Roop Saree Kendra, V. ITO Ward-26 (1),

ITA 937/DEL/2008

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 3673 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 3 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-07-2010
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 01-07-2010
• Assessment Year: 2003-2004
• Appeal Filed On: 12-03-2008
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: AMRENDER KUMAR
• Section: 143(2)

Judgement Text

I.T.A. NO.937 /DEL/08 1/5 IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH F NEW DELHI) BEFORE SHRI C.L. SETHI, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER I.T.A. NO.937 /DEL/2008 ASSESSMENT YEAR : 2003-04 M/S ROOP SAREE KENDRA, ITO, 450, IST FLOOR, KATRA CHOBAN, WARD-26 91), CHANDANI CHOWK, DELHI. V. NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY : NONE RESPONDENT BY : SHRI AMRENDER KUMAR, SR. DR. ORDER PER A.K. GARODIA, AM: THIS IS AN ASSESSEE'S APPEAL DIRECTED AGAINST THE O RDER OF LD CIT(A)-XXV, NEW DELHI DATED 19.9.2006 FOR ASSESSMENT YEAR 2003- 04. 2. NONE APPEARED ON BEHALF OF THE ASSESSEE ALTHOUGH ON THE LAST DATE OF HEARING I.E. 30.3.2010, HEARING WAS ADJOURNED AT TH E REQUEST OF THE LD COUNSEL OF THE ASSESSEE AND THE PRESENT DATE OF HEARING WAS NO TED BY HIM AS PER HIS SIGNATURE APPEARING ON HIS ADJOURNMENT APPLICATION ON THAT DATE. WE, THEREFORE, DECIDE THIS APPEAL OF THE ASSESSEE EX PARTE QUA THE ASSESSEE. 3. THE GROUNDS RAISED BY THE ASSESSEE READ AS UNDER :- 1.THAT THE LD CIT(A) HAS COMPLETELY ERRED ON FACTS AND IN LAW BY UPHOLDING THE ADDITION OF RS.20,59,519/- ON ACCOUNT OF CESSATION OF LIABILITY . I.T.A. NO.937/DEL/08 2/5 U/S 41(1) OF THE INCOME TAX ACT, 1961 WHICH IS CONT RARY TO THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. THAT THE LD ASSESSING OFFICER FAILED TO APPRECIA TE THIS FACT THAT NO NOTICE U/S 143(2) OF THE INCOME TAX ACT, 1961 WAS EVER REC EIVED WITHIN THE STIPULATED TIME AS SUCH THE ASSESSMENT IS BARRED B Y LIMITATION AND WITHOUT ANY JURISDICTION. 4. BRIEF FACTS OF THE CASE ARE THAT IT IS NOTED BY THE ASSESSING OFFICER ON PAGE NO.1 OF THE ASSESSMENT ORDER THAT WITH RESPECT TO SOME TRADE CREDITORS, THE ASSESSEE IS SHOWING SOME OUTSTANDING BALANCES FROM YEAR TO YEAR WITHOUT MAKING ANY PAYMENT WHATSOEVER TO THEM. THE ASSESSIN G OFFICER ASKED THE ASSESSEE TO GIVE DETAILS OF SUCH TRADE CREDITORS WH O HAVE NOT BEEN PAID ANY AMOUNT SINCE 31.3.2000 TILL DATE. THE DETAILS GIVE N BY THE ASSESSEE HAS BEEN REPRODUCED BY THE ASSESSING OFFICER ON PAGE NO.2 AN D 3 OF THE ASSESSMENT ORDER AND HE HAS WORKED OUT THE CREDITS OF RS.20,59 ,519/- AND NOTED THAT NO PAYMENT WAS MADE BY THE ASSESSEE TO THESE CREDITORS AFTER 31.3.2000. IT WAS SUBMITTED BY THE ASSESSEE BEFORE THE ASSESSING OFFI CER THAT IN FINANCIAL YEAR 2005-06, THE ASSESSEE HAS WRITTEN BACK VARIOUS SUND RY CREDITORS BUT IT IS NOTED BY THE ASSESSING OFFICER THAT NO SATISFACTORY EVIDE NCE FOR THE SAME HAS BEEN FILED. THE ASSESSING OFFICER CAME TO THE CONCLUSION THAT THERE IS CESSATION OF LIABILITY WITHIN THE MEANING OF SECTION 41(1)(A) OF THE INCOME TAX ACT, 1961 AND HE MADE ADDITION OF THIS AMOUNT. BEING AGGRIEVED, T HE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE LD CIT(A) WHO HAS CONFIRMED THIS ADDITION BY FOLLOWING THE JUDGMENT OF HON'BLE APEX COURT RENDERED IN THE CASE OF TVS SUNDARAM IYANGAR & SONS AS REPORTED IN 222 ITR 324. NOW, TH E ASSESSEE IS IN FURTHER APPEAL BEFORE US. 5. LD DR OF THE REVENUE SUPPORTED THE ORDER OF LD C IT(A). HE ALSO SUBMITTED THAT SINCE LD CIT(A) HAS FOLLOWED THE JUDGMENT OF H ON'BLE APEX COURT RENDERED IN THE CASE OF TVS SUNDRAM (SUPRA), HIS ORDER SHOUL D BE UPHELD. IT WAS POINTED . I.T.A. NO.937/DEL/08 3/5 OUT BY THE BENCH THAT SINCE THE ASSESSEE HAS NOT WR ITTEN BACK THE LIABILITY IN THE PRESENT YEAR IN ITS BOOKS OF ACCOUNTS, THIS ASPECT IS COVERED IN FAVOUR OF THE ASSESSEE BY THE JUDGMENT OF HON'BLE APEX COURT REND ERED IN THE CASE OF CIT V. KESARIA TEA CO. LTD. AS REPORTED IN 254 ITR 434 (SC ) AND ALSO BY ANOTHER JUDGMENT OF HON'BLE APEX COURT RENDERED IN THE CASE OF CIT V. SUGAULI SUGAR WORKS PVT. LTD. AS REPORTED IN 236 ITR 518. IT IS A LSO POINTED OUT BY THE BENCH THAT IN THE CASE OF KESARIA TEA CO. LTD. (SUPRA), H ON'BLE APEX COURT HAS ALSO CONSIDERED AND DISTINGUISHED ITS EARLIER JUDGMENT R ENDERED IN THE CASE OF TVS SUNDRAM (SUPRA). IT WAS SUBMITTED BY THE LD DR OF T HE REVENUE THAT THE MATTER MAY BE RESTORED BACK TO THE FILE OF THE LD CIT(A) F OR A FRESH DECISION AFTER CONSIDERING THE SUBSEQUENT JUDGMENT OF HON'BLE APEX COURT RENDERED IN THE CASE OF CIT V. KESARIA TEA CO. LTD. (SUPRA). 6. WE HAVE HEARD THE SUBMISSIONS OF THE LD DR OF TH E REVENUE AND HAVE GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AN D THE JUDGMENTS OF HON'BLE APEX COURT NOTED ABOVE. WE FIND THAT LD CIT(A) HAS FOLLOWED THE JUDGMENT OF HON'BLE APEX COURT RENDERED IN THE CASE OF CIT V. T VS SUNDRAM (SUPRA). BEFORE THAT, WE WOULD LIKE TO POINT OUT THAT THIS IS UNDIS PUTED FACT OF THE PRESENT CASE THAT THE LIABILITY IN QUESTION IS APPEARING IN THE BALAN CE SHEET OF THE ASSESSEE AND THE SAME WAS NOT WRITTEN BACK BY THE ASSESSEE IN THE PR ESENT YEAR. IN THE LIGHT OF THIS FACT, NOW WE EXAMINE VARIOUS JUDGMENTS OF HON'BLE APEX COURT CITED ABOVE AND ALSO THE PROVISIONS OF SECTION 41(1) . FIRST, WE CO NSIDER THE JUDGMENT OF HON'BLE APEX COURT RENDERED IN THE CASE OF CIT V. TVS SUNDA RAM (SUPRA). THE FACTS OF THIS CASE ARE THAT THE ASSESSEE HAS TRANSFERRED AN AMOUNT OF RS.17381/- TO P&L A/C OF THE COMPANY DURING ACCOUNTING YEAR ENDED ON 31.3.1982 RELEVANT TO ASSESSMENT YEAR 1982-83 AND AN AMOUNT OF RS.38,975 /- DURING ACCOUNTING YEAR ENDED ON 31.3.1983 RELEVANT TO ASSESSMENT YEAR 198 3-84 BUT THESE AMOUNTS WERE NOT INCLUDED IN THE TOTAL INCOME OF THE