DCIT, New Delhi V. M/s Digital Utilities, New Delhi

ITA 6002/DEL/2010

• Counselvise Citation: 600220114 RSA 2010
• Duration Of Justice: 7 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-08-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 13-06-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 30-12-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y KAKKAR
• Section: 133(6); 131; 145; 6; 144; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH B NEW DELHI) BEFORE SHRI RAJPAL YADAV AND SHRI K.G. BANSAL ITA NO. 6002/DEL/2010 ASSESSMENT YEAR: 2007-08 DEPUTY COMMISSIONER OF IT, VS. M/S. DIGITAL UTILIT IES, CIRCLE 22(1), F-58, OKHLA INDL. AREA, NEW DELHI. PHASE-I, NEW DELHI. (PAN: AAFD5984G) (APPELLANT) (RESPONDENT) APPELLANT BY: MS. Y. KAKKA R, SR.DR RESPONDENT BY: SHRI TARUN ROHTAG I, CA ORDER PER RAJPAL YADAV: JUDICIAL MEMBER THE REVENUE IS IN APPEAL BEFORE US AGAINST THE ORD ER OF LEARNED CIT(APPEALS) DATED 27.10.2010 PASSED FOR ASSESSMENT YEAR 2007-08. IN THE FIRST GROUND OF APPEAL, REVENUE HAS PLEADED THAT LE ARNED CIT(APPEALS) HAS ERRED IN DELETING THE ADDITION OF RS.23,21,606 WHIC H WAS ADDED BY THE ASSESSING OFFICER ON ACCOUNT OF SUPPRESSED SALES/UN ACCOUNTED PURCHASES. 2. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS A PARTNERSHIP CONCERN, ENGAGED IN THE BUSINESS OF MANUFACTURING AUTO SULPH UR BURNERS. IT HAS FILED ITS RETURN OF INCOME ON 24.10.2007 ELECTRONICALLY D ECLARING NET INCOME OF RS.34,25,740. IT HAS SHOWN VALUE OF FRINGE BENEFIT AT RS.7,75,495. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSMEN T AND NOTICE UNDER SEC. 2 143(2) DATED 24.9.2009 WAS DULY SERVED UPON THE ASS ESSEE. ASSESSING OFFICER ON AN ANALYSIS OF TRADING RESULTS FOR FOUR ASSESSMENT YEARS, STARTING FROM ASSESSMENT YEAR 2004-05 TILL 2007-08, OBSERVED THAT G.P. RATE HAS BEEN FLUCTUATING AND IN THE CURRENT YEAR IT HAD COME DOW N FROM 12.69% IN FINANCIAL YEAR 2005-06 TO 10-39%. HE DIRECTED THE A SSESSING OFFICER TO EXPLAIN AS TO WHY G.P. HAS FALLEN. THE ASSESSEE HAS MADE ELABORATE SUBMISSIONS. THE FIRST REASON ASSIGNED BY THE ASSES SING OFFICER FOR RAISING A SUSPICION ABOUT THE TRADING RESULTS OF THE ASSESSEE IS THAT ASSESSEE HAS SOLD IDENTICAL ITEMS AT DIFFERENT RATES TO DIFFERENT CON CERNS. THE PRODUCT MANUFACTURED BY THE ASSESSEE HAVE BEEN SOLD IN A RA NGE OF RS. 9 LACS TO RS.11.5 LACS. ACCORDING TO THE ASSESSING OFFICER, T HE DIFFERENCE OF PRICE RANGE IS MORE THAN 20% OF THE MINIMUM SALES PRICE T O THE MAXIMUM SALES PRICE. HE CONFRONTED THE ASSESSEE AS TO HOW SAME PR ODUCTS HAVE BEEN SOLD TO DIFFERENT CUSTOMERS AT DIFFERENT RATES DURING THE S AME PERIOD. IN RESPONSE TO THE QUERY OF THE ASSESSING OFFICER, IT WAS CONTENDE D BY THE ASSESSEE THAT IT HAS BEEN MAINTAINING COMPLETE BOOKS OF