M/S. DOUCEUR SPORTWEAR MFG. CO PVT LTD.,MUMBAI vs. ACIT-15(1)(2), MUMBAI

Having considered the submissions of the assessee, we are of the considered view that there was sufficient cause for not filing the appeal within the prescribed limitation period. Accordingly, the delay in filing the present appeal is condoned and we proceed to decide the appeal on merits.

In this appeal, the assessee has raised the following grounds: - “1. There is no detail list of sundry creditors under consideration of Assessing Officer is given by Ld. Assessing officer for Rs. 1,49,01,483/- out of to Rs. 20,14,33,800.54/- sundry creditors outstanding as on 31/03/2013 to provide evidence if any available with assessee.

The Assessing officer has imposed the Double tax under section 41 (1) of Income Tax on same set of Sundry Creditors of Rs. 1,54,94,367/- as on 31/03/2012 and RS. 1,49,01,483/- is outstanding as on 31/03/2013.

We have considered the submissions of both sides and perused the material available on record. The brief facts of the case are that the assessee is engaged in the business of manufacturing specialty garments. For the year under consideration, the assessee filed its return of income on 30.09.2013 declaring a total loss of Rs.1,46,26,640/-. The return filed by the assessee was selected for scrutiny, and statutory notices under section 143(2) and section 142(1) of the Act were issued and served on the assessee. During the assessment proceedings, the assessee was asked to submit details of ageing -Mum-2024 (A.Y. 2013-14) 4 of sundry creditors. In response, the assessee submitted that there was a fire at its factory premises in Gujarat, and because of which the entire manufacturing activity/business operation of the assessee was paralyzed. The assessee further submitted that due to fire, the damage was caused to the assets as well as the records of the company, and hence, the business activity has come to a standstill. Since the current liabilities in the account of the assessee as on 31.03.2013 stood at Rs.1,49,01,483/- and the assessee failed to submit proper justification, explanation and reason for non-payment of creditors and also failed to submit copy of bills relating to sundry creditors, the Assessing Officer (“AO”), vide order dated 23.03.2016 passed under section 143(3) of the Act, by invoking the provisions of section 41(1) of the Act added the sundry creditors amounting to Rs.1,49,01,483/- to the total income of the assessee.

The learned CIT(A), vide impugned order, also in absence of any details upheld the deletion made by the AO under section 41(1) of the Act. Being aggrieved, the assessee is in appeal before us.

During the hearing, the learned Authorized Representative (“learned AR”) sought admission of additional evidence filed vide an application dated 25.11.2024 under Rule 29 of the Income Tax (Appellate Tribunal) Rules, 1963. The learned AR submitted that due to fire at the premises of the assessee on 06.08.2009, all the records in respect of addition made by the AO were destroyed, and therefore, the assessee could not furnish any evidence in respect of its submission. The learned AR further submitted that in the immediately preceding assessment year, i.e., 2012-13, the AO made similar -Mum-2024 (A.Y. 2013-14) 5 addition under section 41(1) of the Act in respect of the sundry creditors appearing in its books of account. It was further submitted that the liability arose since assessment year 2008-09, and due to the fact that there was fire at the factory premises of the assessee and because of which its business has completely shut down, the liability continues to stand in its books of account. The learned AR also submitted that certain creditors have also approached the Hon’ble National Company Law Tribunal in liquidation proceedings against the assessee, and have claimed the payment due to them. Accordingly, it was submitted that the entire liability standing in the books of account of the assessee cannot be said to have ceased and thus not taxable under section 41(1) of the Act. The learned AR submitted that the documents now produced by the assessee along with application seeking admission of additional evidence were obtained by it from the Income Tax Department and forms part of the assessment record for the preceding assessment year. Accordingly, the learned AR prayed that the same may be considered for deciding the issue at hand.

On the other hand, the learned Departmental Representative (“learned DR”) submitted that no document was furnished by the assessee during the assessment as well as the appellate proceedings, and accordingly, the addition was made under section 41(1) of the Act in respect of sundry creditors appearing in the books of account of the assessee. The learned DR further submitted that the documents now placed on record by the assessee, vide application seeking admission of additional evidence, forms part of the -Mum-2024 (A.Y. 2013-14) 6 assessment record for the preceding assessment year, and therefore, were not considered by any of the lower authorities in the year under consideration.

Having considered the submissions of both sides and perused the material available on record, we are of the considered view that this is a fit case for admission of additional evidence filed by the assessee. Since it is evident from the record that these evidences were not considered by any of the lower authorities, therefore, we deem it appropriate to restore the matter to the file of the jurisdictional AO for de novo consideration after due examination and verification of the details/evidences furnished before us by the assessee. Accordingly, the impugned order is set aside and the matter is restored to the file of the AO for consideration afresh. We further direct that the assessee shall be at liberty to furnish any other information/document in support of its claim before the AO. We also direct the assessee to fully co- operate in the assessment proceedings and furnish any other document as may be sought by the AO for complete adjudication of the issue. As a result, the grounds raised by the assessee are allowed for statistical purposes.

In the result, the appeal by the Assessee is allowed for statistical purposes.