEE HAS TAKEN UNSECURED LOAN OF RS.50,03,3 60 FROM M/S. MAGNETEC MANGAL PVT. LTD. IN WHICH THE SHARE H OLDER, M/S. WILTAN TELEMAG INDIA PVT. LTD. IS ALSO A SUBSTANTIA L SHAREHOLDER IT WAS OBSERVED THAT CERTAIN BALANCE HAVE NOT BEEN PAID SINCE EARLIER YEARS. THE ASSESSEE WAS ASKED AS TO WHY THE SE BALANCE NOT BE WRITTEN BACK U/S 41(1) OF THE INCOME-TAX ACT , 1961, AS THE SAME ARE NO LONGER PAYABLE. 3.2 THE ASSESSEE VIDE ORDER SHEET ENTRY DATED 30.12.201 0 WAS NOT ABLE TO GIVE A CONVINCING REPLY. ACCORDINGLY AN AMO UNT OF RS.50,03,360 IS BEING ADDED BACK TO THE TOTAL INCOM E OF THE ASSESSEE U/S. 41(1) OF THE I.T. ACT. 3 4. ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LEARNED FIRST APPELLATE AUTHORITY. IT POINTED OUT THAT ASSESSING OFFICER DID NOT INQUIRE ABOUT THE ENTRY OF RS.50,03,360. THIS FIGURE CAME T O HIS NOTICE WHILE EXAMINING THE BOOKS OF ACCOUNT ON 30 TH DECEMBER, 2008 AND MADE THE ADDITION IN THE ASSESSMENT ORDER PASSED ON THE NEXT DATE. IT CONTENDED THAT ASSESSEE HAS NOT TAKEN ANY LOAN OR ADVANCE FROM M/S . MAGNETEC MANGAL (P) LTD. AS ALLEGED BY THE ASSESSING OFFICER. THE ASSES SEE COMPANY HAD MADE PURCHASES OF CORES FROM THIS COMPANY. IT HAD FILED COPY OF THE CONFIRMED ACCOUNT FROM THAT COMPANY AND POINTED OUT THAT THE ASSESSING OFFICER MADE ADDITION UNDER SEC. 41(1) WHICH IS NOT APPLICABLE I N THE PRESENT CASE. ACCORDING TO THE ASSESSEE, AN ADDITION UNDER SEC. 4 1(1) OF THE ACT CAN BE MADE WHERE AN ALLOWANCE IS GRANTED TO AN ASSESSEE I N ANY YEAR IN RESPECT OF ANY LOSS EXPENDITURE OR TRADING LIABILITY AND SUBSE QUENTLY, DURING ANY PREVIOUS YEAR, THE ASSESSEE RECEIVES WHETHER IN CAS H OR IN ANY OTHER MANNER WHATSOEVER, ANY AMOUNT IN RESPECT OF LOSS OR EXPEND ITURE OR THE ASSESSEE IS BENEFITED BY THE REMISSION OR CESSATION OF SUCH TRA DING LIABILITY. THE LIABILITY SO EXTINGUISHED WOULD BE CHARGEABLE AS PROFIT OF TH E PREVIOUS YEAR. IT POINTED OUT THAT NO SUCH FACTS WERE AVAILABLE IN TH E CASE OF THE ASSESSEE. LEARNED FIRST APPELLATE AUTHORITY HAS GONE THROUGH ALL THESE ASPECTS AND VERIFIED THE BOOKS OF ACCOUNT. HE DELETED THE ADDIT ION BY OBSERVING AS UNDER: 4 2.2 DURING THE HEARING DATED 16.6.2011, THE LEARNE D AR OF THE APPELLANT WAS ASKED TO GIVE COPY OF OUTSTANDING BAL ANCE. IN COMPLIANCE TO WHICH CONFIRMATION OF ACCOUNT OF M/S. MAGNETEC MANGAL (P) LTD. WAS FILED FOR FINANCIAL YEAR 2006-0 7 TO 2010-11 WHICH WAS VERIFIED AND IT WAS FOUND THAT BALANCE AM OUNTING