RITEPLAZA TRADING COMPANY PRIVATE LIMITED , MUMBAI V. INCOME TAX OFFICER 1(3)(1), MUMBAI

ITA 5558/MUM/2017

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 7247 (ITAT-MUMBAI)
• Duration Of Justice: 7 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-04-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2014-2015
• Appeal Filed On: 01-09-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAM TIWARI
• Keywords: Opportunity of being heard; Additional evidence; Reasonable cause; Bad and doubtful debts
• Section: 142(1); 234B; 133(6); 68

Judgement Text

1 ITA 5558/MUM/2017 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH D, MUMBAI BEFORE SHRI JOGINDER SINGH (JUDICIAL MEMBER) AND SHRI G MANJUNATHA (ACCOUNTANT MEMBER) I.T.A NO.5558/MUM/2017 (ASSESSMENT YEAR: 2014-15) RITEPLAZA TRADING CO PVT LTD 2 ND FLOOR, JK SOMANI BLDG BRITISH HOTEL LANE, FORT MUMBAI 400 001 PAN : AADCR0300A VS ITO- 4(3)(3), MUMBAI APPELLANT BY SHRI RAJEEV KHANDELWAL REVENUE BY SHRI RAM TIWARI DATE OF HEARING 28-02-2018 DATE OF PRONOUNCEMENT 26-04-2018 O R D E R PER G MANJUNATHA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGA INST THE ORDER OF THE CIT(A)-3, MUMBAI DATED 28-07-2017 AND IT PERTAI NS TO AY 2014-15. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF AP PEAL: THE FOLLOWING GROUNDS OF APPEAL ARE INDEPENDENT OF, AND WITHOUT PREJUDICE TO, ONE ANOTHER: 1. THE COMMISSIONER OF INCOME-TAX (APPEALS) - 3, MU MBAI (HEREINAFTER REFERRED TO AS THE CIT(A)) ERRED IN UPHOLDING THE A CTION OF THE INCOME-TAX OFFICER- 1(3)(1), MUMBAI (HEREINAFTER REFERRED TO A S THE ASSESSING OFFICER) IN MAKING AN ADDITION OF A SUM OF RS 2,25,00,000 UNDER SECTION 41(1) OF THE ACT ON THE BASIS THAT OM METALS INFRAPROJECTS PVT. LTD. , THE LENDER, HAS WRITTEN-OFF THE LOAN/ ADVANCE IN THEIR BOOKS OF ACCOUNT. THE APPELLANTS CONTEND THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) OUGHT NOT TO HAVE UPHELD THE ACTION OF THE ASSESSING OFFICER IN MAKING THE IMPUGNED ADDITION AS THE PROV ISIONS OF SECTION 41(1) ARE NOT APPLICABLE INASMUCH AS THE APPELLANTS HAVE SHOW N THE IMPUGNED LIABILITY IN THEIR BOOKS OF ACCOUNT AND, THE ASSESSING OFFICE R HAS NOT BEEN ABLE TO SHOW 2 ITA 5558/MUM/2017 THAT SOME BENEFIT HAS ACCRUED IN RESPECT OF SUCH LI ABILITY BY WAY OF REMISSION OR CESSATION THEREOF. THE APPELLANTS FURTHER, CONTEND THAT THE CIT(A) HAS ERRED IN NOT ACCEPTING ADDITIONAL EVIDENCE FILED UNDER COVER OF LETTER DAT ED 25 TH JULY, 2017 EVEN THOUGH THE APPELLANTS WERE PREVENTED BY REASONABLE CAUSE IN FURNISHING THE SAID ADDITIONAL EVIDENCES WITH THE ASSESSING OFFICE R DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THE APPELLANTS FURTHER, CONTEND THAT THE CIT(A) HAS GROSSLY ERRED IN BRINGING THE IMPUGNED AMOUNT TO TAX UNDER SECTION 41(1) OF T HE ACT INSPITE OF THE FACT THAT THE ASSESSING OFFICER HAS TAXED THE SAID AMOUN T UNDER SECTION 68 OF THE ACT WITHOUT FOLLOWING THE PRINCIPLES OF NATURAL JUS TICE OF ALLOWING AN OPPORTUNITY OF BEING HEARD TO THE APPELLANTS FOR SU CH CHANGE. 