United Paper Products, Kolkata v. I.T.O.,Ward No. 41(2), Kolkata, Kolkata

ITA 1883/KOL/2009 | 2006-2007
Pronouncement Date: 28-01-2011

Appeal Details

RSA Number 188323514 RSA 2009
Assessee PAN AAAFU8098E
Bench Kolkata
Appeal Number ITA 1883/KOL/2009
Duration Of Justice 1 year(s) 2 month(s) 17 day(s)
Appellant United Paper Products, Kolkata
Respondent I.T.O.,Ward No. 41(2), Kolkata, Kolkata
Appeal Type Income Tax Appeal
Pronouncement Date 28-01-2011
Appeal Filed By Assessee
Bench Allotted B
Tribunal Order Date 28-01-2011
Assessment Year 2006-2007
Appeal Filed On 10-11-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : KOLKATA (BEFORE HONBLE SRI B.R.MITTAL J. M. AND HONBLE SRI C.D.RAO A.M) I.T.A. NO. 1883/KOL/2009 A SSESSMENT YEAR -2006-07 UNITED PAPER PRODUCTS VS INCOME TAX OFFICER WARD -41(2) KOLKATA (PAN NO. AAAFU 8098 E) (APPELLANT) (RESPONDENT) APPELLANT BY : SR I N.K.PODDAR. RESPONDENT BY : SMT . ANURADHA MOOKHERJEE. O R D E R PER SHRI B.R.MITTAL J.M. THIS APPEAL OF THE ASSESSEE FOR THE ASSESSMENT Y EAR 2006-07 WAS FIXED BEFORE THE BENCH TO CONSIDER GROUND NO. 6 OF THE CONCISE D GROUNDS OF APPEAL FILED BY THE ASSESSEE (ORIGINALLY IT WAS GROUND NO. 10 OF THE APPEAL). BEFORE WE CONSIDER THIS GROUND FOR OUR CONSIDERATION IT IS RELEVANT TO STATE THAT THIS APP EAL OF THE ASSESSEE ALONG WITH CROSS APPEAL FILED BY THE DEPARTMENT BEING ITA NO. 1737(KOL)/2 009 WERE HEARD ON 03.12.09 AND THE TRIBUNAL PASSED THE ORDER DATED 22.1.10. VIDE SA ID ORDER BOTH THE ASSESSEES AS WELL AS REVENUES APPEALS WERE ALLOWED. SUBSEQUENTLY ASSE SSEE FILED MISC. APPLICATION BEING M.A.NO. 14(KOL)/2010 STATING THAT ONE OF THE GROUNDS OF AP PEAL I.E. GROUND NO. 6 OF THE CONCISED GROUND OF APPEAL (ORIGINAL GROUND NO. 10 OF THE A PPEAL) RELATING TO ADDITION OF RS.6 08 041 WAS NOT ADJUDICATED BY THE TRIBUNAL AND THUS THER E WAS A MISTAKE IN THE SAID ORDER OF THE TRIBUNAL DATED 22.01.2010. TRIBUNAL VIDE IT S ORDER DATED 17.09.2010 ALLOWED APPLICATION OF THE ASSESSEE TO ADJUDICATE GROUND NO. 10 OF THE APPEAL FILED BY THE ASSESSEE (GROUND NO. 6 OF THE CONCISED GROUND OF APPEAL). HENCE THIS APPEAL WAS FIXED BEFORE THE BENCH TO CONSIDER THE SAID CONCISED GROUND NO. 6 OF THE GROUNDS OF APPEAL WHICH IS AS UNDER : 6. THAT THE LEARNED C.I.T(A) ERRED IN UPHOLDING T HE ADDITION OF RS.6 08 041 ARBITRARILY MADE BY THE AO ON THE ALLEGED GROUND TH AT THE OUTSTANDING OLD BALANCES OF SUNDRY CREDITORS AS APPEARING IN THE BOOKS OF AC COUNTS OF THE APPELLANT FIRM WERE NOT VERIFIABLE EVEN WHEN THE CONDITIONS SET O UT IN SECTION 41(1)(A) READ WITH EXPLANATION 1 THERETO HAD NOT BEEN SATISFIED IN THE INSTANT CASE OF THE APPELLANT ASSESSEE FIRM HEREIN. 2 2. RELEVANT FACTS ARE THAT THE ASSESSEE HAS SHOWN OUTSTANDING SUNDRY CREDITORS FOR GOODS AND OTHER FINANCES TO THE TUNE OF RS.2 90 992 AND RS.3 17 049 RESPECTIVELY IN ITS BALANCE SHEET AS ON 31.03.2006. THE AO HAS STATED THAT THE ASSESSEE FIRM WAS ASKED TO FURNISH THE DETAILS OF THEIR CORRESPONDING ADDRE SSES TO VERIFY THE IDENTITY AND CREDITWORTHINESS OF THE CREDITORS DURING THE COURS E OF THE ASSESSMENT PROCEEDINGS BUT THE ASSESSEE FAILED TO FURNISH THE SAME. THEREFO RE THE AO CONSIDERED THE SAID LIABILITIES AGGREGATING RS.6 08 041 BEING UNVERIFIABLE AND ADDE D TO THE INCOME OF THE ASSESSEE. BEING AGGRIEVED ASSESSEE FILED APPEAL BEFORE THE LEARNE D C.I.T(A). 3. ON BEHALF OF THE ASSESSEE IT WAS CONTENDED BEFOR E THE LEARNED C.I.T(A) AS UNDER : THE ASSESSEE HAS SUNDRY CREDITORS IN ITS BOOKS FOR SUPPLY OF GOODS AND FINANCE AGGREGATING RS.6 08 041/- SINCE LAST SEVERAL YEAR S. EXPENDITURE IN RESPECT OF SUPPLIES MADE BY SUCH CREDITORS WAS CLAIMED BY TH E ASSESSEE SEVERAL YEARS BACK. THE ASSESSEE DID NOT PAY THE CLAIMS OF THE CREDIT ORS CONCERNED ON ACCOUNT OF FINANCIAL CONSTRAINTS. THE ASSESSEE ALSO DID NOT WRITE OF SUCH CREDITORS IN ITS BOOKS OF ACCOUNTS. IT IS SUBMITTED THAT SUCH LIABILITY ON ACCOUNT OF SUCH CREDITORS COULD BE TAXED IN THE YEAR IN WHICH SUCH CLAIMS ARE WRITTEN OFF BY THE ASSESSEE. SINCE THE ASSESSEE HAD NOT WRITTEN OFF THE CLAIMS DURING THE ASSES SMENT YEAR IN QUESTION THE AO COULD NOT HAVE TREATED THE SAME SUO MOTU AS CESSA TION OF LIABILITY UNDER SECTION 41(1) OF THE ACT AND THE ADDITION OF RS.6 08 041/- MADE BY THE ASSESSING OFFICER IN THIS REGARD IS ERRONEOUS WITHOUT JURISDICTION AND LIABLE TO BE SET ASIDE. LEARNED C.I.T(A) AFTER CONSIDERING THE ABOVE SUB MISSIONS OF THE ASSESSEE CONFIRMED THE ACTION OF THE AO VIDE PARA 4.3 OF HIS ORDER WHIC H IS AS UNDER : THE AO MADE THE ADDITION ON THE GROUND THAT THE ASSESSEE FAILED TO FURNISH THE DETAILS OF SUNDRY CREDITORS AND THUS BECOME UNVERI FIABLE. THE AR CONTENDED THAT THE AO ERRONEOUSLY ADDED ON THE GROUND OF CESSATION OF LIABILITIES. THIS CONTENTION IS NOT CORRECT. THE AO WHILE MAKING THE ADDITION CLEARLY HELD THAT DUE TO UNVERIFIABLE NATURE THE ADDITION WAS MADE. I FIND NO INFIRMITY IN THE ACTION OF THE AO. ACCORDINGLY I UPHELD THE ADDITION. THE GRO UND OF THE APPELLANT IS DISMISSED. HENCE THE ASSESSEE IS IN FURTHER APPEAL BEFORE THE TRIBUNAL. 4. AT THE TIME OF HEARING THE LEARNED A.R. REFERR ED PAGE 134 OF THE PAPER BOOK AND SUBMITTED THAT AS ON 31.03.01 THE AMOUNT OF RS.2 90 992.19 WAS OUTSTANDING LIABILITY FOR SUPPLY OF GOODS BY R.K.MANUFACTURING CO. OF RS.1 2 5 216 & BY HINDUSTAN GENERAL TRADING CO. OF RS.1 65 776.19. HE FURTHER SUBMITTED THAT THERE WAS OUTSTANDING LIABILITY OF RS.2 81 581.10 FOR OTHER FINANCE IN THE NAME OF R AJPUTANA GENERAL COMMERCIAL. HE FURTHER SUBMITTED THAT THE SUM OF RS.2 625 WAS THE OUTSTA NDING LIABILITY FOR PAYMENT TOWARDS 3 AUDITOR NAMELY M/S AGHOR & ASSOCIATES . THE LE ARNED A.R. SUBMITTED THAT THE SAID LIABILITIES CONTINUED TO EXIST IN THE ASSESSMENT Y EAR UNDER CONSIDERATION. HE FURTHER SUBMITTED THAT THERE WAS ALSO THE LIABILITY ACCRUED IN THE FINANCIAL YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION OF RS.35 468 IN THE NAME OF VISHWAKARMA NIRMAN PVT. LTD. AND REFERRED PAGE 127 OF THE PAPER BOOK. L EARNED A.R. SUBMITTED THAT THE LIABILITY UNDER THE HEAD FOR GOODS OF RS.2 90 992.19 AND UNDER THE HEAD OTHER FINANCE OF RS.3 17 049.10 AGGREGATING TO RS.6 08 041 IS THE LIABILITY OF THE ASSESSEE AND THERE WAS NO CESSATION OF LIABILITY AS PER SECTION 41(1) OF TH E ACT. THE LEARNED A.R. SUBMITTED THAT THE SAID LIABILITY CONTINUED TO EXIST TILL TODAY IN T HE BOOKS OF ACCOUNT OF THE ASSESSEE AND THEREFORE THE ADDITION MADE BY THE AO IS NOT JUS TIFIED. IN REPLY TO A QUERY FROM THE BENCH IN RESPECT OF AN AMOUNT OF RS.35 468 SHOWN AS LIABILITY OF VISHWAKARMA NIRMAN PVT. LTD. UNDER THE HEAD OTHER FINANCE THE LEARNED A .R. SUBMITTED THAT THIS LIABILITY HAD ACCRUED IN THE ASSESSMENT YEAR UNDER CONSIDERATIO N ON ACCOUNT OF A DEMAND MADE BY PURCHASER OF A PROPERTY FOR EARLIER YEARS UNPAID MU NICIPAL TAXES. HOWEVER THE LEARNED A.R. COULD NOT FURNISH ANY DOCUMENT TO SUBSTANTI ATE HIS ABOVE SUBMISSIONS IN REGARD THERETO. FURTHER THE ATTENTION OF THE LEARNED A.R. WAS DRAWN TO THE SUBMISSIONS MADE BEFORE THE LEARNED C.I.T(A) AS MENTIONED HEREINABOV E AND THE ABOVE SUBMISSION IN RESPECT OF LIABILITY OF RS.35 468 IS CONTRARY AND AT VARIA NCE WITH THE SUBMISSIONS MADE BEFORE THE LEARNED C.I.T(A). HE SUBMITTED THAT THE DIS ALLOWANCE AGGREGATING RS.6 08 041 IS NOT JUSTIFIED AS THERE WAS NO CESSATION OF LIABILITY. 5. ON THE OTHER HAND LEARNED D.R. SUPPORTED THE O RDERS OF THE AUTHORITIES BELOW. LEARNED D.R. SUBMITTED THAT THE ASSESSEE COULD NOT ESTABLISH GENUINENESS OF THE LIABILITY BY FURNISHING THE DETAILS FOR VERIFICATION. HE SUBMITTED THAT THE ADDITION MADE BY THE AUTHORITIES BELOW BE CONFIRMED. 6. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS O F THE LEARNED REPRESENTATIVES OF THE PARTIES AND THE ORDERS OF THE AUTHORITIES BELOW . ON PERUSAL OF PAGE 134 OF THE PAPER BOOK WE OBSERVE THAT THE ASSESSEE HAS SHOWN IN IT S BOOKS OF ACCOUNT THE ABOVE LIABILITIES AS ON 31.03.01 AS UNDER : FOR GOODS 1. R.K. MANUFACTURING COMPANY 125 216.00 2. HINDUSTAN GENERAL TRADING COMPANY 165 77 6.10 290 992.10 FOR OTHER FINANCE RAJPUTANA GENERAL COMMERCIAL 281 581.10 4 WE OBSERVE ON PERUSAL OF PAGE 127 OF THE PAPER BOO K THAT THE ASSESSEE HAS SHOWN THE ABOVE AMOUNT AS OUTSTANDING LIABILITY AS ON 31.3 .06 AND ALSO HAS SHOWN THE AMOUNT PAYABLE TO VISHWARKARMA NIRMAN PVT. LTD. RS.35 468. AS MENTIONED HEREINABOVE THE LEARNED A.R. AT THE TIME OF HEARING SUBMITTED THAT THE LIABILITY OF RS.35 468 SHOWN UNDER THE HEAD OTHER FINANCE HAD ACCRUED IN THE ASSESSMENT YEA R UNDER CONSIDERATION BUT LEARNED A.R. COULD NOT FURNISH ANY DOCUMENTARY EVIDENCE TO SUBS TANTIATE THE SAME. FURTHER IT IS ALSO OBSERVED IN REGARD TO THIS LIABILITY THE STAND OF THE ASSESSEE BEFORE US IS AT VARIANCE VIS- -VIS THE SUBMISSIONS MADE BEFORE THE LEARNED C.I. T(A) THAT THE EXPENDITURE IN RESPECT OF SUPPLIES MADE BY SUCH CREDITORS WAS CLAIMED B Y THE ASSESSEE SEVERAL YEARS BACK. HOWEVER IN RESPECT OF REMAINING AMOUNT OF RS.5 7 2 573 (RS.6 08 041 MINUS RS.35 468) WE AGREE WITH THE LEARNED A.R. THAT THE SAID LIABI LITY IS BROUGHT FORWARD FROM EARLIER YEARS . SINCE THIS LIABILITY IS STILL EXISTING IN THE BOOKS OF ACCOUNT OF THE ASSESSEE WE AGREE WITH THE LEARNED A.R. THAT THE SAID LIABILITY CANNOT BE SAID TO EXIST. THEREFORE IT CANNOT BE ADDED IN THE INCOME OF THE ASSESSEE BY APPLYING THE PROVISIONS OF SECTION 41(1) OF THE ACT. IN CASE THE SAID LIABILITY IS TO BE TREATED A S NOT GENUINE IT COULD BE ADDED IN THE YEAR IN WHICH IT WAS INITIALLY CLAIMED IN THE BOOKS OF ACCOUNT AND CANNOT BE ADDED IN THE ASSESSMENT YEAR UNDER CONSIDERATION. HENCE WE D ELETE THE ADDITION OF RS.5 72 573 OUT OF THE ADDITION OF RS.6 08 041 MADE BY THE AUTHORI TIES BELOW. THEREFORE GROUND NO. 6 OF THE CONCISED GROUND OF APPEAL TAKEN BY THE ASSESSEE (GROUND NO. 10 OF THE ORIGINAL GROUND OF APPEAL) IS ALLOWED IN PART. 7. IN VIEW OF THE ABOVE THE ORDER OF THE TRIBUNAL DATED 22.01.2010 IS MODIFIED BY AMENDING PARA 14 OF THE SAID ORDER AS UNDER : IN THE RESULT THE ASSESSEES APPEAL IS ALLOWED I N PART AND WHEREAS REVENUES APPEAL IS ALLOWED. 8. THIS ORDER BE READ IN CONJUNCTION WITH THE EAR LIER ORDER DATED 22.01.2010 READ WITH ORDER DATED 17 TH SEPTEMBER 2010 PASSED IN M.A.NO. 14(KOL)/2010. ORDER PRONOUNCED IN OPEN COURT ON .01. 2011. SD/- SD/- (C.D.RAO) (B.R.MITTAL) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : .01.2011 5 COPY TO :- 1. ITO WARD NO. 41(2) KOLKATA. 2. UNITED PAPER PRODUCTS 43E BLOCK C NEW ALIPORE KOLKATA. 3. C.I.T.(A) KOLKATA. 4. C.I.T. KOLKATA. 5. D.R. ITAT KOLKATA. TRUE COPY BY ORDER BCD DY REGISTRAR I.T.AT. KOLKATA