TO RS.50,03,360 IS FLUCTUATING IN SUBSEQUENT YEAR DEPE NDING ON THE PURCHASE AND PAYMENT MADE IN THIS REGARD AND IN THE YEAR ENDING 31.3.2011 IT HAS BEEN AT RS.55,72,761. SO THIS IS N OT A CASE WHERE IT CAN BE SAID THAT OUTSTANDING BALANCE WAS NO LONGER PAYABLE. THE FINDINGS OF THE A.O. THAT AMOUNT OF RS.50,03,360 IS NO LONGER PAYABLE IS FOUND TO BE ABSOLUTELY INCORRECT AS AGAINST THIS AMOUNT PAYMENT HAS BEEN IN THE SUBSEQUENT YEAR AND PURCHASES HAS BEEN MADE FROM M/S. MAGNETEC MANGAL (P) LTD. SO THERE IS NO CASE TO INV OKE PROVISION OF SEC. 41(1) OF THE IT ACT AND THE ADDITION MADE BY T HE ASSESSING OFFICER TO THE TUNE OF RS.50,03,360 IS DELETED. GRO UND NO.1 IS ALLOWED IN FAVOUR OF THE APPELLANT. 5. WITH THE ASSISTANCE OF LEARNED DR, WE HAVE GONE THROUGH THE RECORD CAREFULLY. ASSESSING OFFICER HAS FAILED TO PLACE A NY MATERIAL ON THE RECORD WHICH CAN INDICATE THAT FINDINGS OF FACT RECORDED B Y THE LEARNED FIRST APPELLATE AUTHORITY IS FACTUALLY INCORRECT. ASSESSI NG OFFICER DID NOT APPRECIATE THE FACTS IN PROPER PERSPECTIVE. HE FIRS TLY CONSTRUED THE AMOUNT AS A UNSECURED LOAN THEREAFTER HE CONSTRUED THAT IT WA S A LIABILITY WHICH CEASED TO EXIST. HE DID NOT PROVIDE PROPER OPPORTUNITY OF HEARING TO THE ASSESSEE. HE 5 ASKED THE EXPLANATION OF THE ASSESSEE VIDE ORDER SH EET ENTRY DATED 30.12.2010 AND PASSED THE ASSESSMENT ORDER ON 31.12 .2010. THE ASSESSEE HAS EXPLAINED ITS POSITION BEFORE THE LEARNED FIRST APP ELLATE AUTHORITY. THERE IS NO VIOLATION TO RULE 46A IN THE PRESENT APPEAL BECA USE LEARNED FIRST APPELLATE AUTHORITY HAS CONSIDERED THE EVIDENCE I.E . THE CONFIRMATION SUBMITTED BY M/S. MEGNETEC MANGAL (P) LTD. BY EXERC ISING HIS POWERS UNDER SUB-RULE (4) OF RULE 46A THOUGH IT IS NOT SPECIFICA LLY DISCERNIBLE FROM THE ORDER BUT IT EMERGES OUT FROM THE ORDER OF LEARNED CIT(APPEALS) THAT HE HAS VERIFIED THE ACCOUNTS AND THEREAFTER DELETED THE DI SALLOWANCE MADE BY THE ASSESSING OFFICER. CONTRARY TO HIS FINDING OF FACT EXTRACTED SUPRA, ASSESSING OFFICER HAS NOT PLACED ANY MATERIAL EXCEPT RAISING A GROUND OF APPEAL. TAKING INTO CONSIDERATION THE FINDING OF THE LEARNE D CIT(APPEALS), WE DO NOT FIND ANY MERIT IN THIS APPEAL. IT IS REJECTED. DECISION PRONOUNCED IN THE OPEN COURT. ( A.N. PAHUJA ) ( RA JPAL YADAV ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 09/12/2011 MOHAN LAL 6 COPY FORWARDED TO: 1) APPELLANT 2) RESPONDENT 3) CIT 4) CIT(APPEALS) 5) DR:ITAT ASSISTANT REGISTRAR