M/s Vinod Raj & Co., New Delhi V. ITO, New Delhi

ITA 5935/DEL/2010

• Counselvise Citation: 593520114 RSA 2010
• Duration Of Justice: 1 year(s) 8 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-09-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 03-09-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 27-12-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: NONEAPPLICATION ADJ REJECTED
• Section: 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI H BENC H BEFORE SHRI RAJPAL YADAV, JM & SHRI A.N. PAHUJA, AM ITA NO.5935/DEL./2010 ASSESSMENT YEAR : 2006-07 M/S VINOD RAJ & CO., 445-KATRA MEDIGRAM KHARI BOALI, DELHI V/S . INCOME-TAX OFFICER, WARD 28(1), ROOM NO.213, DRUMSHAPE BUILDING, NEW DELHI [PAN :AAAFV 0109 R] (APPELLANT) (RESPONDENT) ASSESSEE BY NONE[APPLICATION FOR ADJ REJECTED] REVENUE BY SHRI SANJAY KUMAR JAIN, DR DATE OF HEARING 03-09-2012 DATE OF PRONOUNCEMENT 07-09-2012 O R D E R A.N.PAHUJA:- THIS APPEAL FILED ON 27.12.2010 BY THE ASSESSEE AGA INST AN ORDER DATED 12.10.2010 OF THE LD. CIT(A)-XXV, NEW DELHI, RAISES THE FOLLOWING GROUNDS:- 1 THAT THE ORDER DISALLOWING OF THE LIABILITY OF ` ` 5,77,300/- IS UNJUST AND ARBITRARY. 2. THAT THE ADDITION UPHELD ON THE BASIS OF FLIMSY GROUNDS IS AGAINST THE LAW AND MAINTAINABLE AND DESERVES DELET ION. 3. THE APPELLANT CRAVES LEAVE TO ADD/AMEND ANY GROU ND OF APPEAL AT THE TIME OF HEARING. 2. THIS APPEAL EARLIER DISPOSED OF VIDE ORDER DATE D 03.3.2011, WAS RECALLED VIDE ORDER DATED 20.01.2012 IN MA NO.239/D EL./2011.ACCORDINGLY,APPEAL WAS FIXED FOR HEARING ON 24.4.2012.,WHEN THE ASSESS EE SOUGHT ADJOURNMENT FOR 3.9.2012.TODAY AGAIN, AN APPLICATION SIGNED BY A PA RTNER OF THE FIRM ,RECEIVED ON 31.8.2012 WAS PLACED BEFORE US, SEEKING ADJOURNMENT ON THE GROUND THAT THEIR ITANNO.5935/DEL./2010 2 COUNSEL SHRI SK KAUL WAS OUT OF STATION. CONSIDERIN G THE NATURE OF ISSUE AND FINDINGS OF THE LD. CIT(A), THE BENCH REJECTED THE REQUEST FOR ADJOURNMENT AND PROCEEDED TO DISPOSE OF THE APPEAL AFTER HEARING TH E LD. DR. 3. FACTS, IN BRIEF, AS PER RELEVANT ORDERS ARE T HAT RETURN DECLARING INCOME OF ` ` 5,624/- FILED BY THE ASSESSEE ON 26 TH MARCH, 2007, WAS SELECTED FOR SCRUTINY WITH THE SERVICE OF A NOTICE U/S 143(2) OF THE INCOME-TAX ACT, 1961, (HEREINAFTER REFERRED TO AS THE ACT), ISSUED ON 01. 06.2007. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER (A.O. IN SHORT) NOTICED THAT THE ASSESSEE HAD WRITTEN OFF CREDIT BALANCE OF ` 5,77,300/- REFLECTED IN ITS BALANCE SHEET IN THE NAME OF M/S AMANDEEP ENTERPRISES, INGL E KA BARA, DAAL BAZAR, LASKAR, GWALIOR, M.P. THE ASSESSEE WROTE OFF THI S LIABILITY IN THE CURRENT YEARS RETURN BY SHOWING THIS AS AN INCOME IN THE P&L ACCO UNT. HOWEVER, IN RESPONSE TO A NOTICE U/S 133(6) OF THE ACT ISSUED TO M/S AMANDE EP ENTERPRISES , THE POSTAL AUTHORITIES RETURNED THE NOTICE WITH THE REMARKS O N ENQUIRY THERE IS NO SUCH ADDRESS. ACCORDINGLY, THE AO ASKED THE ASSESSEE A S TO WHY THE AMOUNT BE NOT DISALLOWED. IN RESPONSE, THE ASSESSEE SUBMITTED TH AT THE LIABILITY WAS