M/s. Anupam Enterprises, CHENNAI V. ITO, CHENNAI

ITA 507/CHNY/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4707 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 7 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-10-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 09-10-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 08-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T N BETGIRI JT
• Assessee Lawyers: D ANAND
• Keywords: Unexplained cash credit
• Section: 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : CHENNAI [BEFORE DR. O.K. NARAYANAN, VICE-PRESIDENT AND SHRI S. S. GODARA, JUDICIAL MEMBER] I.T.A.NO.507/MDS/2012 ASSESSMENT YEAR : 2007-08 M/S ANUPAM ENTERPRISES 16/20 ERULAPPAN STREET CHENNAI 600 079 VS THE INCOME TAX OFFICER BUSINESS WARD X(I) CHENNAI [PAN AAAFA 7378 M] (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI D.ANAND, ADVOCATE RESPONDENT BY : SHRI T.N.BETGIRI, JT.CIT DATE OF HEARING : 09-10-2013 DATE OF PRONOUNCEMENT : 24-10-2013 O R D E R PER S.S.GODARA, JUDICIAL MEMBER THIS APPEAL FILED BY THE ASSESSEE, FOR ASSESSMEN T YEAR 2007-08, IS DIRECTED AGAINST THE ORDER OF THE COMMI SSIONER OF INCOME- TAX (APPEALS)-IV CHENNAI, DATED 14.11.2011, PASSED IN APPEAL NO.6/10-11/A-IV, IN PROCEEDINGS UNDER SECTION 143(3 ) OF THE INCOME- TAX ACT, 1961 (IN SHORT THE ACT). 2. IN THE COURSE OF HEARING, IT IS VEHEMENTLY ARGUED BY THE ASSESSEE THAT THE CIT(A) HAS ERRED IN CONFIRMING AD DITION OF I.T.A.NO.507/12 :- 2 -: UNEXPLAINED CREDITS MADE BY THE ASSESSING OFFICER AMOUNTING TO ` 19,70,100/- BY INVOKING SECTION 41(1) OF THE ACT. IN SUPPORT THEREOF, IT QUOTES CASE LAW OF CHENNAI ITAT IN I.T.A.NO. 108 /MDS/2009 A.S.R.M. SUBBAIAH PILLAI VS DCIT, DECIDED ON 20.9.2 013 AND PRAYS FOR ACCEPTANCE OF THE APPEAL. 3. THE REVENUE STRONGLY SUPPORTS THE ORDER OF THE CIT( A) UNDER CHALLENGE AND PRAYS FOR ITS CONFIRMATION. 4. THE ASSESSEE IS A FIRM . IT IS ENGAGED IN THE B USINESS OF TRADING IN BATTERIES AND CONSTRUCTION. FOR THE IMP UGNED ASSESSMENT YEAR, THE ASSESSEE HAD FILED ITS RETURN ON 30.10. 2007 AND ADMITTED INCOME OF ` 86,350/-. IN THE COURSE OF SCRUTINY, THE ASSES SING OFFICER NOTICED ASSESSEES CLAIM OF SUNDRY CREDI TORS NUMBERING THREE I.E M/S COROMANDEL GRANITES, MR. KIRTHI GOLECHA AND M/S SHREYANSE FINANCE LTD. HE ISSUED NOTICE TO ALL OF THEM U/S 133(6) OF THE ACT. IN RESPONSE, THE ASSESSING OFFICER GOT CONFIRMATION F ROM CREDITOR NO.2 ONLY WHEREAS QUA OTHERS, THE SAME DID NOT COME AND THE NOTICES WERE RECEIVED BACK WITH THE REMARK LEFT. IN VIEW THE REOF, THE ASSESSING OFFICER, IN THE ASSESSMENT ORDER DATED 31.12.2009, MADE THE IMPUGNED ADDITION TOTALING ` 19,70,000/- COMPRISING OF ` 10,07,500/- IN I.T.A.NO.507/12 :- 3 -: CASE OF M/S COROMANDEL GRANITES AND ` 9,62,600/- IN CASE OF M/S SHREYANSE FINANCE LTD. 5. AGGRIEVED, THE ASSESSEE PREFERRED APPEAL. VIDE O RDER UNDER CHALLENGE, THE CIT(A) HOLDS THAT IN THE INSTA NT CASE, NEITHER THE ASSESSEE HAD FILED ALL THE RELEVANT DETAILS NOR HA D IT PAID INTEREST TO THE CREDITORS. IN HIS OPINION, THE ACT OF THE ASS ESSEE AMOUNTS TO REMISSION/CESSATION OF LIABILITY LIABLE TO BE DEALT WITH U/S 41(1) OF THE ACT. ACCORDINGLY, THE CIT(A) HAS CONFIRMED THE ADD ITION. HENCE, THE ASSESSEE IS IN APPEAL. 