M/s. R.B. Enterprises, Dehradun V. ACIT, Dehradun

ITA 5092/DEL/2013

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 3898 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 4 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-01-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2009-2010
• Appeal Filed On: 03-09-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAJESH ARORA
• Assessee Lawyers: F R MEENA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B NEW DELHI BEFORE SHRI G.D. AGRAWAL, HONBLE PRESIDENT AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA NO. 5092/DEL/2013 AY: 2010-11 DCIT, VS M/S GENERAL POWER COMPANY PVT. LTD . CIRCLE 10(1), 406-E, INTERNATIONAL TRADE TOWER, NEW DELHI. NEHRU PLACE, NEW DELHI-110019 (APPELLANT) ( RESPONDENT) APPELLANT BY : SHRI F.R. MEENA, SR. DR RESPONDENT BY: SHRI RAJESH ARORA, CA DATE OF HEARING: 24.10.2017 DATE OF PRONOUNCEMENT: 19.01.2018 ORDER PER SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGA INST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX(A)-15 D ATED 22.05.2015 AND PERTAINS TO ASSESSMENT YEAR 2010-11. 2. THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS E NGAGED IN THE BUSINESS OF MANUFACTURING AND TRADING OF PORCELAIN INSULATORS AND ACCESSORIES. THE RETURN WAS FILED DECLARING IN COME OF RS. 2,58,720/- AND THE ASSESSMENT WAS COMPLETED AT A TO TAL INCOME OF RS.3,87,22,330/- WHICH INCLUDED AN ADDITION OF R S. 46,33,901/- ON ACCOUNT OF ADDITION U/S 41(1) OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED 'THE ACT') IN RELATIO N TO SUNDRY CREDITORS. THIS ADDITION BY THE ASSESSING OFFICER WAS DELETED BY ITA NO, 5092/DEL/2015 ASSESSMENT YEAR 2010-11 2 THE LD. COMMISSIONER OF INCOME TAX(A) AND IS THE SO LE ISSUE IN THE APPEAL BEFORE US. THE GROUNDS RAISED BY THE DEPART MENT ARE AS UNDER:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE WHE THER THE CIT (A)-15 HAS ERRED IN DELETING THE ADDITION M ADE BY THE AO ON ACCOUNT OF CESSATION OF LIABILITY U/S 41( 1) OF THE IT ACT, 1961 WITHOUT APPRECIATING THE FACT THAT EVEN AFTER PROVIDING SUFFICIENT OPPORTUNITY, THE ASSESS EE HAS NOT FURNISHED DETAILS OF THE AUDITOR. 2. THE APPELLANT CRAVES TO ADD, AFTER, AMEND, MODI FY, ADD OR FOREGO ANY GROUND OF APPEAL AT ANY TIME BEF ORE OR DURING THE HEARING OF THIS APPEAL. 3. LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT T HERE WERE TOTAL SUNDRY CREDITORS OF RS. 3,20,67,115/- AS ON 3 1.03.2010 IN THE RELEVANT SCHEDULE OF BALANCE SHEET. THE ASSESS EE WAS REQUIRED VIDE QUESTIONNAIRE DATED 1.6.2012 TO FURNI SH THE DETAILS OF SUNDRY CREDITORS AS ON 31.03.2009 AND 31.03.2010 WITH COMPLETE NAME, ADDRESS AND ASSESSMENT PARTICULARS O F THE CREDITORS. IT WAS FURTHER SUBMITTED BY THE LD. DR THAT VIDE ORDER SHEET ENTRY DATED 06.02.2012, THE ASSESSEE WAS ASKE D TO FURNISH THE CONFIRMATION FROM THE CREDITORS OF MORE THAN RS . 