ARONI COMMERCIALS LTD, MUMBAI V. ACIT 2(1), MUMBAI

ITA 4457/MUM/2010

• Counselvise Citation: 445719914 RSA 2010
• Duration Of Justice: 1 year(s) 3 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 14-09-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 31-05-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P K B MENON
• Keywords: Additional evidence

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A : MUMBAI BEFORE SHRI D. MANMOHAN, (VICE PRESIDENT [MZ]) AND SHRI RAJENDRA SINGH,(ACCOUNTANT MEMBER) ITA NO.4457/MUM/2010 ASSESSMENT YEAR : 2006-07 M/S. ARONI COMMERCIALS LTD. 209-210, ARCADIA BUILDING, 2 ND FLOOR, NCPA ROAD, 195 NARIMAN POINT, MUMBAI 400 021. ..( APPELLANT ) P.A. NO. (AAACA 8974 A) VS. ASST. COMMISSIONER OF INCOME TAX CIRCLE-2(1), AAYAKAR BHAVAN, MUMBAI-400 020. ..( RESPONDENT ) APPELLANT BY : SHRI VIJAY MEHTA RESPONDENT BY : SHRI P. K. B. MENON DATE OF HEARING : 14.09.2011 DATE OF PRONOUNCEMENT : 23RD SEPTEMBER, 2011 O R D E R PER RAJENDRA SINGH (AM). THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER D ATED 7.4.2010 OF THE CIT(A) FOR THE ASSESSMENT YEAR 2006-07 . THE ONLY DISPUTE RAISED BY THE ASSESSEE IN THIS APPEAL IS REGARDIN G ADDITION OF RS.14,83,490/- MADE BY THE AO UNDER SECTION 41(1) OF T HE I.T ACT. ITA NO.4457/MUM/2010 A.Y: 2006-07 2 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE ASSESSEE WHO WAS ENGAGED IN THE BUSINESS OF FINANCING, TRADING AND INVE STMENT IN SHARES AND SECURITIES HAD SHOWN SUNDRY CREDITORS OF RS.14,83,490/ -. THE AO ASKED THE ASSESSEE TO EXPLAIN AS TO WHY SUNDRY CREDITORS SH OULD NOT BE ADDED UNDER SECTION 41(1). AS PER THE AO, ASSESSEE DID N OT FILE ANY DETAILS AND AGREED TO THE ADDITION PROPOSED BY THE A O. ACCORDINGLY, THE AO ADDED RS.14,83,490/- UNDER SECTION 41(1) OF TH E I.T. ACT. THE ASSESSEE DISPUTED THE DECISION OF AO AND SUBMITTED BEFORE C IT(A) THAT THOUGH THE CREDITORS WERE OUTSTANDING FROM MORE THAN T HREE YEARS, THE LIABILITIES WERE TO BE DISCHARGED BY THE ASSESSEE IN FUTURE ON SETTLEMENT OF DISPUTES. THE LIABILITY HAD NOT CEASED TO EXIST AND THE ASSESSEE HAD NOT WRITTEN BACK THE LIABILITY. THE ASSESSEE A LSO FILED ADDITIONAL EVIDENCE IN THE FORM OF P&L ACCOUNT AND LED GER ACCOUNT IN RESPECT OF ASSESSMENT YEAR 2009-10 IN WHICH THE LIABILITIE S WERE WRITTEN BACK BY THE ASSESSEE. THE ASSESSEE REQUESTED FOR ADM ISSION OF ADDITIONAL EVIDENCE ON THE GROUND THAT THE SAME WE RE NOT AVAILABLE AT THE TIME OF PASSING OF ORDER BY THE AO. THE CIT( A) HOWEVER, DID NOT ADMIT THE ADDITIONAL EVIDENCE AND CONFIRMED THE ADDITION MADE BY THE AO, AGGRIEVED BY WHICH ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 3. BEFORE US THE LD. A.R FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAD SHOWN THE LIABILITIES AS OUTSTANDING IN THE B ALANCE SHEET. THE ASSESSEE VIDE LETTER DATED 6.11.2008 ADDRESSED TO AO HAD ITA