Pyare Lal Agro & Exports Ltd, Meerut v. ACIT, Meerut

ITA NO. 4373/DEL/2009 A.Y. 2006-07 1 IN THE INCOMETAX APPELATE TRIBUNAL DELHI BENCH F: NEW DELHI BEFORE SHRI C.L. SETHI JUDICIAL MEMBER & SHRI SHAMIM YAHYA ACCOUNTANT MEMBER ITA NO. 4373/DEL/2009 A.Y. : 2006-07 M/S PYARE LAL AGRO & EXPORTS LTD. VS. ACIT C IRCLE-2 BHOLA ROAD MEERUT MEERUT-250002 (UP) (PAN: AAACP 8375J) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SUNIL KUMAR FCA DEPARTMENT BY : SHRI HK LAL SR. DR O R D E R PER SHAMIM YAHYA : AM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDERS OF THE LD. CIT(A) DATED 28.10.2009 PERTAINING TO ASSESSMENT YEAR 2006-07. 2. THE FIRST ISSUE RAISED IS THAT THE LD. CIT(A) ER RED IN SUSTAINING THE ADDITION OF RS. 82 198/- UNDER SECTION 40A(3. 3. BEFORE US THE LD. COUNSEL OF THE ASSESSEE SUBMIT TED THAT HE SHALL NOT PRESS THIS GROUND AS SUCH THIS GROUND IS DISMISSED AS NOT PR ESSED. 4. THE NEXT ISSUE RAISED IS THAT THE LD. CIT(A) ERR ED IN SUSTAINING ADDITION OF 2 34 461/- U/S 41 OF THE IT ACT. 5. IN THIS CASE DURING THE ASSESSMENT PROCEEDINGS THE AO REQUIRED THE ASSESSEE TO FURNISH CONFIRMATIONS IN RESPECT OF SUNDRY CRED ITORS EXCEEDING RS. 1 LAKH. THE ASSESSEE FILED COPIES OF ACCOUNTS FOR SUBSEQUENT PE RIODS WHEN THE ACCOUNTS WERE CLEARED AND THE OUTSTANDING BALANCE PAID FOR ALL TH E CREDITORS EXCEPT ONE NAMELY M/S SHIVAM TRADING COMPANY AMOUNTING TO RS. 2 34 46 1/-. SHE THEREFORE MADE THE ADDITION TREATING IT AS CESSATION OF LIABILITY UNDE R SECTION 41 OF THE IT ACT 1961. ITA NO. 4373/DEL/2009 A.Y. 2006-07 2 6. BEFORE THE LD. CIT(A) ASSESSEE SUBMITTED THAT J UST BECAUSE OF COPY OF ACCOUNT REGARDING ONE CREDITOR WAS NOT FILED THE LIABILI TY OF THE COMPANY DID NOT CEASE. IT WAS FURTHER CLAIMED THAT THE ASSESSEE COMPANY REPAI D THE ENTIRE AMOUNT OF RS. 2 34 461/- IN THE SUCCEEDING YEAR. UPON PERUSING THE SAME LD. CIT(A) OBSERVED THAT IN THE SUBSEQUENT PAYMENT THERE WERE 13 PAYMENTS OF AMOUNT BELOW RS. 20 000/- IN CASH. HE OBSERVED THAT COPY OF ACCOUNT WAS NOT CON FIRMED BY THE CREDITOR. HENCE HE OPINED THAT THE GENUINENESS OF THE CLAIMS COMES UND ER DOUBT AND HE CONFIRMED THE ADDITION. 7. AGAINST THIS ORDER THE ASSESSEE IS IN APPEAL BEF ORE US. 8. WE HAVE HEARD BOTH THE COUNSELS AND PERUSED THE RECORDS. WE FIND THAT ADDITION UNDER SECTION 41 OF THE IT ACT HAS BEEN MA DE IN THIS REGARD ONLY ON THE GROUND THAT ASSESSEE HAS NOT BEEN ABLE TO PRODUCE T HE CONFIRMATION OF OUTSTANDING BALANCE. IT IS NOT THE CASE OF THE AO THAT HE HAS ACTUALLY MADE AN ENQUIRY AND FOUND THAT THE ASSESSEES LIABILITIES IN THIS REGARD HAS CEASED TO EXIST. MOREOVER IT IS ALSO THE ASSESSEES CLAIM THAT SUBSEQUENTLY THE AMOUNT HAS B EEN PAID. UNDER SUCH CIRCUMSTANCES IN OUR CONSIDERED OPINION THE ADDITI ON IN THIS REGARD AS CESSATION OF LIABILITY IS NOT LIABLE TO BE SUSTAINED. ACCORDING LY WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND DECIDE THE ISSUE IN FAVOUR OF THE ASSESSEE. 9. IN THE RESULT THE ASSESSEES APPEAL IS PART LY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 14/01/2010 UP ON CONCLUSION OF THE HEARING. SD/- SD/- [C.L. SETHI] [SHAMIM YAHYA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 14/01/ 2010 SRB COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR ITAT TRUE COPY BY ORDER DEPUTY REGISTRAR ITAT DELHI BENCHES