ACCOUNT. THE PRODUCTS MANUFACTURED BY THE ASSESSEE ARE EXCISEABLE PRODUCT S. COMPLETE RECORD OF PRODUCTION, CONSUMPTIONS HAVE BEEN KEPT AND ARE AUD ITED/INSPECTED BY THE EXCISE AUTHORITIES FROM TIME TO TIME. IT EMPHASIZED THAT 80% OF ITS SALES ARE SUBJECT TO EXCISE. THE ASSESSEE FURTHER CONTENDED T HAT IT IS SUBMITTING 3 QUANTITATIVE DETAILS OF OPENING STOCK, PURCHASES, S ALES AND DETAILS OF PRODUCTION AND CONSUMPTIONS. THESE THINGS HAVE DULY BEEN NOTICED BY THE AUDITOR IN THE AUDITORS REPORT. WITH REGARD TO THE VARIATION IN SALES PRICE OF THE SAME PRODUCT SOLD TO DIFFERENT CUSTOMERS, IT WA S CONTENDED THAT ORDERS ARE NEGOTIATED AT THE MOST FAVOURABLE RATES, DEPEND ING UPON THE MARKET CONDITIONS, COMPETITION AND CUSTOMER BACKGROUND. TH E ASSESSEE USED TO INSTALL, ERECT AND COMMISSIONED ITS PRODUCT. IT GIV ES TRAINING TO THE STAFF OF THE PURCHASER. ALL THESE EXPENSES ARE ON THE HIGHER SIDE FOR NEW BUSINESS GROUP, BECAUSE MORE VISITS WOULD REQUIRED FOR ITS T HEIR STAFF AND CUSTOMERS STAFF, AS COMPARED FOR EXISTING CUSTOMERS FOR REPEA T ORDER. ACCORDING TO THE ASSESSEE, SOMETIME, IN ORDER TO GAIN ENTRY IN A PAR TICULAR FIELD, IT HAS TO BEAR LOSS AND SUPPLIED ITS PRODUCTS AT A LESSER PRICE. T HUS, THE RATES ARE NEGOTIATED ACCORDING TO THE BUSINESS EXIGENCIES. ASSESSING OFF ICER HAS CONFRONTED THE ASSESSEE WITH REGARD TO TWO ITEMS SOLD TO M/S. BAJA J SUGAR LTD. AND M/S. KANORIA SUGAR & GENERAL MFG. CO. LTD. THE ASSESSEE SUBMITTED THAT IT HAS GIVEN AN OFFER FOR RS.12,50,000 BUT ULTIMATELY THE RATE WAS SETTLED AT A LESSER PRICE. ACCORDING TO THE ASSESSING OFFICER, THESE AR E GENERAL EXPLANATIONS OF THE ASSESSEE AND IT IS UNABLE TO SUBSTANTIATE ITS C LAIM. 4 3. ASSESSING OFFICER THEREAFTER, RECASTED TRADING A CCOUNT OF THE ASSESSEE. HE DIRECTED THE ASSESSEE TO SUBMIT MONTHWISE TRADIN G ACCOUNT. ON AN ANALYSIS OF THE DETAILS SUBMITTED BY THE ASSESSEE, HE FOUND THAT THERE IS A VARIATION OF G.P. FROM 9% TO 24.87% DURING DIFFERE NT MONTHS. THE NEGATIVE FIGURE IS 35.12%. ASSESSING OFFICER RECASTED THIS T RADING ACCOUNT BY ADOPTING A UNIFORM G.P. RATE AT 10.39%. HE HAS REPR ODUCED THIS TRADING ACCOUNT. ON THE BASIS OF THIS, HE ARRIVED AT A NEGA TIVE STOCK IN THE MONTH OF NOVEMBER WHICH IS HAVING THE VALUE OF RS.23,12,606. ASSESSING OFFICER DIRECTED THE ASSESSEE TO EXPLAIN THE AVAILABILITY O F THIS NEGATIVE STOCK IN THE MONTH OF NOVEMBER. ACCORDING TO THE ASSESSING OFFIC ER, ASSESSEE FAILED TO EXPLAIN THIS NEGATIVE STOCK AND HE REJECTED THE BOO K RESULTS OF THE ASSESSEE. HE ESTIMATED THE G.P. BY APPLYING THE RATE OF 12.69 % AND WORKED OUT AN AMOUNT OF RS.21,26,429. ASSESSING OFFICER INSTEAD O F MAKING THE ADDITION OF THIS AMOUNT, MADE THE ADDITION OF VALUE OF NEGATIVE STOCK WORKED OUT IN THE MONTH OF NOVEMBER I.E. RS.23,21,606. HE ADDED THIS AMOUNT ON ACCOUNT OF SUPPRESSED SALES/UNACCOUNTED PURCHASES. 