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TMI Blog2012 (5) TMI 30X X X X Extracts X X X X X X X X Extracts X X X X ..... garwala for the Respondent JUDGEMENT J.B. Pardiwala, J 1. As common questions of fact and law arise in the above captioned batch of four appeals and the appeals are also preferred against a common order passed by Income Tax Tribunal, B Bench, Ahmedabad, the same were taken up for hearing together and are being disposed of by this common judgment and order. 2. These appeals under Section-260(A) of the Income Tax Act, 1961 are at the instance of the Revenue and are directed against an order dated 04/06/2010 passed by the Income Tax Tribunal, B Bench, Ahmedabad in Income Tax Appeals bearing ITA No.169, 170, 171 and 172-AHD-2009 for the Assessment Year 2001-02, 2002-03, 2003-04 and 2006-07 respectively. 3. The facts giving rise to present Appeals can be summed up thus: (1) The assessee, respondent herein is one of the key persons of the group comprising of the Agarwal (also known as Garg) family of Surat and Vadodara, engaged mainly in the business of transportation of petro-product and trading of sarees, bitumen etc. A search operation was conducted under Section-132 of the Act at the residential premise of the assessee on 31/05/2006. During the course of as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of liability under Section-41(1) of the Act on the basis of material subsequently produced before Appellate Tribunal subjecting such material to verification for proving genuineness of the payments and thereby totally ignoring the findings of the Assessing Officer/CIT(A) in this regard?" Contentions of Revenue:- 8. Learned Senior Counsel Mr.M.R.Bhatt appearing with learned advocate Ms.Mauna Bhatt submitted on behalf of the Revenue that Appellate Tribunal was not justified in setting aside the addition made by the Assessing Officer in respect of assessment of liabilities for the Assessment Years 2001-02, 2002-03, 2003-04 and 2006-07. He further submitted that during the search conducted under Section-122 of the Act, it was found that the assessee was not having proper address or contact numbers, phone numbers, mobile numbers, web site addresses or any other details or whereabouts of alleged sellers. Learned Senior Counsel Mr. Bhatt further contended that the Tribunal below has committed a substantial error of law in holding that Section-41(1) of the Act was not applicable from the material on record. 9. In order to appreciate the aforesaid question, it will be profitable t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Supreme Court, approving an earlier Full Bench decision of the Gujarat High Court in that case, are relevant and quoted below: "As pointed out already, the crucial words in the Section require that the assessee has to obtain in cash or in any other manner some benefit. That part of the Section has been omitted to be considered by the Division Bench of the Bombay High Court. The said words have been considered by a Full Bench of Gujarat High Court in detail in The Commissioner of Income-tax, Gujarat-II, Ahmedabad v. M/s. Bharat Iron and Steel Industries, Bhavnagar, 1993 Tax LR 188. The following passages in the judgment brings out of the reasoning of the Full Bench succinctly (At Pp. 195 and 196 of Tax LR): "11. In our opinion, for considering the taxability of amount coming within the mischief of S. 41(1) of the Act, the system of accounting followed by the assessee is of no relevance or consequence. We have to go by the language used in S. 41(1) to find out whether or not the amount was obtained by the assessee or whether or not some benefit in respect of trading liability by way of remission or cessation thereof was obtained by the assessee and it is in the previous year in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oints are to be kept in view: (1) In the course of assessment for an earlier year, allowance or deduction has been made in respect of trading liability incurred by the assessee; (2) Subsequently, a benefit is obtained in respect of such trading liability by way of remission or cessation thereof during the year in which such event occurred; (3) in that situation the value of benefit accruing to the assessee is deemed to be the profit and gains of business which otherwise would not be his income; and (4) such value of benefit is made chargeable to income tax as the income of the previous year wherein such benefit was obtained. The High Court, agreeing with the Tribunal, rightly held that the resort to Section 41(1) could arise only if the liability of the assessee can be said to have ceased finally without the possibility of reviving it. On the facts found by the Tribunal, the Tribunal as well as the High Court were well justified in coming to the conclusion that the purchase tax liability of the assessee had not ceased finally during the year in question. Despite the finality attained by the judgment in Neroth Oil Mills' case, the other issues having bearing on the exigibility of pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re us. Merely because the assessee obtained benefit of reduction in the earlier years and balance is carried forward in the subsequent year, it would not prove that the trading liabilities of the assessee have become non existent. 16. Moreover, as pointed out in the case of Sugauli Sugar Works (P) Ltd. (supra), vide the last five lines of the paragraph-6 of the judgement, the question whether the liability is actually barred by limitation is not a matter which can be decided by considering the assessee's case alone but has to be decided only if the creditor is before the concerned authority. In the absence of the creditor, it is not possible for the authority to come to a conclusion that the debt is barred and has become unenforceable. There may be circumstances which may enable the creditor to come with a proceeding for enforcement of the debt even after expiry of the normal period of limitation as provided in the Limitation Act. 17. We, thus, find that the views taken by the Tribu nal is absolutely consistent with the ones taken by the Supreme Court in the case of Sugauli Sugar Works P. Ltd. (supra) and other decisions which have been referred to in the judgment. We do no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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