M/S. RITA PLASTICS PVT. LTD.,NEW DELHI vs. ITO, NEW DELHI

PER SUDHANSHU SRIVASTAVA, JM: This appeal is preferred by the assessee against the order of the ld. C.I.T.(A)-7, New Delhi dated 25.04.2016 pertaining to assessment year 2011-12 on the following grounds: -

(2) That the Learned CIT(appeals) has grossly erred in confirming the action of the Assessing Officer in making an addition of Rs. 45,46,161/- under section 41(1) of the Act without appreciating evidence brought on record during the course of appellate proceedings establishing the outstanding balance of the creditors.

Assessment year 2011-12

2.1 That the Learned CIT (appeals) has grossly erred in confirming the addition made by the Assessing Officer under section 41(1) of the Act by incorrectly concluding that the liabilities of sundry creditors as at 31.03.2011 did not subsist in spite of the clinching evidence having been filed during the course of appellate proceedings to establish the existence of trading liability.

(3) That the appellant craves to add, alter or delete the above grounds of appeal at the time of hearing.”

2.0 The brief facts of the case are that during the year, the assessee company was engaged in the business of manufacturing of corrugated boards and boxes. The return of income was filed declaring the income at Nil and after initially processing the return u/s 143(3) of the Income Tax Act, 1961 (hereinafter called 'the Act'), the case was selected for scrutiny. During the course of assessment proceedings, the Assessing Officer noticed that there was a remission of liability u/s 41(1) to the tune of Rs. 45,46,161/- and the assessee was asked to file confirmation from the creditors regarding the same. However, the assessee could not file any supporting evidences in this regard nor were any supporting bills or books of accounts produced before the Assessing Officer. The Assessing Officer proceeded to add this amount to the income of the assessee along with some other Assessment year 2011-12 additions. The assessee’s appeal against the additions was dismissed because of the reason that the assessee could not file supporting evidences with respect to the remission of liability u/s 41(1) of the Act.

2.1 Now, the assessee is in appeal before this Tribunal and has challenged the confirmation of the addition by the ld. Commissioner of Income Tax(A).

2.2 The ld. AR submitted that the ld. Commissioner of Income Tax(A) was incorrect in confirming the addition by incorrectly concluding that the liabilities of sundry creditors as on 31.3.2011 did not subsist although clinching evidence had been filed during the course of appellate proceedings to establish the existence of the trade liability. The ld. AR submitted that in view of the evidences filed before the ld. Commissioner of Income Tax(A), the assessee should be allowed the benefit of remission of trade liability.

3.0 In response, the ld. Sr. DR vehemently supported the order of both the lower authorities.

3.1 On a query from the Bench, both the parties before us agreed that the issue can be restored to the file of the lower Assessment year 2011-12 authorities for re-examination and re-appreciation of the evidences.

3.2 Therefore, in view of the facts of the case and the concurrence of both the parties, we deem it appropriate to restore the file to the office of the ld. Commissioner of Income Tax(A) to re-examine the issue after duly considering the evidences which the assessee might file in support of its claim and, thereafter, pass an order in accordance with law after giving due opportunity to the assessee.

Order pronounced in the open court on 15th July, 2019.