ITO 1(1)(2), MUMBAI vs. CRYSTAL HOSPITALITY SERVICES P.TLD, MUMBAI
What did the Tribunal hold?
The Tribunal found that the CIT(A) deleted the addition without confronting the material to the Assessing Officer and without a proper reconciliation. Therefore, the issue requires fresh examination by the Assessing Officer.
What were the facts?
The Assessing Officer made an addition of Rs. 50,00,000/- under Section 41(1) as cessation of liability, as the assessee's books showed a payable amount to Hotel Rugby Ltd., but Hotel Rugby Ltd.'s books did not show it as receivable. The CIT(A) deleted this addition.
What were the issues?
Whether the CIT(A) erred in deleting the addition made by the AO under Section 41(1) without proper examination and reconciliation of the discrepancy in the books of accounts.
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “C” Bench, Mumbai
Before: Shri B.R. Baskaran (AM) & Shri Pawan Singh (JM)
The appeal filed by the Revenue is directed against the order dated 27.6.2014 passed by the learned CIT(A)-1, Mumbai and it relates to A.Y. 2010- 11.
None appeared on behalf of the assessee even though notice was issued by registered post on more than one occasion. Hence, we proceed to dispose of the assessee ex-pare, without presence of the assessee.
We have heard learned Departmental Representative and perused the record. The Revenue is contesting relief granted by the learned CIT(A) in respect of addition of ` 50,00,000/- made by the Assessing Officer u/s. 41(1) of the Act on account of cessation of liability standing in the name of M/s Hotel Rugby Ltd.
2 M/s. Crystal Hospitality Services Pvt. Ltd.
Learned Departmental Representative submitted that the Books of account of the assessee showed that a sum of ` 50,00,000/- was payable to Hotel Rugby Ltd. The Assessing Officer called for the account copy of the assessee as appearing in the books of account of Hotel Rugby Ltd. and noticed that no such amount of ` 50,00,000/- was shown as receivable from assessee as on 31.3.2010. Accordingly, the Assessing Officer assessed an amount of ` 50,00,000/- as cessation of liability u/s. 41(1) of the Act. Learned Departmental Representative submitted that the learned CIT(A) has deleted the addition without confronting material to the Assessing Officer. She further submitted that the assessee has not furnished any reconciliation statement reconciling the difference between the assessee’s book and books of other party.
Having heard the submission made by learned Departmental Representative, we are of the view that this issue requires fresh examination at the end of the Assessing Officer. Accordingly, we set aside the order passed by the learned CIT(A) on this issue and restore the same to the file of the Assessing Officer with the direction to examine the same afresh by considering all material that were already filed and that may also be filed before him.
In the result, appeal filed by the Revenue is allowed for statistical purposes.
Order has been pronounced in the Court on 26.10.2016
More judgments on Section 41(1)
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