Assistant Commissioner of Income-tax, Pune V. Balkishan Agarwal, Pune

ITA 921/PUN/2017

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 6764 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 5 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-09-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 13-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: IS DIRECTED AGAINS T PASSED
• Keywords: Additional evidence

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE VIRTUAL COURT BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER ITA NO. 921/PUN/2017 / ASSESSMENT YEAR : 2011-12 ACIT, CIRCLE-7, PUNE VS. SHRI BALKISHAN AGARWAL, 857/1, DASTUR MEHER ROAD, CAMP, PUNE 411 001 PAN : ABNPA8286G APPELLANT RESPONDENT / ORDER PER R.S.SYAL, VP : THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A)-5, PUNE ON 30-11-2016 IN RELATION TO THE ASSESSMENT YEAR 2011-12. 2. THE ONLY ISSUE RAISED IN THIS APPEAL IS AGAINST THE DELETION O F ADDITION OF RS.2,95,60,819/- MADE BY THE ASSESSING OFFICE R (AO) U/S.41(1) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER ALSO CA LLED THE ACT). ASSESSEE BY SHRI VIPIN K GUJARATHI REVENUE BY SHRI S.P. WALIMBE DATE OF HEARING 15-09-2020 DATE OF PRONOUNCEMENT 15-09-2020 ITA NO.921/PUN/2017 BALKISHAN AGARWAL 2 3. BRIEFLY STATED, THE FACTS ARE THAT THE ASSESSEE IS A CONTRA CTOR WHO FILED HIS RETURN DECLARING TOTAL INCOME AT RS.1.37 CRORE . DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO OBSE RVED THAT THERE WAS A LIABILITY OF RS.2,99,29,471/- OUTSTANDING IN TH E BOOKS OF THE ASSESSEE TOWARDS SUNDRY CREDITORS. ON BEIN G CALLED UPON TO SUBMIT CONFIRMATIONS FROM THE CREDITORS, THE ASSESS EE COULD NOT FURNISH EXCEPT THE ONE FROM GODREJ & BOYCE MANUFACTU RING COMPANY. INVOKING THE PROVISIONS OF SECTION 41(1) OF THE ACT, THE AO MADE ADDITION OF RS.2,99,29,471/-. THE ASSESSEE A GITATED THE ASSESSMENT ORDER BEFORE THE LD. CIT(A) CONTENDING THAT EFF ECTIVE SCRUTINY PROCEEDINGS STARTED ON 12-02-2014 AND THE AO, W ITHOUT PROVIDING ADEQUATE OPPORTUNITY OF HEARING, COMPLETED THE ASSESSMENT ON 24-03-2014. IN SUPPORT OF THE GENUINENES S OF THE EXISTING LIABILITY IN RESPECT OF WHICH ADDITION WAS MADE BY THE AO, THE ASSESSEE SUBMITTED THAT THE AO WRONGLY INVOKED SECTION 41 (1) OF THE ACT IN RESPECT OF ALL THE 45 CREDITORS APPEARING IN THE BOOKS OF ACCOUNT. IT WAS ALSO STATED THAT PERIODICAL TRANSACTIONS WER E TAKING PLACE ON ACCOUNT OF PURCHASES AND PAYMENTS MADE T HROUGH CHEQUES IN THESE ACCOUNTS. THE ASSESSEE ALSO FURNISHED CONFIRMATION OF LEDGER EXTRACTS OF SUNDRY CREDITORS. THE LD . CIT(A) ITA NO.921/PUN/2017 BALKISHAN AGARWAL 3 SENT SUCH ADDITIONAL EVIDENCE TO THE AO WITH A DIRECTION TO SUBM IT A REMAND REPORT. THE AO OBJECTED TO ADMISSION OF THE AD DITIONAL EVIDENCE VIDE HIS REMAND REPORT DATED 27-04-2015. HE, HOWEVER, ADMITTED THE ASSESSEES POINT OF VIEW THAT ALL THE EXPENSES WER E DISALLOWED AND ALL THE SUNDRY CREDITORS WERE ADDED. THE LD. CIT(A) ADMITTED THE ADDITIONAL EVIDENCE AFTER ENTERTAINING THE COUNTER COMMENTS FROM THE ASSESSEE ON THE REMAND REPORT . ON SUCH BASIS, THE LD. CIT(A) DELETED THE ADDITION TO THE TUNE O F RS.2,95,60,819/- AGAINST WHICH THE REVENUE HAS COME UP IN APPEAL BEFORE THE TRIBUNAL. 