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Income Tax Appellate Tribunal, “D” BENCH, MUMBAI
Before: SHRI M. BALAGANESH, AM & SHRI AMARJIT SINGH, JM
O R D E R
PER AMARJIT SINGH, JM:
The assessee has filed the present appeal against the order dated 15.03.2019 passed by the Commissioner of Income Tax (Appeals) -24, Mumbai [hereinafter referred to as the “CIT(A)”] relevant to the A.Y.2015- 16.
At the very outset, we find that there is delay of 26 days in filing of appeal by the assessee before us. We find that the assessee has filed an affidavit stating that it went into the clutches of Insolvency and Bankruptcy Code (IBC) in that all the employees of company had resigned and the existing counsel has been appointed by the Interim Resolution Professional (IRP). This collectively had contributed to the delay of 26 days in preferring appeal before us. We are inclined to condone the delay of 26 days and admit the appeal for adjudication. A.Y. 2015-16 3. The assessee has raised the following grounds: - Addition of Rs,2,24,06,551/- u/s 41(1) on Cessation of “I Liability The Ld. Commissioner (Appeals) has erred in law & in facts in confirming the addition u/s 41(1) of Rs.2,24,06,551/-. The CIT(A) order being contrary to evidence and facts of the case, should be amended or modified in the light of the ground prayed above. The appellant crave leave to reserve to themselves the right to add to alter or amend the grounds at or before the time of hearing.”
The brief facts of the case are that the assessee filed its return of income on 08-09.2015 declaring total loss to the tune of Rs.1,71,69,333/-. The return was processed u/s 143(1) of the I. T. Act, 1961. Thereafter, the case was selected for scrutiny. Notices u/s 143(2) & 142(1) of the Act were issued and served upon the assessee. On perusal of the balance-sheet, it was noticed that the assessee has shown trade payable to the tune of Rs.21,50,49,000/-. The assessee has shown the revenue from operations only to the tune of Rs.1,64,51,000/-. The trade payable in the balance-sheet was abnormally high as compared to the revenue declared during the year and earlier years. The liability for the period of w.e.f. 2009 & 2012 shown as under.:-
Sr. No. Particular Amount (Rs.) 1 Power construction for the month of Jan, 2010 117380 2 Power construction upto Dec, 2009 557623 3 Power construction for the month of Feb, 2010 11926 4 Power construction for the month of March, 2010 96042 5 Telephone CHGS24.03.201 to 22.05.2010 2146 6 Telephone CHGS 20.06.10 to 20.07.2010 955 7 Telephone CHGS 23.07.2010 to 20.08.2010 1249 A.Y. 2015-16 8 Interest Paid on ICD to Lavasa June, 2010 7671 9 Interest Paid on ICD to Lavasa, Sep, 2010 14839 10 Lease Rent Paid to Lavasa Area, sep, 2010 25074 11 Tata Landline CHGS Period for 23.09.2010 to 22.12.2010 2497
Interest paid on ICD to lavasa Dec, 2010 16358
Tata landline CHGS period from 23.12.2010 to 22.01.11 1841 12 Being Interest paid on ICD for 20 days 5041 13 Being interest payable on ICD @ 14.5% less TDS 10% 6525000 14 Tata Landline CHGS period from 23.01.11 to 22.02.11 891 15 Tata Landline CHGS period from 23.02.11 to 22.04.11 678 16 Tata Landline CHGS period from 23.4.11 to 22.5.11 281 17 Tata Landline CHGS period from 23.5.11 to 22.6.11 281 18 Tata Landline CHGS period from 23.6.11 to 22.7.11 281 19 Tata Landline CHGS period from 23.7.11 to 22.8.11 303 20 Lease Rent Oct to sep, 2011, lavasa Cor. Ltd. 25074 21 Tata Landline CHGS period from 23.8.11 to 22.9.11 300 22 Tata Landline CHGS period from 23.9.11 to 22.10.11 414 23 Tata Landline CHGS period from 23.10.11 to 22.11.11 290 24 Renewal of Insurance Policy paid by lavasa Ltd. 84772 25 Tata landline charge