M/s. Backbone Projects Ltd., RAJKOT-GUJARAT V. The Additional Commissioner of Income Tax, Range-1, RAJKOT-GUJARAT

ITA 95/RJT/2012

• Counselvise Citation: [2012] 120 COUNSELVISE.COM (IT) 0150 (ITAT-RAJKOT)
• Duration Of Justice: 7 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 01-10-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 09-03-2012
• Result in Favour of: Set Aside
• Court: TRIBUNAL
• Department Lawyers: MK SINGH
• Assessee Lawyers: DM RINDANI
• Keywords: Period of limitation
• Section: 28

Judgement Text

: : IN THE INCOME TAX APPELLATE TRIBUNAL: RAJKOT BENCH: RAJKOT . .. . . . . . . .. . . . . . # # # # BEFORE SHRI T. K. SHARMA JM AND SHRI D. K. SRIVASTA VA AM ITA NO. 95/RJT/2012 / ASSESSMENT YEAR 2007-08 M/S BACKBONE PROJECTS LIMITED V. ADDL. CIT EKTA HOUSE, JALARAM 2 RANGE-1 2, UNIVERSITY ROAD, RAJKOT RAJKOT PAN: AABCB1582E DATE OF HEARING: 01.10.2012 DATE OF PRONOUNCEMENT: 30.10.2012 FOR THE ASSESSEE: D M RINDANI, FCA FOR THE REVENUE: M K SINGH, DR / // / ORDER . .. . . . . . /D. K. SRIVASTAVA: THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A) ON 02-01-2012, ON THE FOLLOWING GROUND: THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-I , RAJKOT HAS ERRED IN UPHOLDING THE ADDITION OF RS.10,21,420/- MADE BY TH E ASSESSING OFFICER U/S 41(1) OF THE I.T. ACT IS UNWARRANTED, UNJUSTIFIED A ND BAD IN LAW. 2. THE ASSESSEE IS A CONTRACTOR ENGAGED IN THE BUSI NESS OF CARRYING OUT CIVIL WORKS AWARDED BY THE GOVERNMENT AGENCIES AND OTHERS . THE ASSESSEE-COMPANY FILED ITS RETURN OF INCOME ON 29-10-2007 RETURNING TOTAL INCOME AT RS.4,09,05,507/-. AFTER PROCESSING, THE RETURN WAS SELECTED FOR SCRUT INY DURING WHICH THE ASSESSING OFFICER PERUSED THE BALANCE SHEET FILED BY THE ASSE SSEE AND NOTICED THAT THE ASSESSEE HAS SHOWN A SUM OF RS.10,21,420/- AS OUTST ANDING IN THE BALANCE SHEET IN THE NAMES OF CREDITORS. HE ALSO NOTICED THAT THE AFORESAID SUM WAS BEING CONSISTENTLY SHOWN AS OUTSTANDING IN THE BALANCE SH EET FOR MORE THAN THREE YEARS. AFTER HEARING THE ASSESSEE, THE ASSESSING OFFICER A DDED THE IMPUGNED SUM U/S 41(1), WITH THE FOLLOWING OBSERVATIONS:- 6. THE SUBMISSION OF THE ASSESSEE WAS CONSIDERED I N VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE. IT IS PERTINENT TO N OTE THAT IN THE CASE OF CREDITORS WHERE PAYMENTS ARE OUTSTANDING FOR EVEN M ORE THAN 3 YEARS AND THE PAYMENTS HAVE NOT BEEN MADE EVEN SUBSEQUENTLY T HE FACT EMERGES THAT THE PAYMENTS ARE OUTSTANDING FOR