ASSESS EE IN THE RESPECTIVE YEARS. SINCE IN THE PRESENT CASE, THE ASSESSEE HAS NOT WRI TTEN BACK SUNDRY CREDITORS, THE FACTS IN THE PRESENT CASE ARE DIFFERENT AND HEN CE THIS JUDGMENT OF HON'BLE APEX COURT IS NOT RELEVANT IN THE PRESENT CASE. WHE N ASSESSEE WRITE BACK THE . I.T.A. NO.937/DEL/08 4/5 LIABILITY AND CREDIT IT TO ITS P&L A/C, EXPLANATION -1 TO SECTION 41(1) INSERTED BY FINANCE NO.2 ACT 1996 W.E.F. 1.4.1997 IS APPLICABLE . AS PER THIS EXPLANATION, WRITING OFF LIABILITY IN ACCOUNTS BY A UNILATERAL A CT OF THE ASSESSEE WILL ALSO BE CONSIDERED AS REMISSION OR CESSATION OF LIABILITY. BUT IN THE PRESENT CASE EVEN THIS EXPLANATION-1 OF SECTION 41 IS ALSO NOT APPLICABLE BECAUSE THE ASSESSEE HAS NOT WRITTEN BACK THE LIABILITY IN ITS ACCOUNTS. 7. NOW, WE EXAMINE TWO OTHER JUDGMENTS OF HON'BLE A PEX COURT RENDERED IN THE CASE KESARIA TEA CO. LTD. (SUPRA) AND IN THE CA SE OF SUGAULI SUGAR WORKS PVT. LTD. (SUPRA). IN THE CASE OF KESARIA TEA CO. ( SUPRA), HON'BLE APEX COURT HAS ALSO CONSIDERED AND DISTINGUISHED ITS OWN EARLIER J UDGMENT RENDERED IN THE CASE OF TVS SUNDARAM (SUPRA). IN THE CASE OF KESARIA TEA CO. LTD. (SUPRA), THE FACTS ARE THAT THE ASSESSEE HAS WRITTEN BACK IN ITS ACCOU NT A SUM OF RS.14.65 LAKHS REPRESENTING THE PROVISIONS MADE DURING EARLIER YEA R TOWARDS PURCHASE TAX LIABILITY. IT IS ALSO NOTED THAT THE LIABILITY TO PAY PURCHASE TAX WAS IN DISPUTE AND HENCE PROVISION WAS MADE EARLIER WHICH WAS WRITTEN BACK SUBSEQUENTLY. THE ASSESSMENT YEAR INVOLVED IN THAT CASE WAS 1985-86. UNDER THESE FACTS, EVEN WHEN THE ASSESSEE HAS WRITTEN BACK THE LIABILITY IN ITS BOOKS OF ACCOUNTS, IT WAS HELD BY HON'BLE APEX COURT THAT SECTION 41(1) CANNO T APPLY BECAUSE IT CANNOT BE SAID THAT THE LIABILITY HAS CEASED FINALLY WITHOUT THE POSSIBILITY OF REVIVING IT. ALTHOUGH, AFTER THE AMENDMENT IN SECTION 41(1)BY WA Y OF INSERTION OF EXPLANATION-1 THEREIN W.E.F. 1.4.1997, THE POSITION IS DIFFERENT IN THOSE CASES WHERE THE ASSESSEE HAS WRITTEN BACK THE LIABILITY I N ITS BOOKS OF ACCOUNTS BUT WHERE THE ASSESSEE HAS NOT WRITTEN BACK THE LIABILI TY IN ITS BOOKS OF ACCOUNTS, SECTION 41(1) CANNOT BE APPLIED BECAUSE IT CANNOT B E SAID THAT LIABILITY HAS CEASED TO EXIST FINALLY WITHOUT ANY POSSIBILITY OF REVIVING IT. HENCE, BY RESPECTFULLY FOLLOWING THE JUDGMENT OF HON'BLE APEX COURT RENDER ED IN THE CASE OF KESARIA TEA CO LTD. (SUPRA), WE DELETE THE ADDITION MADE BY THE ASSESSING OFFICER IN THE PRESENT CASE BY INVOKING OF PROVISIONS OF SECTION 4 1(1) OF THE ACT. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. . I.T.A. NO.937/DEL/08 5/5 9. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE O F HEARING I.E. IST JULY, 2010. SD/- SD/- (C.L. SETHI) (A.K. G ARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER DT. 01.7.2010. HMS COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DELHI. TRUE COPY. BY ORDER (ITAT, NEW DELHI).