BELA INVESTMENT & INVESTMENT CO. LTD, MUMBAI V. ITO 8(1)2, MUMBAI

ITA 6776/MUM/2013

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0982 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 4 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-04-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 24-04-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 25-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PURUSHOTTAM KUMAR ITA NO M MUM
• Keywords: Tax effect

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL BENCH D MUMBAI BEFORE SHRI D.T.GARASIA , JM AND SHRI RAJESH KUMAR, AM I.T.A. NO. 6759 /MUM/20 1 3 ( / ASSESSMENT YEAR : 20 10 - 11 ) INCOME TAX OFFICER - 8(1)(2) , ROOM NO.205, 2 ND FLOOR, AAYKAR BHAVAN, M K ROAD, MUMBAI - 400020 / VS. M/S BELA INVESTMENT AND FINANCE CO.LTD. GUL MANZIL, 1 ST FLOOR, 14 D J ROAD, VILE PARLE (E) MUMBAI - 400056 APPELLANT RESPONDENT I.T.A. NO. 6776 /MUM/20 13 ( / ASSESS MENT YEAR : 2010 - 11 ) M/S BELA INVESTMENT AND FINANCE CO.LTD. GUL MANZIL, 1 ST FLOOR, 14 D J ROAD, VILE PARLE (E) MUMBAI - 400056 / VS. INCOME TAX OFFICER - 8(1)(2), ROOM NO.205, 2 ND FLOOR, AAYKAR BHAVAN, M K ROAD, MUMBAI - 400020 APPELLANT RESPONDENT I.T.A. NO. 3702 /MUM/20 16 ( / ASSESSMENT YEAR : 2010 - 11 ) M/S BELA INVESTMENT AND FINANCE CO.LTD. GUL MANZIL, 1 ST FLOOR, 14 D J ROAD, VILE PARLE (E) MUMBAI - 400056 / VS. INCOME TAX OFFICER - 8(1)(2), ROOM NO.205, 2 ND FLOOR, AAYKAR BHAVAN, M K ROAD, MUMBAI - 400020 APPELLANT RESPONDENT ./ PAN : AA ACB1784B ( / APPELLANT) : ( / RESPONDENT ) / ASSESSEE BY : SHRI RAJESH S SHAH / REVENUE BY : SHRI PURUSHOTTAM KUMAR 2 ITA NO. 6776 /M/201 3,6759/MUM/2013 AND 3702/MUM/2016 / DATE OF HEARING : 2 4.4 . 2017 / DATE OF PRONOUNCEMENT : 24. 4. 201 7 / O R D E R PER RAJESH KUMAR, A. M: THESE THREE APPEALS HAVE BEEN FILED BY THE RESPECTIVE PARTIES. ITA NO.6759/MUM/2013 AND 6776/MUM/2013 ARE CROSS APPEALS AND DIRECTED AGAINST THE ORDER DATED 14.8.2013 FOR THE ASSESSMENT YEAR 2010 - 11 AN D ITA NO.3702/MUM/2016 IS DIRECTED AGAINST THE ORDER DATED 11.3.2016 OF THE LD.CIT(A) - 16, MUMBAI FOR ASSESSMENT YEAR 2010 - 11 . SINCE THESE APPEALS PERTAIN TO SAME ASS ESSEE AND GROUND S OF APPEAL RAISED THEREIN ARE IDENTICAL AND THEREFORE THESE APPEAL S ARE CLUBBED TOGETHER, HEARD TOGETHER AND ARE BEING DECIDED BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. I.T.A. NO.6759/MUM/2013 2. AT THE OUTSET, WE HAVE NOTIC ED THAT THE TAX EFFECT IN TH IS APPEAL OF THE REVENUE IS BELOW RS.10 LAKHS, THEREFORE, THE SAME IS NOT MAINTAINABLE AS PER THE CBDT CIRCULAR NO.21/2015, DATED 10TH DECEMBER, 2015. WE FOUND THAT AS PER THE RECENT CIRCULAR NO.21/2015, DATED 10TH DECEMBER, 201 5, ISSUED BY THE CBDT, THE MONETARY LIMIT HAS BEEN REVISED FOR FILING OF APPEAL BEFORE ITAT BY THE REVENUE FIXING THE TAX EFFECT LIMIT OF RS.10 LAKHS. IN THE INSTANT CASE, THE TAX EFFECT IS BELOW RS.10 LAKHS, THEREFORE THE SAME IS NOT 3 ITA NO. 6776 /M/201 3,6759/MUM/2013 AND 3702/MUM/2016 MAINTAINABLE AND LIAB LE TO BE DISMISSED IN LIMINE. THIS CIRCULAR IS RETROSPECTIVE AND APPLICABLE TO THE PENDING APPEALS ALSO. 3. CONSIDERING THE ABOVE CBDT CIRCULAR, WE FOUND THAT TH IS APPEAL OF THE REVENUE IS NOT MAINTAINABLE AS THE TAX EFFECT IN TH IS APPEAL IS BELOW RS.10 LAKHS. ACCORDINGLY, WE DISMISS THE APPEAL OF THE REVENUE. I.T.A. NO.6776/MUM/2013 4. GROUNDS OF APPEAL TAKEN BY THE ASSESSEE ARE AS UNDER : BEING