2. THE CIT(A) ERRED IN UPHOLDING THE ACTION OF THE ASSESSING OFFICER IN CHARGING INTEREST OF RS.1,46,002 AND RS.24,09,033 U NDER SECTIONS 234A AND 234B OF THE ACT, RESPECTIVELY. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E FILED ITS RETURN OF INCOME FOR AY 2014-15 ON 28-11-2014 DECLARING TOTAL INCOME AT NIL. THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS AND ACCOR DINGLY NOTICES U/S 143(2) AND 142(1) OF THE ACT WERE ISSUED. IN RESPO NSE TO NOTICES, AUTHORIZED REPRESENTATIVE OF THE ASSESSEE APPEARED FROM TIME TO TIME AND FILED DETAILS, AS CALLED FOR. DURING THE COURS E OF ASSESSMENT PROCEEDINGS, THE AO NOTICED THAT THE ASSESSEE HAS B ORROWED LOAN FROM M/S OM METALS INFRAPROJECTS LTD AMOUNTING TO RS. 2. 25 CRORES IN THE FINANCIAL YEAR, 2007. IN ORDER TO VERIFY THE GENUI NENESS OF LOAN, THE AO ISSUED NOTICE U/S 133(6) TO M/S OM METALS INFRAPROJ ECTS LTD . THE CREDITOR, VIDE LETTER DATED 19-09-2016 FURNISHED CO PY OF LEDGER ACCOUNT OF ASSESSEE IN THEIR BOOKS OF ACCOUNT FOR THE YEAR ENDING 31-03-2014 AS PER WHICH, THE PARTY HAS WRITTEN OFF LOAN ADVANCED TO THE ASSESSEE WITH A NARRATION THAT IT WAS LYING OUTSTANDING AND THE COM PANY DID NOT PAY; 3 ITA 5558/MUM/2017 HENCE, WRITTEN OFF AS BAD DEBTS. THEREAFTER, THE A O VIDE LETTER DATED 25- 10-2016 REQUESTED ASSESSEE TO SHOW CAUSE AS TO WHY THE LOAN AMOUNT OF RS.2.25 CRORES SHALL NOT BE TREATED AS UNEXPLAIN ED CASH CREDIT U/S 68 OF THE ACT. IN RESPONSE, THE ASSESSEE, VIDE LETTER DATED 7-12-2016 SUBMITTED THAT IT HAS RECEIVED LOAN FROM THE PARTY BY ACCOUNT PAYEE CHEQUE AND DUE TO FISCAL CONSTRAINTS, THE SAME WAS NOT REPAID. HOWEVER, THE SAME IS VERY MUCH A LIABILITY AND ASSE SSEE COMPANY INTENT TO REPAY THE SAME AND ARRANGEMENTS ARE BEING MADE F OR THE SAME. THE AO, AFTER CONSIDERING EXPLANATIONS OF THE ASSESSEE OBSERVED THAT THE ASSESSEE KNEW THE CREDITOR, M/S OM METALS INFRAPROJ ECTS LTD HAD ALREADY WRITTEN OFF THE ENTIRE LOAN AMOUNT. FROM T HE ABOVE, IT WAS CLEAR THAT THE ASSESSEE HAD REDUCED AN AMOUNT OF RS.2.25 CRORES FROM PROFIT INSTEAD OF MAKING ADDITION U/S 41(1). IN VIEW OF T HE ABOVE, THE ENTIRE LOAN AMOUNT OF RS.2.25 CRORES WAS ADDED TO TOTAL IN COME U/S 68 OF THE ACT. 3. AGGRIEVED BY THE ASSESSMENT ORDER, ASSESSEE PREF ERRED APPEAL BEFORE THE CIT(A). BEFORE THE CIT(A), ASSESSEE HAS FILED CERTAIN ADDITIONAL EVIDENCES U/R 46A ALONGWITH COPIES OF LE TTERS DATED 04-01- 2017 AND 09-01-2017 ADDRESSED BY THE CREDITOR IN RE SPONSE TO A LETTER ISSUED BY THE ASSESSEE. AS REGARDS ADDITION MADE B Y THE AO TOWARDS LOAN U/S 68, THE