6. WE HAVE HEARD BOTH PARTIES AND PERUSED THE CASE FIL E. THE CASE LAW QUOTED BY THE ASSESSEE (SUPRA) HAS ALSO B EEN GONE THROUGH. UNDISPUTEDLY, THE CONTENTION OF THE ASSESSEE THROU GHOUT HAS BEEN THAT THE CREDITORS IN QUESTION ARE VERY OLD DATING BACK TO THE YEAR 1994-95. IT IS TO BE SEEN THAT THE VERY GROUND WAS ALSO RAISED IN THE LOWER APPELLATE PROCEEDINGS AND THE FACTUAL PLEA HA S NOWHERE BEEN EXPRESSLY TURNED DOWN BY THE CIT(A). EVEN IN TH E COURSE OF HEARING BEFORE US, THE REVENUE HAS NOT REBUTTED THE ARGUMEN T OF THE ASSESSEE THAT THE CREDITORS ARE VERY OLD I.E MORE T HAN TWO DECADES. THAT BEING THE CASE, THERE IS NO DOUBT ABOUT THE GENUINENESS AND CREDITWORTHINESS OF THE CREDITORS IN QUESTION. THI S LEADS US TO THE I.T.A.NO.507/12 :- 4 -: SECOND LIMB OF ASSESSEES ARGUMENT THAT WITHOUT A NY EVIDENCE OF REMISSION OR CESSATION OF LIABILITY, THE AUTHORITIE S BELOW COULD NOT HAVE INVOKED SECTION 41(1) OF THE ACT. AFTER GIVING OUR THOUGHTFUL CONSIDERATION, WE FIND FORCE IN THIS SUBMISSION OF THE ASSESSEE. IN THE CASE LAW RELIED UPON BY THE ASSESSEE (SUPRA), WE F IND THAT THE VERY ISSUE AS TO WHETHER IN THE ABSENCE OF CESSATION OR REMISSION OF LIABILITY, SECTION 41(1) OF THE ACT COULD BE INVOKED OR NOT, H AS BEEN DEALT WITH AS UNDER: 7. WE HAVE HEARD BOTH PARTIES, PERUSED THE RELEV ANT FINDINGS, PAPER BOOKS AND THE CASE LAW. THE FIRST QUESTION S OUGHT TO BE RAISED BY THE ASSESSEE IS AS TO WHETHER OR NOT THE LIABIL ITY OF SUNDRY CREDITORS COMPUTED IN ITS ACCOUNTS FOR THE PRECEDING ASSESSME NT YEARS COULD BE DEEMED TO HAVE BEEN REMITTED OR CEASED FOR THE P URPOSE OF SEC.41(1) OF THE ACT. IN THIS REGARD, WE FIND THAT THERE IS NO MATERIAL RELIED UPON BY THE REVENUE APART FROM MERELY DRAWIN G AN INFERENCE THAT THE LIABILITY IN QUESTION HAD ACTUALLY BEEN RE MITTED OR CEASED FOR THE PURPOSE OF SEC.41(1) OF THE ACT. IN THE PRESEN T CASE, THE ASSESSING OFFICER HAS PRESUMED THAT SINCE THE LIABI LITY IN QUESTION HAD BEEN CONTINUING FOR THE PAST MANY YEARS, THIS SHOWS THE ASSESSEES INTENTION OF NOT PAYING THEM WHICH WOULD AMOUNT TO ITS REMISSION AND CESSATION. IN THIS REGARD, WE FIND FROM A PERUSAL OF THE CASE LAW RELIED UPON BY THE ASSESSEE IN THE CASE OF CIT V. SOUTHER N ROAD WAYS LTD. (2006) 282 ITR 379(MADRAS) THAT OBTAINING OF A BENE FIT BY VIRTUE OF REMISSION OR CESSATION IS A CONDITION PRECEDENT FOR EXIGIBILITY OF THE RELEVANT PROVISION. SIMILARLY, THEIR LORDSHIPS IN T HE CASE OF CIT V. TAMILNADU WAREHOUSING CORPORATION (2007) 292 ITR 31 0(MADRAS) HAVE FURTHER ECHOED THE PRINCIPLE THAT IN THE ABSEN CE OF CESSATION OF A LIABILITY, SEC.41(1) OF THE ACT COULD NOT BE PRESSE D INTO OPERATION. UNDISPUTEDLY, APART FROM THE INFERENCE, NO EVIDENCE OF ANY REMISSION OR CESSATION IS FORTHCOMING IN THE CASE IN HAND. T HEREFORE, WE ACCEPT THE ASSESSEES CONTENTIONS AND DELETE THE IMPUGNED ADDITION OF ` 20,60,559/-. I.T.A.NO.507/12 :- 5 -: IN VIEW THEREOF, WE ALSO HOLD THAT SINCE THERE IS N O EVIDENCE OF REMISSION OR CESSATION OF LIABILITY IN QUESTION, SE CTION 41(1) OF THE ACT COULD NOT HAVE BEEN PRESSED INTO OPERATION IN ASSE SSEES CASE BY THE LOWER AUTHORITIES. THEREFORE, WE ACCEPT ASSESSEE S CONTENTION AND HOLD THAT THE ADDITION IN QUESTION MADE BY THE ASSE SSING OFFICER AND CONFIRMED BY THE CIT(A) U/S 41(1) OF THE ACT IS L IABLE TO BE DELETED. 7. THE ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED ON THURSDAY, THE 24 TH OF OCTOBER, 2013, AT CHENNAI. SD/- SD/- (DR. O.K. NARAYANAN) VICE-PRESIDENT (S. S. GODARA) JUDICIAL MEMBER DATED: 24 TH OCTOBER, 2013 RD COPY TO: APPELLANT/RESPONDENT/CIT(A)/CIT/DR