ITO 13(3)(2), MUMBAI vs. WELLBERT PHARMACEUTICAL BOMBAY P.LTD, MUMBAI

None appeared on behalf of the assessee. However, a petition seeking adjournment was filed, wherein it is stated that the company has been closed about three years back and further the directors are not keeping good health. The Ld D.R strongly objected to the adjournment petition filed by the assessee. He submitted that the Ld CIT(A) has granted relief to the assessee without passing a reasoned order.

We agree with the contentions of the Ld D.R. It is the duty of the assessee to defend the appeal and the reasons cited by the assessee for seeking adjournment are not proper reasons. Accordingly we reject the petition filed by 2 M/s. Wellbert Pharmaceutical Bombay Pvt. Ltd. the assessee and proceed to dispose of the appeal, ex-parte, without presence of the assessee.

We heard Ld D.R and perused the record. We notice that the AO, during the course of assessment proceedings, asked for details of sundry creditors along with name, addresses, PAN and amount. Since the assessee has failed to furnish the same, the AO assessed the outstanding amount as income of the assessee u/s 41(1) of the Act. The Ld CIT(A) has deleted the same on the reasoning that the AO has not brought any material to show that the entire liability has ceased.

The main contention of Ld D.R was that the assessee has failed to furnish the details that were called for by the AO in order to prove that the liability of the assessee towards sundry creditors subsists as on the last day of the financial year. He submitted that the Ld CIT(A) was not right in granting relief to the assessee, since the assessee has failed to prove the same even before Ld CIT(A).

We agree with the contentions of the Ld D.R. There should not be any doubt that the responsibility is placed upon the assessee to prove that the liability towards sundry creditors is subsisting as on the last date of the previous year. In the instant case, the assessee has not furnished the details that were called for by the AO and it did not furnish the details even before Ld CIT(A). Hence the Ld CIT(A) was not justified in deleting the addition by putting blame on the AO, when the assessee has failed to furnish the details. At the same time, we are of the view that, in the interest of natural justice, the assessee may be given one more opportunity to prove its case before the AO. Accordingly we set aside the order passed by Ld CIT(A) on this issue and direct the AO to re-examine the impugned issue afresh. The assessee is directed to furnish all the details that were/ may be called by the AO. After considering

In the result, the appeal of the revenue is treated as allowed for statistical purposes.