PADMINI HOLDINGS P. LTD, MUMBAI V. ITO 7(1)(3), MUMBAI

ITA 9059/MUM/2010

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 3175 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 9 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-09-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 10-03-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 27-12-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PREMANAND J
• Assessee Lawyers: SUBASH SHETTY
• Section: 143(3); 133(6)

Judgement Text

M/S PADMINI HOLDINGS P LTD. ITA NO. 9059 /MUM/20 1 0 1 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH C , MUMBAI , , BEFORE SHRI G S PANNU , ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA , JUDICIAL MEMBER ITA NO. : 9059 /MUM/20 1 0 ( ASSESSMENT YEAR: 200 7 - 0 8 ) M/S PADMINI HOLDINGS P LTD. , 701 - 702, NIRMAN KENDRA, 20, DR E. MOSES ROAD, MAHALAXMI, MUMBAI - 400 020 .: PAN: AAACP 2385 A VS ITO - 7(1)(3), 6 TH FLOOR, AAYAKAR BHAVAN, MUMBAI - 400 020 (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SUBASH SHETTY RESPONDENT BY : SHRI PREMANAND J /DATE OF HEARING : 01 - 0 7 - 201 5 / DATE OF PRONOUNCEMENT : 28 - 09 - 201 5 ORDER , . . : PER AMIT SHUKLA, J M : THE A FORESAID APPEAL HA S BEEN FILED BY THE ASSESSEE AGAINST IMPUGNED ORDER DATED 2 3. 0 8 .2010 F OR THE QUANTUM OF ASSESSMENT PASSED U/S 143(3) FOR ASSESSMENT YEAR 2007 - 08. THE AS SESSEE IS MAINLY AGGRIEVED BY THE ADDITION OF RS. 9,70,526/ - MADE U/S 41(1) ON ACCOUNT OF CESSATION OF LIABILITY IN RESPECT OF TWO PARTIES , NAMELY , (I) M/S SAMBHAV TRADING AGENCIES RS. 18,326/ - AND (II) M/S WORLD LINK FINANCE LTD RS. 9,50,200/ - . 2. BRIEF FACTS ARE THAT , ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF FINANCE. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO FR O M THE PERUSAL OF THE DETAILS OF SUNDRY CREDITORS NOTED M/S PADMINI HOLDINGS P LTD. ITA NO. 9059 /MUM/20 1 0 2 THAT , IN RESPECT OF VARIOUS PARTIES, NO TRANSACTIONS DURING THE ACCOUNTING YEAR HAS TAKEN PLACE. THE DETAILS OF SUCH SUNDRY CREDITORS WERE AS UNDER : - SR. NO. NAME AMT PAYABLE (RS.) 1 SAMBHAV TRADING AGENCIES 18326 2 HARSHWARDHAN BHUWALKAR (446) 3 NALVA METAL & ALLOYS LTD. 116950 4 MULTIMINT INVESTMENT 109402 5 JINDAL IRON AND STEEL 1432408 6 JINDAL STRIPS LTD 346400 7 WORLD LINK LTD 952200 TOTAL 2975240 IN RESPONSE TO THE SHOW CAUSE NOTICE, ASSESSEE SUBMITTED THAT THE LIABILITY IS STILL EXISTING IN THE BOOKS AND SAME HAS NOT BEEN WRITTEN OFF. FURTHER, AS AT 3 1 ST MARCH , 2009 THE LIABILITY OF