Case Law Details
Sarjan Synthetics P. Ltd. Vs DCIT (ITAT Surat)
In the case of Sarjan Synthetics P. Ltd. Vs DCIT, the ITAT Surat remanded the matter to the Assessing Officer (AO) for further verification of an outstanding liability of ₹15.71 lakh, which was added under Section 41(1) of the Income Tax Act for AY 2015-16. The AO had made the addition based on the lack of evidence of payment and non-deduction of TDS. The assessee argued that the liability was discharged in the subsequent assessment year, supported by ledger accounts, and requested the matter to be sent back for verification. The CIT(A) had upheld the addition in an ex parte order, but the ITAT found that the discharge of liability required further scrutiny. Consequently, the ITAT allowed the appeal for statistical purposes and directed the AO to verify the discharge of the liability, including any payments made and whether TDS was deducted, providing the assessee an opportunity for relief if the verification was favorable.
FULL TEXT OF THE ORDER OF ITAT SURAT
1. This appeal by assessee is directed against the order of learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi dated 29.03.2024 for Assessment Year (AY) 2015-16. The assessee has raised following grounds of appeal:
“1. The Ld. CIT(A) has erred and was not just and proper on the facts of the case and in confirming the addition of Rs. 15,71,698/- u/s 41(1) by passing a ex parte order.
2. PRAYER
2.1 The addition may kindly be deleted.
2.2 Personal hearing may be granted.
2.3 Any other relief that your honours may deem fit may be granted.
3. The assessee craves leave to add, amend, modify alter or delete any of the grounds at the time of hearing.”
2. Rival submissions of both the parties and perused the record. The learned Authorized Representative (ld. AR) of the assessee submits that ld. CIT(A) has passed the ex parte order in confirming the addition made by Assessing Officer under section 41(1) of Income Tax Act (Act). The ld. AR of the assessee further submits that Assessing Officer also made addition by disregarding the submission made by assessee. The assessee before Assessing Officer explained about the outstanding liability which represents the salary of director, commission and payment on account of service contract. The assessee submitted that such liability was discharged in subsequent assessment year. The ld. AR submits that he has filed the ledger account to substantiate the fact that such liability was discharged and matter may be restored back to the file of Assessing Officer for verification of fact. The assessee undertakes to be produced all such evidence before Assessing Officer.
3. On the other hand, learned Senior Departmental Representative (ld. Sr. DR) for the revenue supported the order of lower authorities. The ld. Sr. DR submits that assessee failed to produce any evidence against such discharge of liability, no TDS was deducted and no evidence about payment in subsequent year was produced. Out of which substantial part relates to salary of ex-director. Thus, there was no longer liability as such liability has ceased to exist, the Assessing Officer was justified in making such addition.
4. In short rejoinder, the ld. AR of the assessee submits that Assessing Officer may be directed to verify the discharge of such liability and to allow relief to the assessee.
5. I have considered the rival submission of both the parties and have gone through the orders of lower authorities carefully. I find that Assessing Officer made disallowance of outstanding liability on account of salary of ex-director of Rs.11,48,452/- and payment against Kamlesh Kanani and Moti Consultant, all aggregating to Rs.15,71,698/-. The Assessing Officer held that assessee failed to produce that outstanding amount was due. The Assessing Officer also made addition on alternative basis on account of non-deduction of TDS. The ld. CIT(A) also upheld the addition for the want of submission. Before me, the assessee reiterated the similar submission that assessee has discharged liability and furnished ledger account as on 31.03.2018, showing certain payment against such discharge of liability. Considering the fact that such fact required verification, therefore, the matter is remanded to the file of Assessing Officer for verification of fact if the assessee has discharged its liability in subsequent assessment years, if such discharge, the assessee may be allowed relief to that extent. For statistical purposes, the appeal of the assessee is allowed.
6. In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced on 17/10/2024 in the open court.
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