Punjab & Haryana H.C : the Assessing Officer has not discharged his onus in proving that the liability has ceased in the year under consideration ignoring the fact that the assessee had not only failed to file confirmation from the concerned creditors to the effect that the liabilities were still outstanding on the date of the balance-sheet but had also failed to provide the addresses of the creditors, their permanent account numbers or the details as to where they were assessed

High Court Of Punjab And Haryana

CIT VS. Speedways Tyre Ltd.

Assessment Year : 2002-03

Section : 41(1)

Ajay Kumar Mittal And Jaspal Singh, JJ.

IT Appeal No. 213 Of 2009 (O & M)

April 22, 2014

JUDGMENT

CM No. 19021 CII of 2013

Ajay Kumar Mittal, J. – The documents annexures R-1 to R-8 are allowed to be taken on record. CM stands disposed of.

I. T. A. No. 213 of 2009

2. This appeal has been preferred by the Revenue under section 260A of the Income-tax Act, 1961 (in short, “the Act”), against the order dated October 8, 2008, annexure A-3 passed by the Income-tax Appellate Tribunal, Amritsar Bench, Amritsar (in short, “the Tribunal”) in ITA No. 72 (ASR)/2006, for the assessment year 2002-03. The appeal was admitted on August 11, 2009, for determining the following substantial questions of law :

“(I) Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was right in law in holding that the Assessing Officer has not discharged his onus in proving that the liability has ceased in the year under consideration ignoring the fact that the assessee had not only failed to file confirmation from the concerned creditors to the effect that the liabilities were still outstanding on the date of the balance-sheet but had also failed to provide the addresses of the creditors, their permanent account numbers or the details as to where they were assessed ?

(II) Whether, on the facts and in the circumstances of the case, the hon’ble Income-tax Appellate Tribunal has erred in law in holding that there has been no remission or cessation of liability when it is clear that the trade debts aggregating to Rs. 29,66,953 have remained unpaid for several years and have become unenforceable ?”

3. Briefly, the facts necessary for adjudication of the controversy involved, as narrated in the appeal, may be noticed. The assessee derives income from manufacturing and sale of auto and cycle tyres and tubes. Return declaring total income of Rs. 1,70,099 computed under the provisions of the Act and Rs. 23,88,900 under the provisions of section 115JB of the Act accompanied by the audit report under sections 44AB and 80-IA of the Act was furnished by the assessee on October 31, 2002, which was processed under section 143(1) of the Act. Subsequently, the case was selected for scrutiny and notices under sections 142(1) and 143(2) of the Act were issued to the assessee. During the course of assessment proceedings, the Assessing Officer observed that the assessee had shown old creditors in the books of account to the tune of Rs. 29,66,953. The assessee stated before the Assessing Officer that it was the duty of the Department to show that the liability had been ceased or was no more existing. The explanation was rejected by the Assessing Officer since the assessee failed to substantiate the genuineness of the existence of creditors. Vide order dated February 28, 2005, annexure A-1, the Assessing Officer made an addition of Rs. 29,66,953 by invoking the provisions of section 41(1) of the Act. Aggrieved by the order, the assessee went in appeal before the Commissioner of Income-tax (Appeals) (CIT(A)). Vide order dated December 30, 2005, annexure A-2, the Commissioner of Income-tax (Appeals) deleted the addition of Rs. 29,66,953. Not satisfied with the order, the Revenue filed appeal before the Tribunal. Vide order dated October 8, 2008, annexure A-3, the Tribunal dismissed the appeal. Hence, the present appeal by the Revenue.

4. The primary issue that arises for consideration in this appeal is whether the assessee-respondent had discharged the liability in respect of the trade debts aggregating to Rs. 29,66,953.

5. Civil Miscellaneous Application No. 19021 CII of 2013 had been filed by the assessee wherein it had sought to place on record documents annexures R-1 to R-8 to show that it had made the payments to various creditors/parties in subsequent assessment years. Notice of this application was issued to the Revenue. Mr. Sethi has produced a communication dated March 12, 2014, received from the office of the Assistant Commissioner of Income-tax, Central Circle I, Jalandhar, wherein it has been stated as under :

“1. Yes, as per the records of this office, the appeal of the assessee is pending before the hon’ble Punjab and Haryana High Court, Chandigarh.

2. The assessee-company had filed its return of income for the assessment year 2001-02 wherein it had shown the amounts due towards its sundry creditors as outstanding liabilities in the balance-sheet for the assessment year 2001-02.

3. It is verified from the record that the payments as regards the liabilities towards the said sundry creditors are made in the next subsequent assessment years and the same has been accepted by the Department under section 143(3)/153C of the Income-tax Act. The certified copies of the assessment orders passed by the concerned Assessing Officers under section 143(3)/153C of the Income-tax Act for the assessment years 2003-04 to 2009-10 are enclosed herewith.

4. Sundry creditors have already paid their dues in the subsequent years.”

The above communication dated March 12, 2014, is taken on record.

6. A perusal of the aforesaid communication clearly shows that it was not disputed by the Department that in assessments framed under sections 143(3)/153C of the Act for the assessment years 2003-04 to 2009-10, the liabilities towards the abovementioned sundry creditors were made in the subsequent assessment years which was accepted by the Revenue.

7. In view of the above, it was agreed by the learned counsel for the parties that the present appeal has been rendered infructuous and may be disposed of as such. Ordered accordingly.

[Citation : 364 ITR 401]