5 LACS AND IN RESPONSE, VIDE ITS REPLY DATED 22.10.2012, THE ASSE SSEE FURNISHED A LIST OF SUNDRY CREDITORS COMPRISING OF THEIR NAME , OPENING & ITA NO, 5092/DEL/2015 ASSESSMENT YEAR 2010-11 3 CLOSING BALANCES AND STATUS BUT DID NOT FURNISH COM PLETE ADDRESSES, PAN AND CONFIRMATION OF THE CREDITORS. T HE LD. DR REFERRED TO THE ASSESSMENT ORDER AND SUBMITTED THAT 17 CREDITORS HAD REMAINED STATIC SINCE LONG. THE LD. DR FURTHER SUBMITTED THAT THE ASSESSEE DID NOT FURNISH ANY CONFIRMATION/ COPY OF LEDGER ACCOUNT MAINTAINED IN ITS BOOKS OF ACCOUNT AS WELL AS IN THE BOOKS OF THE CREDITORS AND, THEREFORE, IN ABSENCE O F DETAILS, GENUINENESS OF THE CREDITORS PARTICULARLY OF STATIC CREDITORS WAS NOT PROVED, AND THE ADDITION WAS MADE. IT WAS SUB MITTED THAT IN VIEW OF THE DETAILED FINDINGS OF THE ASSESSING OFFI CER, THE ADDITION HAD BEEN WRONGLY DELETED BY THE LD. COMMISSIONER OF INCOME TAX(A). 4. IN RESPONSE, THE LD. AR PLACED RELIANCE ON THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX(A) AND SUBMITTED THAT TH E ASSESSEE HAD PROVIDED NAMES AND ADDRESSES OF THE SU NDRY CREDITORS AND THE CONFIRMATIONS FROM RESPECTIVE CRE DITORS COULD NOT BE FILED AS THE ASSESSEES PLANT WAS CLOSED SIN CE MARCH 2012 DUE TO BEING DECLARED AS NON-PERFORMING ASSET BY THE BANK. IT WAS SUBMITTED THAT THE ASSESSEE COMPANY WAS NOT IN A POSITION TO PAY BACK THE CREDITORS WHO HAD REMAINED STATIC O VER A PERIOD ITA NO, 5092/DEL/2015 ASSESSMENT YEAR 2010-11 4 OF TIME. IT WAS SUBMITTED THAT THE AMOUNTS WERE ST ILL OUTSTANDING AND THE LIABILITY HAD NOT CEASED TO EXI ST AND, THEREFORE, ADDITION U/S 41(1) OF THE ACT HAD BEEN R IGHTLY DELETED. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS VERY CLEAR FROM THE PERUSAL OF ASSESSMENT ORDER THAT THE ASSESSING OFFICER HAD INV OKED PROVISIONS OF SECTION 41(1) OF THE ACT ON THE SOLE GROUND THAT THE OPENING AND CLOSING BALANCES WERE STATIC. HOWEVER, NO INQUIRIES WERE MADE BY THE ASSESSING OFFICER IN RESPECT OF GE NUINENESS OF THESE CREDITORS. FURTHER, THE ASSESSEE WAS ITSELF ADMITTING THE AMOUNTS AS OUTSTANDING LIABILITIES. ACCORDINGLY, T HE ASSESSING OFFICER WAS WRONG IN INVOKING PROVISIONS OF SECTION 41(1) OF THE ACT. THE LD. COMMISSIONER OF INCOME TAX(A) HAS ALS O RETURNED A SIMILAR FINDING AND HAS PLACED RELIANCE ON THE JU DGMENT OF HONBLE APEX COURT IN THE CASE OF COMMISSIONER OF I NCOME TAX(A) VS SUGAULI SUGAR WORKS (P) LTD. REPORTED IN 236 ITR 518 (SC) WHILE ALLOWING ASSESSEES APPEAL. WE FIND THE SAME TO BE IN ORDER. THE LD. DEPARTMENTAL REPRESENTATIVE ALSO CO ULD NOT POINT OUT ANY FACTUAL OR LEGAL INFIRMITY IN THE FIN DINGS RECORDED BY THE LD. COMMISSIONER OF INCOME TAX(A). THEREFOR E, WE FIND ITA NO, 5092/DEL/2015 ASSESSMENT YEAR 2010-11 5 NO REASON TO INTERFERE WITH THE ORDER OF THE LD. CO MMISSIONER OF INCOME TAX(A) AND DISMISS THE GROUNDS RAISED BY THE REVENUE. 6. IN THE RESULT, THE APPEAL OF THE DEPARTMENT IS D ISMISSED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 19TH J ANUARY, 2017. SD/- SD/- (G.D. AGRAWAL) (SUDHANSHU SRIVASTAVA) PRESIDENT JUDICIAL MEMBER DATED: 19 TH JANUARY, 2018 GS COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER ASSISTANT REGI STRAR