ARUNDAS M. BIJLANI, V. ITO WD 18(3)(1),

MA 142/MUM/2010

• Counselvise Citation: [2010] 119 COUNSELVISE.COM (IT) 3802 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 22 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 18-06-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2003-2004
• Appeal Filed On: 26-02-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MOHAMMED USMAN
• Assessee Lawyers: R S SABNIS
• Keywords: Onus to prove

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A MUMBAI BEFORE SHRI R.S. SYAL (AM) AND SMT. ASHA VIJAYARAG HAVAN (JM) M.A. NO. 142/MUM/2010 (ARISING OUT OF ITA NO. 4123/MUM/2007 ASSESSMENT YEAR-2003-04 MR. ARJUNDAS M. BIJLANI, SHOP NO. 2, DEVDEEP BLDG., SHITLADEVI TEMPLE ROAD, MAHIM, MUMBAI-400 016 PAN - AAAPB 8123D VS. THE ITO, WARD 18(3)(1), PIRAMAL CHAMBER, PAREL, MUMBAI-400 012 (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI R.S. SABNIS RESPONDENT BY: SHRI MOHAMMED USMAN O R D E R PER SMT. ASHA VIJAYARAGHAVAN (JM) IN THE TRIBUNAL ORDER DT 20.1.2010, THE SECOND GROU ND REGARDING ADDITION U/S 41(1) HAS NOT BEEN DEALT WITH. HENCE T HE ASSESSEE FILED AN M.A AND ACCORDINGLY THE ORDER IS RECALLED FOR DEALI NG WITH THE GROUND REGARDING ADDITION U/S 41(1). AFTER PARA 6 OF THE I TAT ORDER THE FOLLOWING MAY BE ADDED: 7. THE NEXT ISSUE IS AGAINST THE ADDITION BY AO OF RS. 4,93,203/- BEING CREDIT BALANCES STANDING TO THE CREDIT OF 7 PARTIES, AS ASSESSEES INCOME U/S 41(1). ON APPEAL THE LD. CIT( A) CONFIRMED THE ADDITION OBSERVING AS UNDER: I HAVE CAREFULLY CONSIDERED THE REPLY GIVEN BY THE APPELLANT AND PERUSED THE ASSESSMENT ORDER. SINCE THE APPELLA NT HAS NOT BROUGHT ANY EVIDENCE TO SHOW THAT THE LIABILITY OF RS. 4,93,203/- IS STILL EXIST, THEREFORE, THE ASSESSING OFFICER IS RIGHTLY ADDED THIS LIABILITY AS INCOME OF THE ASSES SEE U/S 41(1) OF THE I. T. ACT ON ACCOUNT OF CESSATION,. AS REGA RDS THE M.A. NO. 142/M/10 2 CONTENTION OF THE APPELLANT THAT THERE IS NO RECOVE RY FROM THE DEBTORS ALSO AND CREDIT FOR THE SAME SHOULD BE GIVE N IS NOT ACCEPTABLE AS THE ASSESSEE HAS NOT WRITTEN OFF THIS DEBTS IN HIS BOOKS OF ACCOUNTS AS IRRECOVERABLE, THEREFORE N O DEDUCTION CAN BE ALLOWED TO THE APPELLANT IN THIS REGARD DURI NG THE YEAR. IT IS THE APPELLANT TO FIRST WRITTEN OFF THE BAD DE BTS AND CLAIM DEDUCTION U/S 36(1)(VII) OF THE I. T. ACT THEREAFT ER. IT MAY BE POSSIBLE THAT THE CREDITORS WHO HAVE ADVANCED MONEY TO THE APPELLANT MIGHT HAVE WRITTEN OFF THIS AMOUNTS IN TH EIR BOOKS OF ACCOUNTS AS NO CONFIRMATION HAS BEEN FILED BY THE A PPELLANT FROM THE CREDITORS. IN VIEW OF THIS THE ADDITION M ADE BY THE ASSESSING OFFICER IS JUSTIFIED AND CONFIRMED. 