ITO, New Delhi V. Sh. Uttam Chand Jain, New Delhi

ITA 5889/DEL/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 7503 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-03-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Assessment Year: 2008-2009
• Appeal Filed On: 30-12-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C B SINGH

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH `H : NEW DELHI) BEFORE SHRI U.B.S. BEDI, JUDICIAL MEMBER AND SHRI K.G. BANSAL, ACCOUNTANT MEMBER ITA NO.5889/DEL./2011 (ASSESSMENT YEAR : 2008-09) ITO, WARD 29(2), VS. SHRI UTTAM CHAND JAIN, NEW DELHI. 2343, DHARAMPURA, CHAWRI, NEW DELHI-110006. (PAN/GIR NO.AAFPJ4475K) (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE REVENUE BY : SHRI C.B. SINGH, SR.DR ORDER PER U.B.S. BEDI, J.M. THIS APPEAL OF THE REVENUE IS FILED AGAINST THE ORD ER OF LD. CIT(A)-XXV, NEW DELHI DATED 10.10.2011 RELEVANT TO ASSESSMENT YEAR 2008-09 BY RAISING THE FOLLOWING SOLITARY GROUND :- THAT THE FACTS AND IN CIRCUMSTANCES OF THE CASE, T HE CIT(A)-XXV, NEW DELHI HAS ERRED IN DELETING THE ADDITION OF RS.9,19 ,320/- MADE BY THE ASSESSING OFFICER ON THE BASIS OF AUDIT REPORT ON ACCOUNT OF DEBIT NOTE. 2. FACTS IN THIS CASE AS INDICATED IN THE ORDER O F THE ASSESSING OFFICER ARE THAT THE ASSESSEE IS A PROPRIETOR OF M/S CHAMANLAL UMESH CHA ND AND IS ENGAGED IN THE BUSINESS OF PURCHASE, SALE OF PAPER AND PAPER BOARD. THE AS SESSEE HAS DECLARED THE TOTAL TURNOVER OF RS.66,18,893/-, THE GP @ 5.13% OF RS.3,39,523/- AND THE ASSESSEE HAS FILED THE RETURN OF INCOME OF RS.2,62,080/-. 2.1 THE ASSESSEE USED TO MAKE SALE TO SUMAN PRAKASH AN P. LTD. AND HAD OPENING DEBIT BALANCE OF RS.1,08,33,393/- AS ON 01.04.2007 AND TH E CLOSING BALANCE OF RS.1,00,43,638/- I.T.A. NO.5889/DEL./2011 (A.Y. : 2008-09) 2 WHICH INCLUDED THE UNREALIZED INTEREST AMOUNT OF RS .9,19,320/- AND AS SUCH THE ASSESSEE HAD THE NET DEBIT BALANCE OF RS.91,24,318/- (RS.1,0 0,43,638/- (-) RS.9,19,320/-). 2.2 THE SUMAN PRAKASHAN P. LTD. WAS IN BUSINESS TRO UBLE AND WAS NOT IN A POSITION TO MAKE THE PAYMENT TO THE ASSESSEE. THE ASSESSEE HAD RAISED A DEBIT NOTE OF RS.9,19,320/- AS INTEREST FOR THE DELAY IN PAYMENT FROM THE PARTY BUT THE SAME WAS NOT ACCEPTED BY THE PARTY. SO, THE DEBIT AMOUNT OF INTEREST REMAINED U NREALIZED AND ACCORDINGLY, THE SAME WAS NOT CREDITED IN THE P&L ACCOUNT OF THE ASSESSEE AND THE FACT WAS QUALIFIED BY THE AUDITORS IN THE AUDIT REPORT OF THE ASSESSEE. SINC E THE CLAIM OF INTEREST AMOUNT WAS NOT ACCEPTED BY THE PARTY, THE ASSESSEE ALSO DID NOT CR EDIT THE P&L ACCOUNT WITH THIS AMOUNT. THE ASSESSING OFFICER HAD CALLED FOR THE EXPLANATIO N OF THE ASSESSEE REGARDING THE NON- CREDITING OF THE INTEREST AMOUNT IN THE P&L ACCOUNT BUT THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE EXPLANATION OF THE ASSESSEE AND ACCORDINGLY, HAS MADE THE ADDITION OF THE ACCRUED INTEREST INCOME. 3. THE ASSESSEE TOOK UP THE MATTER IN APPEAL AGAINS T THE ORDER OF THE ASSESSING OFFICER AND SUBMITTED BEFORE FIRST APPELLATE AUTHO RITY THAT THE ASSESSING OFFICER IS NOT JUSTIFIED TO MAKE THE ADDITION WITHOUT ANY VALID AN D PROPER REASONS. IT IS SUBMITTED THAT THE BUSINESS TRANSACTION WITH THE PARTY SUMAN PRAKA SHAN P. LTD. HAD STOPPED W.E.F. 09.01.2008 AND THE PARTY WAS NOT IN A POSITION TO M AKE THE PAYMENT OF THE OUTSTANDING AMOUNT OF RS.91,24,318/- AND THE ASSESSEE HAD RAISE D THE DEBIT NOTE OF RS.9,19,320/- AS INTEREST TO SAFEGUARD HIS INTEREST FOR THE FUTURE L ITIGATION. THE ASSESSEE HAD GONE IN ARBITRATION WITH THE PAPER MERCHANTS ASSOCIATION W HICH HAD GIVEN AN EX-PARTE AWARD IN FAVOUR OF THE ASSESSEE WHICH THE ASSESSEE HAD TAKEN TO THE HONBLE DELHI HIGH COURT FOR A DECREE. BUT, IT WAS FOUND DURING THE COURSE OF LIT IGATION THAT THE PARTY SUMAN PRAKASHAN P. LTD. WAS IN BUSINESS TROUBLE AND WAS IN LIQUIDAT ION AND AN OFFICIAL LIQUIDATOR WAS APPOINTED TO OVERSEE THE LIQUIDATION OF THE COMPANY . THE MAIN SUBMISSION OF THE ASSESSEE IS THAT THE ASSESSEE HAS NEITHER RECEIVED THE PRINCIPAL AMOUNT NOR THE INTEREST AMOUNT WHICH WAS RAISED IN THE FORM OF A DEBIT NOTE . IT IS SUBMITTED BY THE ASSESSEE THAT NO INTEREST INCOME HAD EVER ACCRUED TO THE ASSESSEE AND NO INTEREST INCOME WAS RECEIVED BY THE ASSESSEE AND IT WAS ONLY A DEBIT NOTE WHICH WAS RAISED AS A PRECAUTION TO RAISE I.T.A. NO.5889/DEL./2011 (A.Y. : 2008-09) 3 DEMAND AGAINST THE PARTY AS THE PARTY WAS NOT MAKIN G THE PAYMENT IN TIME. THE ASSESSEE ALSO RELIED ON THE CASE LAWS IN SUPPORT OF THE CLA IM THAT NO INTEREST INCOME ACCRUED TO THE ASSESSEE AS UNDER:- (I) CIT VS. HINDUSTAN HOUSING & LAND DEVELOPMENT TR UST LTD., 161 I.T.R. 524(SC) (1986). (II) CIT VS. VASISTH CHAY VYAPAR LTD., 330 I.T.R. 4 40 (DEL.) (2011) 4. THE LD.CIT(A) WHILE CONSIDERING AND ACCEPTING TH E PLEA OF THE ASSESSEE HAS CONCLUDED TO DELETE THE ADDITION AS PER PARA. 4.5 W HICH IS REPRODUCED AS UNDER: I HAVE CONSIDERED THE ADDITION OF THE ASSESSING OF FICER AND THE SUBMISSIONS OF THE ASSESSEE AND I FIND CONSIDERABLE MERIT IN THE S UBMISSION OF THE ASSESSEE THAT NO INTEREST INCOME EVER ACCRUED TO THE ASSESSEE AND ME RE RAISING THE DEBIT NOTE DOES NOT TAKE THE FORM OF INCOME. IT IS ALSO A MATTER O F FACTS THAT THE ASSESSEE HAD RAISED THE DEBIT NOTE TO PROTECT THE INTEREST OF TH E ASSESSEE FOR FUTURE LITIGATION AS THE PARTY WAS NOT MAKING THE PAYMENT IN TIME. IT I S ALSO A MATTER OF FACTS THAT THE PARTY, SUMAN PRAKASHAN P. LTD. FROM WHICH THE ASSES SEE IS TO RECEIVE THE MONEY FROM THE SALES IS IN LIQUIDATION AND THE ASSESSEE H AS NEITHER RECEIVED THE PRINCIPAL AMOUNT NOR THE INTEREST AMOUNT WHICH WAS RAISED IN THE FORM OF DEBIT NOTE. AFTER CONSIDERING ALL THE FACTS AND CIRCUMSTANCES OF THE CASE, I AM OF THE VIEW THAT THERE IS NO ACCRUED INTEREST IN FAVOUR OF THE ASSESSEE AN D AS SUCH THE ASSESSING OFFICER IS NOT JUSTIFIED TO MAKE THE ADDITION AND ACCORDING LY, THE SAME IS DELETED. 5. AGGRIEVED BY THIS ORDER OF CIT(A), DEPARTMENT HA S COME UP IN APPEAL AND WHILE RELYING UPON THE ORDER OF ASSESSING OFFICER, IT WAS PLEADED BY THE LD.DR. TO SET ASIDE THE ORDER OF CIT(A) AND RESTORE THAT OF THE ASSESSING O FFICER. 6. AFTER HEARING LD.DR. AND CONSIDERING THE MATERIA L ON RECORD, WE FIND THAT CIT(A) WHILE CONSIDERING AND ACCEPTING THE PLEA OF THE ASS ESSEE HAS CONCLUDED TO DELETE THE IMPUGNED ADDITION GIVING SOUND BASIS AND CONVINCING REASONS. LD.DR. COULD NOT PLACE ANY CONTRARY MATERIAL ON RECORD OR POINT OUT ANY IN FIRMITY OR FLAW IN THE ORDER OF CIT(A). AS SUCH, WHILE CONSIDERING ENTIRETY OF FACTS AND MA TERIAL ON RECORD, WE UPHOLD THE ORDER OF CIT(A), AS WE DO NOT FIND ANY JUSTIFIABLE REASON TO INTERFERE IN THE IMPUGNED ORDER. I.T.A. NO.5889/DEL./2011 (A.Y. : 2008-09) 4 7. IN THE RESULT, THEREFORE, THE APPEAL OF THE REVE NUE GETS DISMISSED. ORDER PRONOUNCED SOON AFTER THE CONCLUSION OF HEARI NG ON 05.03.2012. SD/- SD/- (K.G. BANSAL) ACCOUNTANT MEMBER (U.B.S. BEDI ) JUDICIAL MEMBER DATED : 05.03.2012. SKB COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A)-XXV, NEW DELHI. 5. DR BY ORDER DEPUTY REGISTRAR, ITAT