ACIT RG 25(3), MUMBAI V. EXIM TRAC, MUMBAI

ITA 5073/MUM/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 55373 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 23-08-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 17-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V P KOTHARI
• Keywords: Corroborative evidences
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, H BENCH, MUMBAI. BEFORE SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER AND SHRI R.S.PADVEKAR, JUDICIAL MEMBER I.T.A NO.5073/ MUM/2010 ASSESSMENT YEAR: 2007-08 ACIT 25(3), .. APPELLANT C-11, R.NO.308, PRATYAKSH KAR BHAVAN, BANDRA-KURLA COMPLEX, BANDRA (EAST), MUMBAI-51. VS M/S. EXIM TRACE .. RESPONDEN T B/SHOP NO.3, LAXM CHSL, BEHIND PATEL NAGAR, M.G.CROSS ROAD NO.4, KANDIVALI(WEST), MUMBAI-067. PA NO.AAAFE 7436 J APPEARANCES: V.V.SHASTRI, FOR THE APPELLANT V.P.KOTHARI , FOR THE RESPONDENT DATE OF HEARING : 23.8.2011 DATE OF PRONOUNCEMENT : 30 -09-2011 O R D E R PER PRAMOD KUMAR: 1. BY WAY OF THIS APPEAL, THE ASSESSING OFFICER HAS CALLE D INTO QUESTION CORRECTNESS OF CIT(A)S ORDER DATED 22 ND JANUARY, 2010, IN THE MATTER OF ASSESSMENT UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961, F OR THE ASSESSMENT YEAR 2007-08 ON THE FOLLOWING GROUND: I.T.A NO.5073/ MUM/2010 ASSESSMENT YEAR: 2007-08 2 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT(A) ERRED IN DIRECTING TO ACCEPT THE CLAIM OF THE ASSESSEE IN ALLOWING COMMISSION PAYABLE OF RS.32,61,285 WITHOUT APPRECIATING THE FAC T THAT THE ASSESSEE COULD NOT SUBSTANTIATE THE COMMISSION PAYABLE AS GENUINE OUTSTA NDING LIABILITY WHICH IS NOT CEASED U/S.41(1) OF THE I.T.ACT, 1961. 2. BRIEFLY STATED THE RELEVANT MATERIAL FACTS ARE LIK E THIS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT A S PER BALANCE SHEET AS ON 31.3.2007, A SUM OF RS.32,61,285 WAS OUTSTANDING AS C OMMISSION PAYABLE. THE AO ALSO NOTICED THAT THE ABOVE OUTSTANDING AMOUNT CON SISTED OF EARLIER YEAR COMMISSION OF RS.30,76,058 AND CURRENT YEAR COMMISSION P AYABLE AT RS.1,85,227. THE ASSESSING OFFICER REQUIRED THE ASSESSEE TO FURNISH THE P ARTYWISE LEDGER OF COMMISSION PAYABLE SINCE INCEPTION. FROM THE DETAILS FI LED BY THE ASSESSEE, THE ASSESSING OFFICER OBSERVED THAT EVEN THOUGH THE COMMISSION WAS PROVIDED IN THE YEAR 2004-05, THE SAME WAS NOT PAID UPTO 31.3.2008 I. E. FOR A PERIOD OF THREE YEARS. IT WAS SUBMITTED BEFORE THE AO THAT THE ASSESSEE HAS TO RE CEIVE RS.71,76,894 FROM THE ASSOCIATE CONCERN OF M/S. COMMERCIAL IMPORTER & EXPORTERS, WHO IS THE ASSOCIATED CONCERN OF M/S. MUMMCO GENERAL TRADING CO. AND THE ABOVE AMOUNT WAS TO BE RECEIVED FROM M/S. TRANS AFRICAN ENTERPRISES LTD. IT WAS ALSO SUBMITTED THAT THE ASSESSEE PAID RS.23,78,383 DURING F.Y. 2009-10 AND SU BMITTED NECESSARY EVIDENCE BEFORE THE AO. IT WAS IN THIS BACKDROP THA T THE ASSESSING OFFICER WAS OF THE OPINION THAT THE COMMISSION WAS PAYABLE TO M/S. MUMMCO GENERAL TRADING CO. BUT ACTUALLY THE PAYMENTS WERE MADE TO M/S. COMMERCIAL IM PORTER & EXPORTERS AND, THEREFORE, TREATED THE SAME AS CEASED LIABILITY AND D ISALLOWED THE ENTIRE UNPAID LIABILITY OF ` .32,61,285 UNDER SECTION 41(1) OF THE ACT. AGGRIEVE D, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A). 