Dec to jan 2012 624 26 Interest on icd apr to dec, 2012 @ 14% lavasa 4323632 27 Interest on icd apr to mar, 12 @ 16% lavasa 1535423 28 Electricity charges jul to dec, 2011 rhl paid lavasa 29203 29 Interest on ICD Mar, 2012 @ 16% lavasa 39344 30 Tata landline charge mar, 2012 426 31 Tata landline charges Apr to Jun, 2012 1168 32 Renewal of insurance policy paid by lcl sep, 2012 98514 33 Being construction work done by ICL, Sep, 2012 8845152 34 Paid to lavasa Cor. AGST Part Payment 19074 35 Telephone charges Jul to Sep. 2012 910 36 Telephone Charges Oct, 2012 287 37 Telephone Charges Nov, 2012 287 38 Telephone Charges Dec, 2012 287 A.Y. 2015-16 39 Recd. From lavasa tsds. Deposits u/s 257 of C. Act. 500 40 Ins. Policy Renewal CGL & PI, GPA Policy by ICL RHL 4504 41 Ins Policy renewal IAR/CAR/LOP/ Money/Fedelity 8036 42 Total 22406551 5. All the amount has been shown outstanding as on 31.03.2015. The said amount was disallowed in view of the provisions of Section 41(1) of the I. T. Act, 1961. The total income of the assessee was assessed to the tune of Rs.52,37,220/-. Feeling aggrieved, the assessee filed an appeal before the CIT(A) and the CIT(A) dismissed the appeal of the assessee, therefore, the assessee has filed the present appeal before us.
ISSUE No. 1
We have heard the arguments advanced by the Ld. Representative of the parties and perused the record. Debt was due towards the Lavasa Corporation Ltd., Hincon House Lal Bahadur Shastri Marg, Vikhroli, West, Mumbai in sum of Rs.23,38,82,388.98 as on 11.04.2019. In this regard, the demand notice is on the file which lies at page no. 1 to 3 of the paper book. The Reasonable Housing Ltd. confirmed the balance due toward Lavasa Corporation Ltd. in sum of Rs.21,16,36,848.68 according to the balance- sheet. The copy of letter is on the file which lies at page no. 4 of the paper book. The Lavasa Corporation Ltd, confirmed the due amount in sum of Rs.21,16,36,848.68 as on 31.03.2015 by virtue of letter dated 20.01.2021. The said letter was based upon the statement of accounts as on 31.03.2015. Audited financial statement of Reasonable Housing Society for the year 31.3.2015 is on the file in which the amount in sum of Rs.21,16,36,848.68 is due against assessee. Anyhow the debtor as well as creditor have shown the figure in the books of accounts which is not in dispute. The same cannot be treated as cessation of liability and income of the assessee. The assessee A.Y. 2015-16 has not written back the liability so the said amount nowhere treated as remission or cessation of the liability and is not liable to be chargeable u/s 41(1) of the Act. In this regard, we also find support of the decision of the Hon’ble Supreme Court in the case of CIT Vs. Sugauli Sugar Works (P.) Ltd. (1999) 236 ITR 518, Bombay Dyeing & Mfg. Co. Ltd. Vs. State of Bombay AIR 1958 SC 328, Kesoram Industries & Cotton Mills Ltd. Vs. CIT (1992) 196 ITR 845 (Cal), CIT Vs. Jain Exports Pvt. Ltd. (2013) 35 taxmann.com 540 & CIT Vs. G. K. Patel & Co. (2013) 29 taxmann.com 248 (Guj). Taking into accounts of all the above facts and circumstances and by relying upon the decisions mentioned above, we are of the view that the finding of the CIT(A) is not justifiable, therefore, we set aside the finding of the CIT(A) and allow the claim of the assessee. ISSUE NO.2 & 3 7. Issue nos. 2 & 3 are formal in nature which are not required to be adjudicated. 8. In the result, the appeal filed by the assessee is hereby allowed. Order pronounced in the open court on 08/04/2020 Sd/- Sd/- (M. BALAGANESH) (AMARJIT SINGH) लेखध सदस्य / ACCOUNTANT MEMBER न्यधनिक सदस्य/JUDICIAL MEMBER मुंबई Mumbai; ददनांक Dated : 08/04/2020 Vijay Pal Singh/Sr. P.S.