4. ON APPEAL, LEARNED CIT(APPEALS) HAS GONE THROUGH ALL THESE ASPECTS AND DELETED THE ADDITION BY RECORDING FOLLOWING FIN DINGS: (4) I HAVE CONSIDERED THE BASIS OF ASSESSING OFFIC ERS CONCLUSION THAT THE BOOKS OF ACCOUNT OF THE ASSESSEE WERE NOT RELIABLE, THOUGH THIS 5 HAS NOT BEEN EXPRESSED IN VERY CLEAR TERMS BY HIM I N THE ASSESSMENT ORDER. THE ASSESSING OFFICER HAS RELIED ON THE NEGA TIVE STOCK WORKED OUT BY HIM BY ADOPTING A UNIFORM GROSS PROFIT RATE FROM MONTH TO MONTH AND ALSO BY POINTING OUT THE VARIATION IN SAL ES PRICE OF THE SAME PRODUCT TO DIFFERENT BUYERS. THE SUBMISSIONS OF THE APPELLANT DURING THE COURSE OF ASSESSMENT PROCEEDINGS AS WELL AS IN THE APPELLATE PROCEEDINGS HAVE BEEN CONSIDERED. IT IS A MATTER OF FACT THAT THE SALES MADE BY THE ASSESSEE ARE TO TWO ENTITIES NOWHERE PE RSONALLY CONNECTED TO THE PARTNERS OF THE ASSESSEES FIRM AND DEALING WITH THEM HAVE BEEN ON COMMERCIAL BASIS. THE ASSESSING OFFICER HAS NOT BROUGHT ON RECORD ANYTHING TO DOUBT THE GENUINE COMMERCIAL RELATIONSH IP BETWEEN THE BUYER AND THE SELLER. THE ASSESSING OFFICER HAS ALS O IGNORED THE FACT THAT TURNOVER OF THE ASSESSEE HAS INCREASED BY 70% FROM LAST YEAR AND THEREFORE, THE ASSESSEES CLAIM THAT PRICES HAVE TO BE NEGOTIATED WITH DIFFERENT BUYERS IN ORDER TO ACHIEVE THE LARGER GOA L OF HIGHER TURNOVER IS CORRECT. THE ASSESSING OFFICERS ALLEGATION THAT SOME ON MONEY/CASH MUST HAVE PASSED FROM THE BUYER TO THE A SSESSEE FIRM IN RESPECT OF SALES AT LOWER RATES IS NOT BACKED BY AN Y LOGICAL REASONING AND ALSO NO EVIDENCE OF COLLUSION BETWEEN THE TWO H AS BEEN BROUGHT ON RECORD. THE BUYERS OF THE PRODUCTS OF ASSESSEE F IRM ARE LARGE LISTED COMPANIES HAVING NO PERSONAL RELATIONSHIP WITH THE ASSESSEE FIRM AND THEREFORE, THE PRESUMPTION/CONCLUSION ARRIVED AT BY THE ASSESSING OFFICER ON DIFFERENTIAL PRICING OF SAME PRODUCTS LE ADING TO PASSING OF ON MONEY IS ERRONEOUS. THIS ERRONEOUS CONCLUSION CA NNOT BE THE BASIS FOR REJECTING THE BOOKS OF ACCOUNT UNDER SEC. 145. 6 THE WORKING OF CLOSING STOCK AT THE END OF EVERY M ONTH BY APPLYING UNIFORM GROSS PROFIT RATE IS INCORRECT AS IT WOULD ALWAYS LEAD TO IMPROBABLE/ILLOGICAL FIGURES. IF THE GROSS PROFI T RATE ON YEAR TO YEAR BASIS IS NOT EXPECTED TO BE CONSTANT, THEN THE SAME TO BE ASSUMED AS CONSTANT ON MONTH TO MONTH BASIS IS WITHOUT ANY LOG IC. THE WORKING OF MONTHLY CLOSING STOCK BY THE METHOD ADOPTED BY T HE ASSESSING OFFICER IS CONTRARY TO ANY RECOGNIZED ACCOUNTING PR INCIPLE. THE RELIANCE PLACED BY THE AUTHORIZED REPRESENTATIVE OF THE APPELLANT ON THE CASE OF SAQY BROS. VS. ITO IS CORRECT. THE JUDGMENT OF THE HONBLE ITAT, CHANDIGARH BENCH, HAS ALSO REFERRED TO THE CA SE OF BHALLA BROS. 10 TLR 215, WHEREIN THE ADDITION MADE BY THE ASSESS ING OFFICER BY WORKING OUT NEGATIVE STOCK ON MONTHLY BASIS WAS DEL ETED BY THE ITAT AND HONBLE HIGH COURT AGREED WITH THE SAME. THEREF ORE, THE ASSESSING OFFICERS RELIANCE UPON THE NEGATIVE CLOS ING STOCK IN THE MONTH OF NOVEMBER TO THE TUNE OF RS.23,21,606 AND M AKING THE ADDITION THE SAME GROUND IS DELETED. 