INTEREST PAYABLE IS NOT APPEARING. AS REQUIRED BY THE AO, ADDRESSES OF THE CREDITORS WERE SUBMITTED BY THE ASSESSEE TO THE AO, WHO ISSUED NOTICE U/S 133(6) TO ALL THE PARTIES. I N RESPONSE , SOME OF THE PARTIES DENIED THE TRANSACTION OR DID NOT CONFIRM THE B ALANCE AND IN SOME CASES NOTICED RETURNED WITH THE REMARK LEFT OR UNKNOWN. ACCORDINGLY, THE AO AFTER DETAILED DISCUSSION CONFIRMED THE SAID ADDITION. 3. AT THE STAGE OF FIRST APPELLATE PROCEEDINGS, THE ASSESSEE AGAIN FILED THE DETAILS OF ALL THE PARTIES WITH THE PROOF OF PAYMENT AND SUBMITTED THAT THE SAID LIABILIT IES HA VE BEEN DISCHARGED IN THE SUBSEQUENT YEAR. THE LD. CIT(A) SENT THE MATTER TO THE AO FOR SUBMISSION OF HIS REMAND REPORT AFTER ENQUIRY. D URING THE COURSE OF REMAN D PROCEEDINGS, THE AO MADE ENQUIRIES AND IN THE COURSE OF SUCH ENQUIRY, HE FOUND THAT IN CASE OF FOUR PARTIES, NOT ONLY THEY HAD APPEARED BEFORE THE AO , BUT ALSO HAD CONFIRMED THE PAYMENT RECEIVED FROM THE ASSESSEE. THE DETAILS OF SUCH PARTIES AND THE PAYM ENTS RECEIVED BY THEM HAVE BEEN GIVEN AT PARA 2.4 OF THE APPELLATE ORDER. ACCORDINGLY, THE LIABILITY APPEARING IN THE CASE OF THE FOUR PARTIES FOR SUMS AGGREGATING TO RS. 20,05,160/ - WAS DELETED WHICH ARE NOT IN DISPUTE . HOWEVER, IN RESPECT OF FOLLOWING TW O PARTIES : - M/S PADMINI HOLDINGS P LTD. ITA NO. 9059 /MUM/20 1 0 3 SR. NO. NAME AMT PAYABLE 1 SAMBHAV TRADING AGENCIES 18,326 2 WORLD LINK LTD 9,52,200 TOTAL 9,70,526 THE LD. CIT(A) HELD THAT ASSESSEE COULD NOT FILE ANY CONFIRMATION AND HENCE THAT THE LIABILITY IS STILL OUTSTANDING AND ACCORDINGLY , HE CONFIRMED THE AMOUNT OF RS. 9,70,526/ - U/S 41(1). 4 . BEFORE US, THE LD. COUNSEL SUBMITTED THAT BEFORE THE AO, THE ASSESSEE HA D SUBMITTED THE AUDITED BALANCE SHEET FOR THE YEAR 31 ST MARCH, 2009 WHEREIN THE LIABILIT IES UNDER THE HEAD SUNDRY CREDITORS WAS REDUCED TO RS. 53,665/ - . THIS FACT HAS BEEN NOTED IN THE ASSESSMENT ORDER ALSO . FURTHER , THE ASSESSEE HAS GIVEN THE ENTIRE DETAILS OF THE CREDITORS ALONG WITH THE CORRECTED ADDRESS. THE RELEVANT SUBMISSION REGARDING TWO PARTIES BEFORE THE AO WERE AS UNDER : - A) M/S SAMBHAV TRADING AGENCY CR. BAL RS. 18,326/ - THE FACT IS THAT OUR CLIENT RECEIVED EXCESS INTEREST FROM THE ABOVE PARTY WHICH WA S SHOWN UNDER THE HEAD SUNDRY CREDITORS (INTEREST PAYABLE). FROM THIS FACT IT IS CLEAR THAT OUR CLIENT HAS NOT CLAIMED ANY DEDUCTION IN PROFIT AND LOSS ACCOUNT FOR THIS LIABILITY. THIS FACT CAN BE VERIFIED FROM THE LEDGER ACCOUNT OF THE PARTY WHICH IS ENCLOSED. B) WORLD