SHRI ANIL KUMAR MANAK BOHARA, Jaipur V. INCOME TAX OFFICER, Jaipur

ITA 930/JPR/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 3607 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 4 month(s) 25 day(s)
• Appeal Type: Income Tax (International Taxation) Appeal
• Pronouncement Date: 29-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 04-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J C KULHARI
• Assessee Lawyers: RAM SWAROOP JAJOO
• Section: 133(6); 131

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA-@ ITA. NO. 930/JP/2017 FU/KZKJ.K O'K Z@ ASSESSMENT YEARS : 2012-13 SHRI ANIL KUMAR MANAK BOHRA E-344B, VKI AREA, JAIPUR. CUKE VS. THE ITO, WARD-4(2), JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: ACTPM 0682 M VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDEN T FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI RAM SWAROOP JAJOO (ADV.) JKTLO DH VKSJ LS @ REVENUE BY : SHRI J.C.KULHARI (JCIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 01/05/2018 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT : 03/05/2018 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF LD. CIT(A)-2, JAIPUR DATED 25.09.2017 FOR ASSESSMENT YE AR 2012-13 WHEREIN THE ASSESSEE HAS CHALLENGED THE ACTION OF T HE LD CIT(A) IN CONFIRMING THE ADDITION OF RS. 12,05,182/- U/S 41(1 ) OF THE ACT. 2. BRIEFLY, THE FACTS OF THE CASE ARE THAT THE ASSE SSEE IS ENGAGED IN MANUFACTURING AND TRADING OF CAST IRON CASTING IN T HE NAME AND STYLE OF ITA NO. 930/JP/2017 ANIL KUMAR MANAK BOHRA VS. ITO 2 M/S GOVIND METAL WORKS AND DURING THE YEAR UNDER CO NSIDERATION, THE AO OBSERVED THAT AMOUNT IN RESPECT OF FOUR SUNDRY C REDITORS TOTALLING TO RS. 12,05,182/- WAS OUTSTANDING AND THE ASSESSEE WA S ASKED TO EXPLAIN WHY IN THE CASE OF THE CREDITORS WHO HAVE NOT BEEN REPAID, IT SHOULD NOT BE HELD THAT THERE WAS CESSATION OF LIABILITY. IN R ESPONSE, THE ASSESSEE FURNISHED A LETTER ALONG WITH THE AFFIDAVITS ISSUED BY THE PROPRIETOR OF THE FOUR FIRMS. HOWEVER, THE SAME WERE NOT ACCEPTA BLE TO THE ASSESSING OFFICER AS THESE AFFIDAVITS WERE MADE ON SIMILAR PAPERS AND FORMATS WITH THE SAME HANDWRITING. FURTHER, THE LE TTERS ISSUED U/S 133(6) OF THE I.T. ACT AS ON 24.02.2015 TO THESE PA RTIES WERE RETURNED BY THE POSTAL DEPARTMENT WITH REMARK INCORRECT ADD RESS NO SUCH FIRM ON THIS ADDRESS. IT WAS ACCORDINGLY HELD BY THE A O THAT THESE SUNDRY CREDITORS AMOUNTING TO RS. 12,05,182/- REMAINED UNV ERIFIED AND THE SAME WERE BROUGHT TO TAX U/S 41(1) OF THE I.T. ACT. 3. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) AND SUBMITTED THAT DURING THE FINANC IAL YEAR 2010-11 CERTAIN JOB WORKS WERE DONE BY THESE FOUR FIRMS AND THEY RAISED THE BILLS BUT WORK WAS NOT DONE TO THE SATISFACTION OF THE ASSESSEE. ACCORDINGLY, THE PAYMENT WAS HELD UP AND SUBSEQUENT LY WHEN THE WORK WAS COMPLETED IN ACCORDANCE WITH THE SPECIFICATION REQUIRED, THEIR PAYMENTS WERE RELEASED IN THE FINANCIAL YEAR 2013-1 4 RELEVANT TO ASSESSMENT YEAR 2014-15. THE ASSESSEE ALSO RELIED O N THE AFFIDAVITS FILED EARLIER BEFORE THE ASSESSING OFFICER. FURTHER , THE ASSESSEE FILED THE CONFIRMATIONS OBTAINED FROM THESE FOUR FIRMS BEFORE THE LD. CIT(A) CONFIRMING THE AMOUNT AS RECEIVABLE AT THE YEAR END FROM THE ASSESSEE. HOWEVER, THE SAID CONFIRMATIONS