ITO, New Delhi v. M/s. Shivani Textiles Ltd., New Delhi

ITA 5450/DEL/2012 | 2009-2010
Pronouncement Date: 24-10-2013 | Result: Dismissed

Appeal Details

RSA Number 545020114 RSA 2012
Assessee PAN AAACP0620Q
Bench Delhi
Appeal Number ITA 5450/DEL/2012
Duration Of Justice 11 month(s) 29 day(s)
Appellant ITO, New Delhi
Respondent M/s. Shivani Textiles Ltd., New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 24-10-2013
Appeal Filed By Department
Order Result Dismissed
Bench Allotted G
Tribunal Order Date 24-10-2013
Date Of Final Hearing 17-10-2013
Next Hearing Date 17-10-2013
Assessment Year 2009-2010
Appeal Filed On 26-10-2012
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: G NEW DELHI BEFORE SHRI RAJPAL YADAV JUDICIAL MEMBER AND SHRI T.S. KAPOOR ACCOUNTANT MEMBER I.T.A. NO. 5450/DEL/2012 ASSESSMENT YEAR: 2009-10 ITO VS. M/S SHIVANI TEXTILES LTD. WARD- 8 (2) 1501 NIRMAL TOWER NEW DELHI- 26 BARAKHAMBA ROAD NEW DELHI-110001 PAN: AAACP0620Q (APPELLANT) (RESPONDENT) REVENUE BY : MS. Y. S. KAKKAR SR. DR. ASSESSEE BY : SHRI. O. P. MODI ADV. ORDER PER RAJPAL YADAV JM : THE REVENUE IS IN APPEAL BEFORE US AGAINST THE ORDE R OF LD. CIT (A) DATED 23 RD AUGUST 2012 PASSED FOR AY 2009-10. 2. THE SOLITARY GRIEVANCE OF REVENUE IS THAT LD. CI T(A) HAS ERRED IN DELETING THE ADDITION OF RS.22 86 493/- BY ENTERTAI NING ADDITIONAL EVIDENCE IN VIOLATION TO RULE 46A OF THE IT RULES 1962 WHICH W AS MADE BY THE AO WITH 2 THE HELP OF SECTION 41(1) OF THE IT ACT ON THE GRO UND THAT SUNDRY LIABILITY HAS CEASED TO EXIST. 3. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE CO MPANY WAS INCORPORATED ON 10.08.2001. IT IS ENGAGED IN THE BUSINESS OF MAN UFACTURING OF FABRICS AND ITS SALE TRADING OF TEXTILE ITEMS. IT HAS FILED IT S RETURN OF INCOME ON 30 TH SEPTEMBER 2009 DECLARING TOTAL INCOME AT NIL. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSMENT AND A NOTICE U/S 1 43(2) OF THE IT ACT WAS ISSUED AND SERVED UPON THE ASSESSEE. ON SCRUTINY OF ACCOUNTS IT EMERGES OUT THAT AS ON 31 ST MARCH 2008 ASSESSEE HAS SHOWN SUNDRY LIABILITY OF RS.1796015/- AGAINST THE NAME OF RAMATEX (TAIWAN) C O. LTD. THERE WAS A FLUCTUATION GAIN OF RS.4.90 LACS AND THE CLOSING BA LANCE OF THIS LIABILITY HAS BEEN SHOWN AT RS.2286493/- AS ON 31 ST MARCH 2009. THE LD. AO IS OF THE OPINION THAT THIS LIABILITY IS OUTSTANDING FOR A SU FFICIENT LONG TIME THEREFORE IT CEASED TO EXIST AND HE MADE AN ADDITION OF RS.22 86 493/- U/S 41(1) OF THE IT ACT. 4. ON APPEAL LD. CIT (A) HAS DELETED THE ADDITION B Y OBSERVING THAT THERE IS NO MATERIAL ON RECORD WHICH SUGGESTS THAT LIABIL ITY HAS CEASED TO EXIST. THE ASSESSEE HAS BEEN SHOWING THE LIABILITY AS PAYABLE IN ITS ACCOUNTS. 5. WITH THE ASSISTANCE OF LD. REPRESENTATIVE WE HAV E GONE THROUGH THE RECORD CAREFULLY. THERE IS NO DISPUTE THAT IN THE A CCOUNTS ASSESSEE SHOWING 3 THE LIABILITY AS OUTSTANDING. THE AO HAS DRAWN AN I NFERENCE THAT THIS LIABILITY HAS CEASED TO EXIST THE INFERENCE HAS BEEN DRAWN O N THE GROUND THAT ASSESSEE HAS NOT MADE PURCHASES FROM THIS CONCERN IN THE SUB SEQUENT PERIOD AND THERE IS NO CORRESPONDENCE BETWEEN THE PARTIES. 6. THE LD. DR POINTED OUT THAT LD. CIT (A) HAS ENTE RTAINED FRESH EVIDENCE WITHOUT GIVING AN OPPORTUNITY OF HEARING TO THE AO TO REBUT THAT EVIDENCE. SHE TOOK US THROUGH THE SUBMISSIONS OF THE ASSESSEE REPRODUCED ON PAGE 3 IN PARAGRAPH 2 BY THE LD. CIT(A). THE LD. COUNSEL FOR THE ASSESSEE ON THE OTHER HAND POINTED OUT THAT NO ADDITIONAL EVIDENCE WAS AD DUCED BY THE ASSESSEE. THE GROUNDS OF APPEAL TAKEN BY THE REVENUE IS MISCO NCEIVED. 7. ON DUE CONSIDERATION OF THE FACTS AND CIRCUMSTAN CES WE ARE OF THE VIEW THAT IN PARAGRAPH 2 AT PAGE 3 OF THE CIT (A)S ORDER THE ASSESSEE IS REFERRING A COPY OF THE ACCOUNT OF RAMATEX (TAIWAN) CO. LTD. IN ITS BOOKS OF ACCOUNTS WHICH WAS ALSO PRODUCED BEFORE THE AO. THE AO HAS CALLED FOR A CONFIRMED COPY OF ACCOUNT I.E. THE ACCOUNTS SHOULD HAVE BEEN COUNTERSIGNED BY M/S RAMATEX (TAIWAN) CO. LTD. ASSESSEE FAILED TO PRODUCE THAT COPY OF ACCOUNT. THUS THERE IS NO ADDITIONAL EVIDENCE WHICH HAS BEEN PRODUCED BY THE ASSESSEE. 8. HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. SHRI VARDHMAN OVERSEAS LTD. REPORTED IN 343 ITR PAGE 408 HAS OBSE RVED THAT SECTION 41(1) 4 HAS BEEN INCORPORATED IN THE ACT TO COVER A PARTICU LAR FACTS SITUATION. THIS SECTION APPLIES WHERE A TRADING LIABILITY WAS ALLOW ED AS DEDUCTION IN EARLIER YEARS IN COMPUTING THE BUSINESS INCOME OF THE ASSES SEE AND THE ASSESSEE HAS OBTAINED A BENEFIT IN RESPECT OF SUCH TRADING LIABI LITY IN LATTER YEAR BY WAY OF REMISSION OR CESSATION OF THE LIABILITY. IN SUCH A CASE THE SECTION SAYS THAT WHATEVER BENEFIT HAS ARISEN TO THE ASSESSEE IN THE LATTER YEAR BY WAY OF REMISSION OF THE LIABILITY WILL BE BROUGHT TO TAX I N THAT YEAR. THE PRINCIPLE BEHIND THE SECTION IS THAT PROVISION INTENDED TO EN SURE THAT ASSESSEE DOES NOT GET AWAY WITH A DOUBLE BENEFIT ONCE BY WAY OF A DED UCTION IN AN EARLIER AY AND AGAIN BY NOT BEING TAXED ON THE BENEFIT RECEIVE D BY HIM IN A LATTER YEAR WITH REFERENCE TO THE LIABILITY EARLIER ALLOWED AS A DEDUCTION. IN THE CASE OF VARDHMAN OVERSEAS LTD. 4 YEARS HAVE ELAPSED AND THE AO TOOK A VIEW THAT THE LIABILITY HAS CEASED TO EXIST. IT WAS HELD THAT MERELY ELAPSED OF 4 YEARS IS NOT SUFFICIENT TO SAY THAT THE LIABILITY CEASED TO EXIST UNLESS IT HAS BEEN WRITTEN BACK IN THE BOOKS OF ACCOUNT. IN THE PRESEN T CASE BEFORE US THE AO HAS HARBOURED BELIEF THAT EITHER THE LIABILITY IS N OT IN EXISTENCE OR IT HAS BEEN PAID OUTSIDE THE BOOKS BECAUSE ASSESSEE FAIL TO P RODUCE EVIDENCE CONTAINING FORMALITIES OF RESERVE BANK OF INDIA. THE LD. CIT ( A) ON THE OTHER HAND HAS RELIED UPON THE JUDGMENT OF HONBLE DELHI HIGH COUR T IN THE CASE OF CIT VS. SHRI VARDHMAN OVERSEAS LTD. SHE ALSO MADE REFE RENCE TO THE DECISION OF 5 HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. AUT O KASHYAP INDIA (P) LTD. AND THE JUDGMENT OF HONBLE PUNAJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. SMT. SITA DEVI JUNEJA REPORTED IN 325 IT R PAGE 593. THE HONBLE SUPREME COURT HAS ALSO CONSIDERED THIS ASPE CT IN THE CASE OF CHIEF CIT VS. KESARIA TEA CO. LTD. REPORTED IN 254 ITR 4 35 AND CIT VS. SUGAULI SUGAR WORKS P. LTD. REPORTED IN 236 ITR 518. ACCORD ING TO THE JUDGMENTS UNLESS THE LIABILITIES ARE WRITTEN OFF IN THE BOOKS OF ACCOUNT PROVISION OF SECTION 41(1) CANNOT BE APPLIED. THUS ON DUE CONSID ERATION OF THE ORDER OF LD. CIT (A) IN THE LIGHT OF AUTHORITATIVE PRONOUNCE MENT OF THE HONBLE SUPREME COURT AS WELL AS HONBLE JURISDICTIONAL HIG H COURT WE DO NOT SEE ANY REASON TO INTERFERE IN THE ORDER OF LD. CIT (A) . IN VIEW OF THE ABOVE DISCUSSION THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 24/10/2013. SD/- SD/- ( T. S. KAPOOR ) (RAJP AL YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBE R DATED: 24/10/2013 *AK VERMA* COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(APPEALS) 5.DR: ITAT ASSISTANT REGISTRAR