BALAJI CONSTRUCTION,PUNE vs. INCOME TAX OFFICER WARD -7(3), PUNE

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ITA 9/PUN/2021Status: DisposedITAT Pune28 July 2022AY 2015-163 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the addition could not be sustained under Section 41(1) as there was no material evidencing cessation or remission of liability. Furthermore, the addition could not be treated as unexplained cash credits under Section 68 as it amounted to creating a new head of income in appeal.

What were the facts?

The assessee challenged an addition of Rs. 12,30,417 made by the Assessing Officer. This addition was initially treated as cessation of liability under Section 41(1) and later as unexplained cash credits under Section 68 by the CIT(A).

What were the issues?

Whether the addition made on account of cessation of liability is sustainable under Section 41(1) and whether it can be treated as unexplained cash credits under Section 68 in the first appellate proceedings.

Which sections of the Income-tax Act were involved?

Section 41(1),Section 68

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, PUNE BENCH “SMC”, PUNE

Before: SHRI S. S. GODARA

For Appellant: Shri Suhas Bora
For Respondent: Shri M. G. Jasnani
Hearing: 28.07.2022Pronounced: 28.07.2022

ORDER

PER S. S. GODARA, JM:

1.

This assessee’s appeal for assessment year 2015-16 arises against the CIT(A)-5, Pune’s order dated 21.05.2018 passed in case no.PN/CIT(A)-5/ITO, Wd-7(3), Pune/10192/2017-18 involving proceedings u/s 143(3) of the Income Tax Act, 1961; in short “the Act”. Heard both the parties. Case file perused.

2.

It emerges at the outset that the assessee’s sole substantive grievance challenges correctness of addition amount of Rs.12,30,417/- made in the course of assessment as an instance of 41(1) of the Act; which in turn has been treated as unexplained cash credits u/s 68 in the CIT(A)’s lower appellate discussion. 3. I have given my thoughtful consideration to vehement rival stands against and in support of the foregoing twin issues involving the very sum of Rs.12,30,417/-. Suffice to say, Mr. Jasnani could not pinpoint any specific material on assessee’s books evidencing actual cessation or remission; as the case may be, so as to attract section 41(1) of the Act. I thus quote CIT vs. Bhogilal Ramjibhai Atara (2014) 43 taxmann.com 55 (Gujarat) and Vardhman Overseas (2012) 343 ITR 408 (Delhi) to delete the impugned addition for this precise reason alone. 4. The legal position regarding section 68 addition of the very sum also fails the test of legality as it amount to hold together a new head of income in first appellate proceedings not sustainable in light of CIT vs. Shapoorji Pallonji Mistry (1962) 44 ITR 891 (SC), CIT vs. Union Tyres (1990) 240 ITR 556 (Delhi) and CIT vs. Sardarilal & Co. (2001) 251 ITR 864 (Delhi) (FB). The same also stands deleted therefore.

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