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TMI Blog2015 (4) TMI 830X X X X Extracts X X X X X X X X Extracts X X X X ..... quired to be noted that as such the entire issue is remanded by the learned Tribunal to the file of the learned CIT(A) and the matter is remanded to the learned CIT(A). Under the circumstances, with respect to the above, no interference of this Court is called for, as the entire issue with respect to the same would be at large before the learned CIT(A).- Decided against the revenue. - TAX APPEAL NO. 192 of 2015 With TAX APPEAL NO. 193 of 2015 - - - Dated:- 27-3-2015 - MR. M.R. SHAH AND MR. S.H.VORA, JJ. FOR THE APPELLANT : MR.VARUN K.PATEL, ADVOCATE JUDGMENT (PER : HONOURABLE MR.JUSTICE M.R. SHAH) [1.0] As common question of law and facts arise in both these Tax Appeals they are disposed by this common order. [2.0] Feeling aggrieved and dissatisfied with the impugned judgment and order passed by the learned Income Tax Appellate Tribunal, Ahmedabad D Bench (hereinafter referred to as the Tribunal ) dated 17/10/2014 in ITA No.190/Ahd/2011 for the Assessment Year 2007-08, the revenue has preferred Tax Appeal No.192/2015 with the following substantial questions of law; (A) Whether in the facts and circumstances of the case, the learned ITAT has erred in l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... detailed questionnaire was issued and duly served upon the assessee. On verification of the balance sheet, it was noticed that the assessee had shown sundry creditors amounting to ₹ 1,97,72,289/-. The assessee was required to furnish copy of the ledger account of the last three years of the persons against whom sundry creditors were appearing in the balance sheet alongwith complete name, address, PAN and conformation thereof. The assessee failed to produce the breakup of the amounts appearing in the balance sheet. The assessee did not furnish the details asked for and, therefore, show cause notice came to be issued on 20/11/2009 as under; Vide point No.3 of this office show cause notice dated 03/11/2009, you were required to furnish confirmation, name, address and PAN of the persons against whom sundry creditors of ₹ 1,97,72,289/- were reflected in your balance sheet as on 31/03/2007. Thereafter, your A.R. Shri Omkar Mishra attended before the undersigned on 03/11/2009, 12/11/2009 and 17/11/2009 but failed to produce the details as called for. Please note that if you failed to produce the details as called for on the next date of hearing, the credit of ₹ 1,97 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Officer that the assessee had debited the amount of ₹ 1,71,04,226/-, being the labour charges. The assessee was called upon to produce the evidences in support of the expenditure debited in the Profit Loss Account, which the assessee failed to produce. The Assessing Officer disallowed 15% of the labour charges of ₹ 1,71,04,766/- by observing that it is quite possible that the assessee had not executed the major portion of the alleged work but it was only as accommodating contract entity for inflation of the expenses of one of the main contractor and consequently added ₹ 25,65,634/- to the total income of the assessee. [4.2] Feeling aggrieved and dissatisfied with the order passed by the Assessing Officer in making the addition of ₹ 56,96,645/- under Section41(1) of the Income Tax Act and the addition of ₹ 25,65,634/-, being 15% of the labour charges as unexplained expenditure, the assessee preferred appeal before the learned CIT(A) and the learned CIT(A) partly allowed the appeal, however confirming the action of the Assessing Officer in making the addition of ₹ 56,96,645/- by invoking Section 41(1) of the Act and also confirming the acti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7; 56,96,645/- in the balance sheet of the assessee, which were very old. It is submitted that though the assessee was given an opportunity to furnish complete identity, creditworthiness of the creditors etc. by the Assessing Officer and the CIT(A), the assessee had failed to do so. It is submitted that even the assessee also failed to produce the address, PAN number and conformation of the said sundry creditors. It is submitted that under the circumstances when the Assessing Officer made the addition of ₹ 56,96,645/- under Section 41(1) of the Act, the learned Tribunal is not justified in deleting such addition. [5.2] It is submitted that the learned Tribunal has materially erred in relying upon the decision of this Court in the case of CIT Vs. Nitin S. Garg rendered in 22 Taxman 59 (Guj) as well as the decision dated 04/02/2014 in the case of CIT Vs. Bhogilal Ramjibhai Atara in Tax Appeal No.588/2013 since the facts and circumstances of the present case are completely different than that of the aforesaid cases. It is submitted that as such there is no absolute proposition of law in the aforesaid decision. The addition under Section 41(1) of the Act cannot be made if the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e addition was made invoking Section 41(1) of the Act by doubting the creditworthiness and / or identity of the sundry creditors mentioned in the balance sheet and it was found that those sundry creditors were very old and no interest had been paid on those loans, the Division Bench has deleted such addition made under Section 41(1) of the Act. In paragraph 15 the Division Bench has observed and held as under; 15. In the case before us, it is not been established that the assessee has written off the outstanding liabilities in the books of account. The Appellate Tribunal is justified in taking the view that as assessee had continued to show the admitted amounts as liabilities in its balance sheet the same cannot be treated as assessment of liabilities. Merely because the liabilities are outstanding for last many years, it cannot be inferred that the said liabilities have seized to exist. The Appellate Tribunal has rightly observed that the Assessing Officer shall have to prove that the assessee has obtained the benefits in respect of such trading liabilities by way of remission or cessation thereof which is not the case before us. Merely because the assessee obtained benefit of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax Appeal is dismissed. In the present case there was no remission and / or cessation of the liability during the previous year relevant to the assessment year under consideration. As such, there is no remission and / or cessation of the liability during the year under consideration subject to the conditions contained in the statute being fulfilled. In the present case, both the aforesaid elements are missing. [7.0] Under the circumstances, as such, no error has been committed by the learned Tribunal in deleting the additions made under Section 41(1) of the Act. The proposed substantial questions of law (A) and (B) with respect to deleting the addition made under Section 41(1) of the Act are answered against the revenue. [8.0] Now so far as the other two questions in restoring the grounds raised by the learned Tribunal with respect to the additions made under Section 68 of the Act of unexplained labour charges of ₹ 25,65,634/- is concerned, it is required to be noted that as such the entire issue is remanded by the learned Tribunal to the file of the learned CIT(A) and the matter is remanded to the learned CIT(A). Under the circumstances, with respect to the above ..... X X X X Extracts X X X X X X X X Extracts X X X X
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