COPPER CHIMNEY, MUMBAI V. ITO 12(3)(4), MUMBAI

ITA 8596/MUM/2011

• Counselvise Citation: 859619914 RSA 2011
• Duration Of Justice: 2 year(s) 4 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-05-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 09-04-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 20-12-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Section: 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH C, MUMBAI BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND DR. S.T.M. PAVALAN, JUDICIAL MEMBER ITA NO. 8596/MUM/2011 ASSESSMENT YEAR: 2008-09 M/S. COPPER CHIMNEY 18-RAMPART ROAD, KALAGHODA, FORT MUMBAI-400 023 VS. ITO 12(3)(4) AAYAKAR BHAVAN MUMBAI- (APPELLANT) (RESPONDENT) PERMANENT ACCOUNT NO. :AAAFC 1054 E ASSESSEE BY : SHRI JAYESH DADIA REVENUE BY : SHRI RAJESH KUMAR DATE OF HEARING : 09.04.2014 DATE OF PRONOUNCEMENT : 09.05.2014 O R D E R PER DR. S.T.M. PAVALAN, JM: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF THE LD.CIT(A)-23, MUMBAI DATED 11.10.2011 FOR THE ASSES SMENT YEAR 2008-09. 2. IN THIS APPEAL, THE ASSESSEE HAS AGITATED THE DE CISION OF THE LD.CIT(A) CONFIRMING THE ACTION OF AO IN TAXING RS.15,18,077/ - UNDER SECTION 41(1) OF THE INCOME TAX ACT. 3. BRIEFLY STATED, THE ASSESSEE, A FIRM ENGAGED IN THE BUSINESS OF RUNNING RESTAURANTS AS WELL AS EARNING FRANCHISE FEES BY LE NDING ITS EXPERTISE AND TECHNICAL KNOW HOW, DURING THE YEAR UNDER CONSIDERATION, HAD SHOWN AN AMOUNT OF RS.15,18,077/- AS OUTSTANDING AGAINST M/S. SUJASH M EMBERS ASSOCIATION LTD. SINCE THE SAID AMOUNT HAD BEEN OUTSTANDING FOR MORE THAN THREE YEARS PRIOR TO A.Y. 2008- 09, THE AO SOUGHT THE ASSESSEE TO FILE DETAILS WITH RESPECT TO THE CREDIT AND HAD ENQUIRED WHETHER THE LIABILITY WAS DISCHARGED. THE ASSESSEE WAS ALSO REQUIRED TO FILE CONFIRMATION OF THE EXISTENCE OF CREDIT IF THE SAME WAS NOT DISCHARGED TILL DATE. THE ITA NO. 8596/MUM/2011 M/S. COPPER CHIMNEY ASSESSMENT YEAR: 2008-09 2 ASSESSEE, IN ITS IN REPLY, STATED THAT IT HAD ENTER ED INTO AN AGREEMENT WITH M/S. SUJASH MEMBERS ASSOCIATION LTD TO RUN THE RESTAURAN T BUSINESS AT AN AGREED ROYALTY ON SALES. HOWEVER, DUE TO DISPUTE BETWEEN THE ASSES SEE AND THE SAID CONCERN ON ACCOUNT OF VARIOUS EXPENDITURES FOR PURPOSE OF RUNN ING A RESTAURANT AT AHMEDABAD, THE AMOUNT OF ACCOUNT OF ROYALTY WAS STILL PAYABLE BY THE ASSESSEE. THE ASSESSEE WAS FURTHER REQUIRED TO FILE CONFIRMATION FROM THE SAID PARTY. HOWEVER, VIDE LETTER DATED 30 TH NOVEMBER, 2010 THE ASSESSEE MERELY REITERATED THAT THE LIABILITY STILL EXISTED. SUBSEQUENTLY, THE