Deputy Commissioner of Income Tax Circle-4(1)(1), Bangalore V. M/s Karnataka Agro Industries Corporation Limited , Bangalore

MA 263/BANG/2018

• Counselvise Citation: [2018] 124 COUNSELVISE.COM (IT) 7141 (ITAT-BANGALORE)
• Duration Of Justice: 1 month(s) 28 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 28-09-2018
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 31-07-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SIDDAPP A JI R N
• Assessee Lawyers: K Y NINGOJI RAO

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH A BEFORE S HRI SUNIL KUMAR YADAV , JUDICIAL MEMBER AND SHRI JASON P BOAZ , ACCOUNTANT MEMBER M.P. NO.263/BANG/2018 (IN I.T . A. NO. 1223 /BANG/20 17 ) (ASSESSMENT YEAR : 20 12 - 13 ) DY. COMMISSIONER OF INCOME TAX, CIRCLE 4(1)(1), BANGALORE. . APPELLANT. VS. M/S. KARNATAKA AGRO INDUSTRIES CORPN. LTD., NO.24, BELLARY ROAD , HEBBAL, BANGALORE - 560 024 . .. RESPONDENT . APPELLANT BY : SHRI SIDDAPPAJI R N, ADDL. CIT (D.R) R E SPONDENT BY : SHRI K.Y. NINGOJI RAO, C.A. DATE OF H EARING : 1 4 . 9 .2018. DATE OF P RONOUNCEMENT : 28.09 .201 8 . O R D E R PER SHRI JASON P BOAZ, A .M . : THIS MISCELLANEOUS PETITION (M.P.) BY REVENUE IS RAISED IN RESPECT OF TRIBUNAL S ORDER IN ITA NO.1223/BANG/2017 DT.31.1.2018 FOR ASSESSMENT YEAR 2012 - 13. 2. IN THI S PETITION, REVENUE CONTE N DS THAT IN THE IMPUGNED ORDER THE TRIBUNAL HAS FAILED TO ADJUDICATE GROUNDS OF APPEAL NO.4 & 5 AND HAS 2 M P NO.263/BANG/2018 (IN IT A NO. 1223 /BANG/20 17 ) ERRONEOUSLY MENTIONED GROUNDS 2 TO 5 AS HAVING BEEN DISPOSED OFF, AT PARA 6.2.3 THEREOF, WHEN ACTUALLY ONLY GROUNDS 2 & 3 HAVE BEEN ADJUDICATED. 3. WE HAVE HEARD BOTH THE PARTIES AND HAVE CAREFULLY PERUSED THE IMPUGNED ORDER OF THE TRIBUNAL IN ITA NO.1223/BANG/2017 DT.31.1.2018 FOR ASSESSMENT YEAR 2012 - 13. AS CONTENDED BY THE LD. DEPARTMENTAL REPRESENTATIVE OF REVENUE, WE F IND THAT A MISTAKE HAS CREPT INTO THE TRIBUNAL ORDER, WHEREIN WHILE ADJUDICATING GROUND NOS.2 AND 3 AT PARA 6.2.3 THEREOF, IT HAS WRONGLY BEEN MENTIONED THAT GROUNDS 2 TO 5 OF REVENUE HAVE BEEN DISMISSED, WHEREAS IT SHOULD BE RECTIFIED TO CORRECTLY READ AS UNDER : 6.2.3 IN THE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE, AS EMERGE FROM THE IMPUGNED ORDER OF THE LEARNED CIT (APPEALS) (EXTRACTED SUPRA) AND IN THE LIGHT OF THE DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. SHRI VARDH MAN OVERSEAS LTD. (343 ITR 408), WHEREIN IT WAS HELD THAT LIABILITIES APPEARING IN THE BALANCE SHEET IS TANTAMOUNT TO ACKNOWLEDGEMENT OF THE FACT THAT THERE WAS NEITHER CESSATION OF REMISSION OF LIABILITY, WE ARE OF THE CONSIDERED OPINION THAT THE PROVISIO NS OF SEC.41(1) OF THE ACT WOULD NOT BE ATTRACTED IN THE CASE ON HAND IN RESPECT TO THE ISSUE OF TRADE PAYABLES AND THEREFORE UPHOLD THE ORDER OF THE LEARNED CIT (APPEALS) DELETING THE ADDITION MADE BY THE ASSESSING OFFICER UNDER SECTION 41(1) OF THE ACT. CO NSEQUENTLY, GROUNDS 2 & 3 OF REVENUE (SUPRA) APPEAL ARE DISMISSED. 3 M P NO.263/BANG/2018 (IN IT A NO. 1223 /BANG/20 17 ) 3. FROM THE DISCUSSION IN PARA 3 OF THE ORDER (SUPRA), IT IS CLEAR THAT THE MISTA K E THAT CREPT INTO THE TRIBUNAL ORDER FOR ASSESSMENT YEAR 2012 - 13, IN THE CASE ON HAND, WAS THAT GROUNDS 4 & 5, HAVE NOT BEEN ADJUDICATED BY THE TRIBUNAL. THESE GROUNDS ARE EXTRACTED HEREUNDER : - 4. ON FACTS OF THE CASE, WHETHER THE LEARNED CIT (APPEALS) IS RIGHT IN ALLOWING THE APPEAL OF THE ASSESSEE ON THE ISSUE OF ADVANCES RECEIVED AGAINST SA LES / SERVICES AS DISALLOWED UNDER SECTION 41(1) WITHOUT ANY VALID REASONING. THE LEARNED CIT (APPEALS) HAS HELD THAT THESE PAYMENTS ARE LIVE CREDITS, WHEREAS THE BUSINESS OPERATIONS OF THE ASSESSEE COMPANY WAS ORDERED TO CLOSE ON 3.9.2003 BY THE STATE GO VT. OF KARNATAKA. 5. ON FACTS OF THE CASE, THE LEARNED CIT (APPEALS) OUGHT TO HAVE APPRECIATED THAT THE ASSESSEE IS NOT DOING ANY BUSINESS SINCE 3.9.2003. HENCE, THE LIABILITY SHOWN IN THE BALANCE SHEET CANNOT BE ADVANCES RECEIVED AGAINST SALES / SERVI CES. HENCE, LIABLE TO BE ADDED UNDER SECTION 41(1) OF THE ACT. 4. IN THE ABOVE CIRCUMSTANCES, WE RECALL THE IMPUGNED ORDER OF THE TRIBUNAL IN THE CASE ON HAND IN ITA NO.1223/BANG/2017 DT.31.1.2018 FOR ASSESSMENT YEAR 2012 - 13 FOR THE LIMITED EXTEN T OF ADJUDICATION OF GROUNDS 4 & 5 (SUPRA) RAISED BEFORE THE TRIBUNAL AS THEY WERE NOT ADJUDICATED THEREIN. 5. THE REGISTRY IS DIRECTED TO REFIX THE HEARING OF THE CASE, IN DUE COURSE, BY ISSUE OF NOTICE TO BOTH PARTIES. 4 M P NO.263/BANG/2018 (IN IT A NO. 1223 /BANG/20 17 ) 6. IN THE RESULT, REVENUE S MISCELLANEOUS PETITION FOR ASSESSMENT YEAR 2012 - 13 IS ALLOWED AS INDICATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON THE 28.09 . 201 8 . ( SUNIL KUMAR YADAV ) ACCO UNTANT MEMBER ( JASON P BOAZ ) JUDICIAL MEMBER BANGALORE, DT. 28.09 . 2018 *REDDY GP COPY TO : 1 APPELLANT 4 CIT(A) 2 RESPONDENT 5 DR. ITAT, BANGALORE 3 CIT 6 GUARD FILE SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL BANGALORE.