Sarbjit Singh, Mandi v. Addl. CIT, Mandi

ITA 264/CHANDI/2012 | 2005-2006
Pronouncement Date: 27-07-2012 | Result: Allowed

Appeal Details

RSA Number 26421514 RSA 2012
Assessee PAN AJAPS2330Q
Bench Chandigarh
Appeal Number ITA 264/CHANDI/2012
Duration Of Justice 5 month(s)
Appellant Sarbjit Singh, Mandi
Respondent Addl. CIT, Mandi
Appeal Type Income Tax Appeal
Pronouncement Date 27-07-2012
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted B
Tribunal Order Date 27-07-2012
Date Of Final Hearing 25-07-2012
Next Hearing Date 25-07-2012
Assessment Year 2005-2006
Appeal Filed On 27-02-2012
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B CHANDIGARH BEFORE SHRI T.R. SOOD ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA JUDICIAL MEMBER ITA NO.264 /CHD/2012 (ASSESSMENT YEAR:2005-06) SARABJIT SINGH VS. THE ADDL.CIT PROP.J.S.CARGO MOVERS MANDI RANGE V.DHANOTU P.O.MAHADEV MANDI. TEH.SUNDER NAGAR DISTT.MANDI. PAN: AJAPS2330Q (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI R.R.THAKUR RESPONDENT BY : SMT.JAISHREE SHARMA DR DATE OF HEARING : 25.07.2012 DATE OF PRONOUNCEMENT : 27.07.2012 O R D E R PER SUSHMA CHOWLA J.M. : THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER O F THE COMMISSIONER OF INCOME TAX (APPEALS) SHIMLA DATED 16.12.2011 RELATING TO ASSESSMENT YEAR 2005-06 AGAINST THE ORD ER PASSED U/S 144 OF INCOME TAX ACT 1961 (IN SHORT THE ACT). 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE REA D AS UNDER: 1. THAT THE LD COMMISSIONER OF INCOME TAX (APPE AL) HAS ERRED IN DECIDING THE GROUND OF APPEAL NO 4 WHICH IS ARBI TRARY AND AGAINST THE LAW. 2. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEAL) HAS ERRED IN CONFIRMING THE ADDITION OF RS 3 44 477/- O N ACCOUNT OF OLD LIABILITIES BROUGHT FORWARD AS ON 1-4.-2004 IN THE BOOKS OF ACCOUNTS OF THEAPPELLANTUNDERSECTIONS41 (1) OF THE INCOME TA X ACT 1961. 3. THAT THE ID. COMMISSIONER OF INCOME TAX (APPEA L) HAS ERRED IN NOT ACCEPTING THE LIABILITIES OUTSTANDING FOR WH ICH THE PAYMENT WAS MADE TO THE CREDITORS DURING THE YEAR UNDER REF ERENCE. THE LIABILITIES WAS GENUINELY OPENING CREDIT BALANCE AS ON L-4-2004 2 WHICH WAS CREDITED IN EARLIER YEAR AND WAS DISCHARG ED LATER ON. THE ADDITION IS LIKELY TO BE DELETED. 3. THE ONLY ISSUE ARISING IN THE PRESENT APPEAL IS AGAINST THE ADDITION OF RS.3 44 477/- UNDER SECTION 41(1) OF TH E ACT. 4. THE BRIEF FACTS RELATING TO THE ISSUE ARE THAT D URING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NOT ED THAT CERTAIN OPENING CREDIT BALANCES WERE NOT SETTLED BY THE ASS ESSEE TILL THE CLOSE OF THE FINANCIAL YEAR. THE CREDIT BALANCES TO TALING RS.2 66 140/- APPEARED IN THE BOOKS OF M/S J.S.CARG O AND TO THE TUNE OF RS.78 337/- IN THE BOOKS OF M/S SACHDEVA BR OTHERS SOLE PROPRIETARY CONCERN OF THE ASSESSEE. THE ASSESSING OFFICER AT PAGE 9 AND 10 OF THE ASSESSMENT ORDER HAS TABULATED THE ABOVE SAID DETAILS TOTALING RS.2 66 140/- AND RS.78 337/-. TH E ASSESSING OFFICER SHOW CAUSED THE ASSESSEE TO PROVE THE GENUI NENESS OF THE SAID CREDIT BALANCES. HE ALSO NOTED THAT THE OPENI NG CREDIT BALANCES IN RESPECT OF M/S SACHDEVA BROTHERS WERE R EPAID IN CASH DURING THE YEAR ITSELF. THE ASSESSING OFFICER HAD SENT A LETTER OF ENQUIRY TO ONE SUCH CREDITOR SHRI ASHOK KUMAR WHICH WAS RECEIVED BACK UNSERVED. ANOTHER CREDITOR SHRI BIHARI LAL DE NIED HAVING MADE ANY TRANSACTION WITH THE ASSESSEE. IN VIEW TH EREOF THE ASSESSING OFFICER HELD THE ASSESSEE TO HAVE CREATED BOGUS LIABILITY IN HIS BOOKS OF ACCOUNT IN RESPECT OF WHICH HE HAD ALREADY CLAIMED THE EXPENSES IN EARLIER YEARS AND APPLYING THE PROV ISIONS OF SECTION 41(1) OF THE ACT MADE ADDITION OF RS.3 44 477/-. T HE CIT (APPEALS) UPHELD THE ORDER OF THE ASSESSING OFFICER . 5. THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF T HE CIT (APPEALS). THE LEARNED A.R. FOR THE ASSESSEE POINTED OUT THAT PROVISIONS OF SECTION 41(1) OF THE ACT WERE APPLIED TO THE OUTSTANDING BA LANCES WHICH WERE 3 DUE ON CLOSE OF THE YEAR AND ON ACCOUNT OF THE OPEN ING CREDIT BALANCES WHICH WERE PAID BY THE ASSESSEE IN THE SUCCEEDING Y EARS AS IS CLEAR FROM THE DETAILS FURNISHED AT PAGE 9 OF THE PAPER BOOK. THE LEARNED A.R. FOR THE ASSESSEE STRESSED THAT THERE WAS NO MERIT IN AD DING BACK THE SAID LIABILITIES RECOGNIZED BY THE ASSESSEE AS INCOME OF THE ASSESSEE UNDER SECTION 41(1) OF THE ACT. 6. THE LEARNED D.R. FOR THE REVENUE PLACED RELIANCE ON THE ORDER OF THE AUTHORITIES BELOW AND POINTED OUT THAT THE LIAB ILITIES SHOWN BY THE ASSESSEE WERE BOGUS AND HENCE NOT ALLOWABLE. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ASSESSING OFFICER AT PAGE 9 OF THE ASSESSMENT ORDER HAS GIVEN A FINDING THAT FROM THE EXAMINATION OF THE BOOKS OF ACCOUNT O F M/S J.S. CARGO REFLECT CERTAIN LEDGER ACCOUNTS IN THE NAMES OF DIF FERENT TRUCKS WITH CREDIT OPENING BALANCES WHICH WERE NOT SETTLED TIL L 31.3.2005. THE CASE OF THE ASSESSEE IS THAT THE ABOVE SAID AMOUNTS WERE RELATABLE TO THE AMOUNTS DUE TO THE SAID PARTIES FOR SERVICES RENDER ED BY THEM IN THE EARLIER YEARS AND THE SAME WERE OUTSTANDING AS ON 3 1.3.2005 BUT WERE PAID IN THE SUCCEEDING YEARS. THE ASSESSEE HAD FUR NISHED ON RECORD THE DETAILS OF PAYMENTS BEING MADE TO THE SAID PARTIES IN THE SUCCEEDING YEARS AT PAGE 9 OF THE PAPER BOOK. 8. THE PROVISIONS OF SECTION 41(1) OF THE ACT ARE A TTRACTED WHERE THE ALLOWANCE OR DEDUCTION HAD BEEN MADE IN THE ASSESSM ENT FOR ANY YEAR IN RESPECT OF LOSS EXPENDITURE OR TRADING LIABILITY I NCURRED BY THE ASSESSEE AND SUBSEQUENTLY DURING ANY PREVIOUS YEAR THE SAID PERSON WHETHER IN CASH OR IN ANY OTHER MANNER HAD OBTAINED ANY AMOUNT IN RESPECT OF SUCH LOSS OR EXPENDITURE OR SOME BENEFIT IN RESPECT OF S UCH TRADING LIABILITY BY WAY OF REMISSION OR CESSATION THEREOF SUCH AMOU NT SHALL BE VALUE OF 4 BENEFIT SHALL BE DEEMED TO BE THE PROFITS AND GAINS OF THE BUSINESS OR PROFESSION AND CHARGED TO TAX. THE PROVISIONS OF S ECTION 41(1) OF THE ACT ARE ATTRACTED WHERE THE ASSESSEE HAD OBTAINED A NY AMOUNT OR BENEFIT BY WAY OF REMISSION OR CESSATION THE AMOUNT ARE TO BE BROUGHT TO TAX IN THE HANDS OF THE ASSESSEE IN THE PREVIOUS YEARS IN WHICH SUCH REMISSION OR CESSATION TAKES PLACE. IN THE FACTS OF THE PRES ENT CASE BEFORE US THE ASSESSEE HAD INCURRED THE AFORESAID EXPENDITURE IN THE EARLIER YEARS AND DURING THE YEAR UNDER CONSIDERATION HAD RECOGNIZED ITS LIABILITY OF PAYING THE SAID CREDITS WHICH WERE SHOWN AS SUCH AS ON THE START OF THE YEAR AND ALSO ON THE CLOSE OF THE YEAR I.E. TILL 31 .3.2005. IN VIEW THEREOF WE FIND NO MERIT IN THE ORDER OF THE AUTHO RITIES BELOW IN BRINGING TO TAX THE AMOUNT SHOWN BY THE ASSESSEE BE ING LIABLE TO PAY TO THE EXTENT OF RS.2 66 140/- I.E. THE AMOUNT SHOWN A S CREDIT IN THE BOOKS OF ACCOUNT OF M/S J.S. CARGO. FURTHER THE PROVISIO NS OF SECTION 41(1) OF THE ACT HAVE BEEN APPLIED BY THE ASSESSING OFFICER IN RESPECT OF AMOUNTS REPAID BY THE ASSESSEE IN THE BOOKS OF M/S SACHDEVA BROTHERS. THERE IS NO MERIT IN APPLYING THE SAID PROVISIONS OF SECTION 41(1) OF THE ACT TO THE AMOUNT REPAID BY THE ASSESSEE DURING THE YEAR U NDER CONSIDERATION HOLDING THE SAID LIABILITY TO BE BOGUS LIABILITY OF THE ASSESSEE. WE DIRECT THE ASSESSING OFFICER TO DELETE THE ADDITION OF RS. 3 44 477/-. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE THUS A LLOWED. 9. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 27 TH DAY OF JULY 2012. SD/- SD/- (T.R.SOOD) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED 27 TH JULY 2012 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. ASSISTANT REGISTRAR ITAT CHANDIGARH 5