M/s. Rajshree Builder & Promoters Pvt. Ltd., New Delhi v. ITO, New Delhi

ITA 679/DEL/2017 | 2011-2012
Pronouncement Date: 28-02-2020 | Result: Partly Allowed

Appeal Details

RSA Number 67920114 RSA 2017
Assessee PAN AAACR4754R
Bench Delhi
Appeal Number ITA 679/DEL/2017
Duration Of Justice 3 year(s) 22 day(s)
Appellant M/s. Rajshree Builder & Promoters Pvt. Ltd., New Delhi
Respondent ITO, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 28-02-2020
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted F
Tribunal Order Date 28-02-2020
Assessment Year 2011-2012
Appeal Filed On 06-02-2017
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: F NEW DELHI BEFORE SHRI AMIT SHUKLA JUDICIAL MEMBER AND SHRI O.P. KANT ACCOUNTANT MEMBER ITA NO.679/DEL./2017 ASSESSMENT YEAR: 2011-12 M/S. RAJSHREE BUILDER & PROMOTERS PVT. LTD. A.S. LEGAL G-8 JAIN BHAWAN 18/12 PUSA LANE W.E.A. KAROL BAGH NEW DELHI VS. ITO WARD-15(2) NEW DELHI PAN :AAACR4754R (APPELLANT) (RESPONDENT) ORDER PER O.P. KANT AM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST ORD ER DATED 07/11/2016 PASSED BY THE LEARNED CIT(APPEALS)-7 NE W DELHI [IN SHORT THE LD. CIT(A)] FOR ASSESSMENT YEAR 2011-12 RAISING FOLLOWING GROUNDS: 1. THAT THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) HAS GROSSLY ERRED IN LAW AND ON FACTS IN PASSING AN ORD ER UNDER SECTION 250(6) OF THE ACT BY DISMISSING THE APPEAL OF THE APPELLANT EX PARTE THEREBY VIOLATING THE PRINCIPLES OF NATU RAL JUSTICE. APPELLANT BY SHRI RAJIV SAXENA ADV. MS. SUMANGLA SAXENA ADV. RESPONDENT BY SHRI PARIKSHIT SINGH SR.DR DATE OF HEARING 12.02.2020 DATE OF PRONOUNCEMENT 28.02.2020 2 ITA NO. 679/DEL./2017 2. THAT THE ID. COMMISSIONER OF INCOME TAX(APPEALS) HAS IGNORED THE JUDICIAL RULING IN GUJRAT THEMIS BIOSYN LTD. (74 IT D 339 AHD. ITAT) WHEREIN IT WAS HELD THAT SECTION 250(6) MAKE S IT OBLIGATORY FOR THE COMMISSIONER OF INCOME TAX (APPEALS) TO PAS S A SPEAKING ORDER DECIDING THE POINTS RAISED IN APPEAL STATING HIS REASONS FOR THE DECISION AS SUCH. 3. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IS BAD BOTH IN THE EYES OF LAW AND ON FACTS. 4. THAT ON FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED ON F ACTS AND IN LAW AND NOT JUSTIFIED IN UPHOLDING AN ADDITION OF R S. 2 01 02 470/- TO THE BUSINESS INCOME OF THE ASSESSE E BY CONSIDERING THE SAME AS TRADE PAYABLES. 5. THAT ON FACTS AND CIRCUMSTANCES OF THE CASE THE CHARGING INTEREST U/S 234A B C IS ILLEGAL ARBITRARY AND AGAINST THE SETTLED LAW ON THE SUBJECT. 6. THAT THE APPELLANT CRAVES TO RESERVE TO ITSELF T HE RIGHT TO ADD ALTER AMEND SUBSTITUTE AND VARY ANY GROUND OF APPEAL AT AND BEFORE THE TIME OF HEARING. IT IS THEREFORE PRAYED THAT THE ADDITIONS/DISALLO WANCES MADE AS ABOVE BE DELETED. THE INTEREST AS CHARGED BE CANCEL LED AND THE APPEAL BE ALLOWED. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE ASSES SEE COMPANY WAS ENGAGED IN THE REAL ESTATE BUSINESS AND FOR THE YEAR UNDER CONSIDERATION FILED RETURN OF INCOME ON 30/03 /2012 DECLARING LOSS OF 1 25 440/-. THE CASE WAS SELECTED FOR SCRUTINY ASSESSMENT AND NOTICE UNDER SECTION 143(2) OF THE I NCOME-TAX ACT 1961 (IN SHORT THE ACT) WAS ISSUED AND COMPL IED WITH. THE SCRUTINY ASSESSMENT WAS COMPLETED UNDER SECTION 143 (3) OF THE ACT ON 27/03/2014 AFTER MAKING ADDITION OF 2 02 27 914/- UNDER SECTION 41(1) OF THE ACT AS LIABILITY OF TRA DE PAYABLES WRITTEN OFF. ON FURTHER APPEAL THE LD. CIT(A) REJE CTED THE CONTENTION OF THE ASSESSEE AND CONFIRMED THE ADDITI ON IN DISPUTE. AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE THE TRI BUNAL RAISING THE GROUNDS AS REPRODUCED ABOVE. 3 ITA NO. 679/DEL./2017 3. IN GROUND NO. 1 THE ASSESSEE HAS CHALLENGED THE IM PUGNED ORDER AS PASSED EX-PARTY IN VIOLATION OF THE PRINC IPLE OF THE NATURAL JUSTICE. 3.1 THE LEARNED COUNSEL SUPPORTED THE GROUNDS RAISED B Y THE ASSESSEE WHEREAS THE LEARNED DR REFERRED TO PARA 2 OF THE IMPUGNED ORDER WHEREIN THE LD. CIT(A) HAS MENTIONE D THE OPPORTUNITIES PROVIDED TO THE ASSESSEE BUT NOT AVA ILED BY THE ASSESSEE. ACCORDING TO LEARNED DR THE LEARNED CIT( A) CANNOT FAULTED FOR NON-APPEARANCE OR REPRESENTATION DESPI TE SO MANY OPPORTUNITIES PROVIDED. 3.2 WE HAVE HEARD THE RIVAL SUBMISSION OF THE PARTIES ON THE ISSUE IN DISPUTE. THE RELEVANT PARA OF THE LD. CIT( A) IS REPRODUCED AS UNDER : 2. FIRST NOTICE WAS ISSUED ON 19.08.2014 SCHEDULIN G DATE OF HEARING ON 09.09.2014 ON THIS DATE ADJOURNMENT WAS SOUGHT AND CASE WAS ADJOURNED TO 13.10.2014. ON THIS DATE NON E ATTENDED. ON 28.10.2014 ANOTHER NOTICE WAS ISSUED FIXING THE APP EAL FOR HEARING ON 20.11.2014. THERE WAS NO COMPLIANCE. A FRESH NOT ICE WAS ISSUED ON 15.05.2015 FIXING THE CASE FOR HEARING ON 28.05. 2015. ON THIS DATE THE AR OF THE APPELLANT ATTENDED AND FILED PA RT SUBMISSION AND THE CASE WAS ADJOURNED TO 26.06.2015. ON 26.06. 2015 A LETTER WAS FILED FOR ADJOURNMENT AND THE CASE WAS ADJOURNE D TO 16.07.2015. ON THIS DATE ADJOURNMENT WAS SOUGHT AN D THE HEARING DATE WAS RE-FIXED FOR 03.08.2015. ON THIS DATE ADJ OURNMENT WAS SOUGHT AND THE CASE WAS ADJOURNED TO 26.08.2015. ON THIS DATE NONE ATTENDED. NOTICE WAS AGAIN ISSUED ON 10.09.201 5 FIXING THE HEARING ON 08.10.2015. AS THERE WAS NO COMPLIANCE NOTICE WAS RE- ISSUED 20 10.2015 SCHEDULING THE HEARING DATE FOR 0 5.11.2015. ON THIS DATE A LETTER FOR ADJOURNMENT WAS FILED BY A DIFFERENT AR AND THE CASE WAS ADJOURNED TO 23.11.2015. ON THIS DATE NONE ATTENDED. NOTICE WAS ISSUED ON 07.01.2016 AFFORDING FINAL OPP ORTUNITY FOR 25.01.2016. THIS NOTICE WAS RETURNED BACK UN-SERVED . HOWEVER A LETTER WAS FILED SEEKING TIME TO FILE WRITTEN SUBMI SSIONS AND POWER OF ATTORNEY. ON 05.02.2016 YET ANOTHER NOTICE WAS ISSU ED TO THE APPELLANT FIXING THE HEARING ON 22.02.2016. ON THIS DATE POWER OF ATTORNEY ALONGWITH REQUEST FOR ADJOURNMENT WAS FILE D AND THE CASE WAS RE-FIXED FOR 02.03.2016. SINCE HEARING COULD NO T BE CONDUCTED ON THIS DATE REQUEST FOR ADJOURNMENT WAS FILED ON 04.03.2016 AND 4 ITA NO. 679/DEL./2017 THE APPEAL WAS RE-FIXED FOR 18.03.2016. NONE