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Income Tax Appellate Tribunal, DELHI BENCH ‘SMC-2’, NEW DELHI
Before: SHRI J. SUDHAKAR REDDY
This is an appeal filed by the Revenue against the order dt. 28.11.2014 of Ld.CIT(A)-I, New Delhi for Assessment Year 2011-12. 2. None appeared on behalf of the Assessee, despite issue of notice. However an Application was made for adjournment which was rejected and the case was heard exparte qua the assessee on merits. 3. The Revenue has raised the following grounds:- “
On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in:-
1. Deleting the addition of Rs. 14,20,722/- made by the AO on account of bogus outstanding liability when the same is not confirmed by the creditor, rather in the books of creditor NIL balance is appearing in the name of the assessee.
ITA 682/Del/2015 A.Y. 2011-12
The appellant craves leave for reserving the right to amend, modify, alter, add or forego any ground(s) of appeal at any time before or during the hearing of this appeal. 4. After hearing the Ld. DR, Mrs. Rakhi Vimal, I find that the order of the Ld. CIT(A) calls for no interference. Ld. CIT(A) vide para no. 5.3 in his impugned order has held as follows:-
“I have carefully considered the submissions of the Id. AR and perused the order passed by the AO. The AO made addition of Rs.14,20,722/- which was a credit balance in the name of M/s Dow Chemical IntI. P. Ltd. on the ground that in the reply received from Dow Chemical Inti Ltd, the opening balance has been shown at nil and closing balance at Rs.3,46,530/-- as credit, which means that payment of Rs.3,46,530/-- is due to be paid by the said party to the assessee. The AO issued show cause to the assessee. The assessee replied that they have made payment to Dow Chemical IntI. P. Ltd. as advanced. The AO therefore, treated the said liability of Rs.14,20,722/- as bogus and added to the income of the appellant. The appellant submitted that they owed Rs.92,40,783/- to Dow Chemical IntI. P Ltd. However, the appellant company went before BIFR as it had become sick company. It was submitted that the BIFR had directed the appellant to pay 15% of principal outstanding which amounts to Rs.14,20,722/- and balance 85% amount was waived. It was submitted that the BIFR has passed the order on 15.1.2009 issued on 20.5.2009 to this effect. For sake of convenience, the relevant part of para 10.1 of the BIFR order, which pertains to statement of sacrifices is reproduced as under:
"As on 31.3.2008, the company had 93 sundry creditors with outstanding dues of RS.394.51 lakhs (please refer to annexure).
ITA 682/Del/2015 A.Y. 2011-12 Out of the above, 25 sundry creditors amounting to RS.322.05 lakh are considered old, not seeking claims / payment and hence, the company proposes to settle them at 15% of their principal) sum from the Financial Year 2009-10. The entire payment will be completed during the F. Y. 2011- 12. In respect of 68 Sundry Creditors with an outstanding of Rs. 72.46lakhs, no reliefs and concessions are envisaged as they are treated running creditors whose services will continue to be utilized by the company during the rehabilitation period." On perusal of the annexure attached with order, I find that the name of the Dow Chemical Int. P. Ltd. appears at serial no. 6 and 7 under the category old creditors and total amount is Rs.9240783.68 at serial no. 6 and Rs.230689.57 at serial no.
Thus, the fact that the appellant was liable to pay the amount of Rs.14,20,7;22/- to Dow Chemical IntI. P. Ltd. cannot be denied. The fact that the appellant has made the said payment to Dow Chemical IntI. P. Ltd. is also not under dispute. Further the payment made by the appellant to the party cannot be added as income in the hand of the appellant under any provisions of the Act. Moreover, this credit of Dow Chemical IntI. P. Ltd. is not a liability created during the year and therefore, there is no basis for addition of the amount during the year. The observation of the AO that Dow Chemical IntI. P. ltd. has shown nil opening balance of the appellant can be for the reason that Dow Chemical IntI. P. Ltd. had written off the amount receivable in its books of accounts. Dow Chemical IntI. P. Ltd. has not disputed the receipt of aforesaid amount from the appellant. Under these circumstances, the addition made in the hand of the appellant is not sustainable and hence, the same is directed to be deleted. The AO is however
ITA 682/Del/2015 A.Y. 2011-12 directed to inform to the assessing officer of Dow Chemical IntI. P. ltd. to ascertain whether the receipts from the appellant has been shown as their income or not. The grounds of appeal are allowed.”
5. Ld. DR could not controvert this factual findings of the Ld. CIT(A).
6. In view of above, we uphold the order of the Ld. CIT(A). 7. In the result, the Appeal filed by the Revenue stands dismissed. Order pronounced in the Open Court on 19th October,2015.