M/S. DOUCEUR SPORTWEAR MFG. CO PVT LTD.,MUMBAI V. ACIT-15(1)(2), MUMBAI

ITA 6152/MUM/2024

AI Insights

The case involves M/s. Douceur Sportswear Mfg. Co. Pvt. Ltd., the appellant, contesting an order under section 250 of the Income Tax Act, 1961, passed by the Commissioner of Income Tax (Appeals), which upheld an addition made under section 41(1) of the Act concerning sundry creditors. The appellant argued that the same set of creditors was taxed in the previous assessment year, and the liabilities continued to exist due to ongoing business operations and legal claims. The Tribunal found merit in the appellant's request for admission of additional evidence, which was not considered by the lower authorities, and thus restored the matter for a fresh assessment.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 470812 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-03-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Assessment Year: 2013-2014
• Other Referred Cases: Rafig and another vs Munshilal and another, Sangramappa Vs Kanteppa
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRAVIN SALUNKHE
• Assessee Lawyers: SWAPNIL NEWASKAR
• Keywords: Condonation of delay; Set aside; Additional evidence; Period of limitation; Assessment record; Time period of passing order; Liquidation
• Section: 143(3); 142(1); 143(2); 250

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL “H(SMC)” BENCH, MUMBAI BEFORE SHRI AMARJIT SINGH, ACCOUNTANT MEMBER SHRI SANDEEP SINGH KARHAIL, JUDICIAL MEMBER ITA No.6152/MUM/2024 (Assessment Year : 2013–14) M/s. Douceur Sportswear Mfg. Co. Pvt. Ltd., C-96, TTC Industrial Estate, Area MIDC Turbhe, Navi Mumbai – 400705 Maharashtra PAN – AAACD1753G ……………. Appellant v/s Assistant CIT-15(1)(2), Room No.459, Aaykar Bhavan, Mumbai - 400020, Maharashtra ……………. Respondent Assessee by : Smt. Swapnil Newaskar, Adv. Revenue by : Shri Pravin Salunkhe, Sr.DR Date of Hearing – 10/03/2025 Date of Order – 12/03/2025 O R D E R PER SANDEEP SINGH KARHAIL, J.M. The assessee has filed the present appeal against the impugned order dated 02.09.2024, passed under section 250 of the Income Tax Act, 1961 (“the Act”) by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, [“learned CIT(A)”], for the Assessment Year 2013-14. 2. The present appeal is delayed by 23 days. Along with the appeal, the assessee has filed the application seeking condonation of delay submitting as follows: - ITA No.6152 -Mum-2024 (A.Y. 2013-14) 2 “1) The assesse states that the Appellate order dated 02/09/2024 received on 03/09/2024 is passed against the assesse. The manager of the assesse immediately directed Chartered accountant Mr. Uday Sonam to file appeal before ITAT. 2) The assesse states that E Challan for filing appeal before ITAT was taken out on 06/11/2024 by Chartered accountant Mr. Uday Soman, They undertook to do the needful soon after the rush of work of filing returns of income by Mr. Uday Soman was over. My affidavit detailing the aforesaid facts and These may kindly be placed before the Hon'ble Appellate Tribunal for condonation of the short delay in submission of the appeal. 3) The assesse states that soon thereafter I got in touch with Chartered accountant they provided me draft appeal to be filed which is forwarded to advocate for filing. Delay is not willful and beyond control of Assessee hence may please be condoned. 4) The assesse states that liberal approached may please be taken while condoning delay. 5) The assesse states that Hon'ble Supreme Court of India in matter reported in AIR 1981 Supreme Court 1400 in the matter between Rafig and another vs Munshilal and another held that Cost may be imposed and dismissal be set aside because of mistake of advocate to appear before court. 6) The assesse states that Hon'ble Karnataka High Court in matter reported in 2001 AIHC 484 between Sangramappa Vs Kanteppa held that as delay occurred due to negligence of lawyer, delay can be condoned. 7) In above circumstances it is humbly prayed that the delay of 23 days may please be condoned.” 3. Having considered the submissions of the assessee, we are of the considered view that there was sufficient cause for not filing the appeal within the prescribed limitation period. Accordingly, the delay in filing the present appeal is condoned and we proceed to decide the appeal on merits. 