8. AGGRIEVED THE ASSESSEE IS ON APPEAL. THE LD. AR OF THE ASSESSEE SUBMITTED THAT THE A.O. AS WELL AS THE LD. CIT(A) E RRED IN MAKING ADDITION AND CONFIRMING THE SAME IN RESPECT OF RS. 4,93,203/- U/S. 41(1) OF I.T. ACT 1961 ON THE GROUND THAT THE LIABILITIES ARE OUTSTANDING BY FOR A PERIOD MORE THAN 7 / 8 YEARS AND THE SAME PERTAINED TO THE PROPRIETARY CONCERN WHICH IS DISCONTINUED LONG BACK, IN THIS CO NNECTION , THE ASSESSEE BEGS TO SUBMIT AS UNDER DRAWING SUPPORT FR OM VARIOUS JUDICIAL PRONOUNCEMENTS. A) DEDUCTION IN EARLIER ASST YEARS HAS TO BE PROVED, OTHERWISE IT IS NOT OPEN TO REVENUE TO REFER TO SECTION 41(1) FOR CHARGING TAX ON THE RECEIPT BY THE ASSESSEE BY REFUND OR OTH ERWISE OF SUCH EXPENSE. IN SUBSEQUENT YEAR TIRUNELVELI MOTO R BUS SERVICE CO. (P) LTD V CIT (1970) 79 ITR 55 (SC) B) WHERE AN AMOUNT REFUNDED TO THE ASSESSEE IS TREATE D BY THE DEPARTMENT AS INCOME, THE BURDEN TO PROVE THAT SUCH AMOUNT WAS EARLIER ALLOWED AS DEDUCTION IS ON THE DEPARTMENT. THE REFUND CANNOT BE TREATED AS INCOME UNDER S. 10(2A) OF THE I.T. ACT 1922 UNLESS THE BURDEN IS DISCHARGED. STEEL & GENERAL MILLS CO. LTD VS CIT (1 974) 96 ITR 438 (DEL). C) JUST BECAUSE AMOUNTS WERE BEING MERELY CARRIED FORW ARD FOR YEARS AND NO DETAILS WERE SUBMITTED BY THE ASSESSEE , NO ADDITION THEREOF UNDER SEC. 41(1) CAN BE MADE (C.I. T. VS SOUTHERN ROADWAYS LTD (2006) 282 ITR 379 (MADRAS). M.A. NO. 142/M/10 3 D) UNLESS AND UNTIL THE LIABILITY WHICH HAS CEASED OR HAS BEEN REMITTED DURING THE IMPUGNED ASSESSMENT YEAR WAS DE BITED AND CLAIMED IN THE PROFIT AND LOSS A/C AND ALLOWED IN E ARLIER YEARS, IT CANNOT BE TREATED TO BE AN INCOME UNDER SEC. 41(1). (PRISM CEMENT CO. LTD VS. LD. CIT (2006) 101 LTD 103 (MUM ). 9. HEARD BOTH THE PARTIES. AS POINTED OUT BY THE AS SESSEE, FOR ANY AMOUNT TO BE ASSESSED AS INCOME U/S 41(1) THE REVEN UE HAS TO SHOW THAT (A) THE LIABILITY HAS BEEN ALLOWED AS A DEDUCTION I N THE ASSESSMENT OF AN EARLIER YEAR AND (B) THE LIABILITY HAS CEASED AND N OT MERELY THE CREDITORS HAVE NOT DEMANDED THE AMOUNT. WE FIND THAT THE LOWE R AUTHORITIES HAVE NOT EXAMINED THE ISSUE IN THE LIGHT OF THE ABOVE PR INCIPLES. IN THE CIRCUMSTANCES WE DEEM IT FIT TO REMIT THE MATTER TO THE FILE OF THE ASSESSING OFFICER TO REDO THE SAME DENOVO IN ACCORD ANCE WITH LAW AFTER GIVING REASONABLE OPPORTUNITY TO THE ASSESSEE TO PR ESENT THEIR CASE. THE PRESENT PARA 7 MAY BE RENUMBERED AS PARA 10. 10. IN THE RESULT, THE M.A. FILED BY THE ASSESSEE I S TREATED AS ALLOWED ORDER PRONOUNCED ON THIS 18 TH DAY OF JUNE, 2010 SD/- SD/- (R.S. SYAL) (ASH A VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 18 TH JUNE, 2010 RJ COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT-CONCERNED 4. THE CIT(A)-CONCERNED 5. THE DR A BENCH TRUE COPY BY ORDER ASSTT. REGISTRAR, I.T.A.T, MUMBAI M.A. NO. 142/M/10 4 DATE INITIALS 1 DRAFT DICTATED ON: 8.6.2010 SR. PS/PS 2. DRAFT PLACED BEFORE AUTHOR: 9. 6 .2010 ______ SR. PS/PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER: _________ ______ JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER: _________ ______ JM/AM 5. APPROVED DRAFT COMES TO THE SR. PS/PS: _________ ______ SR. PS/PS 6. KEPT FOR PRONOUNCEMENT ON: _________ ______ SR. PS/PS 7. FILE SENT TO THE BENCH CLERK: _________ ______ SR. PS/PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK: _________ ______ 9. DATE OF DISPATCH OF ORDER: _________ ______