WERE NOT CONSIDERED BY THE LD. CIT(A) ITA NO. 930/JP/2017 ANIL KUMAR MANAK BOHRA VS. ITO 3 AS THESE CONFIRMATIONS WERE NOT FILED BEFORE THE AS SESSING OFFICER AND NO REASON WHATSOEVER WAS GIVEN BY THE ASSESSEE FOR NOT FILING THE SAME BEFORE THE AO. IN THIS REGARD, THE LD. CIT(A) FURTH ER OBSERVED THAT THE ADDRESS ON THESE CONFIRMATIONS IS THE SAME ON WHICH THE LETTER SENT BY THE AO HAS BEEN RETURNED BACK WITH REMARK THAT THE SE ADDRESSES WERE INCORRECT AND NO FIRMS EXISTED ON THESE ADDRESSES. IT WAS ACCORDINGLY HELD BY THE LD. CIT(A) THAT IN THE ABSENCE OF ANY R ELIABLE EVIDENCE FOR THE PAYMENTS OF THESE PARTIES MADE IN THE SUBSEQUE NT YEAR AND THE CHANGING STAND OF THE ASSESSEE WHEREIN IT WAS INITI ALLY STATED THAT PAYMENTS WERE MADE BY CHEQUE AND LATTER ON WHEN DET AILS OF CHEQUE PAYMENTS WERE CALLED FOR, IT WAS STATED THAT THE SA ME HAD BEEN PAID IN CASH WHICH SHOWS THAT THE ASSESSEE COULD NOT SUBSTA NTIATE THE PAYMENTS CLAIMED TO HAVE BEEN MADE. IN VIEW OF THE SAME, THE DISALLOWANCE MADE BY THE AO U/S 41(1) OF THE ACT WA S CONFIRMED. 4. NOW THE ASSESSEE IN THIS APPEAL BEFORE US. THE L D. AR OF THE ASSESSEE HAS SUBMITTED THAT DURING THE FINANCIAL YE AR 2010-11 RELEVANT TO ASSESSMENT YEAR 2011-12, CERTAIN JOB WORKS WERE DONE BY THESE FOUR FIRMS AND THEY RAISED THE BILLS BUT WORK WAS NOT DO NE TO THE SATISFACTION OF THE ASSESSEE. IT WAS SUBMITTED THAT AS A RESULT, THE PAYMENT WAS STOPPED AND SUBSEQUENTLY WHEN THE WORK WAS COMPLETE D IN ACCORDANCE WITH THE SPECIFICATION REQUIRED, THE PAYMENTS WERE RELEASED IN THE FINANCIAL YEAR 2013-14 RELEVANT TO ASSESSMENT YEAR 2014-15. IT WAS FURTHER SUBMITTED THAT THE ADDRESSES OF ALL THE FOU R PARTIES WHICH WERE SUBMITTED BEFORE THE AO ARE COMPLETE ADDRESSES AND ALL THESE FIRMS HAVE PERMANENT ACCOUNT. IT WAS SUBMITTED THAT WHEN THE AO ASKED FOR THE INFORMATION ABOUT THESE PARTIES, COMPLETE ADDRE SS ALONG WITH ITA NO. 930/JP/2017 ANIL KUMAR MANAK BOHRA VS. ITO 4 AFFIDAVITS WERE SUBMITTED DURING THE COURSE OF ASSE SSMENT PROCEEDINGS. IT WAS FURTHER SUBMITTED THAT WHEN THE LETTERS ISSU ED BY THE AO U/S 133(6) WERE RETURNED BACK, THE AO COULD HAVE DEPUTE D HIS INSPECTOR TO CARRY OUT THE NECESSARY VERIFICATION WHICH HAS NOT HAPPENED IN THE INSTANT CASE. FURTHER, THE AO DID NOT ISSUE THE SUM MONS U/S 131 OF THE ACT TO THESE PARTIES AND FURTHER NO OPPORTUNITY WAS GIVEN TO THE ASSESSEE TO CALL ON THESE PARTIES TO CONFIRM THE FA CT THAT THEY HAVE RECEIVED THE PAYMENT IN THE SUBSEQUENT FINANCIAL YE AR 2013-14. IT WAS FURTHER SUBMITTED THAT DURING THE COURSE OF APPELLA TE PROCEEDINGS, BESIDES THE AFFIDAVITS SUBMITTED EARLIER, THE NECES SARY CONFIRMATION FROM THESE FOUR FIRMS WERE SUBMITTED WHICH SHOWS THAT AT THE YEAR END, THE AMOUNT WAS DUE AND PAYABLE AT THE YEAR END AND THER E WAS NO REMISSION OR CESSATION OF LIABILITY, A FACT WHICH I S SUBSEQUENTLY PROVED BY THE FACT THAT PAYMENTS HAVE BEEN MADE IN THE SUB SEQUENT FINANCIAL YEAR. 5. THE LD. DR HAS RELIED UPON THE FINDINGS OF THE L OWER AUTHORITIES. 