ACIT CC 6(4) OLD CC-39, MUMBAI vs. T.V UNNIKRISHNAN, MUMBAI

First I take up the appeal filed by the revenue. The grounds raised are as under:-

I find that it is noted by the AO on Page 3 of the Assessment Order that during the verification of the books of account maintained in the computer by the company M/s Akbar travels of India Pvt. Ltd. of which, the assessee is Vice President, it was seen that there is a debit balance of Rs. 25, 32,139.24 in Unnibhai Reference Account. On Page no. 4 of the Assessment Order AO stated that it was replied by the assessee on query that this balance has brought forward from the earlier years orders.

On Page No. 5 of the Assessment Order in Para 8.4, it is stated that the AO that in the case of Unnibhai Ref Account involving the debit balance of Rs. 25,32,139/-, the debit balance is assessed in the hands of Unnibhai alias Shri. T.V.Unnikrishnan, Vice President, substantively u/s 41(1) in A.Y. 2011-12. When the assessee carried the matter in the appeal before the Ld.CIT (A), he deleted this addition by holding that the assessee has shown this amount of Rs. 25,32,139/- is payable to ATIPL, and has never expressed any intention not to honour the liability when demanded by ATIPL., Thereafter he noted that just because the outstanding amount are old, it cannot be said that there is a cessation of liability. In this regard, in my consider opinion, the judgment of Hon’ble Apex Court rendered Sugauli Sugar, 236 ITR 518 (SC) is applicable. It was held in this case that even if the assesssee has written back the liability in its books of accounts, this unilateral action of the assessee will not result into cessation of Liability. Further there is amendment in u/s 41 (1) as per which, if the assessee writes back the liability and credited the same in the profit and loss account, then section 41(1) is applicable but even the amended section 41 (1) also is not applicable in the present case. The assessed has not written back the liability by crediting the same to Profit & Loss Account.

Hence, there is no dispute in the order of the Ld. CIT (A) where it is held by him that Section 41(1) is not applicable in the present case.

Respectfully following the judgment of Hon’ble Apex Court rendered in the case of Sugauli Sugar (supra), I Confirm the order of the Ld. CIT (A).

In the result appeal of the revenue is dismissed.

Now I take up the Cross Objection filed by the assessee. The grounds raised by the assessee in the Cross Objection are as under:-

In view of the above decision in respect of revenue’s appeal as per which I confirmed the order of the Ld. CIT(A), the grounds raised by the assessee in Cross Objection have become of academic interest only because of the reasons of Rs. 25,32,139/- has been deleted by the Ld. CIT (A) and his order upheld by me. Even as per the grounds raised by the assessee in the Cross Objection, there is no other grievance of the assessee except the charging of interest U/s 234A, 234B and 234C and once the addition of Rs. 25,32,139/- stands deleted, interest has to be reduced as a consequence.

Therefore I held that the Cross Objection of the assessee has become infrastructus as facts discussed above, and, therefore, the Cross Objection is Dismissed.

In the result the Cross Objection of the Assessee is dismissed.

In the result combine appeals of the revenue as well as the Cross Objection of the assessee are dismissed.