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TMI Blog2013 (12) TMI 943X X X X Extracts X X X X X X X X Extracts X X X X ..... lty - The AO has observed that it is panel in nature but how it is penal in nature AO has not observed this fact - Decided against Revenue. - ITA No.1662,1898/Del/2011 - - - Dated:- 23-8-2013 - Rajpal Yadav And T S Kapoor, JJ. For the Appellant : Shri Sanjeev Jain, CA For the Respondent : Shri Sameer Sharma, Sr (DR) ORDER:- PER : Rajpal Yadav The assessee and the revenue are in Cross-appeal against the order of ld. CIT (A) dated 21.01.2011 passed for assessment year 2007-08. 2. The ground no. 2 and 3 taken by the revenue are inter-connected with the solitary grounds of appeal taken by the assessee. Therefore, we take all these grounds of appeal together. 3. The brief facts of the case are that assessee company is engaged in the manufacturing of Auto Parts. It has filed its return for AY 2007-08 electronically on 31st October 2007, declaring an income of Rs.1,26,76,220/. The case of the assessee was selected for scrutiny assessment and notice u/s 143(2) of the IT Act 1961, was issued on 29th September 2008. The notice was duly served upon assessee and Shri R.K. Agrawal, Advocate appeared before the AO from time to time. On scrutiny of the accounts, it reve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee. Ld. AO did not adversely comment on these material even in the remand proceedings. Thus ld. CIT (A) has held that once payment was made through account payee cheque in the account of the trade creditor. It cannot be doubted. She deleted the addition. 8. Revenue is challenging this deletion of Rs.38,05,500/- in ground no. 9. With regard to the liability of Rs.30,49,488/- appearing against the name of M/s Raj Industrial Corporation is concern, the ld. CIT (A) has confirmed the addition. 10. The assessee is impugning this confirmation in its solitary ground of appeal. Thus all these three grounds of appeal are inter-connected to the sole issue and therefore, we take them together. 11. The ld. DR relied upon the order of AO, he pointed out that against the name of Durga Enterprises the credit balance was of Rs.1,61,25,279/-. The assessee has written back an amount of Rs.1,59,19,279/-. The ld. CIT (A) fail to give any justification about the deletion of the differential amount, amounting to Rs.2,05,980/-. 12. The ld. counsel for the assessee on the other hand submitted that as per the AO the opening balance as on 1.4.2006 and closing balance as on 31st March 2006 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... do not find error in it. 14. The next item is of Rs.38,05,500/- appearing against the name of Monica Enterprises. According to the assessee the purchases made from M/s Monica Enterprises have been duly entered in the stock registered. M/s Monica Enterprises is registered with the sales tax authorities. The assessee has filed its TIN NO. This concern had issued bills and also Form No. VAT D-3, which bears the hologram seal of the sales tax department of State Government of Haryana. We find that purchases from Monica Enterprises have been made during the year. The opening balance was Nil. Hence AO has rightly inquired the antecedents and existence of this concern. The assessee has placed on record copies of bills as well as copies of Form No. VAT D-3. All these details are available on page no. 48 to 75 of the paper book. M/s Monica Enterprises has shown its address with the sales tax authorities at shop no. D-591 Nehru Ground, Faridabad. It was registered under the sales tax Act on 5th November 2004, its registration is valid up to 5th January 2010. The details to this effect are available on page 55, these details have been taken from the website. Ld. CIT (A) recorded as a matte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his year. The assessee has made payments against the previous outstanding dues. The AO, if wants to make the addition on account of bogus credit u/s 68. Then, it has to be made in the year in which the credits were recorded first time. It is a carry forward from the earlier year, the AO has not disputed this aspect. If AO wants to make addition on account of cessation of liability u/s 41(1) of the IT Act then, the liability has not ceased, assessee has partly made the payment during this year and remaining in the next year. The ld. counsel for the assessee further contended that this concern is also having permanent account no. with the sales tax authority. He drew our attention towards the statement of the bank account available on page 91 and pointed that from the assessee s account with the State Bank of India, these payments have been made. The ld. counsel also drew out attention towards page no. 95, where details of TIN No. i.e. registration with the sales tax department are placed on record. This concern was registered with the sales tax department on 15th May 2001 and it is valid up to 5th January 2010. In order to buttress his contention that addition on account of cessatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liability. In such a case, the section says that whatever benefit has arisen to the assessee in the latter year by way of remission of the liability will be brought to tax in that year. The principle behind the section is that a provision intended to ensure that the assessee does not get away with a double benefit, once by way of deduction in earlier assessment year and again by not being taxed on the benefit received by him in a latter year with reference to the liability earlier allowed as a deduction. The assessee has not shown that liability has ceased, rather it has alleged that out of Rs.30,49,488/-, a sum of Rs.13,47,710 have been paid during this year and the balance Rs.17,01,778/- paid in subsequent years. Legally and logically this amount cannot be added in the hands of the assessee. The reasoning of the ld. CIT (A) is that assessee failed to produce bank details of Raj Industrial Corporation indicating the credits of the amounts debited from its account. To our mind, it is a little too higher technical approach the assessee can produce its accounts, a certificate from its banker. It is to be seen that, why it will pay an amount to some unknown entity. It is better for t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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