ITO 13(3)(1), MUMBAI V. INTERNATIONAL LINKERS, MUMBAI

ITA 653/MUM/2010

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 7668 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-01-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: I
• Next Hearing Date: 28-12-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 27-01-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ARATI DEBNATHSHILPI JAIN

Judgement Text

1 INTERNATIONAL LINKERS IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI MUMBAI MUMBAI MUMBAI I II I BENCH BENCH BENCH BENCH MUMBAI BENCHES, MUMBAI MUMBAI BENCHES, MUMBAI MUMBAI BENCHES, MUMBAI MUMBAI BENCHES, MUMBAI BEFORE BEFORE BEFORE BEFORE SHRI T R SOOD SHRI T R SOOD SHRI T R SOOD SHRI T R SOOD, ,, , AM AM AM AM & SHRI & SHRI & SHRI & SHRI VIJAY PAL RAO, JM VIJAY PAL RAO, JM VIJAY PAL RAO, JM VIJAY PAL RAO, JM ITA NO. ITA NO. ITA NO. ITA NO. 653 653 653 653/MUM/20 /MUM/20 /MUM/20 /MUM/2010 1010 10 (ASST YEAR (ASST YEAR (ASST YEAR (ASST YEAR 200 200 200 2006 66 6- -- -07 0707 07) )) ) THE INCOME TAX OFFICER WARD 13(3)(1), MUMBAI VS INTERNATIONAL LINKERS 5 TH FLOOR AGH CHAMBERS 379/381 NARSI NATHA ST MUMBAI 9 (APPELLANT) (APPELLANT) (APPELLANT) (APPELLANT) (RESPONDENT) (RESPONDENT) (RESPONDENT) (RESPONDENT) PAN NO. PAN NO. PAN NO. PAN NO. AAAF13377G AAAF13377G AAAF13377G AAAF13377G ASSESSEE BY MS ARATI DEBNATH/SHILPI JAIN REVENUE BY SH JITENDRA YADAV DT.OF HEARING 28 TH DEC 2011 DT OF PRONOUNCEMENT 6 TH , JAN 2012 ORDER ORDER ORDER ORDER PER PER PER PER VIJAY PAL R VIJAY PAL R VIJAY PAL R VIJAY PAL RAO AOAO AO, , , , JM JMJM JM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 30 TH NOV 2009 OF THE CIT(A) FOR THE AY 2006-07. 2 THE REVENUE HAS RAISED THE ONLY GROUND AS UNDER; THE LD CIT(A) ON THE FACTS AND CIRCUMSTANCES OF TH E CASE AND IN LAW, ERRED IN DELETING THE ADDITION OF .` 13,23,700/- MADE BY THE ASSESSING OFFICER. THE LD CIT(A) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, ERRED IN DELETING THE ADDITION WITHOUT PROPER VERIFICATION O F FACTS. 3. THE ASSESSING OFFICER HAS NOTED THAT THE ASSESSE E HAS SHOWN CREDITORS FOR EXPENSES IN RESPECT OF THE PARTIES AS UNDER: A) ADAMJI KADERBHAI ` 8,82,583/- B) P N BHASKAR & SONS ` 1,65,675/- C) TAMEEN SHIP CHANDLER4S & GEL. SUPPLIERS ` 2,75 ,522/- 3.1 THE ASSESSING OFFICER ASKED THE ASSESSEE TO EXP LAIN THE REASON FOR NON PAYMENT OF CREDITORS. THE ASSESSEE HAS STATED BEFOR E THE ASSESSING OFFICER THAT 2 INTERNATIONAL LINKERS DUE TO LIQUIDITY PROBLEM, THE ASSESSEE FAILED TO PA Y THE AMOUNT DESPITE REGULAR DEMANDS OF THE CREDITORS AND AS SOON AS THE ASSESSE E HAS THE LIQUIDITY, THE PAYMENT WILL BE MADE. THE ASSESSING OFFICER DID NO T ACCEPT THE ASSESSEES EXPLANATION AND MADE THE ADDITION OF THE SAID AMOUN T OF `. 13,23,780/- U/S 41(1) OF THE ACT TREATING THE SAME AS CESSATION OF LIABIL ITY. 3.2 ON APPEAL, THE CIT(A) HAS DELETED THE ADDITION MADE BY THE ASSESSING OFFICER BY TAKING INTO ACCOUNT THE FACT THAT THE A SSESSEE HAS SQUARED UP PART OF THE AMOUNT OF BALANCE OF CREDITORS. 