ASSESSEE SUBMITTED THAT THE ADDITI ON MADE BY THE AO TOWARDS LOAN RECEIVED FROM M/S OM METALS INFRAPROJE CTS LTD CAN NEITHER 4 ITA 5558/MUM/2017 BE SUSTAINED U/S 68 NOR U/S 41(1) OF THE ACT AS THE ASSESSEE IS STILL ADMITTING THE LIABILITY TOWARDS REPAYMENT OF LOAN. THE ASSESSEE FURTHER SUBMITTED THAT TO MAKE ADDITION U/S 68, THE AMOUNT OF LOAN SHOULD BE RECEIVED DURING THE YEAR WHEREAS IN THIS CASE IT HA S RECEIVED LOAN IN THE FINANCIAL YEAR 2007, THEREFORE, THERE IS NO REASON FOR THE AO TO INVOKE PROVISIONS OF SECTION 68 OF THE ACT. THE ASSESSEE FURTHER CONTENDED THAT TO INVOKE PROVISIONS OF SECTION 41(1) TO TREAT REMISSION OR CESSATION OF LIABILITY, THE ASSESSEE SHOULD EITHER GET CASH O R KIND BENEFIT DURING THE YEAR UNDER CONSIDERATION BY WAY OF WRITE OFF OF LIA BILITY. THE LIABILITY WRITTEN OFF IN THE BOOKS OF ACCOUNT OF THE CREDITOR IS NO LONGER RELEVANT TO DECIDE WHETHER THE ASSESSEE HAS GOT SOME BENEFIT IN THE FORM OF REMISSION OR CESSATION OF LIABILITY. 4. THE CIT(A), AFTER CONSIDERING RELEVANT SUBMISSIO NS OF THE ASSESSEE AND ALSO RELYING UPON CERTAIN JUDICIAL PRECEDENTS O BSERVED THAT IT IS A CLEAR CASE OF CESSATION OF LIABILITY TO WHICH THE A SSESSEE HAS NO OBLIGATION TO DISCHARGE TOWARDS LOAN RECEIVED FROM M/S OM METALS INFRAPROJECTS LTD. THE CIT(A) FURTHER OBSERVED THA T THE CREDITOR CATEGORICALLY STATED IN ITS LETTER ADDRESSED TO THE AO THAT IT HAS ALREADY WRITTEN OFF THE LIABILITY AS BAD DEBT IN ITS BOOKS OF ACCOUNT AND HENCE, THE PROVISIONS OF SECTION 41(1) COMES INTO OPERATION TH E MOMENT, THE ASSESEE DERIVES CERTAIN BENEFIT OUT OF REMISSION OR CESSATION OF LIABILITY EITHER ON ITS OWN OR ON ACCOUNT OF UNILATERAL WRITE BACK OF LIABILITY IN THE 5 ITA 5558/MUM/2017 BOOKS OF ACCOUNT OF THE CREDITOR. THE AO HAS BROUG HT OUT CLEAR FACTS TO THE EFFECT THAT THE LIABILITY IS NO LONGER PAYABLE AND THE ASSESSEE DERIVES BENEFIT OUT OF WRITE OFF OF LIABILITY BY THE CREDIT OR FOR WHICH THE ASSESSEE HAD NOT PRODUCED ANY EVIDENCE TO COUNTER THE FINDIN GS OF THE AO. THEREFORE, HE OPINED THAT THE ADDITION MADE BY THE AO TOWARDS LOAN RECEIVED FROM M/S OM METALS INFRAPROJECTS LTD IS RE QUIRED TO BE ADDED U/S 41(1) BUT NOT U/S 68 AS HELD BY THE AO. WITH T HESE OBSERVATIONS, HE CONFIRMED ADDITION MADE BY THE AO AND DISMISS THE A PPEAL FILED BY THE ASSESSEE. AGGRIEVED BY THE ORDER OF CIT(A), ASSESS EE IS IN APPEAL BEFORE US. 5. THE LD.AR FOR THE ASSESSEE SUBMITTED THAT THE LD .CIT(A) ERRED IN UPHOLDING ADDITION MADE BY THE AO TOWARDS LOAN RECE IVED FROM M/S OM METALS INFRAPROJECTS LTD BY HOLDING THAT THE ADDITI ON MADE BY THE AO IS SUSTAINED U/S 41(1) AS THE ASSESSEE HAS DERIVED CER TAIN BENEFIT OUT OF UNILATERAL REMISSION OR CESSATION OF LIABILITY BY T HE CREDITOR. THE LD.AR FURTHER SUBMITTED THAT THE LD.CIT(A) FAILED TO APPR