4. In this appeal, the assessee has raised the following grounds: - “1. There is no detail list of sundry creditors under consideration of Assessing Officer is given by Ld. Assessing officer for Rs. 1,49,01,483/- out of to Rs. 20,14,33,800.54/- sundry creditors outstanding as on 31/03/2013 to provide evidence if any available with assessee. 2. The Assessing officer has imposed the Double tax under section 41 (1) of Income Tax on same set of Sundry Creditors of Rs. 1,54,94,367/- as on 31/03/2012 and RS. 1,49,01,483/- is outstanding as on 31/03/2013. 3. The Ld. Assessing officer has erred in fact and in law that they have twice imposed tax on same set of sundry debtors one in AY 2012-13 and also in present year AY 2013-14. ITA No.6152 -Mum-2024 (A.Y. 2013-14) 3 4. The LD. CIT Appeal has erred in law and in facts that the figure of Rs. 1,49,01,483/- is not matched with amount of sundry creditors as mentioned in the annual report and trial Balance of the assessee. 5. The LD. CIT Appeal has erred in law and in facts that the Assessing officer has not scrutinized the previous assessment orders passed by the same Assessing officer charging same creditors under section 41. (1) of Income Tax Act. 6. The LD. CIT Appeal has erred in law and in facts that Ld. Assessing officer has charged Income Tax twice on same set of sundry creditors. 7. The Double taxing same transaction in different year is not permissible under law. 8. The LD. CIT Appeal has erred in law and in facts that assessing officer has not. considered material available on record. 9. The LD. CIT Appeal has erred in law and in facts Revenue has not discharge its burden by way of Evidence. 10. That there is no cessation of liability under section 41(1) of Income Tax Act as assesse has admitted to pay all sundry creditors since 2008-09. 11. The assessing officer has failed to brought forward business losses since year 2009-10 while computing the Tax. Liability. The each year business loss to assesee is as under:- A. Business Loss As on 31st March 2010 (-) Rs. 48,71,61,878/- B. Business Loss As on 31st March 2011 (-) Rs.2,58,88,153/- C. Business Loss As on 31st March 2012 (-) Rs.52,32,576/- D. Business Loss As on 31st March 2013 (-) Rs.1,13,39,162/- Total Business loss (-) Rs. 52,96,21,769/- (-) Loss of Rs. Fifty two crores ninety six lacs twenty one thousand seven hundred sixty nine only.) 12. The Assessing officer may please be directed to produce list of sundry creditors of Rs. 1,54,94,367/- as on 31/03/2012 and RS. 1,49,01,483/- is outstanding as on 31/03/2013” 5. We have considered the submissions of both sides and perused the material available on record. The brief facts of the case are that the assessee is engaged in the business of manufacturing specialty garments. For the year under consideration, the assessee filed its return of income on 30.09.2013 declaring a total loss of Rs.1,46,26,640/-. The return filed by the assessee was selected for scrutiny, and statutory notices under section 143(2) and section 142(1) of the Act were issued and served on the assessee. During the assessment proceedings, the assessee was asked to submit details of ageing ITA No.6152 -Mum-2024 (A.Y. 2013-14) 4 of sundry creditors. In response, the assessee submitted that there was a fire at its factory premises in Gujarat, and because of which the entire manufacturing activity/business operation of the assessee was paralyzed. The assessee further submitted that due to fire, the damage was caused to the assets as well as the records of the company, and hence, the business activity has come to a standstill. Since the current liabilities in the account of the assessee as on 31.03.2013 stood at Rs.1,49,01,483/- and the assessee failed to submit proper justification, explanation and reason for non-payment of creditors and also failed to submit copy of bills relating to sundry creditors, the Assessing Officer (“AO”), vide order dated 23.03.2016 passed under section 143(3) of the Act, by invoking the provisions of section 41(1) of the Act added the sundry creditors amounting to Rs.1,49,01,483/- to the total income of the assessee. 