SATWANTKAUR R. CHANEY,MUMBAI vs. ACIT 33(3), MUMBAI

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ITA 6168/MUM/2016Status: DisposedITAT Mumbai26 September 2018AY 2012-133 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal directed the Assessing Officer to verify the facts regarding the write-off and offer of income in AY 2015-16. The AO was instructed to grant appropriate relief to the assessee after verification and providing an adequate opportunity.

What were the facts?

The assessee's assessment for AY 2012-13 included an addition of Rs. 4,00,637/- on account of cessation of liability from sundry creditors. The assessee argued that these amounts were written off and offered as income in AY 2015-16.

What were the issues?

Whether the addition on account of cessation of liability under Section 41 was justified when the amount was subsequently offered as income in a later assessment year.

Which sections of the Income-tax Act were involved?

Section 41,Section 143(3)

AI-generated summary — verify with the full judgment below

PER PAWAN SINGH, JUDICIAL MEMBER;

1.

This appeal by assessee under section 253 of the Income-tax Act (the Act) is directed against the order of ld. Commissioner of Income-tax (Appeals)

(ld. CIT(A)-45, Mumbai dated 24.08.2016, which in turn arises from the assessment order passed by Assessing Officer under section 143(3) of the Act dated 10.03.2015 for Assessment Year 2012-13. The assessee has raised the following grounds of appeal:

1. Under the facts and circumstances of the case and in law, the learned CIT-A has erred in confirming the addition of: (i) A sum of Rs. 4,00,637/-, existing in certain Sundry Creditors’ Accounts in the Books of the Assessee-appellant under the terms of S.41 of the ITA.

2.

Brief facts of the case are that the assessee is in the business of Manufacturer & Trading of Furniture & Fixture, Electrical Fittings, Mum 2016-Satwantkaur R. Channey Plumbing, Painting, and Tiling Polishing & POP work, filed its return of income for Assessment Year 2012-13 on 29.09.2012 declaring total income at Rs. 60,13,280/-. The assessment was completed on 10.03.2015 under section 143(3) of the Act. The Assessing Officer while passing the assessment order made addition of Rs. 4,00,637/- on account of cessation of liability as creditor were standing in the assessee’s book for more than two years. On appeal before the ld. CIT(A), the action of Assessing Officer was confirmed. Thus, aggrieved by the order of ld. CIT(A), the assessee has filed the present appeal before us.

3.

We have heard the submissions of the ld. Authorized Representative (AR) of the assessee and the ld. Departmental Representative (DR) for the revenue and perused the material available on record. The ld. AR of the assessee submits that the amounts pertaining to sundry creditors being written off during the Financial Year 2014-15 i.e. Assessment Year 2015- 16 were offered as income for taxation. On the other hand, the ld. DR for the Revenue submits that no return of income and computation has been furnished on record.

4.

We have considered the rival submissions of the parties and have gone through the orders of the lower authorities. On our direction, the ld. AR of the assessee filed copy of assessment order for Assessment Year 2015-16 passed on 14.12.2017 under section 143(3) along with the return of income and computation of income. We have noted that for computation of 2 ITA No. 6168 Mum 2016-Satwantkaur R. Channey income, the assessee has written back liability of the same amount.

Considering the contention of ld. AR of the assessee, we direct the Assessing Officer to verify the facts and grant appropriate relief to the assessee in accordance with law. Needless to say that the Assessing Officer shall grant adequate opportunity before giving effect to order of hearing before passing the order in accordance with law.

5.

In the result, appeal of the assessee is allowed.

Order pronounced in the open court on 26/09/2018.

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