MORE THAN 5 YEARS, IF CONSIDERED AT THE TIME OF ASSESSMENT. IT IS ALSO TO BE EMPHASIZED THAT THE SE EXPENSES HAVE ALREADY BEEN ALLOWED AS EXPENDITURE OUT OF THE INCOME OF TH E ASSESSEE IN EARLIER YEARS AND HENCE, THE ONUS IS ON THE ASSESSEE TO PROVE THAT IT STILL HAS GENUINE LIABILITIES TOWARDS THESE OUTSTANDING PAYME NTS. FROM THE DETAILS 2 ITA 95/RJT/2012 FILED BY THE ASSESSEE AS REGARDS SUNDRY CREDITORS F OR MORE THAN 3 YEARS, IT IS OBSERVED THAT THIS EVEN INCLUDES LABOUR CONTRACTORS , SECURITY SERVICES, TRANSPORTERS, WATER SUPPLIERS ETC. IN THE CASE OF L ABOUR CONTRACTORS, IT IS UNDISPUTED FACT THAT THEY HAVE TO MAKE PAYMENT TO T HE LABOURERS IMMEDIATELY AND SINCE THEY THEMSELVES ARE MEN OF SMALL MEANS, I T IS NOT POSSIBLE FOR THEM TO MAKE PAYMENTS TO THE LABOURS OUT OF THEIR O WN FUND AND WAIT FOR AN INDEFINITE PERIOD FOR THE PAYMENT FROM CONTRACTORS. SIMILARLY, THE TRANSPORTERS AND WATER SUPPLIERS ARE ALSO SMALL TIME SERVICE PRO VIDERS AND THEY ARE NOT LIKELY TO WAIT FOR AN INDEFINITE PERIOD FOR THE PAY MENT IN RESPECT OF SERVICES PROVIDED. HENCE, THE CIRCUMSTANCES STRONGLY SUGGEST THAT THE ASSESSEE DOES NOT HAVE ANY GENUINE LIABILITY TOWARDS THESE C REDITORS. IT IS PERTINENT TO NOTE THAT IT WAS FOR THE ASSESSEE TO E XPLAIN THE INDIVIDUAL CASES OF CREDITORS AND PROVIDE REASONS AND CIRCUMSTANCES FOR NON-PAYMENT OF THE EXPENSES FOR SUCH A LONG PERIOD FOR EACH CASE OF TH E CREDITORS. HOWEVER, THE EXPLANATION FURNISHED BY THE ASSESSEE ARE GENERAL I N NATURE AND DOES NOT JUSTIFY NON-PAYMENT FOR SUCH A LONG PERIOD IN THE C ASES WHERE THE PARTIES CONCERNED ARE SMALL TIME SERVICE PROVIDERS WHO GENE RALLY WORK ON IMMEDIATE PAYMENT BASIS. FURTHER, THE REASONS SUCH AS LIQUIDI TY CRUNCH AND NON AVAILABILITY OF FUND FOR PAYMENT DOES NOT MAKE A GE NUINE AND VALID REASON AS INDIVIDUAL AMOUNT OUTSTANDING IN ALL THESE CASES AR E VERY SMALL AS COMPARED TO GROSS RECEIPTS OF THE ASSESSEE COMPANY. HENCE, S INCE THE ASSESSEE FAILED TO PROVIDE ANY COGENT AND SATISFACTORY EXPLANATION FOR THE ABOVE CASES OF SUNDRY CREDITORS, IT IS APPARENT IN THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE THAT THE ASSESSEE DOES NOT HAVE ANY GENUIN E LIABILITY TO PAY FOR THESE OUTSTANDING LIABILITIES TOWARDS THE SUNDR Y CREDITORS AMOUNTING TO RS.10,21,420/-. 7. IN THIS REGARD, IT WOULD BE PERTINENT TO REFER T O THE DECISION OF HONBLE CALCUTTA HIGH COURT IN THE CASE OF KESORAM INDUSTRI ES AND COTTON MILLS LTD. VS/- CIT (1992) 196 ITR 845 WHEREIN THE HONBLE HIG H COURT HAS OBSERVED THAT WHETHER THE LIABILITY OF THE ASSESSEE HAS BEEN FULLY DISCHARGED IS WITHIN THE SPECIAL KNOWLEDGE OF THE ASSESSEE AND BURDEN IS ON HIM TO PROVE THAT IN FACT THE LIABILITY SUBSISTS. WHERE THE CONTENT AND SURROUNDING CIRCUMSTANCES DEMONSTRATE THAT THE AMOUNT HAS BEEN REMITTED OR FO RGONE OR THE SUM HAS CEASED TO BE CLAIMABLE AGAINST THE ASSESSEE, IT WOU LD BE A CLEAR CASE OF REMISSION OR CESSATION OF LIABILITY OF THE ASSESSEE . IN VIEW OF THE ABOVE FACTS, IT IS HELD THAT THE LIABILITY OF THE ASSESSEE TO TH E EXTENT OF RS.10,21,420/- HAS CEASED TO EXIST AND THE SAID AMOUNT IS ACCORDINGLY HELD AS INCOME OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION AND ADDED BACK TO HIS TOTAL INCOME, WITHIN THE MEANING OF SECTION 41 (1) OF THE INCOME TAX ACT, 1961. 3. ON APPEAL, THE LD. CIT (A) HAS CONFIRMED THE ACT ION OF THE AO, WITH THE FOLLOWING OBSERVATIONS:- 3 ITA 95/RJT/2012 3.2 I HAVE CAREFULLY CONSIDERED THE OBSERVATIONS OF THE A.O. IN HIS SET ASIDE ASSESSMENT ORDER AND THE SUBMISSIONS OF THE A R OF THE APPELLANT. THE ASSESSING OFFICER OBSERVED THAT IN THE CASE OF CRED ITORS WHERE PAYMENTS ARE OUTSTANDING FOR EVEN MORE THAN 3 YEARS AND THE PAYM ENTS HAVE NOT BEEN MADE EVEN SUBSEQUENTLY THE FACT EMERGES THAT THE PA YMENTS ARE OUTSTANDING FOR MORE THAN 5 YEARS, IF CONSIDERED AT THE TIME OF ASSESSMENT, THESE EXPENSES HAVE ALREADY BEEN ALLOWED AS EXPENDI TURE OUT OF THE INCOME OF THE ASSESSEE IN EARLIER YEARS AND HENCE, THE ONU S IS ON THE ASSESSEE TO PROVE THAT IT STILL HAS GENUINE LIABILITIES TOWARDS THESE OUTSTANDING PAYMENTS. THE EXPLANATION FURNISHED BY THE IN THE CASE OF CRE DITORS WHERE PAYMENTS ARE OUTSTANDING FOR EVEN MORE THAN 3 YEARS AND THE PAYM ENTS HAVE NOT BEEN MADE EVEN SUBSEQUENTLY THE FACT EMERGES THAT THE PA YMENTS ARE OUTSTANDING FOR MORE THAN 5 YEARS, IF CONSIDERED AT THE TIME OF ASSESSMENT. IT IS ALSO TO BE EMPHASIZED THAT THESE EXPENSES HAVE A LREADY BEEN ALLOWED AS EXPENDITURE OUT OF THE INCOME OF THE ASSESSEE IN EA RLIER YEARS AND HENCE, THE ONUS IS ON THE ASSESSEE TO PROVE THAT IT STILL HAS GENUINE LIABILITIES TOWARDS THESE OUTSTANDING PAYMENTS. THE EXPLANATION FURNISH ED BY THE ASSESSEE ARE GENERAL IN NATURE DOES NOT JUSTIFY NON-PAYMENT FOR SUCH A LONG PERIOD IN THE CASES WHERE THE PARTIES CONCERNED ARE SMALL TIME SE RVICE PROVIDERS WHO GENERALLY WORK ON IMMEDIATE PAYMENT BASIS. ACCORDIN GLY, THE ASSESSING OFFICER HELD THAT THE LIABILITY OF THE IN THE CASE OF CREDITORS WHERE PAYMENTS ARE OUTSTANDING FOR EVEN MORE THAN 3 YEARS AND THE PAYMENTS HAVE NOT BEEN MADE EVEN SUBSEQUENTLY THE FACT EMERGES THAT THE PA YMENTS ARE OUTSTANDING FOR MORE THAN 5 YEARS, IF CONSIDERED AT THE TIME OF ASSESSMENT. IT IS ALSO TO BE EMPHASIZED THAT THESE EXPENSES HAVE A LREADY BEEN ALLOWED AS EXPENDITURE OUT OF THE INCOME OF THE ASSESSEE IN EA RLIER YEARS AND HENCE, THE ONUS IS ON THE ASSESSEE TO PROVE THAT IT STILL HAS GENUINE LIABILITIES TOWARDS THESE OUTSTANDING PAYMENTS. TO THE EXTENT OF RS.10, 21,420/- HAS CEASED TO EXIST. I FIND THAT EXAMINATION OF THE FACT REVEALS THAT LIABILITY OF RS.10,21,420/- RELATES TO SMALL TIME CREDITORS I.E. LABOUR CONTRAC TORS, SECURITY SERVICES, TRANSPORTERS, WATER SUPPLIERS ETC. THE APPELLANT HA S NOT EXPLAINED THE REASONS FOR NONPAYMENT TO THESE PETTY CREDITORS FOR SUCH A LONG TIME. THESE PETTY CREDITORS WHO ARE SERVICE PROVIDERS WILL NOT PROVID E THEIR SERVICE INDEFINITELY ON CREDIT. IMMEDIATELY AT THE END OF FINANCIAL YEAR THEY WILL ASK FOR THE PAYMENT. SUCH TYPES OF CREDITORS ARE LIQUIDATED NOR MALLY ON MONTHLY BASIS & NOT MUCH OUTSTANDING REMAINS IN THEIR ACCOUNT. IT I S ONLY THE PAYMENT FOR THE LAST MONTHS I.E. FEB./ MARCH WILL REMAIN OUTSTANDI NG AT THE END OF YEAR. THUS IF SUCH TYPE OF CREDITS REMAINS OUTSTANDING FOR 5 Y EARS OR SO, A REASONABLE INFERENCE CAN BE DRAWN THAT SUCH TYPE OF LIABILITY DOES NOT EXIST AT ALL. OR IT MAY BE A CASE WHERE LIABILITY HAS BEEN LIQUIDATED O UTSIDE THE BOOKS BUT STILL CONTINUES TO EXIST IN THE BOOKS OF ACCOUNTS. IT IS NOT ALSO A CASE WHERE SUCH PETTY CREDITORS WILL EVER BE READY TO REMIT THE LIA BILITY. THE NATURE & TYPE OF 4 ITA 95/RJT/2012 LIABILITY IS CRUCIAL IN DECIDING THE REMISSION OR C ESSATION. HERE KEEPING IN VIEW THE NATURE & TYPE OF LIABILITY IT CAN VERY WELL BE HELD THAT THESE LIABILITIES HAVE CEASED TO EXIST. UNCLAIMED CREDIT LIABILITY MAY BE BARRED BY LIMITATION BUT KEEPING IN VIEW NO POSSIBILITY OF ANY CLAIM IN FUTU RE, SAME CAN BE HELD TO BE REMISSION OR CESSATION OF LIABILITY & HENCE CHARGEA BLE TO TAX U/S.41(1) OF THE ACT (AS HELD IN DISTINCTIVE PROPERTIES & LEASING LT D. VS. ITO (ITAT, DELHI) 1 SOT 460. ACCORDINGLY IT IS HELD THAT AO IS RIGHT IN TAXING THE SAME U/S.41 (1) OF THE ACT. 4. AGGRIEVED BY THE ORDER PASSED BY THE CIT (A), TH E ASSESSEE IS NOW IN APPEAL BEFORE THIS TRIBUNAL. 5. IN SUPPORT OF APPEAL, THE LD. AUTHORIZED REPRESE NTATIVE FOR THE ASSESSEE INVITED OUR ATTENTION TO THE JUDGMENT OF THE HONBL E JURISDICTIONAL HIGH COURT IN CIT V. SILVER COTTON MILLS CO. LTD. 254 ITR 728, 732 (GUJ) IN WHICH THE HONBLE HIGH COURT HAS HELD AS UNDER:- UPON A PERUSAL OF THE PROVISIONS OF SECTION 41(1) OF THE ACT, IT IS VERY CLEAR THAT FOR THE PURPOSE OF ADDING ANY AMOUNT IN A CASE LIKE THE ONE WHICH IS ON HAND, THERE SHOULD BE EITHER REMISSION OF THE LIABI LITY BY THE CONCERNED CREDITOR SO THAT THE LIABILITY WITH REGARD TO MAKIN G PAYMENT COMES TO AN END OR THERE SHOULD BE CESSATION OF THE LIABILITY. IN THE INSTANT CASE, IT IS VERY CLEAR THAT THE CRED ITORS, NAMELY, THE WORKMEN, WHO WERE TO BE PAID BONUS FOR THE EARLIER YEARS HAD NOT EXECUTED ANY WRITING FOR REMISSION OF THE LIABILITY. THERE IS NOTHING ON RECORD TO SHOW THAT THE WORKMEN HAD WAIVED THEIR RIGHT TO GET THE BONUS FRO M THE ASSESSEE. THE LIABILITY OF THE ASSESSEE HAD NOT COME TO AN END OT HERWISE ALSO. THUS, THERE WAS NO CESSATION OF THE LIABILITY. SIMPLY BECAUSE T HE PERIOD OF LIMITATION HAD COME TO AN END FOR THE PURPOSE OF FILING A SUIT FOR RECOVERY OF THE SAID AMOUNT OR FOR TAKING APPROPRIATE ACTION AGAINST THE ASSESS EE, IT CANNOT BE SAID THAT THERE WAS A CESSATION OF LIABILITY. THE LIABILITY S TILL REMAINS, THOUGH IT MAY NOT BE ENFORCEABLE AT LAW ON ACCOUNT OF THE PROVISIONS OF THE LAW OF LIMITATION. IF ONE LOOKS AT THE LEGAL POSITION AS DEPICTED IN T HE JUDGMENTS REFERRED TO HEREINABOVE, IT IS VERY CLEAR THAT IN A CASE WHERE THE REVENUE WANTS TO ADD ANY INCOME UNDER THE PROVISIONS OF SECTION 41(1) OF THE ACT, THERE MUST BE CESSATION OF LIABILITY. THE CASE OF KOHINOOR MILLS CO. LTD [1963] 49 ITR 57 8 (BOM) SHOWS THAT IN A CASE LIKE ONE WHICH IS ON HAND, THE LIABILITY STILL SUBSISTS. THE RATIO LAID DOWN IN THE CASE OF BOMBAY DYEING AND MANUFACTURING CO. LTD. V. STATE OF BOMBAY, AIR 1958 SC 328 ; [1958] SCR 1122, ALSO SUP PORTS THE ASSESSEE. 5 ITA 95/RJT/2012 A SIMILAR VIEW WAS TAKEN IN THE CASE OF J. K. CHEMI CALS LTD. [1966] 62 ITR 34 (BOM) AND AGARPARA CO. LTD. [1986] 158 ITR 78 (CAL) . A SIMILAR VIEW HAS BEEN TAKEN BY THE SUPREME COURT IN THE CASE OF SUGAULI SUGAR WORKS (P) LTD. [1999] 236 ITR 518. IT HAS BEE N OBSERVED BY THE SUPREME COURT THAT UNLESS THERE IS A CESSATION OF L IABILITY, INCOME CANNOT BE ADDED AS PER THE PROVISIONS OF SECTION 41(1) OF THE ACT. THE CASE ON HAND CAN BE VERY WELL COMPARED WITH THE CASE DECIDED BY THE SUPREME COURT IN SUGAULI SUGAR WORKS (P) LTD. [1999] 236 ITR 518. LOOKING TO THE LAW LAID DOWN BY THE SUPREME COURT A ND OTHER HIGH COURTS, IT IS VERY CLEAR THAT UNLESS THERE IS A CESSATION OF L IABILITY OR THERE IS A REMISSION OF LIABILITY BY THE CREDITOR, THE LIABILITY SUBSIST S AND, THEREFORE, EVEN IF THE ENTRIES ARE MADE TO WRITE BACK THE EXPENDITURE, THE AMOUNT SO WRITTEN BACK CANNOT BE ADDED IN THE INCOME OF THE ASSESSEE AS PE R THE PROVISIONS OF SECTION 41 (1) OF THE ACT. 6. RELYING UPON THE AFORESAID OBSERVATIONS, THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE IMPUGNED LIABIL ITIES WERE VERY MUCH IN EXISTENCE IN THE YEAR UNDER APPEAL AND THEREFORE THE AO WAS N OT JUSTIFIED IN TREATING THEM AS CESSATION OR REMISSION OF LIABILITY FOR THE SOLE RE ASON THAT THEY HAVE BEEN OUTSTANDING FOR MORE THAN THREE YEARS . 7. IN REPLY, THE LD. DEPARTMENTAL REPRESENTATIVE SU PPORTED THE ORDERS PASSED BY THE AO AND CIT (A) IN THIS BEHALF. 8. WE HAVE HEARD BOTH THE PARTIES. CAREFUL PERUSAL OF THE JUDGMENT IN CIT V. SILVER COTTON MILLS CO. LTD. (SUPRA) SHOWS THAT THE LIABILITY WAS FOUND SUBSISTING IN THAT CASE AND IT WAS FOR THIS REASON ALONE THAT THE HONBLE HIGH COURT CAME TO THE CONCLUSION THAT THERE WAS NO CESSATION OR REMISSION OF LIABILITY WITHIN THE MEANING OF SECTION 41(1) OF THE INCOME-TAX ACT. WHAT IS CRUCIA L IN THE MATTER UNDER APPEAL IS AS TO WHETHER THE LIABILITY WAS SUBSISTING IN THE YEAR UNDER APPEAL. IF THE LIABILITY WAS SUBSISTING IN THE YEAR UNDER APPEAL, THEY CANNOT TH EN BE TREATED TO HAVE CEASED ONLY FOR THE REASON THAT THEY HAVE BEEN OUTSTANDING FOR MORE THAN THREE YEARS. SO LONG AS THE LIABILITY SUBSISTS, SECTION 41(1) CANNO T BE INVOKED. AN EQUALLY IMPORTANT ISSUE HOWEVER IS AS TO WHAT WOULD HAPPEN IF THE LIA BILITY SHOWN IN THE BALANCE SHEET IS FOUND TO BE FICTITIOUS. ACCORDING TO THE LD. DR, SUCH FICTITIOUS LIABILITY HAS TO BE TREATED AS PROFIT U/S 28 AND CHARGED TO INCOME-TAX ELSE BOTH THE SIDES OF BALANCE SHEET WOULD NOT TALLY. 9. THE SUBSISTENCE OF LIABILITY IS CONDITION PRECED ENT FOR DECIDING AS TO WHETHER THERE IS CESSATION OR REMISSION OF LIABILITY WITHIN THE MEANING OF SECTION 41(1). BOTH THE DEPARTMENTAL AUTHORITIES HAVE TRIED TO MAKE OUT A CASE THAT THE IMPUGNED LIABILITIES HAVE CEASED TO EXIST IN THE YEAR UNDER APPEAL. THE CASE OF THE ASSESSEE IS 6 ITA 95/RJT/2012 THAT THE IMPUGNED LIABILITIES SUBSISTED IN THE YEAR UNDER APPEAL. THERE IS HOWEVER NO EVIDENCE ON RECORD FOR COMING TO THE CONCLUSION EITHER WAY. THE ISSUE AS TO THE SUBSISTENCE OF LIABILITY IN A GIVEN YEAR IS ESSENTI ALLY A QUESTION OF FACT. UNLESS RELEVANT FACTS BACKED BY EVIDENCE ARE BROUGHT ON RE CORD, IT IS NOT POSSIBLE TO ADJUDICATE UPON THE ISSUE. THE FACT AS TO WHETHER T HE IMPUGNED LIABILITIES HAVE CEASED TO EXIST OR WERE SUBSISTING IN THE YEAR UNDE R APPEAL IS WITHIN THE SPECIAL KNOWLEDGE OF THE ASSESSEE. SINCE IT IS THE CASE OF THE ASSESSEE THAT THE IMPUGNED LIABILITIES ACTUALLY SUBSISTED IN THE YEAR UNDER AP PEAL, THE BURDEN IS OBVIOUSLY ON THE ASSESSEE TO ESTABLISH THAT THE IMPUGNED LIABILITIES ACTUALLY SUBSISTED IN THE YEAR UNDER APPEAL. IT IS ONLY WHEN THE ASSESSEE IS IN A POSITION TO PROVE THAT THE IMPUGNED LIABILITIES ACTUALLY SUBSISTED IN THE YEAR UNDER APPEAL THAT THE JUDGMENT OF THE HONBLE HIGH COURT IN CIT V. SILVER COTTON MILL S CO. LTD. WOULD HELP THE ASSESSEE. 9. IN VIEW OF THE FOREGOING, THE ORDER OF THE CIT(A ) IN THIS BEHALF IS SET ASIDE AND THE MATTER IS RESTORED TO HIS FILE WITH THE DIRECTI ON TO GIVE AN OPPORTUNITY TO THE ASSESSEE TO ESTABLISH THAT THE IMPUGNED LIABILITIES ACTUALLY SUBSISTED IN THE YEAR UNDER APPEAL AND THEREAFTER RECORD A CATEGORICAL FI NDING AS TO WHETHER THE IMPUGNED LIABILITIES ACTUALLY SUBSISTED IN THE YEAR UNDER APPEAL AFTER GIVING AN OPPORTUNITY TO THE ASSESSING OFFICER. IF THE CIT(A) COMES TO THE CONCLUSION, ON APPRECIATION OF EVIDENCE PLACED BEFORE HIM, THAT TH E IMPUGNED LIABILITIES ACTUALLY SUBSISTED IN THE YEAR UNDER APPEAL, HE WILL APPLY T HE JUDGMENT OF THE HONBLE HIGH COURT CITED SUPRA AND DECIDE THE ISSUE IN FAVOUR OF THE ASSESSEE. IN CASE HE COMES TO THE CONCLUSION THAT THE IMPUGNED LIABILITIES DID NOT SUBSIST IN THE YEAR UNDER APPEAL OR WERE FICTITIOUS, HE, IN THAT CASE, WILL D ISPOSE OFF THE MATTER ACCORDING TO LAW INCLUDING SECTION 28 OF THE I-T ACT AFTER GIVING RE ASONABLE OPPORTUNITY OF HEARING TO BOTH THE PARTIES. 10. APPEAL FILED BY THE ASSESSEE IS TREATED AS ALLO WED FOR STATISTICAL PURPOSES. ( * 30.10.2012 ( ORDER PRONOUNCED ON 30.10-2012 SD/- SD/- ( . . / T. K. SHARMA) ( .. / D. K. SRIVASTAVA) /JUDICIAL MEMBER / ACCOUNTANT MEMBER /RAJKOT: 30 -10-2012 NVA/- 7 ITA 95/RJT/2012 ( (( ( -. -. -. -. /. /. /. /. / COPY OF ORDER FORWARDED TO:- 1.2 / APPELLANT-M/S. BACKBONE PROJECTS LTD., RAJKOT 2 -42 / RESPONDENT- THE ADDL.. COMMISSIONER OF INCOME-TA X, RANGE-1, RAJKOT 3. 8 / CONCERNED CIT-I, RAJKOT 4. 8- / CIT (A)-I, RAJKOT 5. . -, , / DR, ITAT, RAJKOT 6. / GUARD FILE / BY ORDER TRUE COPY. SENIOR PRIVATE SECRETARY, ITAT , RAJKOT