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TMI Blog2013 (11) TMI 1707X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee. Reopening of the assessment under section 147 r/w s. 148 - To verify the credit entries appearing in the balance sheet - HELD THAT - Insofar as the issue of reopening of the assessment under section 147 r/w section 148 of the Income Tax Act is concerned, the same question is only academic in nature and remains academic as ultimately amount as found by the assessing officer has been taxed though in a subsequent year and therefore, is not required to be considered. - Ajay Rastogi and J.K. Ranka, JJ. For the Appellant: R.B. Mathur For the Respondent : Pawan Sharma JUDGMENT J.K. Ranka, J. 1. Both these income-tax appeals under section 260A of the Income Tax Act, 1961 (for short, Income Tax Act) are directed against the order of the Income-tax Appellate Tribunal, Jaipur Bench B, Jaipur (for short, Tribunal) in ITA No. 554/Jp/2007 and ITA No. 555/Jp/2007, both dt. 20-3-2009 and relate to the assessment year 2002-03. 2. Since the controversy involved is identical, both these income-tax appeals are being decided by this common order. 3. The brief facts, as emerging on the face of record, are that the respondent-assessee (Narendra Mohan Mathur), while carrying on business in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ors are genuine and the respondent-assessee may be called to pay the liabilities as and when the creditor demanded the amount and therefore, there was no justification for invoking of provisions of section 41(1) of the Income Tax Act. On the observation of the assessing officer to treat them as cash credits, it was submitted by the respondent-assessee that they are not in the nature of cash credits rather trade credits and are in the nature of trade liability. However, the assessing officer was not satisfied and assessment was reopened. While framing the assessment, after adverting to the objection raised by the respondent-assessee and in the light of the case laws and further in the light of the fact that the respondent-assessee was unable to produce the books of accounts for the assessment year in question, the genuineness was doubted by the assessing officer and accordingly the said amount of ₹ 48,15,538 was added under section 41(1) of the Income Tax Act. Consequently, interest was also disallowed. 6. Both, reopening of the assessment under section 147 r/w s. 148 of the Income Tax Act so also the addition of ₹ 48,15,358 under section 41(1) of the Income Tax Act, was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... basis, the addition was made in the case of the assessee. The Commissioner (Appeals), in her case, also observed that the entire liability ceased in the assessment year 2006-07 and it has been written off and showed as income in the assessment year 2006-07 and it was, in fact, found as a finding of fact that the assessee also paid an amount of ₹ 38,87,002 by way of tax and accordingly deleted the addition (total surrender) to the tune of ₹ 82,68,755. 10. The Tribunal also, following the case of respondent-assessee Narendra Mohan Mathur observed that since the liability crystallized in the assessment year 2006-07 and same having been shown surrendered in the assessment year 2006-07 and accordingly, in the light of the judgment of respondent-assessee Narendra Mohan Mathur, deleted the same. 11. Shri R.B. Mathur, learned counsel for the Revenue submits that substantial question of law arises out of the order of the Tribunal as the Tribunal has ignored many aspects and in a summary manner dealt with the issue which has wide ramifications. He submits that the order is totally perverse and without proper application of mind. He further submits that the Commissioner (Appeals), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the liabilities were trade liabilities and were genuine and being shown in the books of accounts of the respondent-assessee from year to year and had it not been payable, no interest would have been paid to such creditors. He further submits that the provisions of s. 41(1) cannot be invoked on such facts and circumstances of the case. He further contended that not only the entire amount but the accrued interest also has been written off in the previous year relevant to the assessment year 2006-07 and he submits that provisions of section 41(1), if at all could be invoked for the assessment year 2006-07 and not the year under appeal. He further submits that admittedly, the amounts have been offered for taxation in the assessment year 2006-07. The entire tax has been paid in the assessment year 2006-07 and there is no loss to the Revenue whether to tax the same in the assessment year 2006-07 or in the assessment year 2002-03 as the tax rate remains the same. He submits that under the taxation laws, double tax cannot be levied and since the amount has already been taxed in the assessment year 2006-07, therefore, both the appellate authorities namely, CIT(A) as well as Tribunal ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not to appear or did not respond or even did not come forward on the request of the respondent-assessee before the assessing officer, it does not prove that the trade creditors were not genuine and were not in existence so as to invoke provisions of section 41(1). 16. Section 41(1) requires that the onus is on the assessing officer to come to the conclusion that the liabilities ceased to exist or the assessee has obtained whether in cash or in any other manner whatsoever any amount in respect of such loss or expenditure, or some benefit in respect of such trading liability by way of remission or cessation thereof, the amount obtained by such person. On the one hand, the assessee claims that the amount was payable and the assessee may be justified in saying so because one never knows when a creditor will come and raise the demand. May be, the creditor was justified that interest was being paid, so he did not turn up to take the principal amount. Therefore, it was for the assessing officer to come to a definite finding that the liability ceased to exist during the previous year relevant to the year under appeal which, in our view, has not been proved by the assessing officer. 17. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the last six years, it cannot be presumed that the said liabilities have ceased to exist. 20.1. It is also a conceded position that there is no bilateral act of the assessee and the creditors, which indicates that the said liabilities have ceased to exist. In the absence of any bilateral act, the said liabilities could not have been treated to have ceased. Accordingly, it was held that no addition could be made by invoking provisions of section 41(1) of the Act. Same position exists in the present appeal though the liabilities may be outstanding for the last several years but it is the claim of the respondent-assessee, that they are payable and had it not been payable, the assessee would not have paid any interest and that too year after year. Therefore, the liabilities, in our view, certainly did not cease to exist in the year under appeal. 21. The Delhi High Court, in the case of CIT v. Rajasthan Golden Transport Co. (P.) Ltd. (2001) 249 ITR 723 (Del), held that if amount is received in the course of a trading transaction, even though it is not taxable in the year of receipt as being of revenue character, the amount changes its character when the amount becomes the assessees own ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red by limitation. The assessee itself has treated the money as its own money and taken the amount to its P L a/c. There is no explanation from the assessee why the surplus money was taken to its P L a/c even if. it was somebody else's money. In fact, as Atkinson J. pointed out that what the assessee did was the common sense way of dealing with the amounts. 24. In view of the above facts and circumstances, the amount having been already offered to tax in the year 2006-07 and it being a finding of fact, in our view, no substantial question of law arises for consideration by this Court. 25. Insofar as the issue of reopening of the assessment under section 147 r/w section 148 of the Income Tax Act is concerned, the same question is only academic in nature and remains academic as ultimately amount as found by the assessing officer has been taxed though in a subsequent year and therefore, is not required to be considered. 26. In view of the discussion made above, we do not find any illegality, infirmity or ambiguity in the orders impugned passed by the authorities below so as to call for interference of this Court. It is essentially a finding of fact and no substantial question of l ..... X X X X Extracts X X X X X X X X Extracts X X X X
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