3. THE CIT(A) UPHOLD THE GRIEVANCE OF THE ASSESSEE AND DIRECTED THE AO TO DELETE THE ADDITION OF RS.32,61,285/- INTER ALIA, OBSERVING THAT THE AO BEFORE APPLYING SECTION 41(1) DID NOT EXAMINE WHETHER THEY ARE TRADING LIABILITIES AND WHETHER THERE WAS ANY REMISSION OR CESSATION. THE CIT ( A) FURTHER OBSERVED THAT THE ONLY OBJECTION OF THE AO IS THAT THE PAYMENT WAS MADE TO M/S. COMMERCIAL IMPORTER & EXPORTERS WHEREAS IT WAS PAYABLE TO M/S. MUMMCO GENERAL TRADING CO BUT THE AO DID NOT PUT ANY NOTICE TO THE ASSESSEE ABOU T THIS ISSUE. AS PER SUPPORTING I.T.A NO.5073/ MUM/2010 ASSESSMENT YEAR: 2007-08 3 EVIDENCE FILED, IT IS NOTICED THAT AT THE REQUEST OF M/S. MUMMCO GENERAL TRADING CO., THE ASSESSEE MADE PAYMENT TO M/S. COMMERCIAL IMPORTER & EXPORTERS. THEREFORE, IT IS CLEAR THAT THE ASSESSEE MADE PAYMENT IN THE SUBSEQUENT YEAR AND AS ON DATE THE BALANCE OUTSTANDING WAS NIL. FOR THIS PROPOSITION, HE RELIED ON THE DECISION OF ITAT LUCKNOW IN THE CASE OF ALLIED LEATHER FINISHERS (P) LT D., AGGRIEVED BY THE STAND SO TAKEN BY THE CIT(A), THE ASSESSING OFFICER IS IN APPEAL BEFORE US. 4. HAVING HEARD THE RIVAL CONTENTIONS, WE ARE INCLI NED TO UPHOLD THE ORDER OF THE CIT(A) ON THIS ISSUE. IN THE ASSESSMENT ORDER, THE AO HA S NOT ESTABLISHED THAT THERE HAD BEEN CESSATION OF LIABILITY. THE ONUS WAS ON THE ASSE SSING OFFICER TO PROVE THAT THE LIABILITY APPEARING IN THE BALANCE SHEET HAS CEA SED FINALLY. THE ONLY OBJECTION OF THE AO IS THAT THE PAYMENT WAS MADE TO M/S. COMMERCIA L IMPORTER & EXPORTERS WHEREAS IT WAS PAYABLE TO M/S. MUMMCO GENERAL TRADING CO BUT THE AO DID NOT PUT ANY NOTICE TO THE ASSESSEE ABOUT THIS ISSUE. IN THE IMPUG NED ORDER, THE CIT(A) OBSERVED THAT AS PER SUPPORTING EVIDENCE FILED, IT IS NOTICED THAT AT THE REQUEST OF M/S. MUMMCO GENERAL TRADING CO., THE ASSESSEE MADE PAYM ENT TO M/S. COMMERCIAL IMPORTER & EXPORTERS. HENCE, THE OBJECTION RAISED BY THE ASSESSEE IS OF NO USE. UNLESS THE AO PROVED THAT THERE WAS REMISSION OR CESSATION DURING THE YEAR UNDER APPEAL, THE SAME CANNOT BE TAXED UNDER SECTION 41(1). THERE IS NO MATERIAL BEFORE US, AS WAS THE POSITION BEFORE THE AUTHORITIES BELOW, TO INDICATE THAT THERE WAS ANY CESSATION OF LIABILITY, WHICH IS SINE QUA NON FOR INVO KING TAXABILITY UNDER SECTION 41(1). THE CIT(A) WAS THUS JUSTIFIED IN GRANTING THE IMPUGNED RELIEF. WE, ACCORDINGLY, UPHOLD THE ORDER OF THE CIT(A) AND DEC LINE TO INTERFERE. 5. IN THE RESULT, APPEAL IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 30 TH SEPT.2011 SD/- (R.S.PADVEKAR) JUDICIAL MEMBER SD/- (PRAMOD KUMAR) ACCOUNTANT MEMBER MUMBAI, DATED 30 TH SEPTEMBER, 2011 PARIDA I.T.A NO.5073/ MUM/2010 ASSESSMENT YEAR: 2007-08 4 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER OF INCOME TAX (APPEALS),35 MUMBAI 4. COMMISSIONER OF INCOME TAX, 25 , MUMBAI 5. DEPARTMENTAL REPRESENTATIVE, BENCH H MUMBAI //TRUE COPY// BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI