Sh. Sunil Kumar Bhatia, Delhi v. ACIT, New Delhi

ITA 2020/DEL/2013 | 2007-2008
Pronouncement Date: 11-10-2013 | Result: Allowed

Appeal Details

RSA Number 202020114 RSA 2013
Assessee PAN AAFPB5064J
Bench Delhi
Appeal Number ITA 2020/DEL/2013
Duration Of Justice 6 month(s) 5 day(s)
Appellant Sh. Sunil Kumar Bhatia, Delhi
Respondent ACIT, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 11-10-2013
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted G
Tribunal Order Date 11-10-2013
Assessment Year 2007-2008
Appeal Filed On 05-04-2013
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL DELHI DELHI DELHI DELHI BENCH BENCH BENCH BENCH G GG G : NEW DELHI : NEW DELHI : NEW DELHI : NEW DELHI BEFORE SHRI G. BEFORE SHRI G. BEFORE SHRI G. BEFORE SHRI G.D.AGRAWAL D.AGRAWAL D.AGRAWAL D.AGRAWAL VICE PRESIDENT AND VICE PRESIDENT AND VICE PRESIDENT AND VICE PRESIDENT AND SHRI SHRI SHRI SHRI I.C.SUDHIR I.C.SUDHIR I.C.SUDHIR I.C.SUDHIR JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ITA NO. ITA NO. ITA NO. ITA NO.2020/DEL/2013 2020/DEL/2013 2020/DEL/2013 2020/DEL/2013 ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR : : : : 2007 2007 2007 2007- -- -08 0808 08 SHRI SUNIL KUMAR BHATIA SHRI SUNIL KUMAR BHATIA SHRI SUNIL KUMAR BHATIA SHRI SUNIL KUMAR BHATIA F FF F- -- -50 KOLHAPUR ROAD 50 KOLHAPUR ROAD 50 KOLHAPUR ROAD 50 KOLHAPUR ROAD NEAR KAMLA NAG NEAR KAMLA NAG NEAR KAMLA NAG NEAR KAMLA NAGAR AR AR AR DELHI. DELHI. DELHI. DELHI. PAN : PAN : PAN : PAN : AAFPB5064J. AAFPB5064J. AAFPB5064J. AAFPB5064J. VS. VS. VS. VS. ASSISTANT COMMISSIONER OF ASSISTANT COMMISSIONER OF ASSISTANT COMMISSIONER OF ASSISTANT COMMISSIONER OF INCOME TAX INCOME TAX INCOME TAX INCOME TAX CENTRAL CIRCLE CENTRAL CIRCLE CENTRAL CIRCLE CENTRAL CIRCLE- -- -17 17 17 17 NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K.R.MANJANI ADVOCATE. RESPONDENT BY : MS. Y.S.KAKKAR SR.DR. ORDER ORDER ORDER ORDER PER G. PER G. PER G. PER G.D.AGRAWAL D.AGRAWAL D.AGRAWAL D.AGRAWAL VP VPVP VP : : : : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(A)-IV NEW DELHI DATED 5 TH FEBRUARY 2013 FOR THE AY 2007- 08. 2. THE ONLY GROUND RAISED BY THE ASSESSEE READS AS UNDER:- LEARNED CIT(A) HAS ERRED ON FACTS AS WELL AS IN LAW I N SUSTAINING ADDITION OF RS.7 94 592/- OUTSTANDING IN THE BOOKS IN THE NAME OF SHRI BANARSI LAL S/O SHRI LAXMAN DAS. ORDER OF LEARNED CIT(A) IS AGAINST LAW HAVING FAILED TO DEAL WITH JUDGMENTS GIVEN IN WRITTEN ARGUMENT BEFORE HIM. 3. AT THE TIME OF HEARING BEFORE