ASSESSEE SUBMITTED THE A DDRESS OF THE SAID PARTY AND A NOTICE U/S 133(6) WAS SENT BY THE AO TO THE SAID PA RTY. HOWEVER, THE SAME WAS RETURNED UNSERVED WITH THE REMARK NOT KNOWN. THUS, THE AO ADDED THE AMOUNT OF RS.15,18,077/- U/S 41(1) OF THE ACT, AS THE ASSESSE E DID NOT CONFIRM THAT THE LIABILITY STILL EXISTS AND AS PER THE LIMITATION ACT, THE LIA BILITY IS MORE THAN 5-6 YEARS OLD IT COULD NOT BE ENFORCED. 4. ON APPEAL BEFORE THE LD.CIT(A), THE ASSESSEE SUB MITTED THAT MERE FACT THAT LIABILITY REMAINED UNPAID CANNOT LEAD TO CONCLUSION THAT THE SAME WAS NO MORE PAYABLE OR CEASED. THE ASSESSEE FURTHER RELIED ON T HE HONBLE SUPREME COURT DECISION IN THE CASE OF SUGAULI SUGAR WORKS PVT. LTD. (236 ITR 518), TAMILN ADU WAREHOUSING CORPORATION (292 ITR 310), AHUJA GRAPHI C MACHINERY PVT. LTD. 109 ITD 71 (MUM) (TM), NITIN S GARD (40 SOT 253-A BAD), A LLIED LEATHER FINISHERS P. LTD. (32 SOT 549 (LUCK), VIP INDUSTRIES LTD.-30 SOT 254 (MUM), DSA ENGINEERS (BOMBAY) VS. ITO (30 SOT 31), AND KAPS ADVERTISING 11 ITR (TRIB) 113 (DELHI) TO SUPPORT THE CONTENTION THAT MERE NON-AVAILABILITY O F CREDITORS AND LACK OF CORRESPONDENCE WITH THEM WOULD NOT OBLITERATE THE D EBT. BESIDES THE SAID CONTENTION, THE ASSESSEE STATED THAT THE ENTIRE LIA BILITY WAS PAID IN THE IMMEDIATE SUCCEEDING ASSESSMENT YEAR 2009-10 BY WAY OF ASSIGN MENT OF THE SAME TO ONE OF THE PARTNERS, NAMELY, MR. SUDHIR CHADDHA AND AS FAR AS THE ASSESSEE FIRM IS CONCERNED, THE SAID LIABILITY HAD BEEN PAID. HOWEVE R, THE LD.CIT(A) DID NOT ACCEPT THE CLAIM OF THE ASSESSEE AS THE ASSESEE HAD NOT FI LED ANY CONFIRMATION FROM THE CONCERNED PARTY TO THE EFFECT THAT THE LIABILITY RE MAINED OUTSTANDING AND DUE FROM THE ASSESSEE. THE LD.CIT(A) HAD FURTHER OBSERVED TH AT NOTICE ISSUED TO THE PARTY AT THE ADDRESS FURNISHED BY THE ASSESSEE ALSO WAS RETU RNED BACK UNSERVED. ALSO, NO ITA NO. 8596/MUM/2011 M/S. COPPER CHIMNEY ASSESSMENT YEAR: 2008-09 3 SUITS/CLAIM WAS MADE BY THE PARTY ON THE ASSESSEE. ACCORDINGLY, THE LD.CIT(A) UPHELD THE IMPUGNED ADDITION MADE BY THE AO. 5. HAVING HEARD BOTH THE SIDES AND PERUSED THE MATE RIAL ON RECORD, IT IS PERTINENT TO MENTION THAT THE IMPUGNED LIABILITY HA S BEEN OUTSTANDING SINCE SIX TO SEVEN YEARS AS OBSERVED BY THE AUTHORITIES BELOW. I T IS NOTED THAT THE ASSESSEE HAS NOT FILED ANY CONFIRMATION FROM THE CONCERNED PARTY TO THE EFFECT THAT THE LIABILITY REMAINS OUTSTANDING AND DUE FROM THE ASSESSEE. NOTI CE ISSUED TO THE PARTY AT THE ADDRESS FURNISHED BY THE ASSESSEE ALSO HAS BEEN RET URNED BACK UNSERVED AND ALSO NO SUIT/CLAIM HAS BEEN