4 WE HAVE HEARD THE LD DR AS WELL AS THE LD AR OF T HE ASSESSEE AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. THE LD DR HAS SUBMITTED THAT THE CIT(A) HAS ALLOWED THE CLAIM OF THE ASSESSEE WITHO UT PROPER VERIFICATION OF THE FACT AND GIVING PROPER OPPORTUNITY TO THE ASSESSING OFFICER TO VERIFY THE FACTS SUBMITTED BY THE ASSESSEE BEFORE THE CIT(A). 4.1 ON THE OTHER HAND, THE LD AR HAS SUBMITTED THAT WHEN THE ASSESSEE HAS NOT FINALLY WRITTEN BACK THESE AMOUNTS AND THE LIAB ILITY STILL STAND IN THE BOOKS OF THE ASSESSEE AND PART OF THESE CREDITORS HAVE BEEN SQUARED UP IN THE SUBSEQUENT YEAR THEN, THE CIT(A) HAS RIGHTLY DELETE D THE ADDITION MADE BY THE ASSESSING OFFICER . 5 HAVING CONSIDERED THE RIVAL CONTENTION AND THE FA CTS AND CIRCUMSTANCES OF THE CASE, WHEN THE FACT RECORDED BY THE CIT(A) HAS NOT BEEN DISPUTED BY THE REVENUE THEN WE DO NOT FIND ANY SUBSTANCE OR MERIT IN THE APPEAL OF THE REVENUE. THE CIT(A) HAS DECIDED THIS ISSUE IN PARA 5.1 AND 5 .2 AS UNDER: 5.1 SHRI RAVINDRA CHATURVEDI, C.A. LD.COUNSEL OF TH E ASSESSEE APPEARED AND SUBMITTED THAT OUT OF `13,23,780/-, BA LANCE OF CREDITORS, MAJOR PART OF RS.1 8,82,583/- IS OF M/S ADAMJI KADER BHY PVT. LTD. IN THIS CONNECTION WE WOULD LIKE TO MENTI ON THAT THE M/S ADAMJI KADER BHY PVT. LTD IS ALSO HAVING DEBIT BALA NCE OF RS. 15,02,564!- AND ULTIMATELY THE NET YEAR END BALANCE OF THIS COMPANY 3 INTERNATIONAL LINKERS IS CREDIT BALANCE OF `. 6,19,981/- AND THE SAME HAS BEEN ADJUSTED IN THE BALANCE SHEET AS AT 31ST MARCH, 2008 AS PER JV AND FURTHER SUBMITTED THE COPY OF ACCOUNTS OF 2004-05 TO 2007-0 8. HE FURTHER SUBMITTED THAT THE OTHER CREDITORS ARE PERSUADING F OR THE PAYMENT BUT HOWEVER DUE TO LIQUIDITY CRUNCH THE ASSESSEE HA S NOT MADE THE PAYMENT AND AT THE SAME TIME COMPANY IS ALSO HAVING DEBTORS OF ` 25,90,220.08, WHO ARE NOT MAKING THE PAYMENTS AND A RE DOUBTFUL TO BE RECOVERED. THE ASSESSEE IS TRYING HARD TO CREATE LIQUIDITY BY RECOVERING FROM DEBTORS AND THEREBY INCREASE PROFIT ABILITY IN THE BUSINESS TO CLEAR THE DUES. 5.2 I HAVE CONSIDERED THE SUBMISSION OF THE LD. COU NSEL AND FIND THAT NO BE MADE U/S 41(1) IN VIEW OF THE FACTS MENTIONED HERE-IN-BEFORE AND SINCE THERE IS NO CESSATION OF LIABILITY TH E ADDITION MADE IS HEREBY DELETED. 6 WHEN THE LIABILITY HAS NOT BEEN WRITTEN BACK BY T HE ASSESSEE IN THE BOOKS OF ACCOUNTS, THEN THE SAME CANNOT BE TREATED AS CES SATION OF LIABILITY, PARTICULARLY WHEN PART OF THE AMOUNT HAS BEEN ADJUS TED AGAINST THE DEBIT BALANCE OF THE PARTIES. HENCE, THE APPEAL FILED BY THE REVENUE IS DEVOID OF ANY MERIT AND DESERVES TO BE DISMISSED. ACCORDINGLY, TH E APPEAL OF THE REVENUE IS DISMISSED. 7 IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMI SSED. ORDER PRONOUNCED ON THE 6 TH , DAY OF JAN 2012. SD/ SD/- ( (( ( T R SOOD T R SOOD T R SOOD T R SOOD ) )) ) ACCOUNTANT MEMBER ( (( ( VIJAY PA VIJAY PA VIJAY PA VIJAY PAL RAO L RAO L RAO L RAO ) )) ) JUDICIAL MEMBER PLACE: MUMBAI : DATED: 6 TH , JAN 2012 RAJ* RAJ* RAJ* RAJ* 4 INTERNATIONAL LINKERS COPY FORWARDED TO: 1 APPELLANT 2 RESPONDENT 3 CIT 4 CIT(A) 5 DR /TRUE COPY/ BY ORDER DY /AR, ITAT, MUMBAI