6. The learned CIT(A), vide impugned order, also in absence of any details upheld the deletion made by the AO under section 41(1) of the Act. Being aggrieved, the assessee is in appeal before us. 7. During the hearing, the learned Authorized Representative (“learned AR”) sought admission of additional evidence filed vide an application dated 25.11.2024 under Rule 29 of the Income Tax (Appellate Tribunal) Rules, 1963. The learned AR submitted that due to fire at the premises of the assessee on 06.08.2009, all the records in respect of addition made by the AO were destroyed, and therefore, the assessee could not furnish any evidence in respect of its submission. The learned AR further submitted that in the immediately preceding assessment year, i.e., 2012-13, the AO made similar ITA No.6152 -Mum-2024 (A.Y. 2013-14) 5 addition under section 41(1) of the Act in respect of the sundry creditors appearing in its books of account. It was further submitted that the liability arose since assessment year 2008-09, and due to the fact that there was fire at the factory premises of the assessee and because of which its business has completely shut down, the liability continues to stand in its books of account. The learned AR also submitted that certain creditors have also approached the Hon’ble National Company Law Tribunal in liquidation proceedings against the assessee, and have claimed the payment due to them. Accordingly, it was submitted that the entire liability standing in the books of account of the assessee cannot be said to have ceased and thus not taxable under section 41(1) of the Act. The learned AR submitted that the documents now produced by the assessee along with application seeking admission of additional evidence were obtained by it from the Income Tax Department and forms part of the assessment record for the preceding assessment year. Accordingly, the learned AR prayed that the same may be considered for deciding the issue at hand. 8. On the other hand, the learned Departmental Representative (“learned DR”) submitted that no document was furnished by the assessee during the assessment as well as the appellate proceedings, and accordingly, the addition was made under section 41(1) of the Act in respect of sundry creditors appearing in the books of account of the assessee. The learned DR further submitted that the documents now placed on record by the assessee, vide application seeking admission of additional evidence, forms part of the ITA No.6152 -Mum-2024 (A.Y. 2013-14) 6 assessment record for the preceding assessment year, and therefore, were not considered by any of the lower authorities in the year under consideration. 9. Having considered the submissions of both sides and perused the material available on record, we are of the considered view that this is a fit case for admission of additional evidence filed by the assessee. Since it is evident from the record that these evidences were not considered by any of the lower authorities, therefore, we deem it appropriate to restore the matter to the file of the jurisdictional AO for de novo consideration after due examination and verification of the details/evidences furnished before us by the assessee. Accordingly, the impugned order is set aside and the matter is restored to the file of the AO for consideration afresh. We further direct that the assessee shall be at liberty to furnish any other information/document in support of its claim before the AO. We also direct the assessee to fully co- operate in the assessment proceedings and furnish any other document as may be sought by the AO for complete adjudication of the issue. As a result, the grounds raised by the assessee are allowed for statistical purposes. 10. In the result, the appeal by the Assessee is allowed for statistical purposes. Order pronounced in the open Court on 12/03/2025 Sd/- -AMARJIT SINGH ACCOUNTANT MEMBER Sd/- SANDEEP SINGH KARHAIL JUDICIAL MEMBER MUMBAI, DATED: 12/03/2025 prabhat ITA No.6152 -Mum-2024 (A.Y. 2013-14) 7 Copy of the order forwarded to: (1) The Assessee; (2) The Revenue; (3) The PCIT / CIT (Judicial); (4) The DR, ITAT, Mumbai; and (5) Guard file. True Copy By Order Assistant Registrar ITAT, Mumbai "