ITO WD 19(3) 3, MUMBAI v. MUKESH KANTILAL SHAH, MUMBAI

ITA 5301/MUM/2009 | 2006-2007
Pronouncement Date: 03-12-2010 | Result: Dismissed

Appeal Details

RSA Number 530119914 RSA 2009
Assessee PAN AADPS6647J
Bench Mumbai
Appeal Number ITA 5301/MUM/2009
Duration Of Justice 1 year(s) 2 month(s) 17 day(s)
Appellant ITO WD 19(3) 3, MUMBAI
Respondent MUKESH KANTILAL SHAH, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 03-12-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 03-12-2010
Date Of Final Hearing 29-11-2010
Next Hearing Date 29-11-2010
Assessment Year 2006-2007
Appeal Filed On 16-09-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI B BENCH BEFORE SHRI N.V.VASUDEVAN JUDICIAL MEMBER & SHRI T.R.SOOD ACCOUNTANT MEMBER I.T.A.NO.5301/MUM/2009 - A.Y 2007-07 INCOME TAX OFFICER 19(3)(3) MUMBAI. VS. MR. MUKESH KANTILAL SHAH 22/A LAND BREEZE 52 PALI HILL BANDRA (E) MUMBAI 400 050 AADPS 6647 J (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI R.S.SRIVASTAV. RESPONDENT BY : SHRI CHETAN A. KARIA. O R D E R PER T.R.SOOD AM: IN THIS APPEAL VARIOUS GROUNDS HAVE BEEN RAISED B UT THE ONLY DISPUTE IS REGARDING DELETION OF ADDITION MADE BY T HE AO IN RESPECT OF SUNDRY CREDIT BALANCES U/S.41[1]. 2. AFTER HEARING BOTH THE PARTIES WE FIND THAT DUR ING THE ASSESSMENT PROCEEDINGS AO NOTICED THAT THE ASSESSEE WAS CARRYING ON CERTAIN DEBIT BALANCES IN THE BALANCE SHEET WHICH W ERE OLD. ASSESSEE WAS ASKED TO FILE NAMES ADDRESSES AND CONFIRMATION S OF THESE PARTIES. ASSESSEE FILED DETAILED REPLIES VIDE LETTERS DATED 22-8-2007 AND 14-11- 2007 WHICH ARE AS UNDER: WE RESPECTFULLY SUBMITTED THAT THE SUNDRY CREDITO RS AS PER SCHEDULE A OF THE BALANCE SHEET AS ON 31-03-2005 ARE AS UNDER: 1. COMMISSION PAYABLE ` `` ` .3 47 237 HEMANT S.RUPANI PERTAINS TO A.Y 2000-01 AND ` `` ` .50 517/- PAID TO HIM ON 10/06/2000 2. INTEREST PAYABLE ` `` ` .31.500 2 PERTAIN TO A.Y 2001-02 A. DEVJI RANCHOD PATEL-HUF ` `` ` .12 263/- WD 30(2)/BBY-D-3026 B. JYOTI DEDHIA AASPD0586M ` `` ` . 9 197/- C. KANTILAL SAVLA ACSPS 3523 ` `` ` . 9 197/- D. MAHENDRA GANGOR AAPG 3878 M ` `` ` .10 763/- THE INTEREST IS STILL PAYABLE. WE HAVE NOT RECEIVED AMOUNT FROM VARIOUS SUNDRY DEBTORS AND HENCE THE SAME IS NOT PA ID. 3. PRAJAPATI CF&S AGENCY ` `` ` .17 220/- PERTAINS TO A.Y 2001-02 THE GOODS IMPORTED WERE FOUND HAVING SHORTAGE HENCE THE AMOUNT PAYABLE IS PENDING THE DISPUTE IS NOT YET SE TTLED. 