AGGRIEVED AGAINST ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) - 16, MUMBAI, THIS APPEAL PETITION IS BEI NG FILED TO CONSIDER THE FOLLOWING GROUNDS OF APPEAL, WHICH ARE INDEPENDENT AND WITHOUT PREJUDICE TO EACH OTHER: 1. THE LEARNED COMMISSIONER OF INCOME TAX (A) ERRED IN CONFIRMING THE ADDITION OF RS.13,12,608/ - U/S.41 OF THE ACT THROUGH LIABILITIES WERE I N EXISTENCE AS ON BALANCE SHEET DATE. 2. THE LEARNED COMMISSIONER OF INCOME TAX (A) ERRED IN CONFIRMING THE ADDITION OF THE ABOVE LIABILITIES THOUGH THE SAID LIABILITIES ARE NOT WRITTEN BACK IN BOOKS OF ACCOUNT AND THE LIABILITY REMAINS TO BE PAYABLE ON DEMAND AND IN FACT WERE PAID IN RESPECT OF THREE PARTIES AND COPIES OF ACCOUNTS WERE FILED DURING THE HEARING BEFORE COMMISSIONER OF INCOME TAX (A). 3. THE LEARNED COMMISSIONER OF INCOME TAX (A) ERRED IN CONFIRMING THE ADDITION OF THE OUTSTANDING BALANCE S OF THE ABOVE PARTIES U/S.41 THOUGH THE APPELLANT HAD NEVER CLAIMED ANY ALLOWANCE AND / OR DEDUCTION IN RESPECT OF THE SAID LIABILITIES IN THE EARLIER YEAR/S 4. THE LEARNED COMMISSIONER OF INCOME TAX (A) ERRED IN CONFIRMING THE DISALLOWANCE OF DEPRECIAT ION OF RS.15,847/ - ON DEEP FREEZER. 5. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, MODIFY, SUBSTITUTE, AND OR CANCEL ANY OF THE GROUNDS OF APPEAL 4 ITA NO. 6776 /M/201 3,6759/MUM/2013 AND 3702/MUM/2016 5. THE ISSUE RAISED IN GROUNDS OF APPEAL NO.1,2 AND 3 IS AGAINST THE CONFIRMATION OF ADDITION OF RS.13,12, 608/ - BY THE LD.CIT(A) AS MADE BY THE AO U/S 41 OF THE INCOME TAX ACT , 1961 IN RESPECT OF LIABILITIES IN EXISTENCE AS ON BALANCE SHEET DATE AND WERE PAID IN THE SUBSEQUENT YEAR S . 6. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS CALLED U PON FOR DETAILS OF SUNDRY CREDITORS AS ON THE DATE OF END OF THE FINANCIAL YEAR WHICH WERE DULY FILED BY THE ASSESSEE ALONG WITH THE CONFIRMATION S . HOWEVER, THE AO NOTED THAT THE PARTIES IN RESPECT OF ALPIC A/C RUSHABH, ALPIC A/C GRRENWOOD, DEEPAK JAWALKA R AND WARNA INDUSTRIES LTD, THE ASSESSEE DID NOT FILE ANY CONFIRMATION S AND ACCORDINGLY , THE AO ISSUED SHOW CAUSE NOTICE TO THE ASSESSEE DATED 27.11.2012 CALLING UPON THE ASSESSEE AS TO WHY THE SAID CREDITORS SHOULD NOT BE ADDED U/S 41(1) OF THE ACT TO THE TOTAL INCOME OF THE ASSESSEE TREATING IT AS INCOME OF THE ASSESSEE FOR WHICH NO EXPLANATION WAS OFFERED BY THE ASSESSEE AND ACCORDINGLY ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. AGGRIEVED BY THE ORDER OF AO, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD.CIT(A) WHO ALSO CONFIRMED THE SAID ADDITION BY RELYING ON THE VARIOUS DECISIONS AND PASSING A VERY DETAILED ORDER AFTER CONSIDERING THE SUBMISSIONS AND CONTENTIONS OF THE ASSESSEE. THE LD. CIT(A) PRIMARILY RELYING ON THE DECISION OF THE HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V/S GENERAL ELECTRODES AND EQUIPMENT LTD (1985) 155 ITR 78 (BOM) AND THE DECISION IN THE CASE OF PROTES ENGINEERS CO.PVT LTD V/S CIT 5 ITA NO. 6776 /M/201 3,6759/MUM/2013 AND 3702/MUM/2016 (1995) 211 ITR 919 (BOM) BY HOLDING THAT THERE WAS A DIRECT NEXUS WITH THE BUSINESS OF THE ASSESSEE OF THESE UNCLAIMED BALANCES AND THEREFORE COVERED UNDER THE PROVISIONS OF SECTION 28(IV) OF THE ACT AS BENEFIT ACCRU ED FROM THE BUSINESS OF THE ASSESSEE. ACCORDINGLY, THE LD.CIT(A) CONFIRMED THE ACTION OF THE AO. FURTHER AGGR IEVED BY THE ORDER OF LD.CIT(A), THE ASSESSEE IS IN APPEAL BEFORE THIS TRIBUNAL. 