US IT IS STATED BY T HE LEARNED COUNSEL THAT THE ASSESSING OFFICER MADE THE ADDITION OF ` 7 94 592/- IN RESPECT OF THE LIABILITY SHOWN BY THE ASSESSEE IN THE NAM E OF SHRI BANARSI LAL S/O SHRI LAXMAN DAS IN ITS BALANCE SHEET. HE SUBMITTED ITA-2020/DEL/2013 2 THAT THE LIABILITY IS WITH REGARD TO GOODS PURCHASED B Y THE ASSESSEE FROM THIS PARTY IN THE EARLIER YEARS AND THE CREDIT W AS OUTSTANDING IN THE BALANCE SHEET OF 31 ST MARCH 2007. HE SUBMITTED THAT THE ASSESSEE HAS NOT DENIED THE LIABILITY. HOWEVER DURING ASSESSMEN T PROCEEDINGS THE ASSESSEE COULD NOT PRODUCE THE CONFIRMATION FROM TH E CREDITOR BECAUSE OF UNREST IN AFGHANISTAN AT THE RELEVANT TIME. HE STATED THAT AFTER THE RESTORATION OF NORMALCY IN AFGHANISTAN THE ASSESSEE TRIED TO TRACE THE ABOVE PARTY AND SINCE HE WAS UNABLE TO TRAC E THE PARTY THE ASSESSEE HIMSELF HAS WRITTEN BACK THE LIABILITY TO ITS PRO FIT & LOSS ACCOUNT ON 10.04.2012. HE THEREFORE SUBMITTED THA T AS PER EXPLANATION (1) TO SECTION 41(1) THE WRITING BACK OF THE LIABILITY IS TO BE TREATED AS INCOME OF THE PREVIOUS YEAR ENDED ON 31 ST MARCH 2013. HE ALSO STATED THAT THE ASSESSEE HAS CREDITED THE ABOVE LIABI LITY TO THE PROFIT & LOSS ACCOUNT AND WILL INCLUDE IN ITS INCOME I N THE RETURN WHICH IS LIKELY TO BE FILED SHORTLY. 4. LEARNED DR ON THE OTHER HAND STATED THAT THE ASSE SSEE HAS NOT FURNISHED ANY EVIDENCE CORRESPONDENCE OR DETAIL WHIC H MAY JUSTIFY THAT THE LIABILITY WAS EXISTING AS ON 31 ST MARCH 2007 AND HAS CEASED ONLY DURING THE FY 2012-13. SHE FURTHER STATED THAT DURING ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER ALLOWED OPPORTUNITY TO THE ASSESSEE TO FURNISH THE CONFIRMATION FROM THE CREDITOR BUT TH E SAME WAS ALSO NOT FURNISHED. THE PURCHASE WAS MADE TEN YEARS BACK AND TH E WHEREABOUTS OF THE CREDITOR ARE NOT KNOWN THEREFORE THE ASSESSING OFFICER RIGHTLY TREATED THAT THE LIABILITY HAS ALREA DY CEASED. BY WRITING OF THE LIABILITY IN THE FY 2012-13 THE ASSESSEE HIMSELF HAS ADMITTED THE CESSATION OF LIABILITY BUT THE ASSESSEE IS ONLY TRYING TO POSTPONE THE PAYMENT OF TAX ON SUCH LIABILITY. SHE THEREFORE SU BMITTED THAT THE ORDER OF LEARNED CIT(A) SHOULD BE SUSTAINED. ITA-2020/DEL/2013 3 5. WE HAVE CAREFULLY CONSIDERED THE ARGUMENTS OF BOTH THE SIDES AND PERUSED THE MATERIAL PLACED BEFORE US. AFTER CON SIDERING THE ARGUMENTS OF BOTH THE SIDES AND THE FACTS OF THE CASE I T IS EVIDENT THAT NOW THE CONTROVERSY IS VERY NARROW BECAUSE IT IS THE ST AND OF BOTH THE PARTIES THAT THE LIABILITY HAS CEASED. THE ONLY DISPUT E IS WITH REGARD TO THE YEAR OF CESSATION OF LIABILITY. AS PER ASSESSING OFFI CER THE LIABILITY CEASED IN THE FINANCIAL YEAR ENDED ON 31 ST MARCH 2007 WHILE AS PER ASSESSEE LIABILITY CEASED IN THE FINANCIAL YEAR ENDED O N 31 ST MARCH 2013. THE ASSESSEE HAS WRITTEN BACK THE LIABILITY IN IT S BOOKS OF ACCOUNT FOR THE FY 2012-13. THAT SECTION 41(1) REA DS AS UNDER:- 41. 41. 41. 41. (1) WHERE AN ALLOWANCE OR DEDUCTION HAS BEEN MAD E IN THE ASSESSMENT FOR ANY YEAR IN RESPECT OF LOSS EXPENDITURE OR TRADING LIABILITY INCURRED BY THE ASSE SSEE (HEREINAFTER REFERRED TO AS THE FIRST-MENTIONED PERSON ) AND SUBSEQUENTLY DURING ANY PREVIOUS YEAR (A) THE FIRST-MENTIONED PERSON HAS OBTAINED WHETHER IN CASH OR IN ANY OTHER MANNER WHATSOEVER ANY AMOUNT IN RESPECT OF SUCH LOSS OR EXPENDITURE OR SOME BENEFIT IN RESPECT OF SUCH TRADING LIABILITY BY WAY OF REMISSION O R CESSATION THEREOF THE AMOUNT OBTAINED BY SUCH PERSON OR THE VALUE OF BENEFIT ACCRUING TO HIM SHALL BE DEEME D TO BE PROFITS AND GAINS OF BUSINESS OR PROFESSION AND ACCORDING LY CHARGEABLE TO INCOME-TAX AS THE INCOME OF THAT PREVI OUS YEAR WHETHER THE BUSINESS OR PROFESSION IN RESPECT OF WHICH THE ALLOWANCE OR DEDUCTION HAS BEEN MADE IS IN EXISTENCE IN THAT YEAR OR NOT; OR (B) THE SUCCESSOR IN BUSINESS HAS OBTAINED WHETHER IN CASH OR IN ANY OTHER MANNER WHATSOEVER ANY AMOUNT IN RESPECT OF WHICH LOSS OR EXPENDITURE WAS INCURRED BY TH E FIRST-MENTIONED PERSON OR SOME BENEFIT IN RESPECT OF TH E TRADING LIABILITY REFERRED TO IN CLAUSE (A) BY WAY O F REMISSION OR CESSATION THEREOF THE AMOUNT OBTAINED BY THE SUCCESSOR IN BUSINESS OR THE VALUE OF BENEFIT ACCRUING TO THE SUCCESSOR IN BUSINESS SHALL BE DEEMED TO BE PROFITS AND GAINS OF THE BUSINESS OR PROFESSION AND ACCORDINGLY ITA-2020/DEL/2013 4 CHARGEABLE TO INCOME-TAX AS THE INCOME OF THAT PREVI OUS YEAR. [EXPLANATION 1.FOR THE PURPOSES OF THIS SUB-SECTION TH E EXPRESSION 'LOSS OR EXPENDITURE OR SOME BENEFIT IN RESPEC T OF ANY SUCH TRADING LIABILITY BY WAY OF REMISSION OR CESSATION THEREOF' SHALL INCLUDE THE REMISSION OR CESSATIO N OF ANY LIABILITY BY A UNILATERAL ACT BY THE FIRST ME NTIONED PERSON UNDER CLAUSE (A) OR THE SUCCESSOR IN BUSINESS UNDE R CLAUSE (B) OF THAT SUB-SECTION BY WAY OF WRITING OFF S UCH LIABILITY IN HIS ACCOUNTS.] [EXPLANATION 2].FOR THE PURPOSES OF THIS SUB-SECTION 'SUCCESSOR IN BUSINESS' MEANS (I) WHERE THERE HAS BEEN AN AMALGAMATION OF A COMP ANY WITH ANOTHER COMPANY THE AMALGAMATED COMPANY; (II) WHERE THE FIRST-MENTIONED PERSON IS SUCCEEDED BY ANY OTHER PERSON IN THAT BUSINESS OR PROFESSION THE OTHER PERSON; (III) WHERE A FIRM CARRYING ON A BUSINESS OR PROFESSION IS SUCCEEDED BY ANOTHER FIRM THE OTHER FIRM;] [(IV) WHERE THERE HAS BEEN A DEMERGER THE RESULTING COMPANY.]. 6. FROM THE ABOVE IT IS EVIDENT THAT MAIN SECTION I .E. 41(1) WOULD BE APPLICABLE WHERE THE ASSESSEE HAS OBTAINED SOME BENEFI T IN RESPECT OF ANY TRADING LIABILITY BY WAY OF REMISSION OR CESSAT ION THEREOF. IT IS A SETTLED LEGAL POSITION THAT MERELY BECAUSE A LIABILITY HAS BECOME TIME BARRED OR IS OUTSTANDING FOR A LONGER PERIOD IT CANN OT BE PRESUMED THAT THERE IS A REMISSION OR CESSATION OF THE LIABILITY. EXPLANATION (1) TO SECTION 41(1) IS A DEEMING PROVISION BY WHICH REMISSION OR CESSATION OF LIABILITY WOULD BE PRESUMED IN THE YEAR IN WHICH THE DEBTOR HAS WRITTEN OFF THE LIABILITY IN HIS BOOKS OF ACCOUNT. IN OUR OP INION IN THE CASE OF THE ASSESSEE EXPLANATION (1) TO SECTION 41(1) WOULD BE SQUARELY APPLICABLE FOR THE FY 2012-13. ADMITTEDLY THERE C ANNOT BE CESSATION OF LIABILITY TWICE. THEREFORE WHEN AS PER EXPLANAT ION (1) THERE WOULD ITA-2020/DEL/2013 5 BE CESSATION OF LIABILITY IN THE FY 2012-13 I.E. RELE VANT TO THE ASSESSMENT YEAR 2013-14 IN OUR OPINION THE ADDITION F OR THE SAME CANNOT BE MADE BY PRESUMING REMISSION OR CESSATION OF LI ABILITY IN THE YEAR UNDER CONSIDERATION I.E. AY 2007-08. WE THERE FORE DELETE THE ADDITION OF ` 7 94 592/- MADE BY THE ASSESSING OFFICER. 7. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED. DECISION PRONOUNCED IN THE OPEN COURT ON 11 TH OCTOBER 2013. SD/- SD/- ( (( (I.C.SUDHIR I.C.SUDHIR I.C.SUDHIR I.C.SUDHIR) )) ) (G.D.AGRAWAL) (G.D.AGRAWAL) (G.D.AGRAWAL) (G.D.AGRAWAL) JUDICIAL JUDICIAL JUDICIAL JUDICIAL MEMBER MEMBER MEMBER MEMBER VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT DATED : 11.10.2013 VK. COPY FORWARDED TO: - 1. APPELLANT : SHRI SUNIL KUMAR BHATIA SHRI SUNIL KUMAR BHATIA SHRI SUNIL KUMAR BHATIA SHRI SUNIL KUMAR BHATIA F FF F- -- -50 KOLHAPUR ROAD 50 KOLHAPUR ROAD 50 KOLHAPUR ROAD 50 KOLHAPUR ROAD NEAR KAMLA NAGAR DELHI. NEAR KAMLA NAGAR DELHI. NEAR KAMLA NAGAR DELHI. NEAR KAMLA NAGAR DELHI. 2. RESPONDENT : ASSISTANT COMMISSIONER OF INCOME TAX ASSISTANT COMMISSIONER OF INCOME TAX ASSISTANT COMMISSIONER OF INCOME TAX ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE CENTRAL CIRCLE CENTRAL CIRCLE CENTRAL CIRCLE- -- -17 NEW DELHI. 17 NEW DELHI. 17 NEW DELHI. 17 NEW DELHI. 3. CIT 4. CIT(A) 5. DR ITAT ASSISTANT REGISTRAR