ECIATE THE FACT THAT THE ADDITION MADE BY THE AO CAN NEITHER BE SUSTAINED U/ S 68 NOR U/S 41(1) AS THE AMOUNT OF LOAN RECEIVED ON ACCOUNT OF CAPITA L ACCOUNT WHICH CANNOT BE ADDED U/S 41(1) AS THE PROVISIONS OF SECT ION 41(1) APPLIES IN A CASE WHERE AN ALLOWANCE OR DEDUCTION HAS BEEN MADE IN THE ASSESSMENT FOR ANY YEAR IN RESPECT OF LOSS, EXPENDI TURE OR TRADING LIABILITY INCURRED BY THE ASSESSEE AND SUBSEQUENTLY DURING ANY PREVIOUS 6 ITA 5558/MUM/2017 YEAR THE FIRST MENTIONED PERSON HAS OBTAINED WHETHE R IN CASH OR IN ANY OTHER MANNER, WHATSOEVER, ANY AMOUNT IN RESPECT OF SUCH LOSS OR EXPENDITURE OR SOME BENEFIT IN RESPECT OF SUCH TRAD ING LIABILITY BY WAY OF REMISSION OR CESSATION THEREOF. IN THIS CASE, THE ASSESSEE HAS RECEIVED LOAN FROM THE CREDITOR WHICH HAS BEEN CONTINUED IN THE ACCOUNT OF THE ASSESSEE. IT IS IRRELEVANT WHETHER THE CREDITOR HA S WRITTEN OFF THE LIABILITY IN ITS BOOKS OF ACCOUNT OR NOT. WHAT IS TO BE SEEN IS WHETHER THE ASSESSEE HAS DERIVED ANY BENEFIT OUT OF REMISSION O R CESSATION OF LIABILITY AND SUCH LIABILITY IS ON ACCOUNT OF TRADI NG LIABILITY OR NOT. THE LIABILITY TOWARDS LOAN IS ON ACCOUNT OF CAPITAL ACC OUNT FOR WHICH NO BENEFIT HAS BEEN DERIVED BY THE ASSESSEE IN THE EARLIER YEA R. THEREFORE, THERE IS NO REASON FOR THE AO TO TREAT SUCH LIABILITY AS A T RADING LIABILITY FOR WHICH THE ASSESSEE HAS GOT CERTAIN BENEFIT BY WAY OF REMI SSION OR CESSATION. THE LD.AR FURTHER SUBMITTED THAT EVEN THE ADDITION MADE BY THE AO CANNOT BE SUSTAINED U/S 68 OF THE ACT AS THE PROVIS IONS OF SECTION 68 IS APPLICABLE TO A CASE WHERE THE LOAN OR ANY OTHER CR EDIT ARISING DURING THE YEAR UNDER CONSIDERATION. IN THIS CASE, THE ASSESS EE HAS RAISED LOAN IN THE YEAR 2007. THEREFORE, THERE IS NO REASON FOR T HE AO TO INVOKE THE PROVISIONS OF SECTION 68 TO MAKE ADDITION. IN THIS REGARD, THE LD.AR RELIED ON THE FOLLOWING DECISIONS:- 1.AMBICA MILLS 54 ITR 167 (GUJ) 2. CHASE BRIGHT STEEL LTD 177 ITR 128 (GUJ) 7 ITA 5558/MUM/2017 3. SUGAULI SUGAR WORKS (P) LTD 236 ITR 518 (SC) 4. LIQUIDATOR, MYSORE AGENCIES (P) LTD 114 ITR 852 (KAR) 5. CIPLA INVESTMENTS LTD 33 SOT 317 (OM) 6. AIRLINE ALLIED SERVICES LTD 2017) 167 ITD 717 (D EL-TRIB) 7. BOMBAY GAS CO LTD (2012) 54 SOT 13 (MUM) 8. SAMRAT RICE MILLS (P) LTD 54 SOT 1 (DEL) 9. TOSHA INTERNATIONAL LTD 331 ITR 440 (DEL) 10.SURETECH HOSPITAL & RESEARCH CENTRE LTD 293 ITR 53 (BOM) 11.PRABHAVATI S SHAH 231 ITR 1 (BOM) 6. ON THE OTHER HAND, THE LD.DR SUPPORTING THE ORDE R OF CIT(A) SUBMITTED THAT THE ASSESSEE DERIVED BENEFIT OUT OF REMISSION OR CESSATION OF LIABILITY TOWARDS LOAN RECEIVED FROM M /S OM METAL INFRAPROJECTS LTD WHICH IS EVIDENT FROM THE FACT TH AT THE CREDITOR HAS ACCEPTED BEFORE THE AO THT IT HAS UNILATERALLY WRIT TEN OFF THE LIABILITY AS BAD DEBT. THE LD.DR FURTHER SUBMITTED THAT THE MOM ENT THE ASSESSEE DERIVED CERTAIN BENEFIT WHETHER IN CASH OR IN ANY O THER MANNER, BY WAY OF REMISSION OR CESSATION THEREOF, WHETHER SUCH REM ISSION OR CESSATION IS ON ACCOUNT OF UNILATERAL WRITE OFF OF LIABILITY BY THE CREDITOR OR BY THE ASSESSEE IN ITS BOOKS OF ACCOUNT, AS LONG AS THERE IS A REMISSION OR CESSATION OF LIABILITY, THE ASSESSEE CERTAINLY DERI VED CERTAIN BENEFIT AND ACCORDINGLY, THE CIT(A) WAS RIGHT IN CONFIRMING THE ADDITION MADE BY THE AO U/S 41(1) OF THE ACT. 8 ITA 5558/MUM/2017 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIALS AVAILABLE ON RECORD. THE AO MADE ADDITION TOWARDS LOAN RECEI VED FROM M/S OM METAL INFRAPROJECTS LTD ON THE BASIS OF CONFIRMATIO N RECEIVED FROM THE CREDITOR WHEREIN THE CREDITOR CONFIRMED THAT IT HAS WRITTEN OFF THE LIABILITY IN ITS BOOKS OF ACCOUNT AS BAD DEBT. ACCORDING TO THE AO, EVEN THOUGH THE CREDITOR WROTE OFF THE LIABILITY, THE ASSESSEE CONTINUE TO CLAIM THE LIABILITY IN ITS BOOKS OF ACCOUNT, THEREFORE, HE OP INED THAT THE CREDIT APPEARED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE IS UNEXPLAINED AS THE ASSESSEE FAILED TO EXPLAIN WITH NECESSARY EVIDENCES THE GENUINENESS OF TRANSACTIONS. THE LD.CIT(A) CONFIRMED ADDITION MAD E BY THE AO HAS APPLIED THE PROVISIONS OF SECTION 68; THE ADDITION MADE BY THE AO IS SUSTAINABLE U/S 41(1) AS THE ASSESSEE HAS DERIVED C ERTAIN BENEFIT OUT OF REMISSION OR CESSATION OF LIABILITY. IT IS THE CON TENTION OF THE ASSESSEE THAT THE ADDITION MADE BY THE AO NEITHER CAN BE SUS TAINED U/S 41(1) NOR COULD IT BE SUSTAINED U/S 68 OF THE ACT AS THE AO H AS MADE ADDITION OF LOAN ON THE BASIS OF CONFIRMATION RECEIVED FROM THE CREDITOR WITHOUT APPRECIATING THE LEGAL POSITION WITH REGARD TO SUCH CREDIT. THE ASSESSEE FURTHER CONTENDED THAT THE ADDITIONS MADE BY THE AO U/S 68 CANNOT BE SUSTAINED BECAUSE THE PROVISIONS OF SECTION 68 APPL IES TO ANY CREDITS FOUND IN THE BOOKS OF ACCOUNT OF THE ASSESSEE FOR W HICH THE ASSESSEE OFFERS NO EXPLANATION. THE ADDITION MADE BY THE AO CANNOT BE SUSTAINED EVEN U/S 41(1) AS THE PROVISIONS OF SECTI ON 41(1) APPLIES TO A 9 ITA 5558/MUM/2017 TRADING LIABILITY FOR WHICH AN ALLOWANCE OR DEDUCTI ON HAS BEEN MADE IN THE ASSESSMENT FOR ANY YEAR AND SUBSEQUENTLY DURING ANY PREVIOUS YEAR THE PERSON HAS OBTAINED WHETHER IN CASH OR IN ANY O THER MANNER, WHATSOEVER SOME BENEFIT IN RESPECT OF SUCH LIABILIT Y BY WAY OF REMISSION OR CESSATION THEREOF. ACCORDING TO THE ASSESSEE, T HE LIABILITY TOWARDS LOAN FROM THE CREDITOR IS CONTINUED IN ITS BOOKS OF ACCOUNT AND IT IS BOUND TO REPAY THE LOAN. MERELY THE CREDITOR WROTE OFF THE LOAN IN ITS BOOKS OF ACCOUNT, IT CANNOT BE SAID THAT THE ASSESSEES OBLI GATION TOWARDS REPAYMENT OF LOAN CEASED TO EXIST. THE ASSESSEE FU RTHER CONTENDED THAT THOUGH THE CREDITOR HAS WRITTEN OFF THE LOAN IN ITS BOOKS OF ACCOUNT AS BAD DEBT BUT IT HAS ADDRESSED A LETTER TO THE ASSESSEE. THE OUTSTANDING BALANCE OF RS.2.25 CRORES IS STILL PAYABLE WHICH IS EVIDENT FROM THE FACT THAT THE CREDITOR HAS ADDRESSED TWO LETTER ON 04-01 -2017 AND 09-01- 2017. 8. HAVING HEARD BOTH PARTIES, WE FIND THAT ALTHOUGH, T ECHNICALLY THE ADDITION TOWARDS LOAN CANNOT BE SUSTAINED EITHER UN DER SECTION 68 OR 41(1) OF THE ACT, YET THE NATURE OF TRANSACTION CLEARLY I NDICATES THAT THE TRANSACTION IS NOT GENUINE WHICH IS EVIDENT FROM THE FACT THAT CREDITOR HAS UNILATERALLY WRITTEN OF SUCH A HUGE LOAN AMOUNT TO GIVEN TO A TH IRD PARTY. ONCE TRUNCATION IS PROVED TO BE NON GENUINE AND APPEARS TO BE SUSPICIOUS, THEN, THE MOMENT THE ASSESSEE DERIVES CERTAIN BENEFIT WHE THER IN CASH OR IN KIND 10 ITA 5558/MUM/2017 OR IN ANY OTHER MANNER, WHATSOEVER, TOWARDS A LIABI LITY BY WAY OF REMISSION OR CESSATION THEREOF, SUCH LIABILITY IS LIABLE TO B E TAXED UNDER THE ACT AND TO THAT EXTENT THERE IS NO CONTROVERSY. IN THE PRESENT CASE, THE AO OBTAINED THE CONFIRMATION FROM THE CREDITOR TO FIND TRUE STA TUS OF THE LIABILITY SHOWN BY THE ASSESSEE. THE CORRECT FACTS EMERGED FROM CONFIR MATION FILED BY THE CREDITOR SHOWS THAT THE CREDITOR HAS WRITTEN OFF TH E OUTSTANDING LOAN IN ITS BOOKS OF ACCOUNT AS THE ASSESSEE HAS NOT PAID THE A MOUNT OVER A LONG PERIOD. WE FURTHER OBSERVE THAT EVEN THOUGH THE ASS ESSEE KNEW OF THE WRITE OFF OF LIABILITY BY THE CREDITOR, IT HAS CONT INUED TO CLAIM THE LIABILITY IN ITS BOOKS OF ACCOUNT WITHOUT MAKING PAYMENT TOWARDS LOA N. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT LOAN TRANSACTION APPEAR S TO BE NON GENUINE OR SHAM TRANSACTION. BUT, FACT REMAINS THAT ASSESSEE H AS FILED TWO LETTERS DATED 04-01-2017 AND 09-01-2017 ISSUED BY CREDITOR AS PER WHICH THE CREDITOR STATES THAT LIABILITY TOWARDS LOAN IS STIL L PAYABLE BY THE ASSESSEE AND WHICH HAS BEEN REITERATED BY THE ASSESSEE. THEREFORE , WE ARE OF THE CONSIDERED VIEW THAT THE ISSUE NEEDS TO BE RE-EXAMI NED BY THE AO IN THE LIGHT OF ADDITIONAL EVIDENCES IN FORM OF LETTERS OF CREDITOR TO ASCERTAIN GENUINENESS OF LOAN TRANSACTION. THE AO IS DIRECTED TO CAUSE ALL POSSIBLE ENQUIRIES TO ASCERTAIN TRUE NATURE OF TRANSACTIONS. HENCE, WE SET ASIDE THE ISSUE TO THE FILE OF THE AO AND DIRECT HIM TO P ASS DE NOVO ASSESSMENT IN ACCORDANCE WITH LAW IN LIGHT OF OUR O BSERVATION ABOVE. 11 ITA 5558/MUM/2017 9. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS A LLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH APRIL, 2018. SD/- SD/- (JOGINDER SINGH) (G MANJUNATHA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DT : 26 TH APRIL, 2018 PK/- COPY TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR /TRUE COPY/ BY ORDER SR.PS, ITAT, MUMBAI