LINK FINANCE LTD. AFTER ENQUIRY OUR CLIENT CAME TO KNOW TH A T THE REGISTERED OFFICE OF THE ABOVE COMPANY NOW IS NOT SITUATED AT NARIMAN POINT MUMBAI 400 021. AFTER ENQUIRY OUR CLIENT FOUND THEIR ADDRESS AT DELHI AS BELOW : M/S WORLD LINK FINANCE LTD. G4, TYAGI BUSINESS CENTRE, S 530 SCHOOL BLOCK, SHAKARPUR II, N EW DELHI 110 092 M/S PADMINI HOLDINGS P LTD. ITA NO. 9059 /MUM/20 1 0 4 HE ALSO REFERRED TO THE COPY OF ACCOUNT OF THESE PARTIES AS APPEARING IN THE BOOKS OF THE ASSESSEE , TO SHOW THAT THE LIABILITY WA S OUTSTANDING AND ASSESSEE HAD NOT WRITTEN OFF . 5 . ON THE OTHER HAND LD. DR, SUBMITTED THAT THE ASSESSEE HAS SHOWN TO ALL HAVE RECEIVED MONEY FROM THESE PARTIES ON WHI CH THE ASSESSE E WAS LIABLE TO PAY INTEREST. THESE SUNDRY CREDITORS HAVE BEEN TREATED AS LOAN IN THE BALANCE SHEET AS AT 31 ST MARCH, 2009. HE SUBMITTED THAT IT IS UNBELIEVABLE ASSESSEE WAS CARRYIN G THIS LIABILITY FOR MORE THAN 15 YEARS AND ACCORDINGLY , THE ADDITION MADE/SUSTAINED U/S 41(1) SHOULD BE UPHELD. 6 . WE HAVE HEARD THE RIVAL CONTENTIONS AND ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSE SSEE HAD SUBMITTED THAT THE SUNDRY CREDITORS WERE IN THE FORM OF INTEREST PAYABLE TO VARIOUS PARTIES AND SUCH SUNDRY CREDITORS ARE NOT APPEARING IN THE BALANCE SHEET AS AT 31 ST MARCH, 2009. IN RESPONSE TO TH E NOTICE AT ASSESSMENT STAGE, THE ASSESSEE HAD GI VEN THE CORRECT ADDRESS AND ALSO THE REASONS FOR TREATING IT AS A LIABILIT Y IN THE BALANCE SHEET AS AT 31 ST MARCH, 2007. LATER ON, SOME OF THESE SUNDRY CREDITORS HAVE BEEN CONVERTED INTO UNSECURED LOAN AS ON 31 S T MARCH, 2009 AND NO BALANCE ON ACCOUNT OF TH ESE PARTIES ARE APPEARING IN THE SUNDRY CREDITORS , THAT IS, NO LIABILITY EXISTS AS ON 31.03.2009 IN THE NAME OF THE ABOVE PARTIES. THUS, ON THESE FACT S, IT CANNOT BE HELD THAT A N Y ADDITION IS CALLED FOR , U/S 41(1) AS CESSATION OF LIABILITY. ACCORDINGLY, G ROUNDS RAISED BY THE ASSESSEE ARE TREATED AS ALLOWED. 7 . IN THE RESULT, APPEAL OF THE ASSESSEE STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH SEPTEMBER , 2015. SD/ - SD/ - ( ) ( ) ( G S PANNU ) ( AMIT SHUKLA ) ACCOUNTANT MEMBER JUDICIA L MEMBER MUMBAI, DATE: 28 TH SEPTEMBER , 2015 M/S PADMINI HOLDINGS P LTD. ITA NO. 9059 /MUM/20 1 0 5 / COPY TO: - 1 ) / THE APPELLANT. 2 ) / THE RESPONDENT. 3) THE CIT (A) - 1 3 , MUMBAI. 4 ) THE CIT 7 , MUMBAI. 5 ) , , / THE D.R. C BENCH, MUMBAI. 6 ) \ COPY TO GUARD FILE. / BY ORDER / / TRUE COPY / / / , DY. / ASSTT. REGISTRAR I.T.A.T., MUMBAI * . . *CHAVAN, SR.PS