ASSISTANT COMMISSIONER OF INCOME TAX 16(1), MUMBAI vs. METALIGHT PRODUCTIONS PRIVATE LIMITED, MUMBAI

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ITA 5020/MUM/2017Status: DisposedITAT Mumbai27 March 2019AY 2012-134 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the CIT(A)'s powers are coterminous with the AO, and if granting relief, further inquiry should have been completed by the CIT(A). The issue was remitted back to the AO for fresh adjudication after proper opportunity to both parties.

What were the facts?

The Assessing Officer added Rs. 7,62,49,495/- to the assessee's income on account of outstanding sundry creditors, as the assessee failed to provide details to confirm their existence. The CIT(A) deleted this addition, stating the AO did not conduct further inquiry.

What were the issues?

Whether the CIT(A) erred in deleting the addition of non-existing liabilities without proper inquiry, and if the matter should be remanded for further investigation by the AO.

Which sections of the Income-tax Act were involved?

Section 41(1),Section 143(1),Section 143(2),Section 142(1)

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, “D” BENCH, MUMBAI

Before: SHRI SHAMIM YAHYA, AM & SHRI AMARJIT SINGH, JM

Hearing: 30.01.2019Pronounced: 27.03.2019

O R D E R

PER AMARJIT SINGH, JM:

1.

The revenue has filed the present appeal against the order dated 19.04.2017 passed by the Commissioner of Income Tax (Appeals) -4, Mumbai [hereinafter referred to as the “CIT(A)”] relevant to the A.Y.2012- 13.

2.

The revenue has raised the following grounds: -

" 1. Whether on the facts in the circumstance of the case and as per law, the Ld. CIT(A) has erred in directing to delete the addition of Rs.7,62,49,495/- on account of the non-existing liabilities, without appreciating that the liabilities mentioned by the ITA No.5020 /M/2017 A.Y.2012-13 assessee against these parties could not be confirmed during the assessment proceedings.

2. Whether on the facts in the circumstance of the case and as per law, the Ld. CIT(A) has erred in directing to delete the addition of Rs.7,62,49,495/- on account of non-existing liabilities, without appreciating that these liabilities were outstanding for more than 5 years and the assessee has not provided any details to confirm whether they were payable in future and whether they were actually paid.

3. Whether on the facts in the circumstance of the case and as per law, the Ld. CIT(A) has erred in directing to delete the addition of Rs.7,62,49,495/- on account of non-existing liabilities and by not following the decision of Hon'ble Mumbai ITAT in the case of ]TO vs Sajjankumar Didwani (47 taxmann.com 391), wherein the Hon’ble ITAT has held that the trading liability which was outstanding for a period of almost six years and no confirmation evidencing existence of liability was furnished at any stage and even no claims with regard thereto were made, same could clearly be said to be unproved, and application of section 41(1) was justified.

4.

Whether on the facts in the circumstance of the case and as per law, the Ld. CIT(A) has erred in directing to delete the addition of Rs.7,62,49,495/- on account of non-existing liabilities and by not following the decision of Hon'ble Delhi High Court in the case of CIT Vs Chipsoft Technology (P) Ltd. (210 taxmann 173).

5. The appellant prays that the order of CIT(A) on the above ground be set aside and that of the Assessing officer be restored."

3.

The brief facts of the case are that the assessee filed his return of income on 25.09.2012 declaring total income to the tune of Rs Nil. The return was processed u/ 143(1) of the Act. Thereafter, the case was selected for scrutiny and notices u/s 143(2) & 142(1) of the Act were issued and served upon the assessee. The assessee is engaged in the business of production, distribution and exhibition of commercial films in India. The assessee declared the loss under the head of income from business and ITA No.5020 /M/2017 A.Y.2012-13 profession. On perusal of the balance-sheet, it was observed that there was his outstanding sundry creditors balance to the tune of Rs.7,62,49,495/-. The assessee was asked to produce or submit the details of creditors but assessee failed to do so, therefore, the net balance in sum of Rs.7,62,49,495/- was added to the income of the assessee. Feeling aggrieved, the assessee filed the appeal before the CIT(A) who allowed the claim of the assessee, therefore, the revenue has filed the present appeal before us.

4. We have heard the argument advanced by the Ld. Representative of the department and has gone through the case carefully. We find that Ld. CIT(A) has summarily deleted the addition, without any cogent explanation from the assessee. The AO has given a finding that the impugned credits were five years old as per assessee’s own admission and there was no information as to whether they are existing or not. Ld. CIT(A) has deleted the addition by holding that AO has not made any further enquiry. We find that power of Ld. CIT(A) are coterminous with that of the Assessing Officer. If the Ld. CIT(A) was going to grant extraordinary benefit to the assessee, he should have completed the remaining enquiry himself. Accordingly, in our considered opinion that the issue needs to be remitted to the file of the Assessing Officer to complete the necessary enquiry after giving the assessee proper opportunity of being heard. Accordingly, we set aside the finding of the CIT(A) on this issue and restored the appeal before the AO to decide the matter of controversy afresh by giving an opportunity of being heard to both the parties in accordance with law.

ITA No.5020 /M/2017 A.Y.2012-13

5.

Accordingly, the impugned issue is remitted to the file of Assessing Officer.

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