New India Silk Mills Trust, C/o. Arunbhai J. Sakkai, 4/330, 2nd Floor, Shri Krishna Niwas, Dudhara Sheri, Begampura, Surat. V/s. The Income-tax Officer, Ward 3(3), Surat.
December, 12th 2013
IN THE INCOME TAX APPELLATE TRIBUNAL
AHMEDABAD "A" BENCH AHMADABAD
, Û `'
Before Shri D.K.Tyagi, Judicial Member and
^ . .×, Û
Shri T.R. Meena, Accountant Member
^ .., ¢
ITA No. 3169/Ahd/2010
Assessm ent Year :2007-08
New India Silk Mills Trust, V/s . The Income-tax Officer,
C/o. Arunbhai J. Sakkai, W ard 3(3),
4/330, 2 n d Floor, Shri Krishna Surat.
Niwas, Dudhara Sheri,
P AN No. AAATN1891N
(Appellant) .. (Respondent)
Shri R. N. Vepari, A.R.
× /By Respondent Shri O. P. Bhateja, Sr. D.R.
/Date of Hearing
/Date of Pronouncement 05.12.2013
PER : Shri T.R.Meena, Accountant Member
This is an appeal at the behest of the assessee which has emanated
from the order of CIT(A)-II, Surat, dated 08.10.2010 for assessment year
2007-08. The sole ground of assessee is against confirming addition of
Rs.12,76,462/- u/s. 41(1A) of the Act.
2. The A.O. observed that assessee was a private beneficiary trust and
presently not carrying out any business activity. The A.O. noticed following
i. Balance outstanding of Beneficiaries Rs. 1,90,413/-
I T A No . 3 16 9 /A h d/ 1 0 A. Y. 07- 0 8 Page 2
ii. Balance outstanding for Depositors Rs. 22,56,348/-
iii. Balance Outstanding for Others Rs. 12,76,462/-.
The A.O. gave notice u/s. 41(1)(a) of the IT Act, why outstanding in the name
of various persons should not be added in the income of the assessee. The
assessee objected the proposal made by the A.O. on the ground that liability
had not seized and certainly they had not seized during the year. He relied
upon numbers of decisions before the A.O. The A.O. held that the assessee
did not provide the details of the parties, reasons for not paying the said
amounts of interest, the efforts made, if any to pay outstanding liability. The
assessee claimed that these outstanding were related to 1990. The assessee
did not provide further details of these transactions and efforts of the payment.
The A.O. also relied upon various case laws and after considering the
assessee's reply, it was held that liability shown outstanding against the
interest amounting to Rs.12,52,592/- and other liability amounting to
Rs.23,870/- was considered to be seized as on 31.03.2007. Thus, he made
addition of Rs.12,76,462/-.
3. Being aggrieved by the order of the A.O., the assessee carried the matter
before the CIT(A) who has confirmed the addition by observing as under:
"5.1 I have duly considered the submission of the appellant and the
discussion made in the assessment order and find that the appellant
has not furnished any material submission during the course
appellate proceedings and the submission made vide letter dated
23.08.10 is not different from the submission made during the course
of assessment proceedings, which has been fully dealt with by the
assessing officer in pages 2 to 8 of the assessment order. In fact,
I T A No . 3 16 9 /A h d/ 1 0 A. Y. 07- 0 8 Page 3
the appellant has not furnished any information either, in respect of
interest expense of Rs.12,52,592/- which has been debited in the
P&L account by appellant in the earlier years, viz. F.Y. 1990-91 or
earlier, but still outstanding, or in respect of other balances
outstanding to the extent of Rs.23,870/-. In so far as the decisions
relied upon are concerned, on facts, they are not applicable at all. If
a liability which is outstanding from 1990 onwards till March 2007,
and not written off, what other reason can be than appellant not
willing to pay taxes on that, and in that case the very purpose of
section 41(1) is defeated and it becomes redundant in the Act, I,
therefore, do not find any reason to deviate from the finding given by
the assessing officer and confirm the above addition. The first
ground of appeal is, accordingly, dismissed."
4. Now the assessee is before us. Ld. Counsel for the appellant
contended that the liability is continued to be carry forwarded and it cannot be
considered to have seized. He again relied upon various case laws, which
were relied before the A.O. He further relied in case of M/s. Hardik Fabrics,
Surat vs. ITO in ITA No.58/Ahd/2011 for A.Y. 2007-08, wherein the liability
was existed on account of sundry creditor shown in the balance sheet. The
Hon'ble ITAT `C' Bench has deleted the addition u/s.41(1) of the IT Act. It
was fairly admitted by the AO that the assessee did not have any detail of
liability but the unilateral action is not permitted under the law. At the outset,
ld. Sr. D.R. relied upon the order of the CIT(A).
5. We have heard the rival contentions and perused the material on
record. The assessee has shown liability of bank interest at Rs.12,52,592/-
in the list of creditors which pertained to 1990. The A.O. asked to furnish the
details, name, and address of the parties from the appellant. The details had
I T A No . 3 16 9 /A h d/ 1 0 A. Y. 07- 0 8 Page 4
not been filed by the appellant before the Lower Authorities as well as before
us. In absence of details the A.O. cannot verify what treatment was given by
the recipient in its book. It is clear that the creditors are very old and reasons
for not paying has not been explained by the assessee with evidences.
Therefore, we have considered view that the liability is no longer required to
be kept when no verification can be made from the book of recipient. Thus,
we confirm the order of the A.O.
6. In the result, the assessee's appeal is dismissed.
This Order pronounced in open Court on 05.12.2013
(D.K.Tyagi) (T.R. Meena)
Judicial Member Accountant Member
/ Copy of Order Forwarded to:-
1. / Appellant
2. × / Respondent
3. / Concerned CIT
4. - / CIT (A)
5. , , / DR, ITAT, Ahmedabad
6. [ / Guard file.
By order/ ,