EXPRESS PUBLICATIONS (MADURAI)pRIVATE lTD., CHENNAI V. DCIT, CORPORATE CIRCLE-II(1), CHENNAI

ITA 719/CHNY/2023

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The case involves Express Publications (Madurai) Private Limited, which appealed against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi. The dispute centered on the disallowance of \\u20b9;53,84,690 under section 41(1) of the Income Tax Act, 1961, related to dormant trade creditors. The Assessing Officer initially disallowed these credits as the assessee failed to provide necessary confirmations and evidence of ongoing liabilities. The CIT(A) upheld this decision. However, the Tribunal set aside the CIT(A)'s order and remitted the matter back to the Assessing Officer to verify the tax payments on these credits in subsequent years, which could potentially negate the disallowance under section 41(1).

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 134978 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-10-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: B
• Next Hearing Date: 09-10-2023
• Assessment Year: 2017-2018
• Appeal Filed On: 06-06-2023
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Set aside
• Section: 68; 143(3); 142(1); 115JB

Judgement Text

आयकर अपीलीय अिधकरण, ‘बी’ Ɋायपीठ, चेɄई IN THE INCOME-TAX APPELLATE TRIBUNAL ‘B’ BENCH, CHENNAI ŵी वी. दुगाŊ राव, Ɋाियक सद˟ एवं ŵी मनोज कु मार अŤवाल, लेखा सद˟ के समƗ । Before Shri V. Durga Rao, Judicial Member & Shri Manoj Kumar Aggarwal, Accountant Member आयकर अपील सं./I.T.A. No.719/Chny/2023 िनधाŊरण वषŊ/Assessment Year: 2017-18 Express Publications (Madurai) Private Limited, C/o Shri T.N. Seetharaman, Advocate, # 384 (Old No. 196), Lloyds Road, Chennai 600 086. [PAN:AAACI0842D] Vs. The Deputy Commissioner of Income Tax, Company Circle II(1) [Now DCIT, Corporate Circle 2(1)], Chennai 600 034. (अपीलाथŎ/Appellant) (ŮȑथŎ/Respondent) अपीलाथŎ की ओर से / Appellant by : Shri T.N. Seetharaman, Advocate ŮȑथŎ की ओर से/Respondent by : Shri D. Hema Bhupal, JCIT सुनवाई की तारीख/ Date of hearing : 10.10.2023 घोषणा की तारीख /Date of Pronouncement : 18.10.2023 आदेश /O R D E R PER V. DURGA RAO, JUDICIAL MEMBER: This appeal filed by the assessee is directed against the order of the ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre [NFAC], Delhi, dated 24.05.2023 relevant to the assessment year 2017-18. 2. Brief facts of the case are that the assessee filed its return of income for the assessment year 2017-18 on 28.10.2017 admitting total income of ₹.14,11,87,900/- and admitted book profit of ₹.14,99,79,328/- I.T.A. No. 719/Chny/23 2 under section 115JB of the Income Tax Act, 1961 [“Act” in short]. The case was selected for scrutiny under CASS and notice under section 143(2) of the Act dated 11.08.2018 was issued and duly served on the assessee. Notice under section 142(1) of the Act dated 16.08.2019 was also issued to the assessee to furnish the detail, evidence and information called for as per annexure enclosed with 142(1) notice. After considering the details furnished by the assessee, the Assessing Officer has completed the assessment under section 143(3) of the Act dated 27.12.2019 by making addition of ₹.52,25,500/-under section 68 of the Act as well as disallowance of ₹.53,84,690/- under section 41(1) of the Act. On appeal, deleting the addition made under section 68 of the Act, the ld. CIT(A) confirmed the disallowance of ₹.53,84,690/- under section 41(1) of the Act. 3. On being aggrieved, the assessee carried the matter in appeal before the Tribunal. By filing the details of dormant creditors and referring to paper book page 6, the ld. Counsel for the assessee has submitted that the assessee has already written off the credit in the books of account and paid taxes in subsequent years and thus prayed for deleting the addition made towards disallowance under section 41(1) of the Act. I.T.A. No. 719/Chny/23 3 4. On the other hand, the ld. DR has fairly conceded that the matter may be remitted back to the Assessing Officer to verify as to whether the assessee paid taxes in sequent years. 5. We have heard both the sides, perused the materials available on record and gone through the orders of authorities below. During the course of assessment proceedings, the Assessing Officer asked the assessee to provide the detailed note on trade payables along with comparative statement of closing balance for three years and also requested to submit the confirmation letters to substantiate the existence of liability from the creditors having no movement of transactions for more than three years. On perusal of the details furnished by the assessee, the Assessing Officer noted that the trade creditors to the tune of ₹.53,84,690/- are not having any movement for more than three years and moreover, the assessee has not furnished confirmation letters or submitted the proof for settlement of liability in subsequent years. Since the assessee was not able to submit the confirmation letters to prove the existence of liability, the Assessing Officer held that the liability of the assessee are ceased to exist and the assessee was not liable to repay the amount. Accordingly, the Assessing Officer disallowed ₹.53,85,690/- and added back to the total income of the assessee as the liability was I.T.A. No. 719/Chny/23 4 ceased to exist. On appeal, the ld. CIT(A) confirmed the assessment order. The case of the assessee is that with regard to the above credits, the assessee has already written off in the books of account and paid taxes in subsequent years and furnished the details in the form of paper book page 6. However, the above submission was not made before the Assessing Officer or before the ld. CIT(A). Accordingly, we set aside the order of the ld. CIT(A) on this issue and remit the matter back to the Assessing Officer to examine the issue as to whether the assessee paid taxes in subsequent years and decide the issue afresh in accordance with law by affording an opportunity of being heard to the assessee. In case, the assessee paid taxes in subsequent years, the provisions of section 41(1) of the Act cannot be invoked. Thus, the ground raised by the assessee is allowed for statistical purposes. 6. In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced on 18 th October, 2023 at Chennai. Sd/- Sd/- (MANOJ KUMAR AGGARWAL) ACCOUNTANT MEMBER (V. DURGA RAO) JUDICIAL MEMBER Chennai, Dated, 18.10.2023 Vm/- I.T.A. No. 719/Chny/23 5 आदेश की Ůितिलिप अŤेिषत/Copy to: 1. अपीलाथŎ/Appellant, 2.ŮȑथŎ/ Respondent, 3. आयकर आयुƅ/CIT, 4. िवभागीय Ůितिनिध/DR & 5. गाडŊ फाईल/GF.