7. BEFORE US, THE LD.AR VEHEMENTLY SUBMITTED THAT THE BALANCES WERE OUTSTANDING IN THE BOOKS OF ACCOUNT ON THE LAST DAY OF FINANCIAL YEAR AND WERE IN FACT OUTSTANDING AND PA ID SUBSEQUENTLY AND THEREFORE, THE LD.CIT(A) HAS GROSSLY ERRED ON FACTS AND IN LAW IN CONFIRMING THE ADDITION AS MADE BY THE AO U/S 41(1) OF THE ACT BY GOING STEP FURTHER BY HOLDING THAT THE SAID UNCLAIMED BALANCES WERE THE BENEFIT ACCRUING TO THE ASSESSE E AND WERE COVERED UNDER THE PROVISIONS OF SECTION 28(IV) OF THE ACT. THE LD. AR FURTHER ARGUED THAT SO LONG AS THE LIABILITY SHOWN IN THE BALANCE SHEET IT SHOULD NOT BE TREATED AS EITHER CESSATION OF LIABILITY IN TERMS OF PROVISION OF SECTION 41(1) OF TH E ACT OR BENEFIT ACCRUING UNDER SECTION 28(IV) OF THE ACT AND THEREFORE, THE LD.AR VEHEMENTLY PRAYED BEFORE THE BENCH THAT THE ORDER OF LD.CIT(A) DESERVE D TO BE REVERSED AND AO BE DIRECTED TO DELETE THE ADDITION. 8. THE LD.DR REITERATED THE SAME CONTENTION S AS MADE BEFORE THE LD.CIT(A) AND HEAVILY RELIED ON THE ORDER OF LD.CIT(A) AND PRAYED THAT ORDERS OF AUTHORITIES BELOW BE CONFIRMED. 6 ITA NO. 6776 /M/201 3,6759/MUM/2013 AND 3702/MUM/2016 9. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS PLACED BEFORE US INCLUDING THE ORDERS OF AUTHORITIES BELOW. WE FIND THAT THE BALANCES WHICH WERE OUTSTANDING ON THE DATE OF BALANCE - SHEET WERE TREATED AS INCOME OF THE ASSESSEE UNDER SECTION 41(1) OF THE ACT BY TREATING THE SAME AS CEASED LIABILITY AND THE LD.CIT(A) UPH ELD THE ADDITION MADE BY TH E AO BY TREATING THE SAME AS BENEFIT ACCRUING TO THE ASSESSEE FROM THE BUSINESS U/S 28(IV) OF THE ACT. IN OUR OPINION , THE LD.CIT(A) HAS FAILED TO APPRECIATE THE FACT SO LONG AS THE LIABILITY AS SHOWN IN THE BALANCE SHEET AT THE END OF THE YEAR THE SA ME CANNOT BE CONSIDERED AS BENEFIT ACCRUING TO THE ASSESSEE SPECIALLY WHEN THESE WERE PAID IN THE SUBSEQUENT YEAR S BY THE ASSESSEE. IT IS A SETTLED LEGAL POSITION THAT SO LONG THE LIABILITY IS SHOWN AS PAYABLE THE SAME CANNOT BE TREATED AS CEASED TO EXIS T. UNDER THESE CIRCUMSTANCES , WE ARE NOT IN AGREEMENT WITH THE LD.CIT(A) THAT THE CREDITORS IN RESPECT OF WHICH THE ASSESSEE DID NOT FILE ANY CONFIRMATION S WERE BENEFIT ACCRUED TO THE ASSESSEE U/S 28(IV) OF THE ACT. ACCORDINGLY , WE ARE INCLINED TO SET A SIDE THE ORDER OF FIRST APPELLATE AUTHORITY AND DIRECT THE AO TO DELETE THE ADDITION . RESULTANTLY, THE APPEAL OF THE ASSESSEE IS ALLOWED. I.T.A. NO.3702/MUM/2016 10. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST CONFIRMATION OF PENALTY OF RS.4,10,49 0/ - BY THE LD.CIT(A) AS LEVIED BY THE AO U/S 271(1)(C) OF THE 7 ITA NO. 6776 /M/201 3,6759/MUM/2013 AND 3702/MUM/2016 ACT . SINCE WE HAVE DIRECTED THE AO TO DELETE THE QUANTUM AGAINST WHICH THE PENALTY IS LEVIED, THE IMPUGNED PENALTY HAS NO LEGS TO STAND AND HENCE WE ALLOW THE APPEAL FILED BY THE ASSESSEE BE ING INFRUCTUOUS. RESULTANTLY, THE APPEAL OF THE ASSESSEE STANDS ALLOWED. 11. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED AND BOTH THE APPEALS FILED BY THE ASSESSEE STAND ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 24TH APRIL , 2017 . S D SD ( D.T.GARASIA ) ( RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : 24. 4 .2017 SR.PS:SRL: / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A ) 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F ILE / BY ORDER, T RUE COPY / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI