SILVASSA ASBESTOS CEMENT PRODUCTS , MUMBAI V. ACIT CIRCLE- 18(3), MUMBAI

ITA 672/MUM/2023

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The case involves M/s Silvassa Asbestos Cement Products appealing against the order of the NFAC, Delhi, which confirmed the addition of Rs. 11,92,296 under section 41(1) of the Income Tax Act, 1961, due to alleged cessation of liability for payment to sundry creditors. The Assessing Officer (AO) had treated these creditors as having ceased liabilities based on the previous assessment year, without adequately considering the current year's submissions. The CIT(A) dismissed the appeal due to non-compliance by the assessee in responding to notices during the appellate proceedings. The Income Tax Appellate Tribunal (ITAT) found that the CIT(A) had not properly adjudicated the points of dispute and thus restored the case for a fresh decision.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 130196 (ITAT-MUMBAI)
• Duration Of Justice: 2 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-05-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 09-05-2023
• Assessment Year: 2015-2016
• Appeal Filed On: 05-03-2023
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase; Opportunity of being heard; Bogus
• Section: 133(6); 143(2)

Judgement Text

P a g e | 1 ITA No.672/Mum/2023 M/s Silvassa Asbestos Cement Products Vs. ACIT, Circle-18(3) IN THE INCOME TAX APPELLATE TRIBUNAL “G” BENCH, MUMBAI BEFORE SHRI KULDIP SINGH, JUDICIAL MEMBER & SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ITA No. 672/Mum/2023 (A.Y.2015-16) M/s Silvassa Asbestos Cement Products, 301, Simran Plaza, Corner of 3 rd & 4 th Road, Khar W, Maharasthra Vs. ACIT, Circle -18(3) R. No. 609, 6 th Floor, Earnest House, Nariman Point, Mumbai - 400021 स्थायी लेखा सं./जीआइआर सं./PAN/GIR No: AAAFS2891M Appellant .. Respondent Appellant by : None Respondent by : Ajay Singh Date of Hearing 10.05.2023 Date of Pronouncement 12.05.2023 आदेश / O R D E R Per Amarjit Singh (AM): The present appeal filed by the assesse is directed against the order passed by the NFAC, Delhi dated 15.02.2023 for A.Y. 2015-16. The assesse has raised the following grounds before us: “1. On the facts and circumstances of the case as well as in law, the Learned CIT(A) has erred in passing ex parte order, without granting sufficient opportunity of being heard to the appellant. 2. On the facts and circumstances of the case as well as in law, the Learned CIT(A) has erred in confirming the action of Learned Assessing Officer in exceeding jurisdiction in the assessment initiated under limited Scrutiny scope through CASS, which is contrary to the CBDT notification no.20/2015 dated 29.12.2015. 3. On the facts and circumstances of the case as well as in law, the Learned CIT(A) has erred in confirming the action of Learned Assessing Officer in making an addition of Rs. 11,92,296/- u/s.41(1) of the Income Tax Act, 1961, on account of cessation of liability for payment to Sundry creditors, on alleged plea that the assessee has taken the accommodation entry of P a g e | 2 ITA No.672/Mum/2023 M/s Silvassa Asbestos Cement Products Vs. ACIT, Circle-18(3) bogus Purchases to reduce the profit, without considering the facts and circumstances of the case. 4. The appellant craves leave to add, amend, alter or delete the said ground of appeal.” 2. Fact in brief is that return of income declaring total income of Rs.2,20,60,710/- was filed on 29.09.2015. The case was subject to scrutiny assessment and notice u/s 143(2) of the Act was issued on 19.09.2016. During the course of assessment assessing officer noticed that assessee has shown sundry creditor of Rs.25,38,993/- in the balance sheet for F.Y. 2014-14. The AO has issued notices u/s 133(6) to the sundry creditors, however, the same were returned unserved. Subsequently all the sundry creditors have made compliance by filing letter in the office of the A.O on 21.12.2017 in response to notice issued u/s 133(6) of the Act. The A.O observed that since the replies have been filed on the same date therefore, it has been managed by the assessee, therefore on the basis of assessment year 2014-15 the Assessing officer has treated sundry creditors to the amount of Rs.11,92,296/- in respect of two parties as cessation of liability on the part of the assesse u/s 41(1) of the Act and added to the total income of the assessee. 3. The assesse filed the appeal before the ld. CIT(A). However, the ld. CIT(A) has dismissed the appeal of the assesse for want of non- compliance to the notice issued by the ld. CIT(A) during the course of appellate proceedings. 4. Heard both the sides and perused the material on record. The assessing officer has disallowed the sundry creditors to the amount of Rs.11,92,296/- u/s 141(1) of the Act on the basis of preceding assessment year without controverting the replies submitted by such sundry creditors during the year under consideration. Further during the course of appellate proceedings the ld. CIT(A) has dismissed the appeal of the assessee for want of non-compliance since assesse has not P a g e | 3 ITA No.672/Mum/2023 M/s Silvassa Asbestos Cement Products Vs. ACIT, Circle-18(3) made compliance to the notice issued during the course of appellate proceedings. In this regard, we have perused the provisions of Sec. 250(6) of the Act which contemplates that the ld. CIT(A) would determine the point in dispute and record reasons for such point in support of his conclusion. However, ld. CIT(A) has not determined those point and not recorded detailed finding. Therefore, we restore this case to the file of the ld. CIT(A) for adjudicating afresh on merit as contemplated Sec. 250(6) of the Act after providing opportunity to the assessee. Accordingly, the appeal of the assesse is allowed for statistical purpose. 5. In the result, the appeal of the assessee is allowed for statistical purpose. Order pronounced in the open court on 12.05.2023 Sd/- Sd/- (Kuldip Singh) (Amarjit Singh) Judicial Member Accountant Member Place: Mumbai Date 12.05.2023 Rohit: PS आदेश की प्रतितिति अग्रेतिि/Copy of the Order forwarded to : 1. अपीलाथी / The Appellant 2. प्रत्यथी / The Respondent. 3. आयकर आयुक्त / CIT 4. विभागीय प्रविविवि, आयकर अपीलीय अविकरण DR, ITAT, Mumbai 5. गार्ड फाईल / Guard file. P a g e | 4 ITA No.672/Mum/2023 M/s Silvassa Asbestos Cement Products Vs. ACIT, Circle-18(3) सत्यावपि प्रवि //True Copy// आदेशानुसार/ BY ORDER, उि/सहायक िंजीकार (Dy./Asstt. Registrar) आयकर अिीिीय अतिकरण/ ITAT, Bench, Mumbai.