4. HAVING HEARD BOTH THE SIDES THROUGH VIRTUAL COURT AND GON E THROUGH THE RELEVANT MATERIAL ON RECORD, IT IS OBSERVED THAT TH E AO INVOKED SECTION 41(1) OF THE ACT FOR MAKING ADDITION IN RESP ECT OF ALL THE SUNDRY CREDITORS. THIS WAS DONE ON THE PREMISE THAT THE ASSESSEE COULD NOT FURNISH CONFIRMATIONS. WE HAVE NOTED ABOVE THAT THE AO DID NOT GRANT ADEQUATE OPPORTUNITY OF HEARING TO THE ASSESSEE. HOWEVER, THE ASSESSEE FURNISHED RELEVANT EVID ENCE DURING THE REMAND PROCEEDINGS. THE AO PINPOINTED INCONSISTENCIES IN RESPECT OF TWO ACCOUNTS, NAMELY, MILANO BATHROOM FITTINGS PVT. LTD., WHERE THE CREDITOR IN RESPONSE TO ITA NO.921/PUN/2017 BALKISHAN AGARWAL 4 NOTICE ISSUED BY THE AO U/S.133(6) DENIED ANY TRANSACTION WITH THE ASSESSEE; AND SHANTI CONSTRUCTION & SUPPLIERS CO., WHERE THERE WAS SOME DIFFERENCE IN THE BALANCE OF AMOUNT AS APPEARING IN THE BOOKS OF THE ASSESSEE AND THE SAID PARTY. AS REGARDS THE MILANO BATHROOM FITTINGS PVT. LTD., THE ASSESSEE TENDERED SOME EXPLANATION, THAT HAS BEEN REPRODUCED AT PAGE 10 OF THE IM PUGNED ORDER. NOTWITHSTANDING THAT, THE LD. CIT(A) CONFIRMED THE A DDITION IN RESPECT OF SUCH CREDITOR AMOUNTING TO RS.1,46,252/-. A S REGARDS THE OTHER CREDITOR, THOUGH THE ASSESSEE FURNISHED EXPLANATION , THE LD. CIT(A) CONFIRMED THE ADDITION IN RESPECT OF THAT ACCOUNT AMOUNTING TO RS.2,22,400/-. THE ASSESSEE IS NOT IN APPEA L AGAINST THE CONFIRMATION OF ADDITIONS BY THE LD. CIT(A) IN RESPECT OF BOTH THE PARTIES TO THE EXTENT NOTED ABOVE. EXCEPT FOR THESE TWO P ARTIES, THE AO, IN THE REMAND PROCEEDINGS, DID NOT POINT OUT ANY INCONSISTENCY CALLING FOR THE APPLICABILITY OF SECTION 41(1) OF THE ACT. THIS SECTION, IN TURN, STATES THAT WHERE AN ALLOWANCE OR DEDUCTION HAS BEEN MADE IN THE ASSESSMENT FOR ANY YEAR IN RESPECT OF LOSS OR EXPENDITURE OR TRADING LIABILITY INCURRED BY THE AS SESSEE AND SUBSEQUENTLY THE ASSESSEE OBTAINS SOME BENEFIT IN RESPE CT OF SUCH TRADING LIABILITY ETC. BY WAY OF REMISSION OR CESSATION TH EREOF, ITA NO.921/PUN/2017 BALKISHAN AGARWAL 5 THE AMOUNT OF BENEFIT OBTAINED BY THE ASSESSEE BECOMES INCO ME U/S.41(1) OF THE ACT. THUS, IT IS EVIDENT THAT OBTAINING OF A NY BENEFIT BY THE ASSESSEE IN THE FORM REMISSION OR CESSATION IS SINE QUA NON FOR INVOKING SECTION 41(1) OF THE ACT. IF THE LIABILITY CONTINUES TO EXIST, THE FACTUM OF DELAY IN PAYMENT DOES NOT IPSO FACTO REQUIRES ADDITION U/S.41(1) OF THE ACT. WE ARE CONFRONTED WITH A SITUATION IN WHICH THE ASSESSEE CATEGORICALLY STATED BEFO RE THE AO THAT ALL THE CREDITORS WERE GENUINELY PAYABLE AND THERE WERE SOME TRANSACTIONS IN THEIR ACCOUNTS AS WELL. DURING THE REMAN D PROCEEDINGS, THE AO DID NOT FIND ANYTHING AMISS IN RESPECT OF THESE CONTENTIONS TO THE EXTENT NOTED ABOVE. WE, THEREFORE, HOLD TH AT THE LD. CIT(A) WAS JUSTIFIED IN COMING TO THE CONCLUSION THAT ADDITION WAS NOT CALLED FOR U/S.41(1) OF THE ACT PRO TANTO . 5. IN THE RESULT, THE APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 15 TH SEPTEMBER, 2020. SD/- SD/- (PARTHA SARATHI CHAUDHURY) (R.S.SYAL) JUDICIAL MEMBER VIC E PRESIDENT PUNE; DATED : 15 TH SEPTEMBER, 2020 ITA NO.921/PUN/2017 BALKISHAN AGARWAL 6 / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. THE CIT(A)-5, PUNE 4. 5. THE PR.CIT-4, PUNE , , / DR A, ITAT, PUNE 6. / GUARD FILE / BY ORDER, // TRUE COPY // SENIOR PRIVATE SECRETARY , / ITAT, PUNE DATE 1. DRAFT DICTATED ON 15-09-2020 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 15-09-2020 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS 7. DATE OF UPLOADING ORDER SR.PS 8. FILE SENT TO THE BENCH CLERK SR.PS 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK 10. DATE ON WHICH FILE GOES TO THE A.R. 11. DATE OF DISPATCH OF ORDER. *