MADE BY THE PARTY AGAINST TH E ASSESSEE. IT IS FURTHER OBSERVED THAT THE ASSESSEE HAS NOT PRODUCED ANY DOC UMENTATION TO SHOW THAT THE SAID COMPANY HAS BEEN CLAIMING ITS MONEY BACK. AS R EGARDS THE CONTENTION OF THE ASSESSEE THAT IT HAS ASSIGNED THE SAID LIABILITY TO ONE OF THE PARTNER, MR. SUDHIR CHADDHA AND AS FAR AS THE ASSESSEE FIRM IS CONCERNE D, THE SAID LIABILITY HAS BEEN PAID, IT IS PERTINENT TO MENTION THAT THE LD.CIT(A) HAS REQUESTED THE ASSESSEE TO FURNISH THE DETAILS OF IT WARD WHERE SHRI SUDHIR CH ADDHA IS ASSESSED, THE CHEQUE NUMBER, DATE AND BANK FROM WHICH PAYMENT HAS BEEN M ADE BY SHRI SUDHIR CHADDHA. HOWEVER, THE ASSESSEE COULD FURNISH ONLY T HE IT WARD NO. OF SHRI CHADDHA AND OTHER DETAILS HAVE NOT BEEN FILED. IN T HIS CONNECTION, THE LD.CIT(A) HAS OBSERVED THAT THE COPY OF ACCOUNT OF SUJAS MEMBERS ASSOCIATION LTD. IN THE BOOKS OF SHRI SUDHIR CHADDHA FILED BY THE ASSESSEE SHOWS THA T ON VARIOUS DATES IN 2009 AMOUNTS HAVE BEEN PAID IN CASH, HOWEVER, THERE IS N O EVIDENCE REGARDING THE NAME/SIGNATURE OF THE RECIPIENT TO SUPPORT THE FACT THAT SUCH PAYMENT IS IN FACT MADE TO SUJASH MEMBER ASSOCIATION LTD. THE LD.CIT(A ) HAS FURTHER OBSERVED THAT FROM THE ENTRY KNOWN AS TO DD RS.6,12,500/-, IT I S NOT ASCERTAINABLE AS TO IN WHICH NAME THE DD HAS BEEN ISSUED AND ENCASHED BY W HOM. IT IS RELEVANT TO STATE THAT THE LD.CIT(A) HAS NOTED THAT IF THE ASSESSEE I S ABLE TO MAKE PAYMENT IN CASH, OR DELIVER A DD, IT IS CERTAIN THAT IT WOULD DEFINI TELY KNOW THE ADDRESS OF THE PARTY, HOWEVER THE SAME IS NOT FURNISHED. CONSIDERING THE ENTIRETY OF FACTS, WE ARE OF THE CONSIDERED OPINION THAT THE ASSESSEE HAS NOT PROVED THAT THE IMPUGNED LIABILITY HAS REMAINED DURING THE YEAR UNDER CONSIDERATION. SINCE THE CASE OF THE ASSESSEE FACTUALLY SPEAKS FOR ITSELF, THE CASE LAWS RELIED O N BY THE ASSESSEE WILL NOT RESCUE THE ITA NO. 8596/MUM/2011 M/S. COPPER CHIMNEY ASSESSMENT YEAR: 2008-09 4 ASSESSEE FROM BRINGING THE IMPUGNED AMOUNT TO TAX. THEREFORE, WE DO NOT FIND ANY JUSTIFIABLE REASON TO INTERFERE WITH THE DECISION O F THE LD.CIT(A) CONFIRMING THE ACTION OF AO IN TAXING THE IMPUGNED AMOUNT OF RS.15 ,18,077/- UNDER SECTION 41(1). THUS THE DECISION OF THE LD.CIT(A) ON THIS COUNT IS UPHELD. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 0 9 TH DAY OF MAY, 2014. SD/- SD/- (P.M. JAGTAP) (DR. S.T.M. PAVALAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 09.05.2014. *SRIVASTAVA COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR C BENCH //TRUE COPY// BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.