5. WITH THE ASSISTANCE OF LEARNED REPRESENTATIVES, WE HAVE GONE THROUGH THE RECORD CAREFULLY. SECTION 145 OF THE ACT PROVI DES THAT INCOME CHARGEABLE UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PR OFESSION OR INCOME FROM OTHER SOURCES SHALL SUBJECT TO THE PROVISIONS OF S UB-SECTION(2), BE COMPUTED IN ACCORDANCE WITH EITHER CASH OR MERCANTILE SYSTEM OF ACCOUNTING REGULARLY EMPLOYED BY THE ASSESSEE. THE ACCOUNTS HAVE TO BE P REPARED BY THE ASSESSEE IN ACCORDANCE WITH ACCOUNTING STANDARD NOTIFIED BY THE CENTRAL GOVERNMENT IN THE OFFICIAL GAZETTEE. SUB-SECTION(3) OF SEC. 14 5 CONTEMPLATES IF THE 7 ASSESSING OFFICER IS NOT SATISFIED ABOUT THE CORREC TNESS OR COMPLETENESS OF THE ACCOUNTS OF THE ASSESSEE, OR WHERE THE METHOD O F ACCOUNTING PROVIDED IN SUB-SECTION(1) OR ACCOUNTING STANDARD NOTIFIED UNDE R SUB-SECTION(2) HAVE NOT BEEN FOLLOWED BY THE ASSESSEE, THE ASSESSING OFFICE R MAY MAKE AN ASSESSMENT IN THE MANNER PROVIDED IN SEC. 144 OF TH E ACT. THIS SECTION CONTEMPLATES THAT INCOME OF AN ASSESSEE HAS TO BE C OMPUTED IN ACCORDANCE WITH THE METHOD OF ACCOUNTANCY EMPLOYED BY THE ASSE SSEE, HOWEVER, SUCH METHOD IS OUGHT TO BE IN LINE WITH THE ACCOUNTING S TANDARD NOTIFIED BY THE CENTRAL GOVERNMENT. IN CASE, AN ASSESSING OFFICER W AS UNABLE TO DEDUCE TRUE INCOME OF AN ASSESSEE FROM SUCH ACCOUNT THEN H E CAN PROCEED TO DETERMINE THE INCOME ACCORDING TO HIS BEST JUDGMENT , MEANING THEREBY, HE CAN ESTIMATE THE INCOME. IN THE PRESENT CASE, ASSES SEE IS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTANCY. ASSESSING OFFICER HAS NOT POINTED OUT PARTICULAR DEFECTS IN THE BOOKS OF THE ASSESSEE. HE POINTED OUT THAT ONLY FALL IN G.P. THE OTHER SHORTCOMING MENTIONED BY HIM IS T HE VARIATION IN THE SALE PRICE OF MORE THAN 20% OF THE MINIMUM TO THE MAXIMU M SALE PRICE. THE GRIEVANCE OF THE ASSESSING OFFICER IS WHY ASSESSEE HAS SOLD THE SAME PRODUCT AT A LESSER PRICE. THE ASSESSEE HAS EXPLAIN ED ITS POSITION THAT REALIZATION OF PRICE IS SUBJECT TO NEGOTIATION AND DEPEND UPON VARIOUS FACTORS. ACCORDING TO THE ASSESSEE, IN CERTAIN CASES IN ORDE R TO GAIN ENTRY IN A 8 PARTICULAR INDUSTRIES, IT HAS SOLD THE PRODUCT AT A LOSS ALSO. IN CERTAIN ORDERS, THE COST OF INSTALLATION, ERRECTION, COMMISSIONING, TRAINING AND TRAVEL EXPENSES ARE ALSO EMBEDDED. IF THE PRODUCT IS SUPPL IED TO A NEW CUSTOMERS AND IN A NEW LINE THEN TRAINING WOULD BE PROVIDED T O THE CUSTOMERS STAFF AS WELL AS ASSESSEES STAFF. IT WILL GIVE RISE TO A HI GHER RATE, WHEREAS IF THE PRODUCT IS SUPPLIED TO THE EXISTING CUSTOMERS THEN IT CAN BE SUPPLIED AT A LESSER PRICE. ASSESSING OFFICER HAS REJECTED THESE CONTENTIONS OF THE ASSESSEE BASED ON THE DETAILS BY OBSERVING THAT THIS IS GENE RAL EXPLANATION. HE HAS NOT POINTED OUT ANY OTHER DEFECTS. THEREAFTER, HE PROCE EDS TO RECAST THE TRADING ACCOUNT MONTHWISE BY ASSUMING A STANDARD G.P. OF 10 .39%, CONSTANTLY AVAILABLE IN EVERY MONTH. ACCORDING TO THE ASSESSEE , TRUE TRADING RESULT CANNOT BE ASCERTAINED ON MONTH TO MONTH BASIS. IT H AS TO BE FINALIZED AT THE END OF YEAR, EVERY MONTH, IT CANNOT MAKE PROVISIONS OF EXPENSES AND PURCHASES. THERE IS NO SPECIFIC LOGIC GIVEN BY THE ASSESSING OFFICER, AS TO WHY THE DETAILS SUBMITTED BY THE ASSESSEE DO NOT DE PICT THE TRUE AFFAIRS. HE TRIED TO PORTRAIT THE DETAILS OF ASSESSEE AS FACTUA LLY INCORRECT WITH ASSUMED CALCULATION BY ADOPTING A STANDARD G.P. DISCLOSED B Y THE ASSESSEE AT THE END OF THE YEAR. THIS WORKING IS TOTALLY UNSCIENTIFIC A ND NOT BASED ON ANY ACCOUNTING PRINCIPLE. LEARNED FIRST APPELLATE AUTHO RITY HAS CONSIDERED ALL THESE ASPECTS IN THE FINDINGS EXTRACTED SUPRA AND H AS MADE REFERENCE TO THE 9 ORDER OF THE ITAT, CHANDIGARH BENCH IN THE CASE OF BHALLA BROTHERS. TAKING INTO CONSIDERATION THE ORDER OF THE LEARNED CIT(APP EALS), IN THE LIGHT OF OTHER DETAILS AVAILABLE IN THE PAPER BOOK, WE DO NO T FIND ANY ERROR IN THE ORDER OF THE LEARNED CIT(APPEALS). THIS GROUND OF A PPEAL IS REJECTED. 6. IN THE NEXT GROUND OF APPEAL, GRIEVANCE OF REVE NUE IS THAT LEARNED CIT(APPEALS) HAS ERRED IN DELETING THE ADDITION OF RS.9,06,139. THIS ADDITION WAS MADE BY THE ASSESSING OFFICER UNDER SE C. 41(1) OF THE ACT ON THE GROUND THAT LIABILITY TO PAY THIS AMOUNT HAS CE ASED. 7. THE BRIEF FACTS OF THE CASE ARE THAT THE DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ON SCRUTINY OF THE ACCOUNTS, IT WAS NO TICED BY THE ASSESSING OFFICER THAT THE CREDIT BALANCE OF RS.7,18,728 AND RS.1,87,411 ARE OUTSTANDING IN THE NAME OF M/S. SNEHA ENGINEERING E QUIPMENTS AND M/S. SIDHARATH TANK & VESSELS PVT. LTD. RESPECTIVELY SIN CE 2005. ASSESSING OFFICER HAD ISSUED NOTICE UNDER SEC. 133(6) OF THE ACT. THE CREDITORS HAVE NOT RESPONDED TO THE NOTICE ISSUED BY THE ASSESSING OFFICER. ASSESSING OFFICER PRESUMED THAT LIABILITY TO PAY HAS CEASED A ND HE MADE THE ADDITION. 