ITO 2(3)(3), MUMBAI vs. TRANS IMPEX P.LTD, MUMBAI

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ITA 6640/MUM/2013Status: DisposedITAT Mumbai05 December 2016AY 2007-082 pages

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

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that since the revision proceedings initiated by the CIT under Section 263 were set aside by a previous Tribunal order, the consequential assessment order would not survive. Therefore, the Revenue's appeal was dismissed.

What were the facts?

The Revenue appealed against the CIT(A)'s order deleting an addition made under Section 41(1) concerning cessation of liability. The original assessment was framed under Section 143(3) read with Section 263.

What were the issues?

The primary issue was whether the addition made under Section 41(1) was valid when the underlying revision proceedings under Section 263 were quashed. The applicability of Section 41(1) was also questioned.

Which sections of the Income-tax Act were involved?

Section 41(1),Section 143(3),Section 263

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “E” BENCH, MUMBAI

For Appellant: Shri Madhur Agarwal, AR
For Respondent: Shri. Vishwas S Mundhe, DR, Shri Madhur Agarwal, AR

IN THE INCOME TAX APPELLATE TRIBUNAL “E” BENCH, MUMBAI BEFORE SRI MAHAVIR SINGH, JM AND ASHWANI TANEJA, AM (A.Y:2007-08) Income Tax Officer M/s Trans Impex P. Ltd. 4th Floor, Darabshaw House, 2(3)(3), Mumbai, Room No.555, Aayakar Bhavan, Mumbai-400020 Vs. S.V. Marg, Ballard Estate, Mumbai-400001 PAN No. AAACT5093R Appellant .. Respondent Revenue by .. Shri. Vishwas S Mundhe, DR Assessee by .. Shri Madhur Agarwal, AR Date of hearing .. 05-12-2016 Date of pronouncement .. 05-12-2016 O R D E R PER MAHAVIR SINGH, JM:

This appeal by the Revenue is arising out of the order of CIT (A)-6, Mumbai in appeal No. CIT(A)-6/IT.64/Rg. 2(3)/12-13 dated 12.08.2013. The Assessment was framed by ITO 2(3)(3), Mumbai for the A.Y. 2007-08 vide order dated 29-11-2012 u/s 143(3) r. w. s. 263 of the Income Tax Act, 1961 (hereinafter ‘the Act’).

2.

The only issue in this appeal of Revenue is against the order of CIT(A) in deleting the addition made by the AO in cessation of liability u/s 41(1) of the Act. For this Revenue has raised following two grounds: - “1. On the facts and in the circumstances of the case and in law, the ld CIT(A) has erred in deleting the addition of Rs.96,02,367/- made u/s 41(10 of the IT Act without appreciating that assessee not only failed to prove that liability did not cease to exist but the corresponding creditors did not show assessee as debtors in its books of account. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs.96,02,367/- made u/s 41(1) of the IT Act without appreciating that the liability was a trading liability as it was included in the sundry creditors in the Balance Sheet and therefore, l provision of section 41(1) of the IT Act were squarely applicable.”

3.

At the outset, the learned Counsel for the assessee Shri Madhur Agarwal took us through the CIT(A)’s order, wherein by this consequential order was passed in consequence to revision proceedings initiated by CIT u/s 263 of the Act. The learned Counsel for the assessee filed a copy of Tribunal’s Order in &

3568/Mum/2012 for the A.Y. 2007-08 & 2009-10 dated 20-07-2016, wherein, Tribunal has set aside the order of CIT and quashed the revision proceedings initiated by the CIT u/s 263 of the Act vide para 6.4 and 7 which reads as under: - “6.4 In any matter, invoking provisions of section 263 of the Act on account of alleged remission of liability is not justified. So, the order of CIT is set aside.

7.

As a result, appeal of assessee is allowed.”

4.

According to the learned Counsel, once revision order is set aside, consequential assessment framed by AO u/s 263 r. w. s. 143(3) of the Act will not survive. After, going through the facts of the case we find that the revision proceedings initiated by CIT u/s 263 and order passed is set aside, consequential order passed under 263 r. w. s. 143(3) of the Act will not survive. Accordingly, this appeal of the Revenue is dismissed.

5.

In the result, the appeal of the Revenue is dismissed. Order pronounced in the open court on 05-12-2016.

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