4. RATILAL & BROTHERS ` `` ` .26 166/- BROKERAGE ON SALE OF TIMBER OPP. PIONEER SAW MILL VICTORIA ROAD BUCULLA MUMBAI-10 PERTAINS TO A.Y 2002-03 5. SHARAT R. DALAL & CO. ` `` ` .16 358/- [PROFESSIONAL FEES] [BACHA NURSING HOME BLDG.] GROUND FLOOR 99 M.K.ROAD MUMBAI 400 020 6. VITAL PHARMACEUTICALS LTD. [01/05/2000 TO 30/01/2001] 68 WELLINGTON COURT 55-67 WELLINGTON ROAD STOCK-IN-TRADE. JOHNS WOOD LONDON NW/8 9TA U.K. DURING THE YEAR 1990-00 & 2001-02 OUT ABOVE NAMED CLIENTS PURCHASED TEAK WOOD MORE THAN US $7 86 040 [APPROX. 2.75 CRORES] FROM VITAL PHARMACEUTICALS LTD. THERE WAS D ISPUTE ABOUT THE QUALITY MORE PARTICULARLY UNEVEN CUTTING DRYNESS PINHOLES SPLITS ETC. OUR ABOVE NAME CLIENT LODGED CLAIM OF US $ OF ` `` ` .58 950/- AND STOP THE MAKING PAYMENT FOR PURCHASES . THE DISPUTE IS STILL PENDING AND WE ARE HOPEFUL THA T THE SAME WOULD BE SETTLED SOON. WE ARE ENCLOSING HEREWITH CO PY OF LETTERS WRITTEN AND RECEIVED FROM THE PARTLY. 7. CAPRI ENTERPRISES ` `` ` .70 000/- [CONFIRMATION OF LOAN FILED] 15 JAITIRATH MANSION BARRACK ROAD BEHIND METRO CINEMA MUMBAI 400 020. 8. HEENA BHATIA ` `` ` .25 000/- [CONFIRMATION OF LOAN FILED] 42 SATYAM 4 TH FLOOR 68 RUNGATA LANE OFF. NEPEANSEA ROAD MUMBAI 400 006. 9. KRISHNA BHATIA ` `` ` .25 000/- [CONFIRMATION OF LOAN FILED] 42 SATYAM 4 TH FLOOR 68 RUNGATA LANE OFF. NEPEANSEA ROAD MUMBAI 400 006. 10. AKSHAY MAKHIJA ` `` ` .20 000/- 3 [CONFIRMATION OF LOAN FILED] 15 JAITIRATH MANSION BARRACK ROAD BEHIND METRO CINEMA MUMBAI 400 020. AS STATED BY YOUR GOOD-SELVES TO ADDED THE AMOUNT OF SUNDRY CREDITORS WE RESPECTFULLY SUBMITTED THAT DETAILS EXPLANATIONS AND AVAILABLE CONFIRMATIONS OF THE SUNDRY CREDITORS AS PER SCHEDULE A OF THE BALANCE SHEET WERE PERSONALLY GIVEN TO YOUR GOO D-SELVES ALONGWITH OUR LETTER ON 22/08/2007. 1) COMMISSION PAYABLE ` `` ` .3 47 237/- HEMANT S RLUPANI PERTAINS TO A.Y 2000-01 AND ` `` ` .50 517/- PAID TO HIM ON 19/06/2000. 2) INTEREST PAYABLE ` `` ` . 31 500/- PERTAIN TO A.Y 2001-02 A. DEVJI RANCHOD PATEL HUF WD 30(2)/BBY-D-3026 ` `` ` . 12 263/- B. JYOTI DEDHIA-AASPD0586M ` `` ` . 9 197/- C. KANTILAL SAVLA-ACSPS 3523 ` `` ` . 9 197/- D. MAHENDRA GANGOR-AAPG 3878 M ` `` ` . 10 763/- 3) PRAJAPATI CF&S AGENCY ` `` ` . 17 220/- PERTAINS TO A.Y 2000-01 THE GOODS IMPORTED WERE FOUND HAVING SHO0RTAGE HENC E THE AMOUNT PAYABLE IS PENDING. THE DISPUTE IS NOT YET S ETTLED. 4) RATILAL & BROTHERS ` `` ` .26 166/- BROKERAGE ON SALE OF TIMBER OPP. PIONEER SAW MILL VICTORIA ROAD MUSTAFA BAZAAR BYCULLA MUMBAI 10 PERTAINS TO A.Y 2002-03 5) SJARAD `. DA;A; & CO. ` `` ` .16 358/- [PROFESSIONAL FEES] 2 LD. -CITADELLE [BACHA NURSING HOME BLDG.] GROUND FLOOR 99 M.K.ROAD MUMBAI 400 020 6) VITAL PHARMACEUTICALS LTD. ` `` ` /38 13 320.18 [01/05/2000 TO 30/01/2001] 68 WELLINGTON COURT 55-67 WELLINGTON ROAD STOCK-IN-TRADE. JOHNS WOOD LONDON NW/8 9TA U.K. THERE WAS DISPUTE ABOVE THE QUALITY MORE PARTICULAR LY UNEVEN CUTTING DRYNESS PINHOLES SPLITS ETC. OUR ABOVE NA ME CLIENT LODGED CLAIM OF US $ OF ` `` ` .5L8 950/- AND STOP THE MAKING PAYMENT FOR PURCHASES. THE DISPUTE IS STILL PENDING AND WE ARE HOPEFUL THAT THE SAME WOULD BE SETTLED SOON. WE ALREADY FORWARDED OF LETTER WRITTEN TO AND RECEIVED FROM THE PARTY ON 22/08/2008 . 7) CAPRI ENTERPRISES ` `` ` .70 000/- [CONFIRMATION OF LOAN FILED] 4 8) HEENA BHATIA ` `` ` .25 000/- [CONFIRMATION OF LOAN FILED] 9) KRISHNA BHATIA ` `` ` .25 000/- [CONFIRMATION OF LOAN FILED] 10) AKSHAY MAKHIJA ` `` ` .20 000/- [CONFIRMATION OF LOAN FILED] WE RESPECTFULLY SUBMITTED THAT ALL THE SUNDRY BALAN CES WERE OLD BALANCES AND PERTAIN TO A.Y 2000-01 AND A.Y 2001-02 . OUR ABOVE NAMED CLIENT HAVE NOT RECEIVED AMOUNT FROM VARIOUS SUNDRY DEBTORS AND HENCE THE CREDITORS WERE NOT PAID. HOWEVER AFTER PERUSING THESE DETAILS AO NOTED THAT IN SOME CASES ADDRESSES WERE NOT GIVEN OR CONFIRMATIONS WERE NOT PROPER. THEREFORE ASSESSEE HAS NOT BEEN ABLE TO PROVE THAT THESE LIAB ILITIES REALLY EXIST AND ACCORDINGLY ADDED A SUM OF ` `` ` .43 87 292/- U/S.41[1]. 3. BEFORE THE CIT[A] IT WAS MAINLY CONTENDED THAT S EC.41[1] IS APPLICABLE ONLY WHEN A DEDUCTION HAS BEEN ALLOWED I N EARLIER YEAR IN RESPECT OF AN ITEM AND LATER ON ASSESSEE HAS OBTAIN ED SOME REFUND OR BENEFIT AGAINST SUCH ITEM. IT WAS ALSO CONTENDED TH AT IN THE CASE OF TRADE CREDITORS MERELY BECAUSE A LIABILITY HAS BECO ME TIME BARRED SECTION 41[1] WOULD NOT BE ATTRACTED BECAUSE AS FAR AS THE ASSESSEE IS CONCERNED THE LIABILITY IS STILL OUTSTANDING AND IN THIS REGARD RELIANCE WAS PLACED ON A DECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF J.K.CHEMICALS LTD. [62 ITR 34]. THE LD. CIT[A] A FTER CONSIDERING THE SUBMISSIONS OBSERVED THAT THERE WAS NO UNILATERAL W RITE OFF OF THE LIABILITIES BY THE ASSESSEE AND THE ASSESSEE WAS TH E BEST JUDGE OF ITS BUSINESS AND AO COULD NOT DICTATE AS TO HOW THE BUS INESS SHOULD BE CONDUCTED. IN THE LIGHT OF THESE OBSERVATIONS THE ADDITION WAS DELETED. 4. BEFORE US LD. DR SUBMITTED THAT DURING THE ASSE SSMENT PROCEEDINGS AO HAS CALLED FOR THE ADDRESSES OF THE PARTIES AND SINCE 5 THE ADDRESSES WERE NOT FURNISHED THE AO COULD NOT MAKE MUCH ENQUIRY. IF THE ADDRESSES WERE AVAILABLE AO COULD HAVE ENQUIRED ABOUT THE EXISTENCE OF THE LIABILITIES BY ISSUING Q UERY LETTERS U/S.133[6]. THEREFORE THE MATTER MAY BE SET ASIDE TO THE FILE OF THE AO AND THE ASSESSEE MAY BE DIRECTED TO FURNISH THE ADDRESSES O F THE PARTIES. 5. ON THE OTHER HAND LD. COUNSEL OF THE ASSESSEE S UBMITTED THAT ADMITTEDLY THESE LIABILITIES HAD NOT BEEN WRITTEN OFF AND THEREFORE SECTION 41[1] IS NOT APPLICABLE. HE ALSO REFERRED T O THE ASSESSMENT ORDER AND SUBMITTED THAT ADDRESSES OF MAIN PARTIES PARTICULARLY THE MAJOR PARTIES WERE GIVEN TO THE AO AND IN THIS REGA RD HE POINTED OUT THAT ADDRESS OF VITAL PHARMACEUTICALS LTD. WHICH CO MPRISES A SUM OF ` `` ` .38 13 320/- WAS GIVEN. SIMILARLY ADDRESSES OF RAT ILAL & BROS SHARAD R. DALAL L& CO. CAPRI ENTERPRISES HEENA BHATIA KR ISHNA BHATIA AND AKSHAY MAKHIJA WERE ALSO GIVEN AND EVEN REASONS WE RE GIVEN AS TO WHY SUCH AMOUNTS WERE OUTSTANDING. IN FACT HE REFE RRED TO PAGE-5 OF THE ASSESSMENT ORDER AND POINTED OUT THAT THE MAIN OBJECTION OF THE AO WAS THAT THE PROPER CONFIRMATIONS WERE NOT FILED . HE ARGUED THAT BASICALLY ASSESSEE HAS PURCHASED SOME MATERIAL FROM SOME OF THE PARTIES WHICH IN TURN WERE SUPPLIED TO OTHER PARTIE S WHICH HAD RAISED DISPUTES AND A SUM OF ` `` ` .2 13 24 551/- WAS STRUCK AS SUNDRY DEBTORS. THE ASSESSEE WAS NOT IN A POSITION TO REALISE THESE PAYMENTS BECAUSE OF DEFECTIVE GOODS WHICH WERE SUPPLIED BY VARIOUS C REDITORS. SINCE THERE WERE DISPUTES WITH THESE PARTIES AND THE LIAB ILITIES WERE NEVER WRITTEN OFF SECTION 41[1] COULD NOT APPLY. 6 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFUL LY AND FIND FORCE IN THE SUBMISSIONS OF THE LD. COUNSEL OF THE ASSESSEE. FROM THE REPLY FURNISHED BEFORE THE AO WHICH WE HAVE REPROD UCED ABOVE IT IS CLEAR THAT IN CASE OF MAJOR ITEMS ADDRESSES WERE GI VEN TO THE AO AND THEREFORE IT CANNOT BE SAID THAT NO ADDRESSES HAVE BEEN GIVEN. MOREOVER THESE LIABILITIES HAVE NEVER BEEN WRITTEN OFF IN THE BOOKS OF ACCOUNTS AND THEY ARE BEING SHOWN AS OUTSTANDING. S ECTION 41[1] COMES INTO OPERATION WHEN ASSESSEE HAS RECEIVED SOM E BENEFIT OR THERE IS A REMISSION OF THE LIABILITY. EVEN AFTER I NSERTION OF EXPLANATION 1 WHEREIN IT IS PROVIDED THAT EVEN IF SUCH LIABILITY IS WRITTEN OFF BY UNILATERAL ACTION OF THE ASSESSEE EVEN THEN REMISS ION WOULD TAKE PLACE. BUT NO SUCH UNILATERAL WRITING OFF OF THE LI ABILITIES HAS TAKEN PLACE. THEREFORE WE FIND NOTHING WRONG WITH THE OR DER OF THE LD. CIT[A] AND CONFIRM THE SAME. 7. IN THE RESULT REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 3 RD DAY OF DECEMBER 2010. SD/- SD/- (N.V.VASUDEVAN) (T.R.SOOD) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI: 3 RD DECEMBER 2010. P/-* 7