8. BEFORE LEARNED CIT(APPEALS), ASSESSEE HAS FILED WRITTEN SUBMISSIONS. IT POINTED OUT THAT FROM SNEHA ENGINEERING EQUIPMEN TS, ASSESSEE HAD MADE PURCHASES. A DISPUTE HAD ARISEN AND WHICH IS STILL PENDING. AS FAR AS SIDHARATH TANK & VESSELS (P) LTD. IS CONCERNED, IT REPRESENTS ADVANCES 10 RECEIVED FROM THE CUSTOMERS. TO SUPPORT ITS CONTENT IONS, ASSESSEE HAS DREW THE CONTENTION OF THE LEARNED CIT(APPEALS) WITH REG ARD TO THE DETAILS AVAILABLE IN THE ACCOUNTS. IT WAS CONTENDED THAT ON THE ADVANCES FROM SIDHARATH TANK, SECTION 41(1) WILL NOT BE APPLICABL E BECAUSE ASSESSEE HAS NOT INCURRED ANY EXPENDITURE WHICH HAS BEEN DEBITED IN THE TRADING/P & L ACCOUNT IN THE EARLIER YEARS. THE MAIN CONTENTION O F THE ASSESSEE BEFORE THE LEARNED CIT(APPEALS) WAS THAT ASSESSEE HAS NOT WRIT TEN OFF THE AMOUNTS IN THE P & L ACCOUNT. IT IS RECOGNIZING ITS LIABILITY TO PAY. THERE IS NO EVIDENCE ON THE RECORD WHICH CAN DEMONSTRATE THAT LIABILITY HAS CEASED. LEARNED FIRST APPELLATE AUTHORITY ACCEPTED THE CONTENTION OF THE ASSESSEE AND DELETED THE ADDITION. 9. WITH THE ASSISTANCE OF LEARNED REPRESENTATIVES, WE HAVE GONE THROUGH THE RECORD CAREFULLY. THE ASSESSEE HAS PLACED ON R ECORD COPY OF ACCOUNT IN RESPECT OF SNEHA ENGINEERING, AND SIDHARATH TANK & VESSELS PVT. LTD. AT PAGES 23 TO 33 OF THE PAPER BOOK. IT HAS POINTED OU T THAT IN THE ACCOUNTS OF SNEHA ENGINEERING, A CLOSING BALANCE OF RS.7,18,728 HAS BEEN SHOWN. THIS AMOUNT REPRESENTS THE PURCHASES. SIMILARLY, IN THE ACCOUNT OF SIDHARTH TANK & VESSELS, IT HAS BEEN SHOWN THAT AMOUNT WAS RECEIV ED AS AN ADVANCE. THE QUESTION BEFORE US IS WHETHER THERE IS SUFFICIENT E VIDENCE AVAILABLE ON THE RECORD DEMONSTRATING THE FACT THAT LIABILITY TO PAY HAS CEASED AND WHETHER THE 11 ADDITION UNDER SEC. 41(1) OF THE ACT CAN BE MADE IN RESPECT OF ADVANCES RECEIVED BY THE ASSESSEE FROM SIDHARATH TANK & VESS ELS. WITHOUT GOING INTO THIS ASPECT, WE FIND THAT ASSESSEE IS RECOGNIZING T HE LIABILITY TO PAY THESE AMOUNTS. IT HAS NOT WRITTEN OFF THE LIABILITY IN TH E ACCOUNTS. THERE IS NO SURROUNDING EVIDENCE WHICH SUGGESTS THAT LIABILITY TO PAY HAS CEASED. ASSESSING OFFICER HAS PRESUMED THE CESSATION OF LIA BILITY ON THE GROUND THAT BOTH THE PARTIES HAVE NOT RESPONDED TO HIS NOTICES. ASSESSEE HAS PRAYED THE ASSESSING OFFICER THAT HE CAN ISSUE THE SUMMON UNDE R SEC. 131 OF THE ACT AND CAN PROCURE THE PRESENCE OF THE REPRESENTATIVES BUT ASSESSING OFFICER DID NOT EXERCISE THAT OPTION. LEARNED FIRST APPELLATE A UTHORITY HAS CONSIDERED THE DISPUTE WITH ALL THESE ANGLES. TAKING INTO CONS IDERATION ALL THE FACTS AND CIRCUMSTANCES, WE ARE OF THE VIEW THAT LIABILITY TO PAY HAS NOT BEEN CEASED AND ADDITIONS CANNOT BE MADE. LEARNED CIT(APPEALS) HAS RIGHTLY DELETED THE ADDITION. WE DONT FIND ANY MERIT IN THIS GROUND OF APPEAL. IT IS REJECTED. 10. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. DECISION PRONOUNCED IN THE OPEN COURT ON 05.08.201 1 SD/- SD/- ( K.G. BANSAL ) ( RAJPAL YADAV ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 05/08/2011 MOHAN LAL 12 COPY FORWARDED TO: 1) APPELLANT 2) RESPONDENT 3) CIT 4) CIT(APPEALS) 5) DR:ITAT ASSISTANT REGISTRAR