6. WE HAVE HEARD THE RIVAL CONTENTION AND PERUSED T HE MATERIAL AVAILABLE ON RECORD. THE FACT OF THE CASE ARE THAT AN AMOUNT OF RS. 12,05,182/- WAS SHOWN UNDER THE HEAD SUNDRY CREDIT ORS IN THE NAME OF FOUR FIRMS WHO HAVE CARRIED CERTAIN JOB WORKS AN D RAISED BILLS ON THE ASSESSEE DURING THE FINANCIAL YEAR 2010-11 RELEVANT TO ASSESSMENT YEAR 2011-12. THE INCURRENCE OF THE EXPENDITURE IN THE E ARLIER YEAR IS THEREFORE, NOT IN DISPUTE AND NO SUCH CONTENTION HA S BEEN RAISED BEFORE US. THE ONLY DISPUTE IS WHETHER THERE IS REMISSION OR CESSATION OF SUCH LIABILITY DURING THE YEAR, BY VIRTUE OF WHICH, THE PROVISIONS OF SECTION ITA NO. 930/JP/2017 ANIL KUMAR MANAK BOHRA VS. ITO 5 41(1) OF THE ACT CAN BE INVOKED IN THE YEAR UNDER C ONSIDERATION. DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE THE LD C IT(A), THE ASSESSEE HAS SUBMITTED COPY OF CONFIRMATIONS OBTAINED FROM T HESE FOUR FIRMS CONFIRMING THAT THE AMOUNTS WERE OUTSTANDING AS ON THE FIRST AND LAST DAY OF THE FINANCIAL YEAR 2011-12 RELEVANT TO IMPUN GED ASSESSMENT YEAR. HOWEVER, THE LD. CIT(A) HAS NOT CONSIDERED TH E SAME FOR THE REASONS THAT THEY WERE NOT FILED BEFORE THE ASSESS ING OFFICER. IN SUCH A SCENARIO, IN OUR VIEW, THE LD CIT(A) COULD HAVE CAL LED FOR THE REMAND REPORT FROM THE AO WHO COULD HAVE CARRIED OUT THE N ECESSARY VERIFICATION. FURTHER, CERTAIN APPREHENSION HAS BEE N RAISED REGARDING MODE OF DISCHARGE OF THE OUTSTANDING LIABILITY DURI NG THE SUBSEQUENT FINANCIAL YEAR 2013-14 RELEVANT TO ASSESSMENT YEAR 2014-15 AND ON ACCOUNT OF THE FACT THAT LETTERS ISSUED BY THE AO U NDER SECTION 133(6) HAVE BEEN RETURNED UNSERVED. 7. IN OUR VIEW, FOR THE PURPOSES OF INVOKING THE PR OVISIONS OF SECTION 41(1) OF THE ACT, WHAT IS RELEVANT TO DETERMINE IS WHETHER THERE IS REMISSION OR CESSATION OF LIABILITY IN RESPECT OF E XPENDITURE WHICH HAS BEEN CLAIMED IN THE EARLIER YEAR. THE LIABILITY TOW ARDS THESE FOUR FIRMS PERTAINS TO IMMEDIATELY PRECEDING FINANCIAL YEAR AN D HAS BEEN SHOWN AS PAYABLE AND NOT WRITTEN OFF BY THE ASSESSEE IN HIS BOOKS OF ACCOUNTS AND THE SAME CONTINUE TO EXIST AT THE YEAR END. FUR THER, WE HAVE PURSUED THE CONFIRMATIONS OBTAINED FROM THESE FOUR FIRMS AVAILABLE AT ASSESSEES PAPER BOOK WHEREIN THESE FIRMS HAVE GIVE N THEIR NAME AND ADDRESS, PAN NUMBER AND HAVE CONFIRMED THAT THE AMO UNT IS OUTSTANDING AT THE BEGINNING AND AT THE END OF THE FINANCIAL YEAR 2011- 12 RELEVANT TO IMPUNGED ASSESSMENT YEAR. IN LIGHT O F THE ABOVE, IT ITA NO. 930/JP/2017 ANIL KUMAR MANAK BOHRA VS. ITO 6 PRIMA FACIE APPEARS THAT THERE IS NO REMISSION OR C ESSATION OF LIABILITY WHICH CAN BE BROUGHT TO TAX BY INVOKING SECTION 41( 1) OF THE ACT. HOWEVER, GIVEN THAT THERE IS NO SPECIFIC FINDING RE CORDED BY EITHER THE AO OR THE LD CIT(A), WE ARE SETTING ASIDE THE MATTE R TO THE FILE OF THE LD CIT(A) WITH A DIRECTION TO DETERMINE WHETHER THERE IS REMISSION OR CESSATION OF LIABILITY DURING THE YEAR UNDER CONSID ERATION AND WHERE ON VERIFICATION, IT IS FOUND THAT THERE IS NO REMISSIO N OR CESSATION OF THE LIABILITY, ALLOW THE NECESSARY RELIEF TO THE ASSESS EE. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 03/05/2018. SD/- SD/- FOT; IKY JKO FOE FLAG ;KNO (VIJAY PAL RAO) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 03/05/2018. *SANTOSH VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SHRI ANIL KUMAR MANAK BOHRA, JAIPUR. 2. IZR;FKHZ@ THE RESPONDENT- ITO, WARD- 4(2), JAIPUR. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE { ITA NO. 930/JP/2017} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR