The ITO, Ward-5(3), Surat V. M/s. Patel Automobile, Surat

ITA 997/AHD/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 73166 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 11 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-03-2014
• Appeal Filed By: Department
• Bench Allotted: B
• Next Hearing Date: 28-03-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 05-04-2011
• Court: TRIBUNAL
• Department Lawyers: P L KUREEL
• Keywords: Period of limitation

Judgement Text

, , , , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD . .. . . . . . , , , , ! '# ! '# ! '# ! '#, , , , $ $ $ $ BEFORE SHRI N. S. SAINI, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER ITA NO. 997/AHD/2011 ASSESSMENT YEAR 2007-08 INCOME TAX OFFICER WARD-5(3) SURAT. VS M/S PATEL AUTOMOBILE GOPAL NAGAR SHOPPING CENTRE, KAMREJ CHAR RASTA, TALUKA KAMREJ, SURAT. PAN: AADFP1020E (APPELLANT) (RESPONDENT) REVENUE BY : SH. P.L. KUREEL, SR. D.R. ASSESSEE(S) BY : NONE !% & #'/ // / DATE OF HEARING : 28/03/2014 )*+ & #' / DATE OF PRONOUNCEMENT : 31/03/2014 , , , ,/ // / O R D E R PER SHRI N.S. SAINI, ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY REVENUE AGAINST THE OR DER OF CIT(A) DATED 22.10.2010. 2. THE SOLE GROUND OF APPEAL TAKEN BY THE REVENUE IN THIS APPEAL IS THAT THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS 12,85,675/- ON ACCOUNT OF BOGUS CREDITORS. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS ING OFFICER OBSERVED THAT FOR THE OUTSTANDING CREDITORS RELATIN G TO EARLIER YEARS THE ASSESSEE COULD NOT PROVIDE DETAILS OF PAYMENTS MADE TO THEM IN SUBSEQUENT YEARS AND CONCLUDED THAT THE CREDITOR S WERE OLD AND ITA NO 997/AHD/2011 M/S PATEL AUTOMOBILE. VS. ITO, WD-5(3), SURAT FOR A.Y. 2007-08 - 2 - HAD REMAINED OUTSTANDING IN SUBSEQUENT YEARS AND TH EREFORE, THE LIABILITIES HAVE CEASED TO EXIST AND MADE ADDITIONS U/S 41(1) OF THE ACT OF RS 12,85,675/-. 4. ON APPEAL, THE LD. CIT(A) DELETED THE ADDITION BY OBSERVING AS UNDER: I HAVE GONE THROUGH THE FINDINGS OF THE A.O. AND SUBMISSIONS OF THE APPELLANT. THE APPELLANT HAS BE EN FILING ITS RETURN OF INCOME, EXERCISING HIS OPTION U/S. 44 AF OF THE ACT AND DOES NOT MAINTAIN ANY BOOKS OF ACCOUNT. TH E RETURNS HAVE BEEN CONSISTENTLY FILED EXERCISING THI S OPTION SINCE A.Y. 2004-05 AND UPTO A.Y. 2009-10. THE FACT THAT RETURN OF INCOME HAD BEEN FILED U/S. 44AF OF THE AC T WAS BROUGHT TO THE NOTICE OF THE A.O. VIDE ASSESSEES L ETTER DATED 6.11.2009. THOUGH THE ASSESSEE HAD NOT MENTIONED SPECIFICALLY IN THE RETURN OF INCOME FOR THE YEAR U NDER CONSIDERATION, THAT INCOME WAS BEING COMPUTED U/S. 44AF OF THE ACT, THIS FACT WAS BROUGHT TO THE NOTICE OF THE A.O. DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THE TURNOVER OF THE APPELLANT IS LESS THAN RS 40,00,000/- AND HE IS A R ETAILER. THE REASON FOR NOT HAVING MENTIONED HIS OPTION IN T HE RETURN OF INCOME HAS BEEN EXPLAINED BY THE APPELLANT. IT IS UNLIKELY THAT THE APPELLANT DOES NOT MAINTAIN BOOKS FOR A.Y. 2004-05, A.Y. 2005-06 AND A.Y. 2006-07, MAINTAINS IT FOR A.Y . 2007- 08 AND AGAIN DOES NOT MAINTAIN BOOKS FOR A.Y. 2008- 09, AND A.Y. 2009-10. FURTHER THE TURNOVER OF THE APPELLANT HAS BEEN ACCE PTED BY THE A.O. LOOKING TO THE TOTALITY OF THE CIRCUMSTAN CES, I AM INCLINED TO ACCEPT THAT INCOME FOR THIS YEAR WAS DE CLARED U/S 44AF OF THE ACT. 5. AT THE TIME OF HEARING, THE LD. DR VERY FAIRLY CONCEDED THAT THE ISSUE WAS NOW COVERED AGAINST THE REVENUE AND IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE HONBLE GUJA RAT HIGH COURT IN THE CASE OF CIT VS. NITIN S. GARG (2012) 22 TAXMANN .COM 59 (GUJ.). 6. NOTICE WAS SENT TO THE RESPONDENT ASSESSEE AND NONE APPEARED WHEN THE CASE OF CALLED FOR HEARING AND NE ITHER ANY ADJOURNMENT APPLICATION WAS FILED. THE BENCH WAS O F THE VIEW THAT ITA NO 997/AHD/2011 M/S PATEL AUTOMOBILE. VS. ITO, WD-5(3), SURAT FOR A.Y. 2007-08 - 3 - THE APPEAL COULD BE DISPOSED OFF WITHOUT THE ASSIST ANCE OF THE LD. AR. HENCE, THE SAME WAS HEARD QUA THE RESPONDENT A SSESSEE AND DISPOSED OFF ON THE BASIS OF MATERIALS AVAILABLE ON RECORD. 7. WE FIND THAT THE HONBLE GUJARAT HIGH COURT IN THE CASE OF NITIN S GARG (SUPRA) HAS HELD AS UNDER: 15. IN THE CASE BEFORE US, IT IS NOT BEEN ESTABLISHED THAT THE ASSESSEE HAS WRITTEN OFF THE OUTSTANDING LIABILITIES IN THE BOOKS OF ACCOUNT. THE APPELLATE TRIBUNAL IS JUSTIFIED IN TAKING THE VIEW THAT AS AS SESSEE HAD CONTINUED TO SHOW THE ADMITTED AMOUNTS AS LIABILITIES IN ITS BALANCE SHEET THE SAME CANNOT BE TREATED AS ASSESSMENT OF LIABILITIES. MERELY BECAUS E THE LIABILITIES ARE OUTSTANDING FOR LAST MANY YEARS, IT CANNOT BE INFERRED THAT THE SAID LIABILITIES HAVE SEIZED T O EXIST. THE APPELLATE TRIBUNAL HAS RIGHTLY OBSERVED THAT TH E ASSESSING OFFICER SHALL HAVE TO PROVE THAT THE ASSE SSEE HAS OBTAINED THE BENEFITS IN RESPECT OF SUCH TRADIN G LIABILITIES BY WAY OF REMISSION OR CESSATION THEREO F WHICH IS NOT THE CASE BEFORE US. MERELY BECAUSE THE ASSES SEE OBTAINED BENEFIT OF REDUCTION IN THE EARLIER YEARS AND BALANCE IS CARRIED FORWARD IN THE SUBSEQUENT YEAR, IT WOULD NOT PROVE THAT THE TRADING LIABILITIES OF THE ASSESSEE HAVE BECOME NON EXISTENT. 16. MOREOVER, AS POINTED OUT IN THE CASE OF SUGAULI SUGAR WORKS (P.) LTD. (SUPRA), VIDE THE LAST FIVE L INES OF THE PARAGRAPH-6 OF THE JUDGEMENT, THE QUESTION WHETHER THE LIABILITY IS ACTUALLY BARRED BY LIMITAT ION IS NOT A MATTER WHICH CAN BE DECIDED BY CONSIDERING TH E ASSESSEE'S CASE ALONE BUT HAS TO BE DECIDED ONLY IF THE CREDITOR IS BEFORE THE CONCERNED AUTHORITY. IN THE ABSENCE OF THE CREDITOR, IT IS NOT POSSIBLE FOR THE AUTHORITY TO COME TO A CONCLUSION THAT THE DEBT IS BARRED AND HAS BECOME UNENFORCEABLE. THERE MAY BE CIRCUMSTANCES WHICH MAY ENABLE THE CREDITOR TO COME WITH A PROCEEDING FOR ENFORCEMENT OF THE DEBT EVEN AFTER EXPIRY OF THE NORMAL PERIOD OF LIMITATION AS PROVIDED IN THE LIMITATION ACT. 17. WE, THUS, FIND THAT THE VIEWS TAKEN BY THE TRIBUNAL IS ABSOLUTELY CONSISTENT WITH THE ONES TAK EN BY ITA NO 997/AHD/2011 M/S PATEL AUTOMOBILE. VS. ITO, WD-5(3), SURAT FOR A.Y. 2007-08 - 4 - THE SUPREME COURT IN THE CASE OF SUGAULI SUGAR WORK S (P.) LTD. (SUPRA) AND OTHER DECISIONS WHICH HAVE BE EN REFERRED TO IN THE JUDGMENT. WE DO NOT FIND ANY ERR OR MUCH LESS AN ERROR OF LAW IN THE JUDGMENT AND ORDER OF THE TRIBUNAL. THEREFORE, THIS GROUND OF APPEAL OF THE REVENUE IS DISMISSED. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE COURT ON MONDAY, THE 31 ST OF MARCH, 2014 AT AHMEDABAD. SD/- SD/- (KUL BHARAT) JUDICIAL MEMBER ( N.S. SAINI) ACCOUNTANT MEMBER AHMEDABAD; DATED 31/03/2014 GHANSHYAM MAURYA, SR. P.S.