STILL OUTSTANDING AND, THEREFORE, COULD NOT BE ADDED. HO WEVER, THE AO DID NOT ACCEPT THE SUBMISSIONS OF THE ASSESSEE AND THE CREDIT BALA NCE WRITTEN OF HAVING BEEN SHOWN AS INCOME IN THE PROFIT AND LOSS ACCOUNT, NO FURTHER ADDITION WAS MADE. 4. ON APPEAL, THE LD. CIT(A) UPHELD THE FINDINGS O F THE AO AND CONCLUDED AS UNDER:- 5. GROUND NO.3: THE ASSESSEE HAS CHALLENGED THE ADDITION OF `5,77,300/- UNDER THE HEAD CREDIT BALAN CE. THE ASSESSEE FIRM HAD BEEN SHOWING THE CREDIT BALANCE O F `5,77,300/- IN ITS BALANCE SHEET IN THE NAME OF M/S AMANDEEP EN TERPRISES. THE ADDRESS OF THE SUNDRY CREDITOR WAS SAID TO BE I NGLE KA BARA, DAAL BAZAR, LASKAR, GWALIOR, M.P. THE ASSESSEE HAS WRITTEN OFF THIS LIABILITY IN THE CURRENT YEARS RETURN BY SHOW ING THIS AS AN INCOME IN THE P&L ACCOUNT. DURING THE COURSE OF AS SESSMENT PROCEEDINGS, THE ASSESSEE TOOK THE PLEA THAT THE LI ABILITY IS STILL EXISTING AND REQUESTED THE ASSESSING OFFICER TO ACC EPT THE REVISED ITANNO.5935/DEL./2010 3 COMPUTATION AND ACCEPT THE CREDIT BALANCE AS A LIAB ILITY AND NOT AS AN INCOME. THE ASSESSING OFFICER HAS NOTICED THAT NOTICE U/S 133(6) WAS ISSUED TO THE SUNDRY CREDITOR BUT THE SA ME WAS RETURNED BY THE POSTAL AUTHORITIES WITH THE COMMENT THAT ON /THE ENQUIRY THERE IS NO SUCH ADDRESS. THE ASSESSING OFFICER A CCORDINGLY ACCEPTED THE INCOME OF THE ASSESSEE AS PER THE RETU RN. THE ASSESSING OFFICER DID NOT MAKE ANY ADDITION AS SUCH AS THE ASSESSEE ITSELF HAD WRITTEN OFF THIS CREDIT BALANCE AND SHOWN IT AS AN INCOME IN ITS P&L ACCOUNT. NOW, THE ASSESSEE IS CHALLENGING THAT THE ASSESSING OFFICER DID NOT ACCEPT THE EXPLA NATION OF THE ASSESSEE THAT THE CREDIT BALANCE IS STILL EXISTING AS A LIABILITY. DURING THE COURSE OF APPELLATE PROCEEDINGS, THE ASSESSEE C OULD NOT SUBMIT ANY CONFIRMATION FROM THE SUNDRY CREDITOR OR ANY DE TAIL TO SHOW THAT THE LIABILITY STILL EXISTS. THE AR OF THE ASSESSEE HAS SUBMITTED THAT EVEN AS ON DATE NO SUCH LIABILITY HAS BEEN PAI D BACK TO THE ALLEGED SUNDRY CREDITOR. AFTER CONSIDERING THE ORD ER OF THE ASSESSING OFFICER AND THE SUBMISSIONS OF THE ASSESS EE, I AM OF THE VIEW THAT THE ASSESSEE HAS NOT BEEN ABLE TO PROVE T HAT ANY GENUINE LIABILITY IS STILL EXISTING AGAINST THE ASSESSEE EV EN AS ON DATE. ACCORDINGLY, THE APPEAL OF THE ASSESSEE IS WITHOUT ANY EVIDENCE AND DEVOID OF ANY MERIT AND ACCORDINGLY, THE SAME I S DISMISSED. 5. THE ASSESSEE IS NOW IN APPEAL AGAINST THE AFORE SAID FINDINGS OF LD. CIT(A). THE LD. DR SUPPORTED THE FINDINGS IN THE IM PUGNED ORDER. 6. WE HAVE HEARD THE LD. DR AND GONE THROUGH THE FACTS OF THE CASE. INDISPUTABLY, CREDIT BALANCE OF ` 5,77,300/- IN THE BALANCE SHEET IN THE NAME OF M/S AMANDEEP ENTERPRISES WAS WRITTEN OFF AND AMOUNT WAS CREDITED TO PROFIT AND LOSS ACCOUNT. THE ASSESSEE FAILED TO ESTABLISH BEFO RE THE AO AND THE LD. CIT(A) THAT THE LIABILITY WAS STILL OUTSTANDING AND DID N OT EXPLAIN THE REASONS AS TO WHY THE AMOUNT WAS SHOWN AS INCOME BY CREDITING THE PRO FIT AND LOSS ACCOUNT. ACCORDINGLY, THE LD. CIT(A) UPHELD THE FINDINGS OF THE