Similar View Has Been Taken By The Apex Court In The Case Of Commissioner Of Income-Tax-Iii, Pune v. Sinhgad Technical Education Society, Reported In [2017

IN THE HIGH COURT OF GUJARAT AT AHMEDABADR/TAX APPEAL NO. 287 of 2019 ==========================================================PRINCIPAL COMMISSIONER INCOME TAX SURAT 1 VersusAMIT VASANTLAL SHAH ========================================================== Appearance:MRS KALPANAK RAVAL(1046) for the Appellant(s) No. 1 ========================================================== CORAM: HONOURABLE MR.JUSTICE J.B.PARDIWALAandHONOURABLE MR.JUSTICE A.C. RAO Date : 08/07/2019 ORAL ORDER (PER : HONOURABLE MR.JUSTICE A.C. RAO) 1.00.The Revenue has filed this Tax Appeal under section 260(A) of the Income Tax Act, 1961 (for short “the Act, 1961) challenging the legality and validity of the order passed by the Income Tax Appellate Tribunal, Surat in IT(SS)A No.216/Ahd/2017/SRT for A.Y.2007-08. 2.00.The revenue has proposed the following question of law in the memo of the appeal:- “Whether on the facts and in the circumstances of the case and in law, the learned ITAT was correct in deleting the addition made under section 41(1) of the Act?” 3.00.The assessee filed his return of income under section 139 of the I.T. Act on 30/09/2008 declaring total income of Rs.3,59,880/-. Thereafter, search under section 132 of the Act was conducted on the group of assessee on 27/12/2012. On the basis of the same, notice under section 153A of the Act was issued to the assessee on 23/5/2013 asking him to furnish return of income within 30 days from the date of receipt of the notice. In response to the said notice, the assessee filed his return of income on 19/3/2014 declaring total income of Rs.3,59,880/-. After hearing the assessee, the assessment order under section 144 r.w.s. 153A of the Act was passed on 27/2/2015 determining the total income of Rs.2,18,71,343/-, after making addition of Rs.2,15,11,460 on account of the Cessation of liability under section 41(1) of the Act. The Assessing Officer took the view that the assessee had not been able to produce sufficient supporting evidence to prove genuineness of the creditors and therefore, made addition of Rs.2,15,11,460 under section 41(1) of the Act on account of Cessation of liability. 3.01.Being aggrieved by the assessment order under section 153A of the Act, the assessee preferred appeal before the Commissioner of Income Tax, Surat and the CIT(A)-4, Surat allowed the said appeal of the assessee vide order dated 03/02/2017 deleting the addition made by the Assessing Officwer. 3.02.Being aggrieved by the order passed by the CIT(A) dated 03/02/2017, the revenue preferred an appeal before the tribunal and the tribunal dismissed the said appeal preferred by the revenue vide order dated 16/11/2018. While dismissing the appeal, the tribunal observed that there was no record or document available with the Assessing Officer to arrive at the conclusion that the concerned liability had ceased to exist and that the appellant was never called upon to make the payment against the liability and therefore, the finding of the Assessing Officer that the liability of the assessee had ceased to exist, was only an assumption. 3.03. Being aggrieved by the order passed by the Income Tax Appellate Tribunal, Surat dated 16/11/2018 in IT(SS)A No.216/Ahd/2017/SRT for A.Y.2007-08, the Revenue preferred this Tax Appeal under section 260(A) of the Act. 4.00.Heard the learned counsel for the revenue and considered the orders passed by the Assessing Officer, Commissioner as well as the Tribunal. the appeal, the tribunal observed that there was no record or document available with the Assessing Officer to arrive at the conclusion that the concerned liability had ceased to exist and that the appellant was never called upon to make the payment against the liability and therefore, the finding of the Assessing Officer that the liability of the assessee had ceased to exist, was only an assumption. 3.03. Being aggrieved by the order passed by the Income Tax Appellate Tribunal, Surat dated 16/11/2018 in IT(SS)A No.216/Ahd/2017/SRT for A.Y.2007-08, the Revenue preferred this Tax Appeal under section 260(A) of the Act. 4.00.Heard the learned counsel for the revenue and considered the orders passed by the Assessing Officer, Commissioner as well as the Tribunal. 5.00.Thus, the findings of fact recorded by the tribunal that no material was recovered during the search as per the provisions of section 153(C) of the Act, which could have been treated as incriminating material and which have been made as a base for supporting the action of the department. Under the circumstances, the addition of Rs.2,15,11,460 on account of Cessation of liability under section 41(1) of the Act is illegal, in valid and not sustainable in the eye of law. If such course is permitted it would amount to reopening assessment order without any new material. 6.00.Similar view has been taken by the Apex Court in the case of Commissioner of Income-tax-III, Pune Versus Sinhgad Technical Education Society, reported in [2017] 84 taxmann.com 290 (SC). In the said decision it has been held by the Apex Court that in absence of any incriminating material which was seized as per the provisions of section 153(C), notice under section 153(C) of the Act cannot sustain. 7.00.Under the circumstances, the impugned order passed by the tribunal is just, legal and in accordance with law. No error or illegality has been committed by the tribunal in dismissing the appeal preferred by the revenue confirming the order passed by the CIT(A) and deleting the addition of Rs.2,15,11,460 made under section 41(1) of the Act on account of Cessation of liability. No substantial question of law arise in this appeal for determination of this Court. Hence, present appeal preferred by the revenue is dismissed. RAFIK... Sd/- (J. B. PARDIWALA, J) Sd/- (A. C. RAO, J)