Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2020 (9) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2020 (9) TMI 1041 - AT - Income TaxReopening of assessment u/s 147 - Addition as Share application money since 31.03.2009, treated as cessation of trading liabilities u/s 41(1) - HELD THAT:- Hon’ble Supreme court, in the case of ACIT vs Rajesh Jhaveri Stock Brokers Pvt. Ltd.[2007 (5) TMI 197 - SUPREME COURT] had clearly held that reasons to believe does not mean that the reasons for reopening should have been factually ascertained by legal evidence or conclusion before the reopening of an assessment. As in the case of Raymond woolen Mills Ltd [1997 (12) TMI 12 - SUPREME COURT] had held that for determining, whether initiation of reopening proceedings was valid, it has only to be seen, whether there was prima-facie some material on the basis of which, the department would reopen the case. It further held that the sufficiency or correctness of the material is not a thing to be considered at the stage of issue of notice. There is no merit in arguments taken by the Ld. Counsel for the assesee challenging reopening of assessment. Additions made towards cessation of trading liability u/s 41(1) - Once the liability has been paid back during AY 2009-10, then the same cannot be considered as continued in the books of accounts as on 31/03/2010, in order to invoke provisions of section 41(1) on the basis of subsequent enquiries conducted during the course of assessment proceedings. In fact, the evidences filed before the authorities have clearly established the fact that the assessee has paid said liability in AY 2009-10. Therefore, we are of the considered view that liability, if at all is ceased to exist, then said liability had been ceased to exist in the FY 2008-09 relevant to AY 2009-10, but not for the AY 2010-11. AO, as well as the Ld.CIT(A) were erred in, coming to the conclusion that the liability is ceased to exist during AY 2010-11. None of the conditions prescribed therein u/s 41(1) were fulfilled, in order to bring said liability within the ambit of provisions of section 41(1) because neither, the liability is ceased to exist during the impugned assessment year, nor the Ld. AO proved that it is a non-genuine trading liability. On the other hand, the assessee has filed necessary evidences to prove that the liability was existed in the books of accounts up to 31/03/2009 and on 31/03/2009 said liability has been fully paid back by converting, the same into share application money with the consent of creditors. AO, as well as the Ld.CIT (A) was completely erred in making additions towards cessation or remission of liability u/s 41(1) of the Act, towards share application money - Decided partly in favour of assessee.
|