ATTEND ED ON THIS DATE AND YET AGAIN A LETTER WAS FILED ON 29.03.2016 REQU ESTING FOR ADJOURNMENT AND THE CASE WAS RE-FIXED FOR 05.04 201 6. THE AR VIDE LETTER DATED 13.04.2016 FILED SOME WRITTEN SUBMISSI ON STATING THE SAME TO BE ADDITIONAL EVIDENCE AND SOUGHT ADJOURNME NT WHICH WAS ALLOWED AND APPEAL WAS RE-FIXED FOR 26.04.2016. NON E ATTENDED ON THIS DATE ON 17.05.2016 A LETTER WAS FILED BY ONE RAJIV SAXENA & CO. STATING THAT THEY HAD BEEN ENGAGED BY THE APPEL LANT TO REPRESENT THE APPEAL AND THEREFORE THE MATTER MAY BE ADJOURNED. A FRESH NOTICE WAS ISSUED ON 18 07.2016 SCHEDULING TH E HEARING DATE ON 02.08.2016. ON THIS DATE NEITHER ANYONE ATTENDED NOR ANY REQUEST FOR ADJOURNMENT WAS RECEIVED. NOTICE WAS AG AIN ISSUED ON 21.10.2016 SCHEDULING THE DATE OF HEARING OF 28.10. 2016. THIS NOTICE WHICH WAS ISSUED ON THE SAME ADDRESS TO WHIC H ALL THE OTHER NOTICES WERE ISSUED AND SERVED AS THE APPELLANT WAS SEEKING CONTINUOUS ADJOURNMENTS HOWEVER CAME BACK UN-SERV ED. NO COMMUNICATION IS ON RECORD REGARDING ANY CHANGE ON ADDRESS FROM THE APPELLANT. GIVEN HISTORY OF NON COMPLIANCE IT IS EVIDENT THAT THE APPELLANT HAS CHOSEN NOT TO ACCEPT THE LATEST NOTIC E FOR REASONS BEST KNOWN TO IT. 3.3 IT IS EVIDENT FROM THE ABOVE PARAGRAPH OF THE IMPU GNED ORDER THAT NUMEROUS OPPORTUNITIES HAVE BEEN PROVID ED BY THE LEARNED CIT(A) TO THE ASSESSEE HOWEVER THE ASSESS EE HAS AVOIDED THE HEARINGS AND DID NOT AVAIL THE OPPORTUN ITIES TO REPRESENT BEFORE THE LD. CIT(A). IN SUCH CIRCUMSTAN CES THE ACTION OF THE LD. CIT(A) IN PASSING THE ORDER ON THE BASIS OF THE MATERIAL ON RECORD CANNOT BE SAID TO BE UNJUSTIFIED OR IN V IOLATION OF THE PRINCIPLE OF THE NATURAL JUSTICE. ACCORDINGLY THIS GROUND OF THE APPEAL OF THE ASSESSEE IS DISMISSED. 4. IN GROUND NO. 2 THE ASSESSEE HAS CHALLENGED THAT I MPUGNED ORDER IS NON-SPEAKING AND UNREASONED. 4.1 WE HAVE HEARD BOTH PARTIES ON THIS ISSUE. WE DO NOT AGREE WITH THE GROUNDS RAISED BY THE ASSESSEE. WE FIND TH AT THE CIT(A) HAS DECIDED THE ISSUE IN PARA 4.2 OF THE IMPUGNED O RDER AND SUPPORTED HIS FINDING WITH THE REASONING WHICH WE WILL BE 5 ITA NO. 679/DEL./2017 REFERRING WHILE DECIDING THE GROUND ON MERIT OF THE ADDITION. THIS GROUND OF THE APPEAL OF THE ASSESSEE IS ACCORDINGLY DISMISSED. 5. THE GROUND NO. 3 OF THE APPEAL BEING GENERAL IN NA TURE WE ARE NOT REQUIRED TO ADJUDICATE SEPARATELY. 6. IN GROUND NO. 4 THE ASSESSEE HAS CHALLENGED THE A DDITION OF 2 02 02 470/- (WRONGLY MENTIONED AS 2 01 02 470/-) ON MERITS. 6.1 THE FACTS IN BRIEF QUA THE ISSUE IN DISPUTE ARE T HAT IN THE BALANCE-SHEET AS ON 31/03/2011 THE AMOUNT OF GENER AL RESERVE WAS INCREASED BY 2 02 27 914/- BY TRANSFERRING THE AMOUNT FROM THE TRADE PAYABLES. THIS FACT WAS NOTICED BY THE ASSESSING OFFICER FROM THE NOTES ON ACCOUNTS FOLLOWING THE PART OF THE BALANCE-SHEET OF THE ASSESSEE WHEREIN AT SR. NO. 8 IT HAS BEEN STATED THAT UNCLAIMED TRADE PAYABLES AMOUNTING TO 2 47 27 914/- HAVE BEEN TRANSFERRED TO GENERAL RESE RVE. THE ASSESSING OFFICER ALSO FOUND THAT AN ADVANCE OF 45 00 000/- (WHICH WAS OFFERED AS ADVANCE IN EARLIER YEARS BY T HE ASSESSEE) WAS ADJUSTED WITH THE TRADE PAYABLES RESULTING IN TO NET INCREASE OF 2 02 27 914/- TO THE GENERAL RESERVE. THE ASSESSIN G OFFICER CALLED UPON THE ASSESSEE TO SHOW-CAUSE AS TO WHY T HIS AMOUNT MAY NOT BE TREATED AS INCOME IN TERMS OF SECTION 41 (1) OF THE ACT. 6.2 THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE SUBM ITTED THAT THE ASSESSEE COMPANY HAD TAKEN UNSECURED LOAN DURING PREVIOUS YEAR 2002-03 FROM M/S OMAX AND SAME HAS BEEN TRANSFERRED TO GENERAL RESERVE. BUT THE ASSESSEE WA S NOT AWARE OF TREATMENT OF THE SAME IN THE BOOKS OF ACCOUNTS OF M /S OMAX AND NO CONFIRMATION WAS FILED BY THE ASSESSEE FROM M/S OMAX. 6 ITA NO. 679/DEL./2017 6.3 THE ASSESSING OFFICER ISSUED NOTICE UNDER SECTION 133(6) OF THE ACT TO M/S OMAXE. THE SAID COMPANY VIDE LETTER WHICH WAS RECEIVED BY THE ASSESSING OFFICER ON 06/03/2014 ST ATED THAT THE COMPANY HAD DEALT WITH THE ASSESSEE COMPANY DURING ASSESSMENT YEAR 2001-02 TO ASSESSMENT YEAR 2005-06 AND WHATEVER THE AMOUNT WAS DUE WRITTEN OFF WELL BEFORE THE ASSESSMENT YEAR 2005-06. 6.4 IN VIEW OF THE REPLY FROM M/S OMAXE THE LEARNED A SSESSING OFFICER REJECTED THE CONTENTION OF THE ASSESSEE THA T THE AMOUNT WAS OUTSTANDING AGAINST THE LOAN BORROWED FROM M/S OMAXE AND HELD THAT THE ASSESSEE COMPANY HAD MADE CERTAIN TRA NSACTION WITH M/S OMAX AND THE OUTSTANDING AMOUNT WAS SHOWN AS TRADE PAYABLE IN ITS BOOKS OF ACCOUNTS AND THUS IT WAS O UTSTANDING AGAINST PURCHASES MADE FROM M/S OMAXE WHICH NOW HA S BEEN TRANSFERRED TO GENERAL RESERVE. 6.5 THE LD. CIT(A) UPHELD THE ADDITION OF OBSERVING TH AT IN INDEPENDENT VERIFICATION UNDER SECTION 133(6) THE ASSESSING OFFICER FOUND THAT M/S OMAXE HAD ALREADY WRITTEN OF F THE AMOUNT WHICH WAS DUE FROM THE ASSESSEE AND THE ASS ESSEE FAILED TO LEAD ANY EVIDENCE TO SUBSTANTIATE THAT IMPUGNED AMOUNT WAS AN UNSECURED LOAN AND NOT PART OF THE TRADE PAYABLE S AS DISCLOSED IN THE BALANCE-SHEET. 6.6 BEFORE US THE LEARNED COUNSEL OF THE ASSESSEE HAS FILED A PAPER-BOOK CONTAINING PAGES 1 TO 75 AND REFERRED TO VARIOUS PAGES TO SUPPORT THE CASE OF THE ASSESSEE. IN THE P APER-BOOK THE ASSESSEE FILED BALANCE-SHEET OF THE ASSESSEE COMPAN Y AS ON 31/03/2004; 31/03/2005; 31/03/2006; 31/03/2007; 31/03/2008; 31/03/2009; 31/03/2010. ALL THESE BALAN CES ARE 7 ITA NO. 679/DEL./2017 UNSIGNED I.E. NOT SIGNED EITHER BY THE AUDITOR OR BY THE DIRECTOR OF THE COMPANY. THE ASSESSEE HAS ALSO FILED FINANC IAL STATEMENT FOR FINANCIAL YEAR 2010-11 RELEVANT TO ASSESSMENT A T 2011-12 BUT THE NOTES TO ACCOUNTS HAS NOT BEEN APPENDED. 6.7 BEFORE US THE LEARNED COUNSEL OF THE ASSESSEE RE FERRED TO PAGE 24 OF THE PAPER-BOOK WHICH CONTAINS SCHEDULED OF THE BALANCE-SHEET AS ON 31/03/2003 AND 31/03/2004. ACCO RDING TO THE SCHEDULE OF CURRENT LIABILITY ADVANCE FROM CUS TOMERS RECEIVED WAS SHOWN AT 2 01 82 725/- AS ON 31/03/2003 WHICH HAS INCREASED FURTHER TO 5 30 38 073/- AS ON 31/03/2004. SIMILARLY THE SECURITY DEPOSIT FROM M/S OMXE WAS S HOWN AT 4 00 00 000/- AS ON 31/03/2003 WHICH DECREASED TO 53 14 877/-. THE LEARNED COUNSEL REFERRED THAT THE AMOUNT MENTIONED IN BALANCE-SHEET AS ADVANCE FROM CUSTOME RS WAS ACTUALLY THE AMOUNT RECEIVED FROM M/S OMXE AS INTER EST FREE UNSECURED LOAN AND WAS WRONGLY SHOWN AS ADVANCE FRO M THE CUSTOMER. HE SUBMITTED THAT OUT OF SAID LOAN RS. 5 .00 CRORES HAS BEEN UTILIZED TOWARDS REPAYMENT TO LOAN OF HOLDING COMPANY. 6.8 THE LEARNED COUNSEL FURTHER REFERRED TO THE PAGE 3 1 OF THE PAPER-BOOK WHICH IS A COPY OF THE BALANCE-SHEET AS ON 31/03/2005. THE LEARNED COUNSEL SUBMITTED THAT IN T HE BALANCE- SHEET AMOUNT RELEVANT TO 31/03/2004 HAVE BEEN SHOWN AS LIABILITY OF 5 83 52 950/- PAYABLE TO OMAXE. HE SUBMITTED THAT IN THE YEAR UNDER CONSIDERATION THE ASSESSEE HAS RE PAID AMOUNT OF RS.2 60 65 685/- LEAVING A CLOSING BALANCE OF RS . 3 22 87 265/-. 6.9 THE LD COUNSEL REFERRED TO BALANCE SHEETS FOR OTHE R YEARS ENDING AND ALSO LEDGER ACCOUNTS OF M/S OMAXE APPEAR ING IN 8 ITA NO. 679/DEL./2017 BOOKS OF THE ASSESSEE COPIES OF WHICH HAVE BEEN FI LED AT PAGES 60 TO 67 OF THE PAPER-BOOK. THE LEARNED COUNSEL SUBMIT TED THAT ASSESSEE HAS REPAID THE LOAN AMOUNT BACK TO M/S. OM AXE IN VARIOUS YEARS LEAVING A BALANCE OF RS.2 47 27 914/- AS ON 31/3/2009. HE SUBMITTED THAT SAID BALANCE OF UNSECU RED LOAN AMOUNT HAS BEEN TRANSFERRED TO THE GENERAL RESERVED ACCOUNT IN THE YEAR UNDER CONSIDERATION BUT THE ACCOUNTANT HAS BY MISTAKE GIVEN THE NARRATION AS TRADE PAYABLES TRANSFERRED. 6.10 THE LEARNED COUNSEL FURTHER IN SUPPORT OF HIS CL AIM THAT WAIVER OF LOAN DOES NOT AMOUNT TO CESSATION OF TRAD ING LIABILITY SO AS TO APPLY SECTION 41(1) OF THE ACT RELIED ON THE DECISION OF COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF WAS AN EXPORTS P LTD REPORTED IN (2019) 106 TAXMANN.COM 21 (DELHI-T RIB.). HE ALSO RELIED ON FOLLOWING DECISIONS: 1. COMMISSIONER VS. MAHINDRA AND MAHINDRA LTD. [20 18] 93 TAXMANN.COM 32 (SC); 2. PRINCIPAL COMMISSIONER OF INCOME-TAX -1 VS. BABU L PRODUCTS (P.) LTD. [2018] 96 TAXMANN.COM 82 (GUJARAT); 3. COMMISIONER OF INCOME-TAX VS. COMPAQ ELECTRIC LT D. [2019] 101 TAXMANN.COM 400 (SC); 4. LUXOR WRITING INSTRUMENTS (P.) LTD. VS. DY. COM MISSIONER OF INCOME-TAX CIRCLE 4(1) NEW DELHI [2013] 31 TAXMA NN.COM 408 (DELHI TRIB.); 5. CIT VS. ICC INDIA P. LTD. ITA NO. 396/2012 (DAT ED: 20 TH NOVEMBER 2012) (DELH-HC) 6. LOGITRONICS (P.) LTD. VS. COMMISSIONER OF INCOM E TAX [2011] 197 TAXMAN 394 (DELHI); 7. SUTLEJ COTTON MILLS LTD. VS. COMMISSIONER OF INC OME TAX [1979] 116 ITR 1 (SC); 8. TUTICORIN ALKALI CHEMICALS & FERTILIZERS LTD. VS . COMMISSIONER OF INCOME TAX [1997] 93 TAXMAN 502 (SC) 6.11 ON THE OTHER HAND LEARNED DR RELIED ON THE ORDER OF THE LOWER AUTHORITIES AND SUBMITTED THAT EVEN DURING TH E APPELLATE PROCEEDINGS THE ASSESSEE HAS FAILED TO FILE ANY CO NFIRMATION FROM 9 ITA NO. 679/DEL./2017 M/S. OMAX TO SUBSTANTIATE THE CLAIM OF THE ASSESSEE THAT THE LIABILITY IN DISPUTE WAS AN INTEREST FREE UNSECURED LOAN NOT RELATED TO ANY TRADING LIABILITY. FURTHER HE SUBMITTED THA T THE BALANCE- SHEET FILED BY THE ASSESSEE FOR VARIOUS YEARS ARE N OT SIGNED EITHER BY THE AUDITORS OR BY THE DIRECTORS AND THEREFORE THE SAME WERE NOT RELIABLE. HE FURTHER SUBMITTED THAT THE ASSESSE E DID NOT AVAIL THE OPPORTUNITY GRANTED BY THE LEARNED CIT(A) AND THEREFORE NOW THE ASSESSEE SHOULD NOT BE ALLOWED TO FILE THE BALA NCE-SHEETS FOR THE EARLIER YEARS WHICH WERE NEVER FILED BEFORE THE ASSESSING OFFICER. 6.12 WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTIES AND PERUSED THE RELEVANT MATERIAL ON RECORD. REGARDING THE CONTENTION OF THE LEARNED DR THAT THE DOCUMENTS I.E. BALANC E-SHEETS FOR VARIOUS YEARS FILED FROM PAGE 21 TO 59 WERE NEVER FILED BEFORE THE ASSESSING OFFICER BUT ON PERUSAL OF THE PAPER- BOOK WE FIND THAT THE AUTHORIZED REPRESENTATIVE SHRI SHYAM SUND ER HAS CERTIFIED ALL THE DOCUMENTS IN THE PAPER-BOOK AS W ERE FILED BEFORE THE LEARNED ASSESSING OFFICER AND LEARNED CIT(A). I N VIEW OF THE CERTIFICATE WE ACCEPT THE DOCUMENTS AS FILED BEFOR E THE ASSESSING OFFICER. THE ISSUE IN DISPUTE IN THE CASE IS WHETHE R THE LIABILITY WHICH WAS APPEARING IN THE BALANCE-SHEET AND TRANSF ERRED TO GENERAL RESERVE BY THE ASSESSEE IN THE YEAR UNDER C ONSIDERATION WAS LIABILITY TO BE CHARGED AS INCOME UNDER SECTION 41(1) OF THE ACT. AS PER SECTION 41(1) OF THE ACT WHERE ANY ALL OWANCE OR DEDUCTION HAS BEEN MADE IN THE ASSESSMENT FOR ANY Y EAR IN RESPECT OF THE LOSS EXPENDITURE OR TRADING LIABILI TY INCURRED BY THE ASSESSEE AND SUBSEQUENTLY DURING ANY PREVIOUS YEAR THE ASESSEE HAS OBTAINED WHETHER IN CASH OR ANY OTHER MANNER AN Y AMOUNT IN 10 ITA NO. 679/DEL./2017 RESPECT OF SUCH LOSS OR EXPENDITURE OR BENEFIT IN R ESPECT OF SUCH TRADING LIABILITY BY WAY OF REMISSION OR CESSION THEN SUCH AMOUNT OBTAINED OR THE VALUE OF THE BENEFIT ACCRUIN G TO HIM IS DEEMED TO BE PROFIT AND GAINS OF THE BUSINESS OR PR OFESSION. 6.13 BEFORE US THE LOWER AUTHORITIES HAS ON THE BASIS OF BOOKS OF ACCOUNT/FINANCIAL STATEMENTS ALONG WITH NOTICE THER EON HAS HELD THAT THE AMOUNT OF RS.2 47 27 914/- WAS TRADE PAYAB LES AND REMISSION THEREOF IS AN INCOME UNDER SECTION 41(1) OF THE ACT. THOUGH THE ASSESSEE CONTENDED THAT THE LIABILITY WA S AN INTEREST FREE UNSECURED LOAN RECEIVED FROM M/S. OMAX HOWEVE R COULD NOT FILE ANY CONFIRMATION FROM THE SAID PARTY. THE ASSE SSING OFFICER ISSUED NOTICE UNDER SECTION 133(6) OF THE ACT TO TH E SAID PARTY AND FOUND THAT SUCH LIABILITY WAS IN RESPECT OF TRA DING TRANSACTIONS AND WHATEVER BALANCE AMOUNT PAYABLE TO THAT PARTY WAS ALREADY WRITTEN OFF BY THE SAID PARTY PRIOR TO THE FINANCIAL YEAR 2005-06. BEFORE THE LEARNED CIT(A) THE ASSESS EE DID NOT APPEAR. BEFORE US NOW THE ASSESSEE HAS FILED BALAN CE-SHEET AS ON 31.03.2004 TO 31.03.2010 AND ALSO THE COPY OF THE L EDGER ACCOUNT OF M/S. OMAX IN THE BOOKS OF ACCOUNT OF THE ASSESSEE FORM 01.04.2004 TO 31.03.2011. IN THE LEDGER ACCOUN T IT IS SHOWN THAT THE ASSESSEE HAS OUT OF LIABILITY OF RS. 5 83 52 950/- HAS PAID VARIOUS AMOUNTS THROUGH BANK LEAVING CLOSI NG BALANCE OF RS.2 47 27 914/- AS ON 31.03.2010 AND IN THE YEA R UNDER CONSIDERATION THIS AMOUNT HAS BEEN REMITTED BACK. T HE CONTENTION OF THE LEARNED COUNSEL IS THAT SUCH AMOU NT BEING IN THE NATURE OF THE LOAN IT DOES NOT AMOUNT TO CESSAT ION OF THE TRADING LIABILITY. THE FINDINGS OF THE COORDINATE B ENCH OF TRIBUNAL 11 ITA NO. 679/DEL./2017 IN THE CASE OF WASAN EXPORTS (P.) LTD. (SUPRA) REL IED UPON BY THE ASSESSEE IS REPRODUCED AS UNDER: 14. WE HAVE CONSIDERED THE RIVAL SUBMISSION AND PE RUSED THE MATERIAL AVAILABLE ON RECORD. SECTION 41(1) OF THE INCOME TAX ACT 1961 PROVIDES WHERE AN ALLOWANCE OR DEDUCTION HAS BEEN MADE IN THE ASSESSMENT FOR ANY YEAR IN RESPECT OF LOSS EXPE NDITURE OR TRADING LIABILITY INCURRED BY ASSESSEE AND SUBSEQUENTLY DUR ING ANY PREVIOUS YEAR (-) THE (A) THE FIRST MENTIONED PERSON HAS OBT AINED 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 OR CESSATION THEREOF THE AMOUNT OBTAINED BY SUCH PERSON OR THE VALUE OF THE BENEFIT ACCRUING IT TO HIM SHALL BE DEEMED TO BE PROFITS AND GAINS OF BUSINESS OR PROFESSION AND ACCORDINGLY CHARGEABLE TO INCOME TAX AS THE INC OME OF THAT PREVIOUS YEAR WHETHER THE BUSINESS OR PROFESSION I N RESPECT OF WHICH THE AMOUNTS OR DEDUCTION HAS BEEN MADE IS IN EXISTENCE IN THAT YEAR OR NOT. THE LEARNED COUNSEL FOR THE ASSE SSEE RELIED UPON THE DECISION OF THE HONBLE SUPREME COURT IN THE CA SE OF MAHINDRA AND MAHINDRA LTD. (SUPRA) IN WHICH THE INCOME TAX OFFICER AFTER PERUSAL OF THE RETURN CONCLUDED THAT WITH THE WAIVE R OF THE LOAN AMOUNT THE CREDIT REPRESENTED THE INCOME AND NOT L IABILITY. THE ASSESSING OFFICER THEREFORE HELD THAT A SUM OF RS .57 74 064/- WAS TAXABLE UNDER SECTION 28 OF THE INCOME TAX ACT. THE POINT FOR CONSIDERATION BEFORE THE HONBLE SUPREME COURT WAS THAT WHETHER IN THE PRESENT FACTS AND CIRCUMSTANCES OF THE CASE THE SUM OF RS.57 74 064/- DUE BY THE RESPONDENT TO KEISER JEEP CORPORATION WHICH LATER ON WAIVED-OFF BY THE LENDER CONSTITUTE TAXABLE INCOME OF THE RESPONDENT OR NOT ?. THE HONBLE SUPREME COURT AFTER CONSIDERING THE ISSUE IN DETAIL HELD THAT IN SUCH CIRCUMSTANCES SECTION 28(IV) OF THE INCOME TAX ACT IS NOT APPLICABLE. THE LD. CIT(A) ALSO IN THE PRESENT CAS E HELD THAT SECTION 28(IV) IS NOT ATTRACTED IN THE PRESENT CASE. THE HONBLE SUPREME COURT IN THE CASE OF MAHINDRA AND MAHINDRA LTD. (SUPRA) ALSO HELD THAT SECTION 41(1) OF THE INCOME TAX ACT DOES NOT APPLY SINCE WAIVER OF LOAN DOES NOT AMOUNT TO CESSATION O F TRADING LIABILITY. IT IS A MATTER ON RECORD THAT THE RESPONDENT HAS NO T CLAIMED ANY DEDUCTION UNDER SECTION 36(1)(III) OF THE INCOME TAX ACT QUA THE PAYMENT OF INTEREST IN ANY PREVIOUS YEAR. IN THE P RESENT CASE THE AUTHORITIES BELOW HAVE NOT GIVEN ANY FINDING OF FAC T WHETHER THE WHOLE AMOUNT OF LOAN HAD BEEN UTILISED EITHER FOR T HE PURPOSE OF ACQUIRING A CAPITAL ASSET OR FOR THE PURPOSE OF BUS INESS ACTIVITY OR TRADING ACTIVITY. THERE IS ALSO NO FINDING OF FACT WHETHER ASSESSEE HAD CLAIMED ANY DEDUCTION IN RESPECT OF INTEREST ON LOAN IN EARLIER YEARS. THIS MATTER REQUIRES FINDING OF FACT IN THE LIGHT OF JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF MAHINDRA AND M AHINDRA LTD. (SUPRA). LEARNED COUNSEL FOR THE ASSESSEE THEREFOR E RIGHTLY 12 ITA NO. 679/DEL./2017 CONTENDED THAT MATTER MAY BE REMITTED BACK TO THE F ILE OF ASSESSING OFFICER FOR RECONSIDERATION OF THE ISSUE AS PER LAW . IN VIEW OF THE ABOVE DISCUSSION WE SET ASIDE THE ORDERS OF THE AU THORITIES BELOW AND RESTORE THE MATTER IN ISSUE TO THE FILE OF ASSE SSING OFFICER WITH A DIRECTION TO RE-DECIDE THE ISSUE STRICTLY IN ACCORD ANCE WITH LAW BY GIVING REASONABLE SUFFICIENT OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. IN THE RESULT THIS GROUND OF APPEAL OF A SSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 6.14 WE FIND THAT VARIOUS BALANCE-SHEETS FILED BY THE AS SESSEE ARE NEITHER SIGNED BY THE AUDITOR NOR BY THE DIRECT OR AND THEREFORE THE SAME ARE NOT RELIABLE. THE ASSESSEE HAS FAILED TO PRODUCE ANY CONFIRMATION TO THE EFFECT THAT THE ASS ESSEE RECEIVED PAYMENT FROM M/S. OMAX AS INTEREST FREE UNSECURED L OAN. THE ASSESSEE HAS NEITHER FILED ANY AGREEMENT FOR OBTAIN ING UNSECURED LOAN FROM SAID PARTY. IN THE FACTS AND CIRCUMSTANCE S OF THE CASE AND IN THE SUBSTANTIAL INTEREST OF THE JUSTICE WE FEEL IT APPROPRIATE TO RESTORE THIS MATTER TO THE FILE OF T HE ASSESSING OFFICER WITH THE DIRECTION TO THE ASSESSEE TO PRODU CE FOLLOWING DOCUMENTS AND DIRECTION TO THE ASSESSING OFFICER TO CARRY OUT ENQUIRIES DEEMED FIT AND THEN DECIDE WHETHER THE RE MISSION OF THE LIABILITY IN QUESTION IS LIABLE TO BE INCOME UNDER SECTION 41(1) OF THE ACT IN ACCORDANCE WITH LAW: (I) THE CERTIFIED COPY OF THE BALANCE-SHEETS DULY SIGNED BY THE AUDITOR AND THE DIRECTOR OF THE COMPANY AND BY THE ASSESSSEE FOR YEAR ENDING ON 31.03.2003 TO 31.03.2011. (II) THE DULY CERTIFIED LEGER ACCOUNTS OF M/S. OMA X IN THE BOOKS OF THE ASSESSEE FROM THE FINANCIAL YEAR IN WH ICH THE PAYMENT WAS RECEIVED TILL 31.03.2011. 13 ITA NO. 679/DEL./2017 (III) COPY OF CONFIRMATION FROM M/S. OMAX STATING T HE NATURE OF THE TRANSACTIONS AND YEAR-WISE ACCOUNT OF THE ASSESSEE IN THE BOOKS OF M/S. OMAX. (IV) COPY OF THE AGREEMENT IN RESPECT OF THE PAYME NT RECEIVED BY THE ASSESSEE. 6.15 SINCE THE ASSESSEE HAS NOT COOPERATED BEFORE THE LEARNED FIRST APPELLATE AUTHORITY IT IS ITS RESPONSIBILITY TO PRODUCE ALL THE DOCUMENTS REQUIRED BY THE ASSESSING OFFICER AND COO PERATE IN THE PROCEEDINGS. THUS GROUND NO. 4 OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 7. THE GROUND NO. 5 BEING CONSEQUENTIAL IN NATURE AND GROUND NO. 6 BEING GENERAL IN NATURE NEED NOT TO BE ADJUD ICATED. 8. IN RESULT THE APPEAL OF THE ASSESSEE IS PARTLY ALL OWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH FEBRUARY 2020. SD/- SD/- (AMIT SHUKLA) (O.P. KANT) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 28 TH FEBRUARY 2020. RK/- (D.T.D.S.) COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR ITAT NEW DELHI