AO. IN THIS CONNECTION, THE RELEVANT PROVISIONS OF SEC. 41(1) OF THE ACT READ A S UNDER: 41 PROFITS CHARGEABLE TO TAX. (1) 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 (HEREINAFTER REFERRED TO A S THE FIRST-MENTIONED PERSON) AND SUBSEQUENTLY DURING ANY PREVIOUS YEAR,- ITANNO.5935/DEL./2010 4 (A) THE FIRST-MENTIONED PERSON HAS OBTAINED WHETHER IN CASH OR IN ANY OTHER MANNER WHATSOEVER, ANY AMOUNT IN RESPECT OF SUCH LOSS OR EXPENDITURE OR SOME BENEFIT IN RESPECT OF SUCH T RADING LIABILITY BY WAY OF REMISSION OR CESSATION THEREOF, THE AMOUNT O BTAINED BY SUCH PERSON OR THE VALUE OF BENEFIT ACCRUING TO HIM SHAL L BE DEEMED TO BE PROFITS AND GAINS OF BUSINESS OR PROFESSION AND ACCORDINGLY CHARGEABLE TO INCOME-TAX AS THE INCOME OF THAT PREV IOUS YEAR, WHETHER THE BUSINESS OR PROFESSION IN RESPECT OF WH ICH THE ALLOWANCE OR DEDUCTION HAS BEEN MADE IS IN EXISTENC E IN THAT YEAR OR NOT; OR (B) THE SUCCESSOR IN BUSINESS HAS OBTAINED, WHETHER IN CASH OR IN ANY OTHER MANNER WHATSOEVER, ANY AMOUNT IN RESPECT OF WHICH LOSS OR EXPENDITURE WAS INCURRED BY THE FIRST-MENTIONED PERSON OR SOME BENEFIT IN RESPECT OF THE TRADING LIABILITY REFERRE D TO IN CLAUSE (A) BY WAY OF REMISSION OR CESSATION THEREOF, THE AMOUNT O BTAINED BY THE SUCCESSOR IN BUSINESS OR THE VALUE OF BENEFIT ACCRU ING TO THE SUCCESSOR IN BUSINESS SHALL BE DEEMED TO BE PROFITS AND GAINS OF THE BUSINESS OR PROFESSION, AND ACCORDINGLY CHARGEA BLE TO INCOME- TAX AS THE INCOME OF THAT PREVIOUS YEAR. EXPLANATION 1.-FOR THE PURPOSES OF THIS SUB-SECTION , THE EXPRESSION 'LOSS OR EXPENDITURE OR SOME BENEFIT IN RESPECT OF ANY SUCH TRADING LIABILITY BY WAY OF REMISSION OR CESSATION THEREOF' SHALL INCLUDE THE REMISSION OR CESSATION OF ANY LIABILITY BY A UNILAT ERAL ACT BY THE FIRST MENTIONED PERSON UNDER CLAUSE (A) OR THE SUCCESSOR IN BUSINESS UNDER CLAUSE (B) OF THAT SUB-SECTION BY WAY OF WRIT ING OFF SUCH LIABILITY IN HIS ACCOUNTS. 6.1 IN THE INSTANT CASE, THE ASSESSEE HAVING U NILATERALLY WRITTEN BACK ACCOUNTS OF SUNDRY CREDITORS IN ITS PROFIT AND LOSS ACCOUNT AND AMOUNT HAVING BEEN SHOWN AS INCOME IN THE A/C, APPARENTLY PROVISIONS OF SEC. 41(1)(A) ARE ATTRACTED. IN THE ABSENCE OF ANY BASIS EITHER BEFORE THE LOWER AUTHOR ITIES AND EVEN BEFORE US, WE ARE NOT INCLINED TO INTERFERE. THEREFORE, GROUND NO .1 IN THE APPEAL IS DISMISSED. 7. GROUND NO.2 IN THE APPEAL BEING GENERAL IN NATUR E, DOES NOT REQUIRE ANY SEPARATE ADJUDICATION WHILE NO ADDITIONAL GROUND HA VING BEEN RAISED BEFORE US IN TERMS OF RESIDUARY GROUND NO.3 IN THE APPEAL, ACCOR DINGLY BOTH THESE GROUNDS ARE DISMISSED . ITANNO.5935/DEL./2010 5 8. IN THE RESULT, APPEAL IS DISMISSED. SD/- SD/- (RAJPAL YADAV) (A.N. PAHUJA) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) COPY OF THE ORDER FORWARDED TO :- 1 ASSESSEE 2. INCOME-TAX OFFICER, WARD 28(1), ROO M NO.213, DRUMSHAPE BUILDING, NEW DELHI 3. CIT CONCERNED. 4. CIT(A)-XXV, DELHI 5.. DR, ITAT,H BENCH, NEW DELHI 6. GUARD FILE. BY ORDER, DEPUTY / ASSTT.REGISTRAR ITAT, DELHI ORDER PRONOUNCED IN OPEN COURT