NO.4457/MUM/2010 A.Y: 2006-07 3 SUBMITTED THAT THE LIABILITIES WERE TO BE DISCHARGED IN FUTURE ON SETTLEMENT OF DISPUTES AND THESE HAD NOT CEASED TO EXIST. IT WAS ARGUED THAT ONUS WAS ON THE AO TO SHOW THAT THE LIABIL ITIES HAD CEASED AND THAT LIABILITIES CANNOT BE CONSIDERED AS CEASED ONLY ON THE GROUND THAT THE RECOVERY WAS BARRED BY LIMITATION. THE ASSESSEE HAD SUBMITTED ADDITIONAL EVIDENCE BEFORE CIT(A) SHOWING TH AT THE LIABILITIES WERE WRITTEN BACK IN ASSESSMENT YEAR 2008-09 BUT IT HAD NOT BEEN ADMITTED BY CIT(A) WHICH WAS NOT CORRECT. IT WAS ACCORDI NGLY REQUESTED THAT THE ORDER OF CIT(A) SHOULD BE SET ASIDE . THE LD. D.R ON THE OTHER HAND, PLACED RELIANCE ON THE ORDERS OF AU THORITIES BELOW. 4. WE HAVE PERUSED THE RECORDS AND CONSIDERED THE RIVAL SUBMISSIONS CAREFULLY. THE DISPUTE IS REGARDING ADDITION ON ACCOUNT OF OUTSTANDING CREDITORS UNDER SECTION 41(1) OF THE I.T. AC T. THE AO TREATED LIABILITIES AS CEASED TO EXIST AS ASSESSEE DID NOT F ILE ANY DETAILS AND ALSO AGREED TO THE ADDITION. BEFORE CIT(A) THE ASSESSEE FILED ADDITIONAL EVIDENCE IN THE FORM OF COPY OF P&L ACCOUNT AND LEDGER ACCOUNT FOR THE ASSESSMENT YEAR 2009-10 IN WHICH THE LIA BILITY HAD BEEN UNILATERALLY WRITTEN BACK BY THE ASSESSEE AS INCOME. THE CIT(A) DID NOT ADMIT THE ADDITIONAL EVIDENCE AND CONFIRMED T HE ADDITION ON THE GROUND THAT THE ASSESSEE HAD NOT FILED ANY DETAILS AND CONFIRMATION BEFORE AO. IN OUR VIEW THE ACTION OF T HE CIT(A) CANNOT BE JUSTIFIED. THE CIT(A) WAS REQUIRED TO EXAMINE THE CLAIM OF THE ITA NO.4457/MUM/2010 A.Y: 2006-07 4 ASSESSEE THAT LIABILITIES WERE OUTSTANDING BECAUSE OF PENDI NG DISPUTES AND TO GIVE A FINDING AS TO WHETHER THE LIABILITY HA D CEASED TO EXIST DURING THE RELEVANT YEAR. NO ENQUIRIES HAD BEEN MAD E WITH THE CREDITORS TO ASCERTAIN WHETHER LIABILITIES WERE PENDING IN THE RELEVANT YEAR. IN OUR VIEW THE MATTER REQUIRES FRESH EXAMINAT ION TO ARRIVE AT A FAIR CONCLUSION. WE, THEREFORE, SET ASIDE THE ORDER OF CIT(A) AND RESTORE THE ISSUE BACK TO HIM FOR PASSING A FRESH ORDER A FTER NECESSARY EXAMINATION AND AFTER CONSIDERING THE ADDITION AL EVIDENCE FILED BY THE ASSESSEE WHICH WERE NOT AVAILABLE AT THE TI ME OF PASSING OF ORDER BY THE AO AND AFTER ALLOWING OPPORTUNITY OF H EARING TO THE ASSESSEE. 5. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR ST ATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 23/9/2011 SD/- SD/- (D. MANMOHAN) (RAJENDRA SINGH ) VICE PRESIDENT ACCOUNTANT MEMBER MUMBAI, DATED: 23/9/2011. JV. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI. ITA NO.4457/MUM/2010 A.Y: 2006-07 5 DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 21.9.11 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 22.9.11 SR.PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7. FILE SENT TO THE BENCH CLERK SR.PS/PS 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER