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Facts
The assessee's appeal is against an order confirming an addition of Rs. 1,54,94,367/- made under Section 41(1) of the Income Tax Act, 1961, related to cessation of liability. The addition was made due to unpaid creditors, where the assessee cited a fire incident as the reason for being unable to service these debts. The Assessing Officer invoked Section 41(1) as no exceptions could be granted, and the CIT(A) confirmed this.
Held
The Tribunal found it appropriate to remit the matter back to the CIT(A) for joint adjudication of both the present appeal and a related pending appeal concerning a reassessment. The assessee is to be given a reasonable opportunity to be heard.
Key Issues
Whether the addition made under Section 41(1) on account of unpaid creditors is justified, especially considering a previous order remanding the matter and a subsequent reassessment for the same assessment year.
Sections Cited
143(3), 41(1), 147, 144, 254, 144B
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “D” BENCH MUMBAI
Before: SHRI SANDEEP GOSAIN & SHRI GIRISH AGRAWAL
O R D E R
PER GIRISH AGRAWAL, ACCOUNTANT MEMBER:
This appeal filed by the assessee is against the order of National Faceless Appeal Centre (NFAC), Delhi, vide order no. ITBA/NFAC/S/250/2024-2025/1073065328(1) dated 10.02.2025, passed against assessment order u/s. 143(3) of the Income-tax Act, 1961 (hereinafter referred to as the “Act”), by ACIT-15(1)(2), Mumbai dated 17.03.2015 for Assessment Year 2012-13.
2. Grounds taken by the Assessee are reproduced as under:
“1. The same issue as raised in present assessment and CIT (A) was raised for same assessment year 2012-13 against which appropriate proceeding is filed by the previous Chartered accountant of the assesses. The said proceeding is culminated to the ITA 4767/MUM/2019 and finally decided on 25/05/2021 by this Hon'ble Tribunal.
Vide order dated 25/05/2021 in ITA 4767/MUM/2019, this hon'ble tribunal has remanded back the same matter to Assessing officer for Verification denono.
3. That as per the order of this Hon'ble tribunal, the Fresh Assessment order is passed dated 28/03/2023 under section 144 r.w. 254, r.w. 144B of the Income Tax act by the assessing officer.
That the sais fresh assessment order dated 28/03/2023 is already challenged by Assessee vide Form 35 and said appeal is pending before CIT Appeals 5. The impugned CIT Appeal is repetition of the same assessment and mistakenly filed. In above circumstances the proceeding and order passed by CIT appeal may please be set aside.”
Brief facts of the case are that present appeal is against assessment completed u/s. 143(3) dated 17.03.2015, wherein an addition of Rs. 1,54,94,367/- is made against cessation of liability u/s. 41(1). Assessee was asked to provide justification in respect of the outstanding amounts against certain creditors for which assessee furnished that on account of fire which occurred in the factory of the assessee, its entire operation came to stand still. Assessee was not able to service these creditors and therefore remained unpaid. Ld. AO took note of these submissions so made and noted that “act of God” had hampered the operations of the assessee and its capacity to service the creditors. He further noted that there cannot be any exceptions which can be granted to the assessee and thus invoked provisions of section 41(1) to make the addition. Ld. CIT(A) confirmed the said addition and dismissed the appeal of the assessee against which assessee has come up before the Tribunal.
4. Ld. Counsel for the assessee submitted that similar issues have been dealt for the same assessment year on the same issue when the reassessment was done u/s. 147 r.w.s 143(3). The said reassessment order was contested by the assessee and reached before the Tribunal in for which the order was pronounced on 25.05.2021 by the co-ordinate bench of ITAT Mumbai, restoring the matter back to the file of Ld. AO for denovo adjudication. Pursuant to this restoration, Ld. AO passed an order u/s. 144 r.w.s. 254 dated 28.03.2023 wherein the addition was repeated. Assessee contested the same by filing the appeal before the Ld. CIT(A) which is pending as on date. On these set of facts Ld. Counsel submitted that there is a repetition of the addition for the same assessment year, one against the assessment made u/s. 143(3) i.e the present case and the other against the reassessment completed u/s. 147 r/w 254 for which the matter is pending before the Ld. CIT(A).
Considering the peculiar fact of this case, we find it appropriate to remit the matter before us, back to the file of Ld. CIT(A) so that both the appeals as stated above are taken up for adjudication together. Needless to say that assessee be given reasonable opportunity of being heard and to make the submissions substantiating the claim so made. Accordingly, grounds raised by the assessee are allowed for the statistical purposes.
In the result, appeal of the assessee is allowed for statistical purposes.